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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
 EFFECT OF FEDERAL MINING FEES AND MINING POLICY CHANGES ON STATE AND 
                LOCAL REVENUES AND THE MINING INDUSTRY
=======================================================================

                        OVERSIGHT FIELD HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                    April 20, 2001, in Reno, Nevada

                               __________

                           Serial No. 107-18

                               __________

           Printed for the use of the Committee on Resources

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
         Committee address: http://resourcescommittee.house.gov

                        U.S. GOVERNMENT PRINTING OFFICE
71-816                          WASHINGTON : 2002
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American Samoa
John J. Duncan, Jr., Tennessee       Neil Abercrombie, Hawaii
Joel Hefley, Colorado                Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland         Frank Pallone, Jr., New Jersey
Ken Calvert, California              Calvin M. Dooley, California
Scott McInnis, Colorado              Robert A. Underwood, Guam
Richard W. Pombo, California         Adam Smith, Washington
Barbara Cubin, Wyoming               Donna M. Christensen, Virgin Islands
George Radanovich, California        Ron Kind, Wisconsin    
Walter B. Jones, Jr., North Carolina Jay Inslee, Washington
Mac Thornberry, Texas                Grace F. Napolitano, California
Chris Cannon, Utah                   Tom Udall, New Mexico
John E. Peterson, Pennsylvania       Mark Udall, Colorado
Bob Schaffer, Colorado               Rush D. Holt, New Jersey
Jim Gibbons, Nevada                  James P. McGovern, Massachusetts
Mark E. Souder, Indiana              Anibal Acevedo-Vila, Puerto Rico
Greg Walden, Oregon                  Hilda L. Solis, California
Michael K. Simpson, Idaho            Brad Carson, Oklahoma
Thomas G. Tancredo, Colorado         Betty McCollum, Minnesota
J.D. Hayworth, Arizona               
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                   Allen D. Freemyer, Chief of Staff
                      Lisa Pittman, Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
                  Jeff Petrich, Democrat Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    BARBARA CUBIN, Wyoming, Chairman
              RON KIND, Wisconsin, Ranking Democrat Member

W.J. ``Billy'' Tauzin, Louisiana     Nick J. Rahall II, West Virginia
Mac Thornberry, Texas                Edward J. Markey, Massachusetts
Chris Cannon, Utah                   Solomon P. Ortiz, Texas
Jim Gibbons, Nevada,                 Calvin M. Dooley, California
  Vice Chairman                      Jay Inslee, Washington
Thomas G. Tancredo, Colorado         Grace F. Napolitano, California
C.L. ``Butch'' Otter, Idaho          Brad Carson, Oklahoma
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 20, 2001...................................     1

Statement of Members:
    Gibbons, Hon. Jim, a Representative in Congress from the 
      State of Nevada............................................     1
        Prepared statement of....................................     5
        Newspaper article ``Clinton Regulations a Threat to 
          Mining'' submitted for the record......................    10

Statement of Witnesses:
    Coyner, Alan, Administrator, Nevada Division of Minerals.....    11
    Gaskin, David, Bureau Chief, Bureau of Mining Regulation and 
      Reclamation, Nevada Division of Environmental Protection...    50
        Prepared statement of....................................    52
    Guinn, Hon. Kenny C., Governor, State of Nevada, Prepared 
      statement of...............................................    13
    Harris, Richard W., Attorney at Law, Harris & Thompson, Reno, 
      Nevada.....................................................    27
        Prepared statement of....................................    29
    Jeannes, Charles A., Senior Vice President Administration and 
      General Counsel, Glamis Gold Ltd., Reno, Nevada............    32
        Prepared statement of....................................    34
    Jensen, Tony, Mine General Manager, Cortez Gold Mines, 
      Crescent Valley, Nevada....................................    24
        Prepared statement of....................................    25
    Kohlmoos, Bill, President, Barium Products and Mining Company    84
        Prepared statement of....................................    86
        Letter submitted for the record..........................   104
    Laney, Debbie, President, Women's Mining Coalition...........    40
        Prepared statement of....................................    42
    Lewis, Frank W., Owner, F.W. Lewis Co., Reno, Nevada.........    81
        Prepared statement of....................................    83
    Lloyd, Nolan W., Chairman, County Commissioner, Elko County, 
      Nevada.....................................................    14
        Prepared statement of....................................    16
    Milton, John H., III, County Commissioner, Humboldt County, 
      Nevada.....................................................    17
        Prepared statement of....................................    18
    Myers, Tom, Director, Great Basin Mine Watch.................    53
        Prepared statement of....................................    55
    Price, Dr. Jonathan G., Director/State Geologist, Nevada 
      Bureau of Mines and Geology................................    68
        Prepared statement of....................................    69
    Putnam, Borden R., III, Principal, RS Investment Management, 
      San Francisco, California..................................    63
        Prepared statement of....................................    66
    Taylor, Thomas Lyle, President and CEO, Geotemps Inc.........    79
        Prepared statement of....................................    80

Additional materials supplied:
        Coyle, Courtney Ann, Attorney at Law, on behalf of the 
          Quechan Indian Nation of Fort Yuma, California, Letter 
          submitted for the record...............................    99
        Rhoads, Hon. Dean, State Senator, State of Nevada, 
          Testimony submitted for the record.....................     7

 EFFECT OF FEDERAL MINING FEES AND MINING POLICY CHANGES ON STATE AND 
                 LOCAL REVENUES AND THE MINING INDUSTRY

                              ----------                              

                         Friday, April 20, 2001

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                         Committee on Resources

                              Reno, Nevada

                              ----------                              

    The Subcommittee met, pursuant to call, at 12:30 p.m., at 
the Washoe County Commission Chambers, 1001 East 9th Street, 
Building A, Reno, Nevada, Honorable Jim Gibbons presiding.
    Chairman Gibbons. First of all, I want to start by 
welcoming everybody here to this hearing. It is the 
Subcommittee on Energy and Mineral Resources which is a 
Subcommittee of the Resource Committee of the United States 
House of Representatives.
    I am Congressman Jim Gibbons. Most of the Committee members 
who were supposed to be here failed to show because of delayed 
flights, which I think many of us can understand, or because of 
work schedules in their own districts during this period which 
prevented them from attending this hearing, so I have the 
privilege and the honor to be the only Congressman on the 
Committee that is attending this meeting today so that we can 
get the hearing going.
    The gentleman that you see up here sitting with me to my 
left is Jack Victory. He is my Legislative Director. To my far 
right is John Rishel and Bill Condit, both staffers from the 
Subcommittee on Energy and Mineral Resources. They will be, of 
course, here to help us.
    We have Margaret Black over here from our Washington office 
as well to help usher the witnesses to the table and make sure 
their testimony is kept and recorded. Also I want to welcome 
our stenographer who has agreed to sit patiently through 3 
hours of hearings without taking a break. She guarantees me 
that her fingers will last long enough to take 3 hours, and we 
are going to put her to the test. Of course, we certainly 
appreciate that.
    Today's hearing is going to have four separate panels. 
Hopefully we will be able to have time at the end for public 
comment and we are trying to set up some time constraints now 
on the witnesses that are going to be in the panels to testify. 
We have given each panel about 20 minutes, hopefully it won't 
take that long.
    Each person on the panel will have about 5 minutes to 
present their testimony, and what we have done to accommodate 
that, the technology of our red light, yellow light, green 
light, which we use so faithfully, has failed us. For some 
reason the technology or the electricity, maybe it is 
California taking the energy away from us, for our little 
timing lights which give us the hint that your 5 minutes is 
about up.
    So when we fall back from our high tech electrical side of 
this we have fallen back to the good old fashion egg timer 
which we will set for 5 minutes, so when the bell goes off you 
know that you have reached your limit or we would appreciate 
you winding up your testimony.
    Also, let me say that everybody who is present here and 
anyone who is not present here has an option of submitting 
written testimony for the record. We will keep the record open 
for ten business days after the date of this hearing. We will 
have the address available for you so that you can submit your 
written remarks in full to the Committee for the record.
    Provided that we get through all four panels, we will open 
the mike up for individuals. In this case because there is so 
many people in the room and we do not know how many people will 
want to testify, we have just two requests. First of all, that 
you provide us with your name and address so that we know who 
is at the mike testifying and so that the reporter can properly 
identify you as well.
    And, secondly, we would request that you try to keep your 
remarks down to 1 minute so that if we have the time we can get 
through as many people who want to submit written testimony as 
well.
    With that, let me welcome all of you. Those of you that are 
here from out of state and those of you that are from within 
the state, we welcome you to our hearing today. And what I'm 
going to do is give my little opening remarks and then we will 
open it up and call the first panel which we will have seated 
at the microphones here.
    But many of us know and those of you who do not know that 
Nevada is the largest gold producing state in the country. It 
is the third largest gold producing, or gold producer in the 
world, so if Nevada were a nation in terms of gold producing it 
would be the third largest nation in the world in terms of its 
production of gold.
    It is my honor and it is definitely a privilege of mine to 
welcome and thank you for taking the time out of your busy day 
and especially for the elected officials here as well to share 
your thoughts and to come before our Committee and discuss with 
us your issues with regard to mining. Hopefully today we will 
hear important testimony on the effect of the new 3809 
amendments to the regulations on mining and the millsite 
opinion that were put in place in the last couple of years 
under Solicitor Leshy, the United States Department of the 
Interior.
    We will also discuss the effect of a proposed Federal 
royalty on mining and the effect of mining claim fees on 
domestic mineral exploration. Let me also state that Nevada is 
the state that is probably the most affected by any of these 
changes to the regulations of any state because of the 
importance of mining in the State of Nevada to the citizens and 
people in this nation.
    Our concern is whether or not these administrative changes 
to the regulations bypass the intent of Congress. Congress 
under the Constitution has the authority to set all laws and 
regulations which deal with the various territories and states. 
And as you know from your study of civics, Congress passes the 
laws and the administration enforces the laws.
    Too many times we have found that the administration in an 
effort to achieve a goal has bypassed Congress creating its own 
``laws.'' As we know, regulations have the force and effect of 
law as they are created by agencies, so we want to make sure 
that these regulatory changes that were proposed comport with 
the intent of Congress and not bypass or sidestep Congress.
    We are interested in how these Federal policies and fees 
affect our nation's domestic mineral exploration production and 
reserves as well as state and local revenues. Mining is a basic 
economic activity and it is necessary to all mankind. The 
knowledge and the use of metals is exceedingly important to 
human civilization.
    I think historically, if we all look back, as man 
progressed out of the Stone Age mining became one of the 
central factors in the evolution of civilization in the world. 
And for the next 2,500 years following the Stone Age, 
historians characterize the advance of civilization by Man's 
increased ability in working with metals. Subsequent periods of 
this advance are divided into the Copper Age, Bronze Age and 
Iron Age.
    Now, let me tell you that as a former mining geologist and 
Vice Chairman of this Subcommittee and Co-Chairman of the 
Energy & Mineral Resource Mining Caucus in Congress, I have a 
deep appreciation and understanding of Nevada's mining 
industry. Nevada, the nation's leading gold producer, as I said 
earlier, has about 30 operating gold producing companies that 
employ around 12,000 people. As you can tell, it is an 
important industry in this state.
    Nevada alone provides an annual direct and indirect 
contribution to the Federal Government of more than 113 million 
dollars in revenue and fees. As the second largest employer of 
the state let me say that it has an even more dramatic impact. 
It provides 1.5 billion dollars in personal business, state and 
local government revenues in the State of Nevada.
    And I think these numbers make it easy to understand why 
mining is such an important part of the State of Nevada. Around 
the globe mining continues to be a basic economic activity 
which supplies strategic metals and minerals that are essential 
for modern agriculture, construction and manufacture.
    A recent study by the National Research Council concluded 
that one of the primary advantages the United States possesses 
over its strongest industrial competitors such as Japan and 
Western Europe is its domestic resource base, and domestic 
mining provides about 50 percent of the metals used by U.S. 
manufacturing companies.
    The United States is among the world's largest producers of 
many important metals and minerals, particularly copper, gold, 
lead, molybdenum, silver and zinc and still has substantial 
domestic reserves of these metals.
    Ladies and gentlemen, 12 western states in the United 
States contain more than 92 percent of the U.S. public land. 
These 12 states account for 75 percent of the U.S. Domestic 
metal production. Thus, much of the United States future metal 
supply will likely, of course, be found on government owned, 
government managed property in the western part of the United 
States.
    Unfortunately, there are some who have used rhetoric 
portraying everything about the mining industry in its worst 
possible light while failing to acknowledge that mining 
provides any substantial benefits to society. And let me say 
that I believe that in the past mining has earned some 
criticism. Mining has also earned some accolades for what it 
has done and achieved over the last few years in terms of 
advancements in its environmental interests. Without mining and 
the knowledge of how to use metals we would still be living, of 
course, as I said earlier, in the stone age.
    As someone who has spent some time in the military, let me 
turn now historically to talk about World War II, because World 
War II has been termed ``a war of copper mines and steel 
mills.'' Using these raw materials produced by miners, American 
industry was able to produce enough war material for itself and 
the allies during that war, and America became known as ``the 
arsenal of democracy'' in large part because the mining 
industry was able to produce raw materials in record amounts.
    Much of the environmental damage from mining was done 
during this time when our ability to produce energy and metals 
for the war effort would determine the future of this nation as 
a free nation, and I think everyone would agree that that war 
was worth winning. Today there are those who seem to think that 
it does not matter if we import all of the metals and minerals 
used by America, but I am concerned about our nation's 
increased reliance on imports for critical and strategic metals 
and minerals.
    In recent years the United States has changed from a net 
exporter to a net importer for copper, lead, magnesium, silver, 
and rare earths. The last thing I want to see is for this 
nation to become dependent upon foreign sources of minerals and 
metals to the same degree it is dependent today on foreign 
sources of oil.
    That would control our economy. It would control the 
strategic balance of power that this country now enjoys. I am 
sure everyone here knows this Congressional District, the 
Second Congressional District of Nevada encompasses some of the 
most important mining areas in the United States. In addition 
to the precious metals that we have and know about, mining 
constitutes the majority of the economic activity in north 
central and northeastern parts of Nevada.
    One of the reasons why the Committee selected Reno for this 
hearing is because Nevada is an important public lands mining 
state with 87 to 90 percent of the land managed by the Federal 
Government and mining accounting for approximately 9 percent of 
the State's gross product.
    Consequently, any detrimental effect of mining or Federal 
mining policy are going to have serious consequences to the 
mining industry and to the livelihoods of families all across 
this great state. There are those who believe that mining does 
not matter in this new age. They think that the future of 
mankind can be secured without basic material resources and 
they think that if they produce words and ideas in the 
``information age,'' then nothing else is necessary.
    Well, I'm here to tell you that that is a wrong approach. 
Mining matters to everyone. Mining makes our civilization. It 
makes the advancements that every one of us enjoy in medical 
care and medicines. It makes the standard of living that we 
have today possible. Everything and everyone in this room, 
everything that you do and use today probably comes from a mine 
somewhere.
    Today we will examine proposed Federal policies on mining 
and government lands and hopefully what we will learn will help 
us find out what the consequences of these policies will be and 
what consequences these policies will have on those who invest 
their capital toward finding mineral deposits and developing 
mines.
    And there is an old saying out there, I think many of us 
who have been in the industry know that if it isn't grown it 
has to be mined. Senators Reid and Ensign have been great 
champions of the mining industry and have expressed great 
interest in the information that will be provided in today's 
testimony. Unfortunately, neither of them could be here today 
because of their schedule.
    [The prepared statement of Mr. Gibbons follows:]

 Statement of The Honorable Jim Gibbons, a Representative in Congress 
                        from the State of Nevada

    Welcome to Nevada, the largest gold producing state in the Country 
and the third largest gold producer in the world. It is my honor and 
pleasure to welcome and thank you for taking time out of your busy 
schedules to share your thoughts on mining with this Committee.
    Today we will hear important testimony on the effect of the new 
3809 rule and the millsite opinion on mining, the effect of a proposed 
Federal royalty on mining and the effect of claim fees on domestic 
mineral exploration. We are interested in how these Federal policies 
and fees affect our nation's domestic mineral exploration, production 
and reserves, as well as state and local revenues.
    Mining is a basic economic activity necessary to mankind. The 
knowledge and use of metals is exceedingly important to human 
civilization. Early man's progress out of the Stone age, his most 
primitive period of tool-making, began when man first learned to use 
metal. Man's subsequent technological advancement for the next 2500 
years is characterized by his increasing ability to work and use 
metals.
    As a former mining geologist and Co-Chairman of the Subcommittee on 
Energy and Mineral Resources and the Congressional Mining Caucus, I 
have a deep appreciation and understanding of Nevada's mining industry. 
Nevada, the nation's leader in gold production, has about 30 operating 
gold producing companies that employ around 12,000 people. Nevada alone 
provides an annual direct contribution to the Federal Government of 
more than $113 million. As the second largest employer in the State, 
mining provides $1.5 billion in personal, business, and state and local 
government revenues. These numbers make it easy to realize why mining 
is such an important part of Nevada.
    Around the globe, mining continues to be a basic economic activity 
which supplies strategic metals and minerals that are essential for 
modern agriculture, construction and manufacturing. A recent study by 
the National Research Council concluded that one of the primary 
advantages that the United States possesses over its strongest 
industrial competitors, Japan and western Europe, is its domestic 
resource base. The domestic mining industry provides about 50 percent 
of the metal used by U.S. manufacturing companies. The United States is 
among the world's largest producers of many important metals and 
minerals, particularly copper, gold, lead, molybdenum, silver and zinc 
and still has substantial domestic reserves of these metals.
    Twelve western states, containing more than 92 percent of U.S. 
public land, account for nearly 75 percent of U.S. domestic metal 
production. Thus, much of the United States future mineral supply will 
likely be found on government-owned land in the West.
    I have a problem with the rhetoric used by some to portray 
everything about the mining industry in the worst light possible while 
failing to acknowledge that mining provides substantial benefits to 
society. Without mining and the knowledge of how to use metals, we 
would still be living in the Stone age.
    World War II has been termed a war of ``copper mines and steel 
mills.'' Using the raw materials produced by miners, American industry 
was able to produce enough war material for itself and our allies. 
America became the ``arsenal of democracy'' in large part because the 
mining industry was able to produce raw materials in record amounts. 
Much of the environmental damage from mining was done during this time 
when our ability to produce energy and metals for the war effort would 
determine our future as a free nation. I think everyone would agree, 
this was a war worth winning.
    Today there are those who seem to think that it doesn't matter if 
we import all of the metals used by Americans. I am concerned about our 
nation's increasing reliance on imports for critical and strategic 
metals and minerals. In recent years, the United States has changed 
from a net exporter to a net importer of copper, lead, magnesium, 
silver and rare earths. The last thing I want to see is this nation 
becoming dependent on foreign sources of minerals and metals to the 
same degree it has become dependent on foreign sources of oil.
    As I'm sure everyone here knows, this Congressional district which 
I represent in Congress, encompasses some of the most important mining 
areas in the United States. In addition, precious metals mining 
constitutes the majority of economic activity in the north central and 
northeastern parts of Nevada.
    One of the reasons why the Committee selected Reno for this hearing 
is because Nevada is an important public lands mining state, with 87 to 
90 percent of Nevada's lands owned by the Federal Government and mining 
accounting for approximately 9 percent of the Gross State Product. 
Consequently, any detrimental effects of Federal mining policy are 
going to have serious consequences to the mining industry and to the 
livelihoods of families across this great State.
    Some seem to believe that mining doesn't matter in this new age. 
They think that the future of mankind can be secured without basic 
material resources. They think that if they produce words and ideas in 
the ``information age'' then nothing else is necessary. They are wrong.
    Mining matters to everyone. Mining makes our civilization, it makes 
the advancements in medical care and medicine and it makes our high 
living standards possible. Everything you will use today began in a 
mine. Everything you do today depends on mining.
    Today we will examine existing and proposed Federal policies on 
mining on government-owned lands. Hopefully, what we learn today will 
help us find out the consequences that some of these policies have had 
or will have on those who invest their capital toward finding mineral 
deposits and developing mines.
    Remember if it isn't grown, it has to be mined!
    Senators Reid and Ensign have also been great champions of the 
mining industry and have expressed great interest in the information 
that will be provided in today's testimony. Unfortunately neither of 
them could be here today, but they will be submitting testimony for the 
record.
    With that it is time to begin. Will the first panel please be 
seated.
                                 ______
                                 
    Chairman Gibbons. I have a letter from State Senator Dean 
Rhoads with his testimony. He represents the Northern Nevada 
Senatorial District. He is a resident of Tuscarora, which for 
those of you who don't know the geography in Nevada, is just 
outside of Elko. He has submitted written testimony and without 
objection the Committee will accept the testimony of State 
Senator Dean Rhoads into the record.
    [The prepared statement of State Senator Dean Rhoads and 
the newspaper article ``Clinton Regulations a Threat to 
Mining'' submitted for the record follow:]
[GRAPHIC] [TIFF OMITTED] T1816.001

[GRAPHIC] [TIFF OMITTED] T1816.002

[GRAPHIC] [TIFF OMITTED] T1816.003

[GRAPHIC] [TIFF OMITTED] T1816.004

    Chairman Gibbons. With that it is time for the first panel. 
Let me invite the first panel up. It will be Mr. Alan Coyner, 
Administrator of the Nevada Division of Minerals testifying on 
behalf of Governor Kenny Guinn; Mr. Nolan Lloyd, Chairman of 
the Elko County Commissioners; and Mr. John Milton, III, 
Humboldt County Commissioner.
    While those gentlemen are being seated, let me recognize 
Jeremy Shields. Jeremy, if you will stand up, this is Senator 
Reid's office staff who has come to attend the hearing. We 
appreciate you being here, Jeremy. Thank you very much.
    Gentlemen, I don't know who has decided to go first. I 
would suggest we just go down the line with Mr. Coyner, then 
Mr. Lloyd and Mr. Milton, and let me welcome you to our hearing 
today. And of course Margaret has the egg timer going and so 
when you start she will start the timer and we would open it 
now for your testimony. Welcome and thank you for taking the 
time out to be here today. Gentlemen.

  STATEMENT OF ALAN COYNER, ADMINISTRATOR, NEVADA DIVISION OF 
                            MINERALS

    Mr. Coyner. Thank you, Congressman Gibbons. It is indeed an 
honor and a privilege to be here today and give the testimony 
of our Governor Kenny C. Guinn. Mr. Chairman, I appreciate the 
opportunity to testify today regarding the effect of Federal 
mining fees and mining policy changes on state and local 
revenues and the mining industry.
    It is indeed appropriate and very timely that this hearing 
be held in Nevada, the nation's leading producer of hardrock 
minerals. We lead the United States in gold and silver 
production, as well as barite, magnesite and several other 
mineral commodities.
    Mining is our second largest industry, providing with 
direct and indirect effects from seven to almost 9 percent of 
my state's gross product. Nevada was founded on mining with the 
discovery of the Comstock Silver Lode near Virginia City in 
1859. That discovery began the settlement of Nevada and played 
a major role in the admission of Nevada into the Union in 1864.
    Many of our communities came into the existence because of 
mining, including such towns as Tonopah, Eureka, Ely and 
Carlin. And on this point, Mr. Chairman, let me be perfectly 
clear, mining has made and continues to make a significant 
contribution to the history of economic development of Nevada.
    It is for this reason that Nevada is highly concerned about 
any proposed changes in Federal mining fees or mining policy 
that would negatively impact our state, local communities, and 
mining industry. As you might expect, our concern is heightened 
by the fact that over 87 percent of the land within our state 
is managed by Federal agencies charged with administrating 
these fees and policies.
    To be completely frank, Mr. Chairman, I am deeply concerned 
about the economic future of many of our rural communities 
because of their heavy dependence on mining. In the year 2000, 
Nevada's mining industry provided approximately 11,000 jobs, an 
update to your number, Mr. Chairman, directly related to 
mining, mostly in those rural communities.
    The average pay for those jobs was nearly $58,000 per year, 
the highest average of any employment sector in our state. In 
addition, we estimate another 36,000 jobs were generated in 
these communities to provide the goods and services needed by 
the direct jobs supplied by the mining industry.
    However, in the last 4 years nearly 4,000 direct jobs have 
been lost. When you consider that only 200,000 of our 1.9 
million citizens live in rural Nevada, the magnitude of the 
economic impact of this 25 percent reduction in employment 
becomes clear.
    Our concern also extends to another important segment of 
our mining industry, which is the exploration for new mineral 
resources. Exploration is the lifeblood that sustains the 
mining economy of Nevada. Without exploration the jobs and 
economic vitality of rural Nevada are threatened. Nevada is 
truly blessed with an incredible mineral endowment, however, 
the new wealth represented by this endowment can only be 
realized through the efforts of the mineral industry and 
private enterprise.
    We also recognize a major portion of this resource is 
located on public lands, and I believe Nevada can work with our 
Federal partners and the mineral industry to responsibly 
develop these resources. But in fact Nevada has experienced a 
significant reduction in exploration activity as evidenced by 
the decrease in the number of active mining claims from nearly 
450,000 in 1991 to 105,000 in 2000.
    This translates into a 45 million dollar reduction in 
exploration activity per year. And other indicators, such as 
the closure of mineral exploration offices and decreases in 
drilling activity, for example, indicate the total annual loss 
is more probably in the hundreds of millions of dollars. For 
this reason, we in Nevada can only support any changes in 
mining fees or policies which would result in a reversal of 
this trend and an increase in exploration activity.
    I would like to make some brief remarks about the lawsuit 
filed by the State of Nevada against the United States 
Department of the Interior and the Bureau of Land Management 
concerning the 3809 mining regulations. The State of Nevada has 
been, and continues to be, deeply committed to effective, 
efficient, environmentally sound mining regulation.
    I believe Nevada is one of the most environmentally 
responsible mining regions in the world. We closely monitored 
BLM's efforts to rewrite the 3809 regulations and commented 
extensively during the lengthy development and review process.
    Nevada repeatedly questioned the need for extensive reform 
of the existing regulations and supported the findings of the 
National Research Council of the National Academy of Sciences 
that only selective regulatory reform was needed, combined with 
enhanced utilization of existing authority. Nevada recognized 
the revised regulations published on November 21, 2000 
threatened to bring great and undue economic hardship to the 
state, along with major disruption of the state-Federal 
relationship critical to effective environmental protection.
    By the BLM's own estimates, the 3809 regulations would 
result in the loss of up to 3,200 jobs and the value of 
industry output reduced by $181 million to $543 million, with 
Nevada citizens losing between $83 million and $249 million in 
total personal income.
    When it became clear that the administrative process had 
failed, Nevada was forced to resort to legal action. And while 
the outcome of the legal process is yet to be determined, we 
have recommended that the BLM suspend the new revised 
regulations and reinstate the rules that were in place on 
January 19th, 2001. Once the previous version is reinstated, 
the State of Nevada would be pleased to work with the BLM and 
other stakeholders to develop selective modifications to the 
3809 regulations to address only the NRC recommendations.
    Finally, I have stated in previous hearings of this 
Subcommittee, and continue to believe, that reasonable mining 
fees and policies would benefit all stakeholders, including the 
states, Federal Government, and industry. Changes to the mining 
claim fees which would enhance opportunities for the Nevada 
prospector will be welcomed.
    Selective reform of the 3809 regulations which would put in 
place a regulatory system which works in concert with state, 
local and other Federal agencies to protect against unnecessary 
or undue degradation of the public lands will receive our 
support.
    Please remember, however, Nevada's past and Nevada's future 
are inextricably entwined with mining. Nevada will only support 
changes to Federal fees and policies as long as they have a 
benefit and are consistent with our goals and objectives, most 
notably to have a strong, well regulated, environmentally sound 
mining industry. Thank you.
    Chairman Gibbons. Thank you very much, Mr. Coyner.
    [The prepared statement of Governor Guinn follows:]

      Statement of Hon. Kenny C. Guinn, Governor, State of Nevada

    Mr. Chairman and members of the Subcommittee, I appreciate the 
opportunity to testify today regarding the effect of Federal mining 
fees and mining policy changes on State and local revenues and the 
mining industry. It is indeed entirely appropriate, and very timely, 
that this hearing be held in Nevada, the nation's leading producer of 
hard rock minerals. We lead the United States in gold and silver 
production, as well as barite, magnesite, and several other mineral 
commodities. Mining is our second largest industry, providing with 
direct and indirect effects nearly 7% of my state's gross product. 
Nevada was founded on mining with the discovery of the Comstock Silver 
Lode near Virginia City in 1859. That discovery began the settlement of 
Nevada, and played a major role in the admission of Nevada to the Union 
in 1864. Many of our communities came into existence because of mining, 
including such towns as Tonopah, Eureka, Ely, and Carlin. On this 
point, Mr. Chairman, let me be perfectly clear. Mining has made, and 
continues to make, a significant contribution to the history and 
economic development of Nevada.
    It is for this reason that Nevada is highly concerned about any 
proposed changes in Federal mining fees or mining policy that would 
negatively impact our state, local communities, and mining industry. As 
you might expect, our concerned is heightened by the fact that over 87% 
of the land within our State is managed by Federal agencies charged 
with administrating these fees and policies. To be completely frank, 
Mr. Chairman, I am deeply concerned about the economic future of many 
of our rural communities because of their heavy dependence on mining. 
In the year 2000, Nevada's mining industry provided approximately 
11,000 jobs directly related to mining, mostly in those rural 
communities. The average pay for those jobs was nearly $58,000 per 
year, the highest average of any employment sector in our state. In 
addition, we estimate another 36,000 jobs were generated in these 
communities to provide the goods and services needed by the direct jobs 
supplied by the mining industry. However, in the last four years, 
nearly 4,000 direct jobs have been lost. When you consider that only 
200,000 of our 1.9 million citizens live in rural Nevada, the magnitude 
of the economic impact of this 25% reduction in employment becomes 
clear.
    Our concern also extends to another important segment of our mining 
industry which is the exploration for new mineral resources. 
Exploration is the lifeblood that sustains the mining economy of 
Nevada. Without exploration the jobs and economic vitality of rural 
Nevada are threatened. Nevada is blessed with a truly incredible 
mineral endowment, however, the new wealth represented by this 
endowment can only be realized through the efforts of the mineral 
industry and private enterprise. We also recognize a major portion of 
this resource is located on public lands, and I believe Nevada can work 
with our Federal partners and the mineral industry to responsibly 
develop these resources. But in fact, Nevada has experienced a 
significant reduction in exploration activity as evidenced by the 
decrease in the number of active mining claims from nearly 450,000 in 
1991 to 105,000 in 2000. This translates into a $45 million reduction 
in exploration activity per year. Other indicators, such as the closure 
of mineral exploration offices and decreases in drilling activity, 
indicate the total annual loss is more probably in the hundreds of 
millions of dollars. For this reason, we in Nevada can only support any 
changes in mining fees or policies which would result in a reversal of 
this trend and an increase in exploration activity.
    I would like to make some brief remarks about the lawsuit filed by 
the State of Nevada against the United States Department of the 
Interior and the Bureau of Land Management concerning the 3809 mining 
regulations. The State of Nevada has been, and continues to be, deeply 
committed to effective, efficient, environmentally sound mining 
regulation. I believe Nevada is one of the most environmentally 
responsible mining regions in the world. We closely monitored BLM's 
efforts to rewrite the 3809 regulations and commented extensively 
during the lengthy development and review process. Nevada repeatedly 
questioned the need for extensive reform of the existing regulations 
and supported the findings of the National Research Council (NRC) of 
the National Academy of Sciences that only selective regulatory reform 
was needed, combined with enhanced utilization of existing authority. 
Nevada recognized the revised regulations published on November 21, 
2000 threatened to bring great and undue economic hardship to the 
State, along with major disruption of the state-Federal relationship 
critical to effective environmental protection. By the BLM's own 
estimates, the new 3809 regulations would result in the loss of up to 
3,220 jobs in Nevada, total industry output in Nevada would be reduced 
by $181 million to $543 million, and Nevada citizens would lose between 
$83 million and $249 million in total personal income. When it became 
clear the administrative process had failed, Nevada was forced to 
resort to legal action. While the outcome of the legal process is yet 
to be determined, we have recommended that the BLM suspend the new 
revised regulations and reinstate the rules that were in place on 
January 19, 2001. Once the previous version is reinstated, the State of 
Nevada would be pleased to work with BLM and other stakeholders to 
develop selective modifications to the 3809 regulations to address the 
NRC recommendations.
    I have stated in previous hearings of this Subcommittee, and 
continue to believe, that reasonable mining fees and policies would 
benefit all stakeholders, including the states, Federal Government, and 
industry. Changes to the mining claim fees which would enhance 
opportunities for the Nevada prospector will be welcomed. Selective 
reform of the 3809 regulations which would put in place a regulatory 
system which works in concert with state, local and other Federal 
agencies to protect against unnecessary or undue degradation of the 
public lands will receive our support. Please remember, however, 
Nevada's past and Nevada's future are inextricably entwined with 
mining. Nevada will only support changes to Federal fees and policies 
as long as they have a benefit and are consistent with our goals and 
objectives, most notably to have a strong, well regulated, 
environmentally sound mining industry. Thank you.
                                 ______
                                 
    Chairman Gibbons. Mr. Lloyd.

 STATEMENT OF NOLAN W. LLOYD, CHAIRMAN, ELKO COUNTY COMMISSION

    Mr. Lloyd.  Thank you, Congressman Gibbons, it is an honor 
to be here, and staff. I appreciate this opportunity of giving 
you testimony today on the impact of the new regulations to the 
economy of Elko County. I come to you as Chairman of the Elko 
County Commission and also as a manager of an exploration 
company seriously impacted by these regulations. I have been 
employed in the mineral exploration business for the past 35 
years.
    The numbers I'm using, I see Mr. Coyner has updated them a 
little better, so I will change my numbers on the loss of 
claims and the effect it has had to our economies. As he 
mentioned, in the last several years there has been a drop of 
about 300,000 in mining claims in the State of Nevada. Prior to 
the implementation of the $100 holding fee, each claim holder 
was expected or required to do $100 worth of assessment work to 
each of their claims. This meant approximately 30 million 
dollars into the economy of Nevada.
    These dollars were spent in local communities for drilling 
companies, surveying, assay, earthmoving contractors, and so 
forth, who did work for the claim holders. Time did not permit 
me to get the exact numbers for Elko County, but the numbers 
are very significant.
    In addition to those dollars that were lost, the remaining 
millions of dollars went directly to the Federal Government and 
not to the local economy. This loss not only affects us today, 
but will continue to hamper future discovery and production by 
undiscovered deposits worth potentially millions. Although 
production of gold has stayed about the same in our area, it is 
known that when exploration is reduced a reduction in 
production will follow in about four to 6 years. So if the 
trend continues, the worst is yet to come.
    The implementation of the new bonding requirements added 
another significant blow to the industry. I have personal 
knowledge how these regulations caused major impact to the 
exploration business.
    In our business alone we have had to reduce our operations 
because of lack of work. Much of our exploration work was done 
for the assessment work. We have reduced from 12 operating rigs 
in the years prior to the new regulations to four operating 
rigs as of today and they are not operating as yet this year.
    There are a number of exploration companies in our area who 
likewise have been affected. The direct and indirect impact is 
multiplied many times as it is estimated that money circulates 
through local communities three to four times.
    The new 3809 regulations have further decreased the 
exploration dollars spent in Nevada. As we have contacted our 
clients this year concerning their drilling programs, the 
message we have received is that they do not plan to do much 
exploration work. I quote, ``Why drill it if we can't mine it'' 
is the comment that we have been universally told.
    As reported in the Nevada Miner in February of 2001, Nevada 
was rated at the top for overall mining investment 
attractiveness by the Fraser Institute. This rating and 
attractiveness is being negatively impacted by the enormous 
amount of Federal regulation that has been imposed. This is 
supported by the Nevada Division of Minerals annual exploration 
survey, which shows that exploration spending in Nevada 
declined from 154 million in 1994 to 87 million dollars in 
1999. I'm sure when the numbers are compiled for 2000 they will 
continue to decline.
    It is no secret that mining companies are spending their 
exploration dollars in areas with a more favorable climate to 
the industry, i.e. out of the United States.
    In conclusion, the full impact of these regulations may be 
difficult to delineate. They are real dollars and amount to 
billions of dollars lost to local and state economies. The 
losses are reflected in Elko County in many other areas such as 
fees to counties, housing, sales taxes, and the list goes on. 
Just 2 days ago there was a headline in the Elko Daily Free 
Press which read, ``County permit fees drop 65 percent.''
    Where the rubber meets the road, so to speak, is evidenced 
in the dilemma of trying to balance the budget in Elko County. 
We are 1.6 million dollars short of balancing. That amounts to 
9 percent of our general fund. Now, that doesn't sound like 
much money, but it is very significant to us. It will result in 
reduction of services and jobs in Elko County, which happens to 
be the fifth largest county in the United States with about 
17,000 square miles of area.
    I'm here today as a County Commissioner asking you to 
please consider the negative impact these regulations are 
having on local government and industry and to do all that you 
can to reverse the trend. Thank you.
    Chairman Gibbons. Thank you very much, Commissioner Lloyd.
    [The prepared statement of Nolan Lloyd follows:]

   Statement of Nolan Lloyd, Chairman, Elko County Commission, Elko 
                             County, Nevada

    I appreciate this opportunity to give you my testimony of how the 
new regulations have impacted the economy of Elko county. I come to you 
as the chairman of the Elko County Commission and also as a manager of 
an exploration company seriously impacted by these regulations. I have 
been employed in the mineral exploration business for the past 35 
years.
    In 1994 approximately 400,000 of Nevada's 700,000 mining claims 
were dropped or abandoned as a result of the $100 per claim fee imposed 
by the Federal Government. Prior to the rental fee implementation, each 
unpatented mining claim in Nevada had to have $100 equivalent of 
assessment or due diligence work performed on it annually to hold it. 
The loss of 400,000 claims created a direct $40 million annual loss to 
the economies of Nevada. These dollars were spent in local communities 
for drilling companies, surveying, earth moving contractors, etc. who 
did work for the claim holders. Time did not permit me to obtain the 
exact numbers for Elko County but the numbers are very significant. In 
addition, there was $30 million given directly to the Federal 
Government in holding fees on the remaining approximately 300,000 
claims, money that left the state. This loss not only effects us today, 
but will continue to hamper future discovery and production by 
undiscovered deposits worth potentially billions. Although production 
(of gold) has stayed about the same in our area, it is known that as 
exploration is reduced a reduction in production will follow in 4-6 
years. So if the trend continues, the worst is yet to come!
    The implementation of the new bonding requirements added another 
significant blow to the industry. I have personal knowledge how these 
regulations caused major impact to the exploration business. In our 
business alone we have had to reduce our operations because of the lack 
of work. Much of our exploration work was assessment work. We have 
reduce from 12 operating rigs in the years prior to the new regulations 
to 4 operating rigs as of today, and they are not operating as yet this 
year. There are a number of exploration companies in our area who have 
likewise been affected. The direct and indirect impact is multiplied 
many times as it is estimated the money circulates through the local 
economies 3 to 4 times.
    The new 3809 regulations have further decreased the exploration 
dollars spent in Nevada. As we have contacted our clients this year 
concerning their drilling programs the message we have received is they 
do not plan on doing much exploration work, ``Why drill it, if we 
cannot mine it?'' is the comment we are told.
    As reported in the Nevada Miner, February 2001, Nevada was rated at 
the top for overall mining investment attractiveness by the Fraser 
Institute. This rating and attractiveness is being negatively impacted 
by the enormous amount of Federal regulation that has been imposed. 
This is supported by the Nevada Division of Minerals annual exploration 
survey, which shows exploration spending in Nevada declining from $154 
million in 1994 to $87 million in 1999. I am sure when the numbers are 
compiled for 2000 they will continue to decline. It is no secret that 
mining companies are spending their exploration dollars in areas with a 
more favorable climate to the industry, i.e. out of the United States.
    In conclusion, the full impact of these regulations may be 
difficult to delineate. They are real dollars and amount to millions of 
dollars lost to local and state economies. These losses are reflected 
in Elko County in many other areas such as fees to counties, housing, 
sales taxes and the list goes on. Just two days ago there was a 
headline in the Elko Daily Free Press which read, ``County permit fees 
drop 65 percent.''
    Where the rubber meets the road, so to speak, is evidenced in the 
dilemma of trying to balance the budget in Elko county. We are $1.6 
million short of balancing. That amounts to about 9% of our general 
fund. Now that doesn't sound like a lot of money, but it is very 
significant to us. It will result in reduction of services and jobs in 
Elko County, which happens to be the 5th largest county in the U.S. 
with about 17,000 square miles of area. I am here today a County 
Commissioner asking you to please consider the negative impact these 
regulations are having on local government and industry and do all that 
you can to reverse the trend.
    I thank you for the opportunity to present this testimony.
                                 ______
                                 
    Chairman Gibbons. Mr. Milton.

 STATEMENT OF JOHN H. MILTON, III, HUMBOLDT COUNTY COMMISSIONER

    Mr. Milton. Thank you, Congressman Gibbons. Thank you for 
the opportunity to be here today. My name is John Milton. I'm a 
member of the Board of County Commissioners from Humboldt 
County, Nevada.
    Humboldt County is located in the northwest portion of 
Nevada and comprises an area of approximately 10,000 square 
miles. Of those 10,000 square miles, about 80 percent is public 
land managed or controlled by the Bureau of Land Management, 
Forest Service or the U.S. Fish and Wildlife Service.
    The economy of Humboldt County is primarily dominated by 
mining, followed closely by ranching and agriculture. The 
majority of the mining and the ranching actually takes place on 
the public land, so it is safe to say that the economy of 
Humboldt County is tied directly to the way the public land is 
regulated or controlled.
    I was first elected in November of '92 and took office in 
'93. That was the year the Bureau of Land Management instituted 
the first major change in the mining law, the annual claim 
maintenance fee of $1,000, excuse me, $100 and the one time 
filing fee of $25 added to the cost of locating a mining claim. 
Prior to that time, the cost of filing a claim with the BLM was 
$10.
    The claim maintenance fee had three effects on mining 
exploration in Nevada. First, it increased the cost to file a 
mining claim by 100, excuse me, 1250 percent. Second, it caused 
the exploration costs to increase, because prior to the 
maintenance fee that is assessed at the time of location and 
every year thereafter, it was only necessary to do $100 worth 
of exploration work each year in order to maintain the validity 
of a mining claim. Now an owner must pay the maintenance fee 
and do the exploration work to prove the viability of the 
claim.
    And last, the maintenance fee has run the small mining 
operator out of the exploration business. Sure, there is an 
exemption for the holder of 10 claims or less, but the small 
independent miner usually had numerous groups of claims that 
could number 100 or better. Now it is simply too expensive for 
those miners to operate.
    To illustrate, in 1992 there were 3,400 claims located in 
Humboldt County. The year the regulations went into effect that 
number dropped to 1,100 and stayed about that through the year 
2000, which there were only 884 claims located last year.
    The two-thirds reduction of exploration in Humboldt County 
has resulted in a substantial loss of revenue to the county and 
loss of income to businesses that benefited from the 
exploration activities and in the long run the discovery of new 
mining sites has almost come to a halt.
    Even more disturbing to Humboldt County would be the 
imposition of a Federal royalty on the production of minerals. 
A Federal royalty would reduce the amount of profit a mining 
company would make which would cause a reduction of the net 
proceeds of mine tax as levied against the mining profits and 
is shared by the state and county government.
    It also could cause marginal mining operations to close 
during this period of depressed mineral prices. A great deal of 
capital is invested by a mining company to bring on line a mine 
that provides jobs for our citizens and taxes for the county 
before any income from operations is ever achieved. With the 
volatility of mineral prices in the last few years, the 
anticipation of payment of yet another fee or royalty could 
doom further exploration and close operating mines.
    There is yet another problem that has the potential to 
destroy the economy of Humboldt County. Over the last few 
years, a series of events undertaken by the Bureau of Land 
Management, Forest Service, and Congress has caused great 
concern. It is the accumulated effort of increased regulation 
and the limiting of access to the public land.
    As I stated before, Humboldt County's economy is tied 
directly to the public land. Through the implementation of 
proposed roadless areas in the forest, the new 3809 regulations 
on mining, grazing reform, BLM off-road regulations, and just 
recently the closure of mining and geothermal development of 
approximately a million acres of Humboldt County by the Black 
Rock NCA/Wilderness Bill passed in the last days of the 
Congress, Humboldt County is being pushed forward toward 
economic collapse.
    For almost 150 years mining and ranching have been the 
primary industries for our county. Without the continued use of 
the public land, both of these industries will cease and 
Humboldt County will no longer have the growing and viable 
economy that we have had in the past. Congressman, I would like 
to thank you for the opportunity to be here today.
    Chairman Gibbons. Thank you very much, Commissioner Milton. 
We appreciate not only your testimony, but the testimony of 
your colleagues sitting there with you.
    [The prepared statement of John Milton follows:]

Statement of John Milton, Commissioner, Board of County Commissioners, 
                        Humboldt County, Nevada

    Chairman Cubin, members of the Committee, my name is John Milton 
and I am a member of the Board of County Commissioners from Humboldt 
County, Nevada.
    Humboldt County is located in the northwest portion of Nevada and 
comprises an area of approximately 10,000 square miles which is larger 
than the States of Massachusetts and Rhode Island combined. Of those 
10,000 square miles, about 80 percent is public land managed or 
controlled by the Bureau of Land Management, Forest Service, or the 
U.S. Fish and Wildlife Service. The economy of Humboldt County is 
primarily dominated by mining, followed closely by ranching and 
agriculture. The majority of the mining and ranching actually takes 
place on the public land. So it is safe to say that the economy of 
Humboldt County is tied directly to the way the public land is 
regulated or controlled.
    I was first elected in November of 1992 and took office in January 
1993. That was the year the Bureau of Land Management instituted the 
first major change in the mining law -- the annual claim maintenance 
fee of $100 and the one-time filing fee of $25 added to the cost of 
locating a mining claim. Prior to that time, the cost of filing a claim 
with the BLM was $10. The claim maintenance fee had three effects on 
mining exploration in Nevada. First, it increased the cost to file a 
mining claim with the BLM by 1250 percent. Second, it caused the 
exploration costs to double because prior to the maintenance fee, that 
is assessed at the time of location and every year thereafter, it was 
only necessary to do $100 worth of exploration work each year in order 
to maintain the validity of a mining claim. Now an owner must pay the 
maintenance fee and do exploration work to prove the viability of the 
claims. And last, the maintenance fee has run the small mining operator 
out of the exploration business. Sure, there is an exemption for the 
holder of 10 claims or less, but the small independent miner usually 
had numerous groups of claims that could number 100 or better. Now it 
is simply too expensive for those miners to operate. To illustrate, in 
1992 almost 3400 claims were located in Humboldt County. In 1993 only 
1100 were located, in 1994 and 1995 about 1200 claims were located, and 
in 2000, the last year of complete records, only a total of 884 claims 
were located. This 2/3 reduction of exploration in Humboldt County has 
resulted in a substantial loss of revenue to the county and loss of 
income to business that benefited from the exploration activities and 
in the long run the discovery of new mining sites has almost come to a 
halt.
    Even more disturbing to Humboldt County would be the imposition of 
a Federal royalty on the production of minerals. A Federal royalty 
would reduce the amount of profit a mining company would make which 
would cause a reduction of the net proceeds of mines tax that is levied 
against mining company profits and is shared by the state and county 
governments. It could also cause marginal mining operations to close 
during this period of depressed mineral prices. A great deal of capital 
is invested by a mining company to bring on line a mine that provides 
jobs for our citizens and taxes for the county before any income from 
operations is achieved. With the volatility of mineral prices in the 
last few years, the anticipation of payment of yet another fee or 
royalty could doom further exploration and close operating mines.
    There is yet another problem that has the potential to destroy the 
economy of Humboldt County. Over the last few years, a series of events 
undertaken by the Bureau of Land Management, the Forest Service, and 
Congress has caused great concern. It is the accumulated effect of 
increased regulation and the limiting of access to the public land. As 
I stated before, Humboldt County's economy is directly tied to the 
public land. Through the implementation of proposed roadless areas in 
the national forest, new 3809 regulations on mining, grazing reform, 
BLM off-road regulations, and just recently the closure to mining and 
geothermal development of approximately a million acres of Humboldt 
County by the Black Rock NCA/Wilderness Bill passed in the last days of 
the last Congress, Humboldt County is being pushed toward economic 
collapse.
    For almost 150 years mining and ranching have been the primary 
industries for our county. Without the continued use of the public 
land, both of these industries will cease and Humboldt County will no 
longer have the growing and viable economy that we have had in the 
past.
    Thank you for allowing me this opportunity to address your 
Committee.
SUMMARY OF TESTIMONY
    The economy of Humboldt County, located in northwest Nevada, is 
dominated by mining, ranching, and agriculture, and is directly tied to 
the way the public land is regulated and controlled. Changes in the 
Federal mining law have significantly increased the cost to file claims 
and doubled exploration costs which has forced small independent miners 
out of business. Mining exploration in Humboldt County has been reduced 
by two thirds since the inception of these changes to the Federal 
mining law. This has resulted in a substantial loss of revenue to the 
county and business owners and has significantly depressed the local 
economy. The imposition of a Federal royalty on the production of 
minerals could cause additional closures of mining operations in 
Humboldt County.
    Recent actions taken by the Bureau of Land Management, the Forest 
Service, and Congress have caused great concern because of their 
potential to destroy the economy of Humboldt County. Implementation of 
proposed roadless areas in the national forest, new 3809 regulations on 
mining, grazing reform, BLM off-road regulations, and the closure to 
mining and geothermal development of approximately 1 million acres in 
Humboldt County by the Black Rock NCA/Wilderness Bill are pushing 
Humboldt County toward economic collapse.
                                 ______
                                 
    Chairman Gibbons. What I would like to do is just perhaps 
ask a couple of questions of each of you and hopefully get a 
little more information for this Committee. Let me start with 
Mr. Coyner.
    Now, the Bureau of Land Management initiated the revisions 
to 3809 and according to the Bureau of Land Management those 
regulations were developed in cooperation with the State. Since 
Nevada may well be one of the most important mining states in 
the union, one would assume they solicited a great deal of 
input from the State of Nevada with regard to these proposed 
modifications and changes from the State of Nevada.
    You have been in this job for a couple of years now, I 
would assume. How would you assess their interaction with the 
State of Nevada with regard to soliciting your input with 
regard to these suggested changes that came out in the last 
year?
    Mr. Coyner. Congressman Gibbons, speaking as the 
Administrator of the Division of Minerals rather than on behalf 
of the Governor, I am aware of numerous sessions that took 
place, both between the BLM and representatives of the states 
through the Western Governor's Association. I think our active 
participation was in place; however, again, the position that 
we would take both from my perspective as Administrator and I 
believe the State perspective is that the comments that were 
offered to those revisions were largely ignored or not listened 
to by the BLM as part of the process.
    I also might state that when the regulations were 
ultimately published there were sections within the regulations 
that the states had never seen prior to them being published. 
In fact, that is one of the key points with regards to the 
lawsuit that the State of Nevada has taken against the 
Department of the Interior and the BLM, this inconsistency with 
the process. NEPA and APA should have put them in a position to 
suggest those changes and allow us to interact with them about 
them.
    Chairman Gibbons. Thank you. Let me ask a general question 
to both Commissioners as we begin here. The importance of 
mining which both of you have stated, and in fact all three of 
you have stated, with regard to not just your county but the 
State of Nevada is critical, and I would like you just to 
summarize some of the impacts that it would have on Elko County 
and Humboldt County. In general if mining were to fall into 
decline to the point where we would see a 25 percent reduction 
in the mining we have today in your counties, what impact say 
would a decline down to that level have on your county, its 
infrastructure? Whether it is schools, hospitals, highways, 
roads, let me just throw that question out there and see if you 
can give us some sort of an estimate of the impacts that would 
have on your counties. Mr. Lloyd, start with you.
    Mr. Lloyd. We are in a unique situation in Elko County. We 
are impacted more so, perhaps. We are right next to Eureka 
County and most of the large mines are in Eureka County, so the 
revenues from the mines go there, particularly net proceeds are 
going to another county and we are impacted because most of the 
workers live in Elko County. So we are struggling to start 
with, because we don't have a lot of the revenue to compensate 
for the number of employees that live in our county.
    If there is a 25 percent reduction, I guess our statement 
is; as many bills in the state have recently impacted the 
county, come and get the courthouse, here are the keys to it. 
We would no longer be able to operate.
    It is going to be difficult this year and the next. We 
predict the future, as we foresee the future in budgeting Elko 
County, suggested revenues are going to be down significantly.
    We have grave numbers now from the real estate community. 
We have about 400 homes on the market in Elko County. We had 
the huge boom in the later 80's and up through the middle of 
the 90's, and, most of the people that were employed by the 
mines came to Elko County and lived in the Elko area.
    So now we have the great reduction in employment. I had a 
manager from one of the local mines sit in my office here last 
week and announced that they are going to cut 2 percent back on 
their employees. And we continue to get this. We have had a 
decline in assessed value in our county last year of between 60 
and 70 million dollars. This is a direct result of the 
regulations that have been imposed, so another 25 percent we 
would be out of business.
    Chairman Gibbons. Thank you. Commissioner Milton.
    Mr. Milton. I would echo Commissioner Lloyd's same 
statement. We would be out of business, too. In Humboldt County 
in the last 5 years the mining employment has dropped almost 50 
percent based primarily on the prices of gold. Our net proceeds 
have gone from about $800,000 down to $20,000. The school 
district is presently laying off 70 employees to help balance 
the budget there.
    We don't have 400 homes, but we have got over 200 homes 
that are vacant and people have walked away from them, and 
likewise we have experienced about a 35 million dollar decrease 
in net valuation of the county.
    A further 25 percent reduction would probably mean that the 
two major mining companies would, one or both of the mines 
would probably have to close to have that much of a reduction, 
so it would be devastating to Humboldt County.
    Chairman Gibbons. Mr. Lloyd, you have been in the 
exploration business, you own a company.
    Mr. Lloyd. I don't own it. I work for it. I'm glad I don't 
own it.
    Chairman Gibbons. You work for it. I was promoting you. The 
bonding regulations that you talked about in your testimony 
that you indicated have had a dramatic effect on the business, 
the exploration business, and I think you said going from 12 
rigs down to four drilling rigs and of course that would mean a 
substantial number of employees are no longer working for your 
firm.
    Those regulations which were put in place, were put in 
place by the previous Administration. What happened to those 
regulations? Do you recall how they were created, whether they 
were created, were they taken to court to determine any 
validity of those regulations?
    Mr. Lloyd. You know, I'm not sure of the details. They were 
strictly imposed by administrative order. There were no 
hearings on the issue, and these new regulations imposed huge 
bonding requirements on small areas of disturbance. It used to 
be a small exploration company could develop a mine site or 
exploration site and if it was less than five acres, it didn't 
have to go through the big bonding issues for the reclamation 
and all that is involved there.
    Since that bonding required huge bonds for the smaller 
acreages again they quit exploring. People just declined to do 
it, they made it impossible for them to do it.
    Chairman Gibbons. Did our court system review those 
regulations?
    Mr. Lloyd. There were some lawsuits imposed and I think 
they are still sitting there. I know some that you are familiar 
with. There was a bill to compensate some of those who have 
been affected by that and it is still out there. I know some 
firms who are still trying to anticipate litigation to see if 
there is some remuneration.
    Chairman Gibbons. Do you believe that the Federal 
Government should reimburse those companies for its illegal 
act? In other words--.
    Mr. Lloyd. Well, actually it was proven in court that it 
was illegal, that it was imposed illegally, so by virtue of 
that illegal act we certainly believe that some compensation is 
due. My employer is one who is pursuing some litigation to get 
some remuneration for that.
    You know, we are basically hanging on to stay in business 
and I think by an illegal act of the government certainly they 
ought to be held accountable for a reduction in our business. 
We are a relatively small exploration company in Elko. We have 
some large ones there, but in our small company we are talking 
roughly a million dollars reduction in salaries and that is 
turned over three or four times. You have three or four million 
dollars in a smaller community that is turned over, and that is 
significant dollars.
    Chairman Gibbons. Let me ask both Commissioners another 
generalized question. I do believe that both Elko and Humboldt 
County provide a service to the industry for mining claims, in 
other words, recording and title. Are you able to continue that 
service with the current revenues that are coming into the 
county in decline as the number of mining claims that are 
either dropping off the books? Is there sufficient revenue for 
you in your counties to continue providing that service to the 
public?
    Mr. Milton. Well, the answer is that all of the recording 
takes place in the Recorder's Office naturally and we have in 
the past tried to run that office with the fees that are 
generated, and since there is a substantial amount of money 
from mining-related fees and it has dropped this year to only 
39 mining claims filed since the first of the year, we have to 
subsidize the Recorder's Office out of the general fund, so it 
is a hardship on the county just in the fees alone.
    Mr. Lloyd. We have not been able to support that. As a 
matter of fact, we are now reducing the number of hours that 
the Recorder's Office can be opened. As you mentioned, because 
of the budget shortfall this year we have to make some 
significant decisions and one of those is looking at reducing 
hours in which the county offices are open and the Recorder's 
Office would be one of those.
    Chairman Gibbons. So I would take it literally from all 
three of you from a state and county effect that you are seeing 
some hardship imposed on our government agencies, government 
services at the county and the state level because of the 
decline in our mining industry within the State of Nevada due 
to changes within the regulatory scheme?
    Mr. Milton. Most definitely. I would just add, and this 
wasn't in my testimony, but I was in the land surveying 
business for 25 years. The main thrust of our business up until 
5 years ago was mining exploration. It is virtually nonexistent 
as part of our business now. We rely just on the domestic work 
around the county and there is hardly any mining exploration 
business out there at all.
    Mr. Lloyd. I would add, it is totally because of the 
regulations. We have become totally dependent on mining, no 
other industry, and even though we look for other ways to 
diversify in Elko County, we have nothing to offer folks.
    We have no infrastructure, the energy situation, the 
natural gas, we have none, so we have nothing to offer folks to 
attract them to Elko County to replace the mining industry. If 
it goes away, we become another ghost town.
    Chairman Gibbons. Gentlemen, I want to thank you for taking 
the time out of your busy schedules. I know all of you are 
public servants who have jobs other than just being here today 
to testify at this hearing and I do appreciate the time you 
have taken and the interest you have shown in this issue.
    I commend you highly, all three of you, for your effort to 
help this industry survive in the state, and certainly would 
again say thank you on behalf of all Nevadans for what you do, 
but with that I would excuse all three of you.
    And now I would like to call up Panel II, our second panel, 
which primarily will deal with the millsite issue and then 
tangentially some of the 3809 regulatory issues. Mr. Tony 
Jensen, who is the Mine General Manager of Cortez Joint 
Venture; Mr. Richard Harris, Attorney at Law, from the law firm 
of Harris and Thompson; Mr. Chuck Jeannes, Senior Vice 
President and General Counsel of Glamis Gold, Limited, and Ms. 
Debbie Laney, President of the Women's Mining Coalition. If we 
can get all of you to come up.
    Chairman Gibbons. I noticed that our egg timer is working 
effectively, but most people are not paying attention to it. It 
is not that we are intending to boil eggs here or throw you out 
if you go over. All I want to do is let you know that we are 
trying to keep this on schedule.
    So I will ask Margaret when there is a minute remaining, so 
at the 4 minute period if she will just kind of wave her hand 
at you to let you know it is coming up. We are not going to 
stop you when it comes to 5 minutes. When you get to 10 
minutes, yeah, we will say something, but kind of wrap it up to 
make sure.
    I presume that we are going to see a slide show or 
something here coming up, so let me first offer, again, a 
welcome to all four of you for being here today. It is our 
pleasure to have you and hear your testimony and of course we 
will start, I presume, with Mr. Jensen, and welcome, and the 
floor is yours. I look forward to your comments.

 STATEMENT OF TONY JENSEN, MINE GENERAL MANAGER, CORTEZ JOINT 
                            VENTURE

    Mr. Jensen. Thank you, Congressman Gibbons, and thank you 
for the opportunity to present here today and present my 
testimony. I am Tony Jensen, the Mine General Manager at the 
Cortez Gold Mines. I would like to thank the Committee for 
holding this hearing in Nevada. As you had mentioned, this is 
particularly relevant because of the social and economic 
importance of mining in this state.
    Cortez Gold Mines is a joint venture between two 
internationally respected mining companies, Placer Dome and 
Kennecott Minerals. Cortez has a long history in Eureka and 
Lander Counties in Nevada. Mining has occurred in the Cortez 
District since the late 1800's and Cortez Gold Mines has been 
part of that community since the mid 1960's.
    Gold mining is an important economic base in many rural 
communities. Cortez alone has an annual payroll of over 23 
million dollars, contributing 3.4 million dollars in payroll 
taxes. It has contributed property taxes of 1.5 million dollars 
annually and pays an annual average of ten million dollars 
through the Net Proceeds of Mines tax.
    Cortez Mines operates almost entirely on public lands and 
is therefore very susceptible to any change in public lands 
policy. Today I want to focus on the potential impacts of the 
Millsite Opinion as well as other actions taken in the final 
days of the last Administration.
    First let me offer some background. After the discovery of 
the Pipeline ore deposit in 1991 the plan of operations was 
submitted to the Bureau of Land Management in 1992, and only 
after the development of a comprehensive Environmental Impact 
Statement, numerous public comments and hearings, technical 
revisions, and the posting of reclamation bonds could 
construction of the 270 million dollar Pipeline Project 
commence in 1996. This culminated in an exhaustive, 
comprehensive and costly permitting process spanning nearly 4 
years.
    Continued exploration outlined additional economic 
mineralization, and an amendment to the Pipeline Plan of 
Operations was submitted in 1996. This amendment was approved 
in 2000, it took almost 4 years after its submittal. Total 
costs to develop the amendment, the amendment alone, were in 
excess of five million dollars, most of which went to 
scientific technical studies to support the Environmental 
Impact Statement.
    That amendment, and sadly like nearly all permits today, 
was immediately appealed by local and national environmental 
groups. In addition, the Appellants filed a Petition for Stay 
in an immediate attempt to shut down our operation. The 
Petition for Stay was denied, but the appeal will linger for 
years. Included in the appeal and Petition for Stay was a 
challenge to Cortez's claims status relative to the Millsite 
Opinion.
    Like any prudent mining company, Cortez regularly evaluates 
its claim package relative to the existing and projected 
operations. The manner in which any responsible mining company 
holds claims must change over time to match project 
development, geologic knowledge, and other factors which cannot 
be predicted at project inception.
    The Millsite Opinion, the January 10th, 2001 Instruction 
Memorandum and the Yarnell Opinion have been attempts to 
administratively reinterpret land tenure rights established by 
the mining law. Firstly, these actions have impacted permitting 
efforts. The appellants continue to use the Millsite Opinion as 
an appeal point, even though it is clear that our claim 
maintenance activities did not violate the mining law, or any 
aspect of the recent legislation passed by Congress, namely the 
Emergency Appropriations Act for 1999 and the Consolidated 
Appropriations Act of Fiscal Year 2000.
    Secondly, the Instruction Memorandum and the Yarnell 
Opinion issued by the former Administration immediately before 
leaving office are particularly troubling and in obvious 
contradiction with Congress. Citing no authority, the former 
Administration took the position that any location or 
relocation of claims requires modifications to the Plans of 
Operation.
    If these legal interpretations are allowed to stand, this 
means a rather dangerous marriage of land tenure issues with 
the National Environmental Policy Act, in that land tenure 
issues are not environmental issues related to NEPA.
    These actions are unacceptable. It will impact our ability 
to permit and operate on the public lands, as well as maintain 
our claims as needed to evolve with project development. And 
they will, I contend, lead to increased chaos in permitting, 
never-ending appeals, and lengthy legal battles, none of which 
will contribute to improved environmental protection or social 
progress.
    The future ability of Cortez Gold Mines, indeed any mine, 
to operate on public land is in jeopardy for a variety of 
reasons. I ask you to urge the Department of Interior to review 
the legality and purpose of the Millsite Opinion as well as the 
Instruction Memorandum and the Yarnell Opinion. I thank you 
very much for the opportunity to come.
    Chairman Gibbons. Thank you, Mr. Jensen.
    [The prepared statement of Tony Jensen follows:]

  Statement of Tony Jensen, Mine General Manager, Cortez Gold Mines, 
                        Crescent Valley, Nevada

I. Introduction
    Good afternoon, Congressman Gibbons and members of the 
Subcommittee. I am Tony Jensen, Mine General Manager at Cortez Gold 
Mines. I would like to thank the Committee for holding this field 
hearing in Nevada. This is particularly relevant because of the social 
and economic importance of mining in this state.
    Cortez Gold Mines is a joint venture between Placer Dome and 
Kennecott Minerals. Both are internationally respected mining companies 
with numerous worldwide operations. In the United States, Placer Dome 
also operates the Bald Mountain and Getchell Mines, both in northern 
Nevada, and the Golden Sunlight Mine in Montana. We employ 
approximately 850 people in the United States, and about 12,000 
worldwide.
    More importantly, Placer Dome and Cortez Gold Mines have a long 
history in Eureka and Lander Counties. Mining has occurred in the 
Cortez District since the late 1800s and Placer Dome has been a part of 
the fabric of the area since the mid-1960s. For nearly two generations, 
we have contributed to the economic vitality of northeastern Nevada 
and, with the discovery and subsequent permitting and construction of 
our new Pipeline and South Pipeline ore deposits and mill, Cortez Gold 
Mines has the potential to continue contributing to the social well 
being of Nevada well into the next generation.
    Gold mining is an important economic base for many rural 
communities, providing thousands of high-quality and high-paying jobs. 
Cortez Gold Mines currently employs 385 dedicated men and women who 
have produced over one million ounces of gold in each of the last three 
years. We have completed this feat without a single lost time accident, 
encompassing over three million man-hours; an accomplishment any 
business would be proud of.
    Cortez Gold Mines' operation in Lander and Eureka Counties has a 
total annual payroll of over $23 million, including over $3.4 million 
in payroll taxes. Cortez is an extremely important corporate citizen in 
rural Lander County, having contributed $1.5 million in annual property 
taxes and an annual average of $10 million over the last 3 years to the 
state through the Net Proceeds of Mines taxes, approximately half of 
which is returned to the county. In addition, Cortez pays approximately 
$750,000 per year to the Bureau of Land Management (BLM) in claim 
holding fees.
II. Cortez' Pipeline Project Permitting
    The past eight years have been a difficult period for mining in the 
United States, particularly for those of us operating on public lands 
managed by the BLM. Cortez Gold Mines is one of the largest mines in 
the United States that operates almost entirely on public lands and is 
therefore very susceptible to any change in public lands regulations. 
Today I want to focus on the potential future impacts to our operation 
of the Millsite Opinion, a subsequent Instruction Memorandum and the 
Yarnell Opinion that were issued in the final days of the last 
Administration
    First, let me offer some background. After the discovery of the 
Pipeline ore deposit in 1991, continued drilling outlined sufficient 
economic mineralization on which to construct a mine in near proximity 
to where we had mined since the 1960's. An initial mine plan of 
operations was submitted to the BLM in 1992 and, after the development 
of an Environmental Impact Statement, public hearings and comment 
opportunities, technical revisions and the posting of financial 
guarantees for reclamation and water monitoring, construction on the 
$270 million project commenced in March 1996; culminating an 
exhaustive, comprehensive, and costly permitting process spanning four 
years.
    Continued drilling during this period outlined additional economic 
mineralization, and an Amendment to the Pipeline Plan of Operations was 
submitted in September 1996. This Plan was approved in June 2000, 
almost four years after its original submittal. Total costs to develop 
this plan of operations from original submittal through approval were 
in excess of $5 million, most of which was spent on technical studies 
to support the Environmental Impact Statement.
    Subsequently, the South Pipeline Amendment has been under appeal 
from local and national environmental groups since its approval. In 
addition, the Appellants filed a Petition for Stay in an attempt to 
immediately shut down the mine. The Petition for Stay was denied on 
January 9, 2001 but the appeal will likely continue for years. Included 
in the appeal and Petition for Stay was a challenge to Cortez' claims 
status relative to the Millsite Opinion issued by the former Solicitor.
III. Cortez Gold Mines Mining Claim Situation
    Like any prudent mining company, Cortez regularly evaluates its 
claim package relative to the existing and projected operational 
situations. Additionally, the extent of the operational facilities 
changes following construction, and some claims are relocated to match 
the current and reasonably foreseeable development. Cortez must 
continue to monitor its claim status and relocate claims as operational 
and geologic conditions mandate. The manner in which Cortez or any 
other responsible mining company holds claims must change over time to 
match the project facilities, geologic inferences, growth, and other 
factors, which cannot be predicted during initial stages of the 
operation.
IV. Impact to Cortez of the Millsite Opinion and Instruction Memorandum
    The Millsite Opinion, the January 10, 2001 Instruction Memorandum, 
and Yarnell Opinion have been attempts to administratively reinterpret 
land tenure rights established by the Mining Law. I will not go into 
details on the politics and legal issues raised by the former 
Solicitor's efforts; this Committee has heard abundant testimony by 
others on those issues. I will, however, address the past and potential 
future impacts to Cortez of the recent administrative actions relative 
to the millsite--lode claim question.
    First, it has impacted Cortez' permitting efforts. Appellants 
continue to use the Millsite Opinion as an appeal point, even though it 
is clear upon review that our claim maintenance activities did not 
violate the Mining Law, the Millsite Opinion, or any aspect of the 
recent legislation passed by Congress; namely, the Emergency 
Appropriations Act of 1999 and the Consolidated Appropriations Act for 
Fiscal Year 2000 - both of which addressed the Millsite Opinions.
    Nonetheless, Appellants use convoluted time frames and unsupported 
accusations of ``claim manipulation'', conveniently encouraged by the 
former Solicitor's last minute directives, to circumvent Congress as 
well as defy common sense, and responsible claim management practices.
    It is also important to point out that land tenure issues are not 
part of the National Environmental Policy Act (NEPA). However, those 
radically opposed to mining will continue to abuse that process by 
using the Millsite Opinion to try and shut down mines.
    Secondly, and particularly troubling to Cortez and others trying to 
develop resources on public land, are the last minute Instruction 
Memorandum and opinion issued by the former Solicitor immediately 
before leaving office. In a flurry of activity, the former Solicitor 
and Interior Secretary issued the Yarnell Opinion and the BLM issued IM 
No. 2001-077, contradicting the obvious intent of Congress in enacting 
the Fiscal Year 2000 Appropriations Act. Citing no authority, they take 
the position that any location or relocation of claims requires that a 
modification to the plan of operations be undertaken. If these legal 
interpretations are allowed to stand, this means that we have a rather 
dangerous marriage of land tenure issues with NEPA. The BLM currently 
has the authority to perform claim examinations and these Interior 
Department mandates will only further serve to abuse the NEPA process 
and render more burden on an already overloaded BLM structure.
    This is unacceptable, and will impact our ability to permit and 
operate on public lands. It will impact our ability to maintain our 
claims as needed to evolve with project development. And it will, I 
contend, lead to increased chaos in permitting, never-ending appeals 
and lengthy legal battles, none of which will contribute to improved 
environmental protection or social progress.
V. Request for Committee Support
    The future ability of Cortez Gold Mines, indeed any mine, to 
operate on public land is in jeopardy for a variety of reasons, 
including the millsite--lode claim issue that I have focused on in this 
testimony. I ask you to urge the new Department of Interior Secretary 
and Solicitor to review and rethink the legality and purpose of the 
original Millsite Opinion as well as the Instruction Memorandum and 
Yarnell Opinion both of which were issued days before the end of the 
last Administration.
    Cortez stands ready to provide you with additional details upon 
your request, and I thank you for the opportunity to provide testimony 
here today.
                                 ______
                                 
    Chairman Gibbons. Mr. Harris, the floor is yours, welcome.

  STATEMENT OF RICHARD W. HARRIS, ATTORNEY AT LAW, HARRIS AND 
                            THOMPSON

    Mr. Harris. Thank you, Congressman Gibbons. Good afternoon. 
My name is Richard Harris. I work as a mining and environmental 
attorney in Reno, have done so for 25 years. My remarks today 
will be directed toward the Solicitor's Opinion, so-called One-
to-One Millsite Opinion.
    Mr. John Leshy, Solicitor of the Interior Department, on 
November 7, 1997 issued an opinion stating that a mining 
claimant could hold only one five-acre millsite for each 
associated lode or placer claim. This was an extraordinary and 
unexpected ruling of law. It is a variance with 120 years of 
mining jurisprudence and the practices and procedures of the 
Interior Department itself.
    Let me say by way of background and introduction that I 
hold a second degree in law from Stanford University in the 
field of mining law. My Master's thesis entitled ``The Law of 
Millsites'' was published in the two national law journals.
    In 1992 I updated this paper with my law partner Richard 
Thompson in an article entitled ``Millsites: Current Problems 
and, Current Issues and Unexplained Problems'' which was 
published by the Rocky Mountain Mineral Law Foundation.
    I say this because Mr. Leshy in his opinion purported to 
survey the entire field of mining and millsite law and yet he 
made no mention of either of these opinions of mine, and that 
is not surprising because I very strongly stated that a miner 
has the right to locate as many millsites as necessary to 
support the mineral operation. I am confident that this is the 
correct opinion, and let me share with you two of the reasons 
why this is so.
    First, the current millsite law is part of the Mining Law 
of 1872 that was written by Senator William Stewart of Nevada. 
Mr. Stewart had been a highly successful mining attorney on the 
Comstock. He was very well acquainted with the practices and 
procedures of the time.
    There was one mine, for example, the Gould and Curry Mine, 
that occupied only 600 feet along the Comstock vein, and yet 
the same mining company had millsite acreage of 272 acres. This 
was the ground necessary to support their mill. They had a 
reservoir blasted out of the rock. They had numerous support 
facilities, so William Stewart knew very well that you required 
a good deal of accessory land to support a land mining 
operation.
    He came up with the five-acre millsite law for the purpose 
of eliminating, excuse me, limiting the abuses that had 
occurred under the Lode Law of 1866. People acquired excess 
acreage for land speculation and so each miner was allowed to 
locate as many five-acre millsites as necessary to support the 
mining and milling activities.
    I am confident that Senator William Stewart who was the 
great proponent and champion of miner's rights in the mineral 
industry did not write a provision in the mining law of 1872 
that would have the purpose of shackling and limiting the 
minerals industry.
    My second point has to do with the longstanding practices 
of the Department of the Interior itself, and I have a chart up 
on the screen. Could you adjust that, Miss, so that the title 
is visible? Very good.
    With the assistance of the Nevada office of the Bureau of 
Land Management I compiled a table of millsite and mining 
combinations issued in mineral patents from 1979 through the 
year 2000.
    It is illustrative of the fact that there are many 
millsites associated with each group of mineral patents. To 
take one example, Cyprus Northumberland patented nine lode 
claims, 180 acres, they had 63 associated millsite patents. And 
more recently Goldfields obtained in conjunction with 19 
mineral claims, 180 millsites. Interestingly enough that latter 
patent was issued by Secretary of the Interior, Bruce Babbitt, 
last year.
    The ratio of millsites to mining claims is roughly seven to 
one. In many cases it is nine and a half to one. Solicitor 
Leshy in his opinion said that some BLM field offices 
apparently have in recent years ignored the limitations of the 
mining law and the BLM's regulations.
    That is a misstatement. In fact, the BLM and the Interior 
Department have long allowed miners to acclaim and appropriate 
and patent as many millsites as are necessary.
    These were not the actions of rogue state offices. Every 
opinion, excuse me, every patent was ultimately reviewed and 
signed by the Secretary of the Interior himself. So I say that 
I am confident that Mr. Leshy's opinion was adopted for purely 
political reasons. It is meant to hobble and to limit the 
mining activities on the public domain. It is a false statement 
of law, and I earnestly request that it be withdrawn and 
canceled and rendered of no effect. Thank you very much.
    Chairman Gibbons. Thank you very much, Mr. Harris.
    [The prepared statement of Richard Harris follows:]

    Statement of Richard W. Harris, Esq., Attorney at Law, Harris & 
                                Thompson

Introduction
    Madam Chairman, Members of the House Committee on Resources, Ladies 
and Gentlemen. I appreciate this opportunity to discuss the Solicitor's 
Opinion dated November 7, 1997, in which former Solicitor John D. Leshy 
ruled that a mining claimant could locate no more than one millsite for 
each lode or placer claim. His Opinion has no foundation in law and 
repudiates long-established policies of the Interior Department itself.
    By way of introduction, I am a Reno attorney specializing in mining 
and environmental law. I hold a law degree from Stanford Law School 
(J.D. 1975) and a special degree in mining law from Stanford University 
(M.S. 1975). My Master's Thesis, entitled ``The Law of Millsites: 
History and Application,'' was published in 9 Natural Resources Lawyer 
103 (1976) and 14 Public Land and Resources Law Digest 133 (1977). I am 
co-author, with my law partner Richard K. Thompson, of ``Millsites: 
Current Law and Unanswered Questions,'' 38 Rocky Mountain Mineral Law 
Institute (1992). I have been engaged as an expert consultant on 
millsite issues by various mining companies, and my published works 
have been cited as authoritative references in prior congressional 
testimony.
    I also hold degrees in Geological Engineering (B.S. 1969, 
University of Nevada, Reno) and Environmental Science (M.S. 1995, 
University of Nevada, Reno). I am a doctoral candidate in Environmental 
Policy at the University of Nevada, Reno, and my dissertation involves 
a review of U.S. mineral policy during the period 1992-95.
    I wish to critique Mr. Leshy's Opinion on historic, legal, and 
practical grounds.
The Leshy Opinion
    In his Opinion Mr. Leshy states, ``Since enactment of the Mining 
Law, there appears to have been little doubt among miners and mining 
lawyers that the law allowed no more than five acres of millsite area 
in connection with each mining claim'' (Opinion, p. 12, emphasis 
added). Mr. Leshy selectively cites various cases and legal authorities 
in support of his Opinion.
    In fact, neither the Mining Law of 1872, one-hundred-twenty-five 
years of administrative decisions and legal cases, nor the actual 
practices of the Interior Department support his position. As noted by 
Mr. Patrick Garver in his appearance before the U.S. Senate in 1999:

          The Solicitor's millsite opinion is not an objective legal 
        analysis. It is advocacy. It reflects a selective presentation 
        of facts and misleading and incomplete characterizations of 
        legal authorities, offered to support a restrictive new policy 
        of this Solicitor regarding the use of public lands for mineral 
        development. (Statement of Patrick Garver to the Senate 
        Subcommittee on Forests and Public Land Management, June 15, 
        1999.)
The Millsite Provision
    The Mining Law of 1872 allows the proprietor of a vein or lode to 
locate a five-acre millsite claim for mining and milling purposes. The 
only limitations are that (1) the land must be nonmineral in character; 
(2) it must be used for mining or milling purposes, or for a ``quartz 
mill or reduction works''; and (3) the millsite claim may not exceed 
five acres in size. A 1960 amendment to the Mining Law allowed the 
proprietor of a placer claim to locate five-acre millsites as well.
    The Mining Law of 1872 was written by Senator William Stewart of 
Nevada. Senator Stewart had been a successful mining lawyer during the 
great silver boom on the Comstock Lode in Virginia City, Nevada. 
Senator Stewart was intimately acquainted with mining practices of the 
day, and he knew that a single five-acre millsite was not sufficient to 
deal with the waste rock, tailings, and surface structures needed to 
support a mining claim on the Comstock. By way of example, the Gould 
and Curry Mine occupied a mere 600 feet along the Comstock vein. Its 
associated millsite, however, occupied 272 acres at the intersection of 
Six and Seven Mile Canyons (the equivalent of 55 modern millsites). The 
mill building covered a full acre and graded terraces surrounded the 
mill. A large reservoir was blasted out of solid rock to supply water 
to the facility. In addition, there were offices, shops, stables, and 
laborers' cottages (Elliot Lord, Comstock Mining and Miners (1883, 1959 
ed. at pp. 124-125); communication from Comstock Mining Services, April 
17, 2001).
    It is inconceivable that Senator Stewart, as the champion of 
miners' rights and author of the Mining Law, would have agreed to a 
millsite provision that precluded or drastically limited mining and 
mineral processing.
    The purpose of the five-acre millsite provision was to curb 
perceived abuses in the Lode Law of 1866, which placed no limit on the 
size of lode claims. Lindley, in his famous treatise on mining law, 
describes ``broom claims'' consisting of a large circle of land 
surrounding the discovery shaft and a narrow strip extending along the 
supposed course of the vein. Lindley also provides a diagram taken from 
a patent issued under the 1866 law which shows a single claim embracing 
215.31 acres (1 Lindley on Mines (3rd ed. 1914) Sec. 59 at pp. 97-99). 
Some of this land was used for nonmining purposes, such as townsite 
development.
    The new mining law therefore sought to restrict the use of 
``accessory lands'' to mining-related purposes. This goal was 
accomplished by the creation of five-acre millsite claims. The 
resulting statute (30 U.S.C. 42(a)) states that:

          Where nonmineral land not contiguous to the vein or lode is 
        used or occupied by the proprietor of such vein or lode for 
        mining or milling purposes, such nonadjacent surface ground may 
        be embraced and included in an application for a patent for 
        such vein or lode, and the same may be patented therewith, 
        subject to the same preliminary requirements as to survey and 
        notice as are applicable to veins or lodes; but no location 
        made of such nonadjacent land shall exceed five acres, and 
        payment for the same must be made at the same rate as fixed by 
        . . . this title for the superficies of a lode. The owner of a 
        quartz mill or reduction works, not owning a mine in connection 
        therewith, may also receive a patent for his mill site, as 
        provided in this section.

    It is notable that the statute, while limiting a millsite claim to 
five acres, does not preclude a mineral claimant from locating multiple 
millsite claims. This is consistent with Senator Stewart's experience 
and the customs and practices of hundreds of mining camps throughout 
the American West.
    Mr. Leshy points to several cases that supposedly established the 
one-to-one millsite rule. However, these decisions represent the 
Interior Department's rejection of attempts to use millsites for land 
speculation. In Alaska Copper Co., 32 LD 128 (1903), a mining claimant 
with 18 lode claims located 18 millsites in a horseshoe formation which 
completely blanketed the waterfront of a small harbor. None of the 
millsites was actually used for any mining purpose. In rejecting the 
claimant's patent application, the Interior Department stated that each 
lode claim was not entitled automatically to a separate millsite. The 
Secretary was clearly annoyed by the attempt to use multiple millsites 
for large-scale land acquisition unrelated to mining.
    In another case, Hard Cash and Other Mill Site Claims, 34 LD 325 
(1905), the patent applicant located four millsites in connection with 
four lode claims. He justified the multiple millsite locations by 
putting ore from each claim on a corresponding millsite. The Secretary 
rejected the application, saying that the applicant had failed to show 
a sufficient and satisfactory reason for using four millsites for the 
storage of ore when it was apparent that one would suffice.
    The underlying rationale in Alaska Copper, Hard Cash, and other 
decisions is that a claimant must show a mining-related need for each 
millsite. This rationale found expression in U.S. v. Swanson, 14 IBLA 
158 (1974), the major millsite case of the last 50 years. There the 
Interior Board of Land Appeals required a showing of ``present use and 
occupancy'' on each 2.5-acre tract of a millsite. ``We believe that in 
granting a gratuity of a millsite the Government is entitled to require 
efficient usage, so that only the minimum land needed is taken'' (Id. 
at 173-174). Again, the emphasis is on need, rather than a strict 
limitation on acreage.
    There is no administrative or legal decision, to the best of my 
knowledge, which states specifically that a mining claimant is limited 
to one millsite per mineral claim.
      Turning to scholarly writings and treatises, Mr. Leshy purports 
to survey the mining literature through 1997. He concludes that there 
is no support for multiple millsites. However, Mr. Leshy conveniently 
overlooked two of my published articles written exclusively on 
millsites. In ``The Law of Millsites,'' I offer the following analysis:

          A five-acre tract might be sufficient for a small mine or 
        mill operator, but it is clearly inadequate for a major mining 
        company which seeks to develop a large, low-grade ore body. . . 
        . Since the statute does not limit a millsite locator to a 
        single claim, the obvious response is to locate several 
        millsites, thereby acquiring enough land for all present and 
        future needs (Harris, 1976, p. 121).

    In a second article, ``Millsites: Current Law and Unanswered 
Questions,'' I stated that ``It is not uncommon for a mining company to 
locate 300 millsites to service a core group of 15 or 20 lode claims'' 
(Harris and Thompson, 1992, p. 12-3). And further in the article I 
state ``A millsite claimant [is] not limited as to the number of claims 
that he might locate, but he [is] not automatically entitled to one 
millsite per lode claim'' (p. 12-4). In reviewing problem areas and 
unanswered questions of millsite law, I did not consider or discuss 
limitations on the number of millsites available to a claimant simply 
because this issue had not been raised in 120 years of mining 
jurisprudence.
    Industry Needs and Administrative Practice. Today's mining industry 
is far different from the pick and shovel practices of the 19th 
Century. Large open pit gold mines in Nevada occupy hundreds of acres; 
most of this area is required for processing and support activities. As 
stated by Stan Dempsey, a noted mining attorney, in a 1968 article:

          Many hundreds or thousands of acres may be required for 
        protection of the title to the mineral deposit, subsidence 
        areas, pit slopes, concentrator sites, tailing disposal areas, 
        and the lands needed for other mining and related purposes. 
        (Dempsey, ``Basic Problems in Locating Claims,'' 14 Rocky 
        Mountain Mineral Law Institute 573 (1968)).

    With the growth of large-scale mining operations in the 1960s, 
there was a concurrent evolution in practices of the Department of the 
Interior. With respect to millsites, the BLM Handbook for Mineral 
Examiners provided that ``Any number of millsites may be located but 
each must be used in connection with a mining and milling operation'' 
(H-3890-1, Ch. III Sec. 8, Rel. 3/17/89). The BLM Manual states:

          A millsite cannot exceed five-acres in size. There is no 
        limit to the number of millsites that can be held by a single 
        claimant. (BLM Manual Sec. 3864.1.B (1991)).

    The Bureau of Land Management, with the consent and approval of the 
Interior Department, proceeded to issue multiple-millsite patents in 
accordance with this policy. Table 1 describes a series of mineral and 
millsite patents issued in Nevada from 1979 through 2000.

                  TABLE 1.--ASSOCIATED MINERAL AND MILLSITE PATENTS ISSUED IN NEVADA, 1979-2000
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of       Number of
               Year of patent                              Patentee               mineral claims     millsites
----------------------------------------------------------------------------------------------------------------
1979, 1980.................................  Placer Amex, Sterling..............              13              84
                                             Mineral Venture....................
1982.......................................  Dresser Industries.................              13              27
1984.......................................  Milchem............................               8              16
1984, 1985.................................  Cyprus Mines.......................               9              63
1985.......................................  Duval Corp.........................               2              41
1989.......................................  Atlas Gold.........................               6               8
1990.......................................  FMC Paradise Peak..................               6              99
1994.......................................  Barrick Goldstrike.................              22             151
1996, 2000.................................  Gold Fields Mining.................              19             180
                                                                                 -------------------------------
      Totals...............................  ...................................              98             669
----------------------------------------------------------------------------------------------------------------

    The average ratio of millsites to mineral claims for this period is 
6.8 to 1--that is, approximately seven millsites for each associated 
mineral claim. It is interesting to note that a patent to a group of 
millsites in the ratio of 9.5 to 1 was issued by Secretary Babbitt in 
2000. It is also interesting to note that Mr. Leshy does not include a 
discussion of Nevada millsite patents in his Opinion, even though 
Nevada was then the leading gold producer in the United States with a 
history of numerous mineral and millsite patents.
    The practice of issuing multiple millsite patents has been well 
known at the Department of the Interior--it is, after all, the 
Secretary of the Interior who authorizes and signs mineral patents. It 
is therefore incorrect for Mr. Leshy's Opinion to state that ``Some BLM 
field offices apparently have, in recent years, ignored the limitations 
of the Mining Law and BLM's regulations'' (p. 7).
Conclusion
    Solicitor Leshy, in a 1988 book entitled The Mining Law: A Study in 
Perpetual Motion, gave a preview of his activist role as Solicitor for 
the Interior Department from 1992 through 2000. In order to force the 
mining industry to adopt changes acceptable to an environmentally 
oriented administration, he says, it would be appropriate for the 
Department of the Interior to ``consciously reach results that make the 
statute unworkable'' (p. 282).
    The impact of Mr. Leshy's one-to-one millsite rule on the mining 
industry has been and will be substantial:

          The effect of applying his ``acreage limitation'' to existing 
        and proposed mines has been to call into question the land 
        positions of most existing domestic mining operations and 
        impose an effective moratorium on the expansion of existing 
        mines and the permitting of new mines. (Patrick Garver, 
        Statement before the Senate Subcommittee on Forest and Public 
        Land Management, June 15, 1999).

    It is my opinion that Secretary Babbitt and Solicitor Leshy, 
frustrated in their efforts to obtain mining law reform through the 
``front door'' of congressional enactment, resorted to various 
``backdoor'' approaches such as the Opinion of November 7, 1997. 1 
respectfully request that the Committee on Resources close this door.
                                 ______
                                 
    Chairman Gibbons. Mr. Jeannes, welcome.

 STATEMENT OF CHUCK JEANNES, SENIOR VICE PRESIDENT AND GENERAL 
                   COUNSEL, GLAMIS GOLD, LTD.

    Mr. Jeannes. Thank you, Congressman Gibbons. I appreciate 
the opportunity to be here today. I'm Chuck Jeannes, Senior 
Vice President and General Counsel for Glamis Gold, Limited. 
Glamis is a mid-sized gold mining company headquartered here in 
Reno. We operate mines in Nevada, California and Honduras.
    We had a long history of successful and responsible mining 
in the United States, have been in continuous operation for 
over 20 years here. Unfortunately, the benefits of Glamis' 
success to its shareholders, employees and the communities in 
which we operate have been severely threatened by the Federal 
policies of the past Administration.
    You heard today about the Millsite Opinion. I would like to 
speak briefly about another Solicitor's Opinion issued in 1999, 
and that is what I call the Undue Impairment Opinion. I would 
also like to speak about the closely related mine veto 
provision that was included in the 3809 regulations.
    The Undue Impairment Opinion was issued by the Solicitor in 
December '99 as I mentioned regarding our Imperial Project in 
California. The opinion initially received little attention 
because it applied only to our project, but I think that it 
laid the groundwork for what I'm afraid is the most damaging 
initiative of the Clinton Administration, that being the mine 
veto provision contained in the 3809 regulations, and I would 
point out that this provision was slipped into the regulations 
late in the process after the public comment period had ended.
    The mine veto provision creates a broad discretionary power 
in the BLM to deny a project on a finding of significant 
irreparable harm to a scientific, environmental or cultural 
resource, and at Imperial the same discretionary standard was 
applied to our Plan of Operations.
    Briefly, the Imperial project was a simple open pit, heap 
leach gold project. We have invested nearly 15 million dollars 
toward this project to date. It is environmentally benign with 
no environmental issues of note, as noted in the final 
Environmental Impact Statement.
    The only contentious issue was the impact on alleged Native 
American cultural and religious resources. Now, the land of 
Imperial is not tribal land, instead the local tribe, the 
Quechan, assert that the entire land in this area is of 
significant religious and cultural value based on things like 
the viewsheds and the setting, feeling, and association of the 
area.
    Until the Solicitor issued his opinion, the law governing 
mining projects in the California desert was very clear. The 
BLM would apply the unnecessary or undue degradation standard 
from FLPMA.
    With the stroke of his pen, the Solicitor revised this law 
and 25 years of BLM practice. He created an entirely new 
standard to be applied at Imperial, that of undue impairment. 
And armed with this Opinion the BLM determined that any 
development in this area would irreparably harm spiritual and 
religious resources, and on that basis the Imperial Project was 
denied and our 15 million dollar investment was lost.
    Now, there are three reasons, Mr. Chairman, why I believe 
this decision is extremely relevant to Nevada and to the mining 
industry as a whole. First, our experience at Imperial must 
frighten any mining company considering a new investment on 
public lands in the United States. We committed funding toward 
this project with a clear understanding of the law and the 
longstanding BLM practice, but 5 years after we started the 
permitting process the Solicitor radically changed the rules.
    With this discretionary standard now embedded in the 3809 
regulations any company can enter onto any public lands open to 
mineral location, make a discovery, invest in the property, go 
through the FLPMA process, meet all of the applicable 
environmental laws and still find at the end of the day that 
its permit can be denied at the discretion of the BLM.
    It is this lack of certainty of investment that I believe 
is a major reason for the continuing flight of capital out of 
the United States. Secondly, it was not physical sacred sites 
that were at issue at Imperial, but instead the spiritual and 
religious importance of the area as a whole.
    But the area of spiritual importance to this particular 
tribe is vast and is said to encompass large parts of the 
desert southwest, including parts of Arizona, California, and 
Nevada. Given these broad claims, our experience at Imperial I 
think sets a dangerous precedent because the land itself is so 
important in Native American religion there is likely very 
little of the American west that cannot be said to be 
culturally significant.
    Now, I don't believe that Congress or the BLM have fully 
considered the immense impact these new policies may have or 
the huge amount of public lands that can be affected. Finally, 
the fundamental changes that I talked about in public land 
policy have been brought about with no congressional or public 
involvement.
    The Department of Interior now for the first time possesses 
a discretionary ability to deny any mine plan, and any mineral 
development on public lands can be halted in favor of Native 
American religious beliefs. Both of these fundamental changes 
were achieved not by way of legislation following public debate 
or by rule making following notice and comment, but instead by 
the Solicitor's strategic use of legal opinions in combination 
with the last amendment to the 3809 regs.
    In conclusion, there indeed has been a movement of 
exploration and mining capital out of the United States. 
Glamis' experience I think is typical. 100 percent of our 
grass-roots exploration budget this year is directed toward 
Mexico and Central America. And this business decision was 
based on a premise that I think would have been untenable just 
a few years ago, and that is that the political risk of 
operating in countries like Honduras or Mexico is less than the 
permitting risk in the United States.
    Now, I don't believe that this unfortunate situation is 
irreversible. I think with prompt and decisive action by this 
Administration in Congress, the misdeeds that were occasioned 
in the past can be undone.
    I think we can reverse the flow of investment dollars, tax 
revenues and jobs offshore and I think we can sustain the human 
social and economic benefits of mining in the United States, 
particularly in Nevada's rural communities. Thank you very 
much. I appreciate the opportunity to be here.
    Chairman Gibbons. Thank you, Mr. Jeannes.
    [The prepared statement of Charles Jeannes follows:]

 Statement of Charles A. Jeannes, Senior Vice President Administration 
                 and General Counsel, Glamis Gold Ltd.

Introduction
    Thank you for the opportunity to present written and oral testimony 
regarding the effect of Federal mining policy changes on state and 
local revenues and the mining industry. My name is Charles Jeannes. I 
am the Senior Vice President Administration and General Counsel of 
Glamis Gold Ltd. A synopsis of my background and qualifications are 
included in the Disclosure Requirement submitted to the Subcommittee 
with my written testimony.
    I am speaking to you today on behalf of Glamis Gold Ltd., a mid-
sized gold mining company headquartered here in Reno, Nevada. Glamis is 
involved in the exploration for, development and mining of precious 
metals--primarily gold--at operations located in the United States and 
Central America. We operate the Marigold Mine in Nevada, the Rand Mine 
in southeastern California and our newest mine, San Martin in Honduras. 
We are also engaged in active closure and reclamation activities for 
two mines in Nevada and one in California that have reached the end of 
their productive lives.
    Although a relatively small company in terms of gold production 
compared to some of our peers in Nevada--we will produce approximately 
230,000 ounces this year--Glamis has a long history of successful and 
responsible operations in the United States, having been in continuous 
operation for more than 20 years. Glamis was one of the pioneers of 
heap leaching technology so prevalent in the gold industry today, and 
we are very proud of our environmentally sound operating mines and our 
innovative and award-winning reclamation practices at the closed 
operations.
    Unfortunately, the benefits of Glamis' success to its shareholders, 
employees and the communities in which it operates have been severely 
threatened by numerous Federal policies relating to mining enacted by 
the past executive administration. The two policies on which I will 
focus my remarks today--the Millsite Opinion and the Undue Impairment 
Opinion--have had and, if left in place, will continue to have a 
dramatic adverse effect on Glamis Gold as well as the domestic mining 
industry generally. I will also discuss the effective codification of 
the Undue Impairment Opinion in the ``mine veto'' provision contained 
in the new 3809 regulations.
    Before turning to the substance of my remarks, I want to point out 
that Glamis Gold is a public company incorporated in British Columbia. 
Opponents of mining will often talk of Glamis and others in our 
industry as ``foreign companies,'' stating or implying that the 
benefits of U.S. resources that we mine are flowing outside the 
country. Nothing could be further from the truth.
    Given Canada's rich mining history, Glamis and many other 
international mining companies originated there and remain incorporated 
in Canada for access to its mining-knowledgeable capital markets. 
However, Glamis' head office and all of its executive and 
administrative functions are located in Reno, all of our operations are 
located in the U.S. or Latin America, the great majority of our shares 
are traded on the New York Stock Exchange and the majority of our 
shareholders are U. S. citizens. Accordingly, our problems are U. S. 
problems; the people who suffer from the policies we are discussing 
here today are U.S. citizens.
    As stated earlier, I will focus today on the Millsite Opinion 
issued by Solicitor Leshy on November 7, 1997, and the Undue Impairment 
Opinion issued by the Solicitor on December 27, 1999. You will note 
that the discretionary power to deny a mining plan of operations 
granted by the Solicitor to the BLM in the Undue Impairment Opinion 
later found its way into the new 3809 regulations in the form of the 
``mine veto provision.'' The common themes among these two opinions is 
that they each represent drastic and fundamental changes in the mining 
law as enacted by Congress and administered by the Interior Department 
for decades; they each have had or threaten to have profound adverse 
impacts on the domestic hardrock mining industry; and yet, each was 
issued and given the force of law within the Interior Department 
without a shred of public or Congressional involvement. It is hard to 
decide which is more detrimental in the long run--the poor policy 
choices and failed legal reasoning contained in the opinions, or the 
complete disregard for the rule of law that is evident in these 
attempts to effect public policy by way of back door legal opinions.
The Millsite Opinion
    The Solicitor's Millsite Opinion concludes generally that a miner 
is limited to one five-acre millsite for each valid unpatented mining 
claim comprising a mining operation. I have reviewed the arguments and 
authorities cited in the opinion and I am convinced that the 
Solicitor's legal reasoning is simply wrong. However, the same legal 
analysis reaching the same conclusion has been presented to this 
Subcommittee before,\1\ and I would respectfully incorporate the 
statements of Mr. McCrum and Mr. Hubbard rather than restate the 
analysis here. I would simply point out the most fundamental failure in 
the opinion; namely, the Solicitor's failure to explain or account for 
the fact that the Bureau of Land Management has been expressly 
interpreting the mining law for decades in exactly the opposite manner 
as concluded in his opinion.\2\ As discussed in connection with the 
Undue Impairment opinion below, it is critical that industry be able to 
rely on consistent agency interpretation and practice, to provide 
certainty and predictability in connection with investment decisions. 
The lack of such predictability in the legal regime that now permeates 
the domestic hardrock mineral industry, as exemplified by the Millsite 
Opinion, is precisely why mineral investment is being diverted from the 
U.S.
    On at least three different occasions since 1997, 1 have heard 
Solicitor Leshy speak publicly about the Millsite Opinion. In each 
instance, he has argued that the opinion must be correct because no 
mining company has sued to overturn it. I would like to take a moment 
to point out the fallacy in this statement. First, a company would only 
resort to litigation with the government if the millsite to mining 
claim ratio limitation of the Millsite Opinion were being applied to it 
and it had no reasonable alternatives. I think its fair to say that in 
the case of the Crown Jewel decision,\3\ Battle Mountain Gold Company 
was surely poised and ready to commence suit at the time that Congress 
intervened in its behalf I am aware of no other situations involving a 
new mine development in the United States to which the limitations of 
the Millsite Opinion have been directly applied. Largely due to this 
and other harmful policies directed at the mining industry by the past 
administration, there simply have been few new mine development 
situations to which the Millsite Opinion would be applicable. So the 
lack of litigation is indicative not so much of the propriety of the 
opinion as its lack of application to date.
    Glamis Gold has had two new development projects to which the 
Millsite Opinion ostensibly applies. First, at its Imperial Project in 
southeastern California, the BLM discussed application of the Millsite 
Opinion, but in the end the project was denied on other grounds--more 
about this in a moment. Secondly, our Marigold Mine in Nevada has been 
engaged in the approval process for an expansion for the past three 
years. The Final Environmental Impact Statement in support of the new 
plan of operations was recently completed and a Record of Decision 
approving the expansion is expected in due course. Opponents of the 
project have raised the ratio limitations of the Millsite Opinion as a 
basis for denial of the project. Fortunately, the Marigold Mine is 
situated in a ``checkerboard'' area with alternating sections of public 
and private lands, and Glamis was able to situate its ancillary 
facilities partially on private ground such that it meets the ratio 
limitations. This configuration was deemed more expedient than 
litigating the applicability of the Millsite Opinion. However, had 
marigold not controlled private lands adjacent to its mining 
operations, it would have been physically impossible for it to meet the 
ratio limitation of the Millsite Opinion. Glamis would have either had 
to successfully challenge the Millsite Opinion or shut down the 
Marigold Mine for lack of space for additional processing facilities.
    Despite Glamis' fortunate situation at Marigold, there is no 
question that the Millsite Opinion has caused or will cause tremendous 
detriment to the U.S. mining industry. In his last days in office, the 
Solicitor issued a follow-up opinion prohibiting the use of lode mining 
claims for ancillary purposes.\4\ Read together, these opinions render 
it practically impossible for a company to construct the facilities 
needed to mine and process minerals on public lands, at least in an 
open pit configuration. If the Millsite Opinion is permitted to remain 
in force, a company will have no choice but to either engage in costly 
and time consuming litigation to challenge the opinion, or forgo the 
development of mineral resources on public lands.\5\
The Undue Impairment Opinion
    The Undue Impairment Opinion is a Solicitor's Opinion issued 
December 27, 1999 regarding Glamis Gold's Imperial Project in Imperial 
County, California. Like the Millsite Opinion, this opinion represents 
an effort by the Solicitor to reinterpret existing statutes governing 
mining and to entirely ignore long-standing BLM interpretation and 
practice. While this opinion originally received little attention 
because it applied only to Glamis' Imperial Project, it unfortunately 
laid the groundwork for what I believe is the Clinton Administration 
initiative most damaging to the domestic mining industry--the mine veto 
provision contained in the new 3809 regulations.
    The mine veto provision is contained at 43 CFR Sec. 3809.415. It 
redefines the phrase ``unnecessary or undue degradation'' from the 
Federal Land Policy and Management Act (``FLPMA'') as ``substantial 
irreparable harm to significant scientific, cultural or environmental 
resource values of the public lands that cannot be effectively 
mitigated.''
    You can see that this language creates a broad discretionary power 
in the BLM to deny a project as causing unnecessary or undue 
degradation upon a finding of ``substantial irreparable harm.'' Because 
the Department of the Interior applied an almost identical 
discretionary standard to our Imperial project, by way of the Undue 
Impairment Opinion, and then denied the plan of operations for our mine 
based on that standard, some of the facts related to Imperial might 
give you a better idea of how the new mine veto provision can be 
applied generally on all BLM lands. I believe you will also understand 
why, if allowed to remain in force, this provision in the new 
regulations will do as much or more to move mineral investment out of 
the United States as any of the other issues being discussed here 
today.
    Briefly, the Imperial Project would be an open pit, heap leach gold 
mine with three open pits, two of which would be backfilled. Glamis has 
invested more than $14 million to date; after another $50 million 
capital investment, the mine would produce around 1.5 million ounces of 
gold over ten years. The mine would generate substantial local economic 
benefit in a county with the highest unemployment rate in all of 
California. The project understandably has strong local support.
    Most importantly, the project is very benign environmentally--the 
Final Environmental Impact Statement identified no environmental issues 
of note. The only contentious issue, and the one on which Secretary 
Babbitt based his denial of the project, is the impact on alleged 
Native American cultural and religious resources.
    The physical resources located at the Imperial Project site are 
unremarkable. They include pot drops, lithic scatter from chipping 
stations and small sections of a large braided system of historic 
walking trails that passes through the area on the way to the Colorado 
River. This is not Tribal land, it is public land open to mineral 
location. There are no burial areas or evidence of historical 
habitation. Importantly, the local tribe, the ``Quechan,'' has admitted 
that the area has not been used for religious, cultural or other 
purposes for at least fifty years. In fact, the only other significant 
recent use of this area apart from mineral exploration was that General 
Patton's Seventh Army trained there prior to World War II. In short, 
the area is far from pristine and there are few physical resources 
there. The Quechan instead assert that the land is of significant 
religious and cultural significance to their tribe based on the 
``vistas'', ``viewsheds'' and the ``setting, feeling and association'' 
of the area.
    The Imperial Project is located within the California Desert 
Conservation Area (``CDCA''). Until the Solicitor issued his opinion, 
the law governing mining projects in this area was very clear--the BLM 
applied the unnecessary or undue degradation standard from FLPMA. For 
each of fourteen plan of operation approvals at nine different mines 
since the CDCA was created in 1976, the BLM applied the unnecessary or 
undue degradation standard. And with respect to cultural or historic 
resources, the law was equally clear. The combination of FLPMA and the 
National Historic Preservation Act required a company to consult with 
local Native Americans, to search for and record any cultural or 
historic resources on the affected lands, and to work with the BLM and 
the local tribe to attempt to mitigate any impacts to those resources. 
But in the end, the applicable law provided that a mining project would 
not be denied on the basis of impacts to cultural resources.\6\
    With the stroke of his pen, Solicitor Leshy revised twenty-five 
years of administrative practice and interpretation. He created an 
entirely new legal standard to be applied within the CDCA, that of 
``undue impairment.'' The opinion states that this standard is 
different from and more stringent than the old unnecessary or undue 
degradation standard, and that it gives the BLM discretionary authority 
to deny a plan of operations based on impacts to the kinds of non-
physical resources asserted to exist at Imperial.\7\ So, for Glamis, 
the Undue Impairment Opinion made a discretionary balancing test 
directly applicable to the Imperial Project. For the rest of the 
industry, unfortunately, I think the groundwork was laid for what we 
now see in the new definition of unnecessary or undue degradation 
contained in the 3809 regulations.
    Armed with this opinion, the BLM concluded that the Imperial 
Project would ``unduly impair'' the religious and cultural resources of 
the Quechan Tribe. Because the resources in the area are spiritual 
rather than physical, the BLM found that any development of these lands 
would impair those resources and that no amount of mitigation by Glamis 
could offset the adverse impacts. On that basis, the Imperial Project 
plan of operations was denied, and with it, Glamis' $14 million 
investment was lost.\8\
Impacts of Undue Impairment Opinion and 3809 Regulations
    1. Lack of Predictability. Glamis' experience at the Imperial 
Project is one that brings fear to any company considering a material 
investment in a new mineral development on U.S. public lands. Glamis 
committed millions of dollars towards this project based on a clear 
understanding of the applicable law and long-standing BLM practice. Two 
draft environmental impact statements were prepared for the Imperial 
Project; even in the face of the Quechan allegations about its impacts, 
the BLM chose in each draft to propose the Glamis development plan as 
its preferred alternative. Then, over five years after Glamis first 
submitted its plan of operations, the Solicitor radically changed the 
applicable rules with the issuance of the Undue Impairment Opinion and 
based on this opinion, the project was denied.
    With the codification of the undue impairment standard in the new 
3809 regulations, this lack of certainty and predictability necessary 
for a company to commit substantial capital to a new project now 
applies to all BLM lands. A company can enter upon lands otherwise open 
to mineral location and development, make significant expenditures to 
discover and develop a mineral resource, apply for a permit and meet 
all applicable environmental laws and regulations during the NEPA 
process, only to be told in the end that its permit will be denied 
based on a discretionary finding of ``significant irreparable harm'' to 
some resource. This legal quagmire can certainly be identified as a 
substantial reason for the continuing flight of mining capital out of 
the United States.
    2. Potential Impacts of Undue Impairment/Mine Veto Provision. The 
kinds of resources that were cited to justify the denial of the 
Imperial Project include non-physical resources such as viewsheds and 
the ``setting, feeling and association'' of the area. These resources, 
along with the alleged impacts on the ability of the Quechan to conduct 
their traditional religious and spiritual practices, formed the basis 
for the denial of the plan of operations. Importantly, the Quechan have 
specifically stated that the Imperial Project impacts only a small 
portion of the 170-mile long ``Trail of Dreams,'' and that the area of 
spiritual significance to the Tribe is vast--extending east into 
Arizona and west to Santa Catalina Island, north to Las Vegas and south 
into Mexico.
    Given these broad claims of significance, the Record of Decision 
for the Imperial Project sets a tremendous precedent for the denial of 
mineral or other development plans on all public lands. As a practical 
matter, because of the importance of the land itself to the religious 
and spiritual practices of Native Americans, there is likely very 
little of the American west that cannot be claimed to be a 
``significant'' resource for cultural or spiritual purposes, and non-
Native Americans have a very limited ability to challenge such 
assertions. This problem was specifically identified by the BLM in the 
Environmental Impact Statement in support of the new 3809 regulations:

          Of specific concern are activities that will potentially 
        affect Native American sacred or religious values. One can 
        argue that religious significance, substantial irreparable 
        harm, and effective mitigation are determined by those who hold 
        those beliefs, not by BLM. Analyzing the implementing and 
        impact of this provision as it applies to sacred and religious 
        values is further complicated by the fact that most of the 
        Native American religions are based on or incorporate the 
        concept that each individual determines what is significant for 
        herself/himself. Because of these concerns, we assume that this 
        provision as it relates to sacred and religious values will be 
        applied extensively.

Final Environmental Impact Statement, ``Surface Management Regulations 
for Locatable Mineral Operations,'' p. 126-27 (October 2000) (emphasis 
added).
    I can tell you from our experience at Imperial that this concern is 
very real. It is practically impossible to test or challenge an 
assertion of spiritual significance as to a particular parcel of land. 
I do not believe that the BLM, Congress or even most industry observers 
have fully considered the immense impact this new provision in the 3809 
regulations may well have in the future, or the vast amount of public 
lands that could be affected.
    In connection with the lawsuit brought by the National Mining 
Association challenging the new 3809 regulations, a motion to stay the 
implementation of the regulations was sought. I was asked to provide an 
affidavit in support of that motion, describing the impact of the 3809 
regulations on Glamis Gold. Reciting what is included in that affidavit 
is the best way I can describe to this Subcommittee what I believe are 
the specific impacts of the adoption of the new 3809 regulations on my 
company. I stated that Glamis had recently adopted its exploration 
budget for 2001 and that out of a $3 million expenditure, no funds were 
budgeted for grass roots exploration in the United States. Our only 
exploration expenditures in the United States will be in the immediate 
vicinity of our existing Marigold Mine in Nevada, with all grass roots 
exploration funding targeted towards Mexico and Central America. I 
stated then what I continue to believe today, particularly in light of 
the denial of the permit for our Imperial Project: that the political 
risk of operating in countries like Honduras, Guatemala or Mexico is 
less than the permitting risk in the United States since the enactment 
of the 3809 regulations and the issuance of the various Solicitor's 
Opinions we have discussed today.
    3. Lack of Public/Congressional Involvement in Substantial Public 
Policy Changes. The third and final observation flowing from the Undue 
Impairment Opinion and the new definition of unnecessary or undue 
degradation in the 3809 regulations is how these substantial changes in 
public land policy have been brought about with absolutely no public or 
Congressional involvement. The Department of the Interior now possesses 
a discretionary veto power to deny any mine plan of operations, and 
mineral development on public lands can be stopped in favor of Native 
American religious practices. All of this was achieved by the 
Solicitor's strategic use of legal opinions combined with the last-
minute inclusion of the mine veto provision in the 3809 regulations 
after the public comment period had already closed. I would ask this 
Subcommittee to consider carefully what appears to be a clear 
usurpation of the legislative function by the executive branch.
    I fully acknowledge that reasonable people can disagree, and that 
there are strong opinions on both sides of these issues. I am sure 
there are people in this room today who passionately believe that 
Native American cultural or religious concerns should trump mineral 
development; those same individuals likely believe that the BLM should 
have an absolute right to say no to mineral development in all cases, 
even if it means changing the rules after an investment has been made. 
I would welcome the opportunity to engage in public debate over those 
issues--to use opportunities such as these to comment on specific 
legislation under consideration and to discuss the economic and human 
impacts of these policies. These are serious public policy issues that 
will profoundly impact not only the minerals industry but also the 
rural West as a whole, and they deserve our full attention. 
Unfortunately, to date, we have been denied that opportunity.
Conclusion
    During the Mining Law reform debates early in the Clinton 
Administration, Secretary Babbitt made clear his desire for ``a process 
. . . for determining that mining activity does not occur on lands that 
are unsuitable for it--that have higher values for other uses.'' \9\ 
This provision in the legislation supported by the administration 
became known as the ``suitability'' provision and became central to the 
debate over comprehensive reform. Eventually, because of the same 
fundamental problems we have discussed today, the Secretary's request 
for the discretionary power to declare lands unsuitable for mining was 
rejected by Congress.
    In the end, however, on the final day of office, Secretary Babbitt 
achieved by various machinations within the Interior Department 
precisely what he asked for and was denied by Congress. I would ask 
this Subcommittee to lend its assistance to efforts to reverse the 
unlawful Millsite Opinion and to support the current administration 
efforts to reconsider the ill-conceived 3809 regulations and, in 
particular, the mine veto provision.
                               footnotes
     \1\ See the Testimony of R. Timothy McCrum before the Energy and 
Mineral Resource Subcommittee of the House Resources Committee, 
``Hearing on Mining Regulatory Issues and Improving the General Mining 
Laws,'' Washington, D.C., August 3, 1999; and the Statement of Randall 
E. Hubbard before the Subcommittee on Energy and Mineral Resources of 
the House Resources Committee, ``Oversight Hearing on the Effect of 
Federal Mining Fees and Proposed Federal Royalties on State and Local 
Revenues and the Mining Industry,'' Golden, Colorado, October 23, 1999.
     \2\ The BLM Manual states: ``A millsite cannot exceed five acres 
in size. There is no limit to the number of millsites that can be held 
by a single claimant.'' BLM Manual Sec. 3864.1.B (1991). The BLM 
Handbook for Mineral Examiners states: ``Each millsite is limited to a 
maximum of five acres in size and must be located on non mineral land. 
Millsites may be located by legal subdivision or metes and bounds. Any 
number of millsites may be located, but each must be used in connection 
with mining or milling operations.'' BLM Handbook for Mineral 
Examiners, H. 3890-1, p. 111-8 (1989).
     \3\ See March 25, 1999 Decision of the Interior Department 
revoking Crown Jewel's Final Environmental Impact Statement in light of 
the Millsite Opinion.
     \4\ Solicitor's Opinion M-37004, ``Use of Mining Claims for 
Purposes Ancillary to Extraction,'' January 18, 2001.
     \5\ The alternative of a land exchange to gain the required ground 
for ancillary facilities as offered by the Solicitor in his opinion has 
been shown to be a severely limited option that is of no practical help 
in these circumstances. See the testimony of M. Craig Haase before the 
Subcommittee on Energy and Mineral Resources of the House Resources 
Committee, ``Oversight Hearing on the Effect of Federal Mining Fees and 
Proposed Federal Royalties on State and Local Revenues and the Mining 
Industry,'' Golden, Colorado, October 23, 1999.
     \6\ See 45 Fed. Reg. 78,902, 78,905 (Nov. 26, 1980): ``If there is 
an unavoidable conflict with an endangered species habitat, a plan 
could be rejected based not on section 302(b) [of FLPMA], but on 
section 7 of the Endangered Species Act. If upon compliance with the 
National Historic Preservation Act, the cultural resources cannot be 
salvaged, or damage to them mitigated, the plan must be approved. 
Essentially, . . . these laws may slow the plan approval process; one 
law may stop a plan while the other may only delay it.'' (emphasis 
added).
     \7\ Solicitor's Opinion re Regulation of Hardrock Mining, p. 17-18 
(December 27, 1999).
     \8\ ``Record of Decision for the Imperial Project Gold Mine 
Proposal'' approved by Bruce Babbitt, Secretary of the Interior, 
January 17, 2001, BLM Case File No. CA 670-41027. On March 12, 2001, 
Glamis filed suit to overturn this decision in the United States 
District Court for the District of Columbia, Case No. I:0ICV00530.
     \9\ Hearing on S.775 before Senate Subcommittee on Mineral 
Resources, Development and Production of the Committee on Energy & 
Natural Resources, 103rd Cong., 1st Sess. at 43 (1993).
                                 ______
                                 
    Chairman Gibbons. We turn now to Ms. Debbie Laney who is 
the President of Women's Mining Coalition. Ms. Laney, welcome 
to our Committee. We are happy to have you and look forward to 
your testimony.
    Ms. Laney. Thank you, Congressman Gibbons.
    Chairman Gibbons. You may want to pull the mike closer to 
you.
    Ms. Laney. Can you hear me?
    Chairman Gibbons. Yes.

 STATEMENT OF DEBBIE LANEY, PRESIDENT, WOMEN'S MINING COALITION

    Ms. Laney. My name is Debbie Laney, and I am here today as 
President of the Women's Mining Coalition. The Women's Mining 
Coalition is a grass roots organization and we came together in 
late '92, '93, because of all of the effects of low metal 
prices and rules and regulations that were affecting our jobs 
and our families' jobs.
    The women in the Women's Mining Coalition work in many 
facets of mining. Many of the women involved in our group work 
for service groups and manufacturing groups that support mining 
through the equipment and services they provide.
    We have direct day-to-day contact with the mining industry. 
We are out at mine sites on a daily basis. Our offices are out 
there. We work in the mines and the mills, members drive 
trucks, are shovel and drill operators.
    I personally work for Barrick Gold Strike. I'm the Chief 
Metallurgist for the Process Division there. I started working 
for Barrick last fall. I have been in mining in Nevada for 17 
years, and throughout my career for over 26 years in the west I 
have worked in copper, gold and poly metallic mines. I have 
undergraduate and graduate degrees in Metallurgical Engineering 
and I'm a licensed Professional Engineer in the State of 
Nevada.
    I understand this hearing is addressing several issues. I'm 
going to focus primarily on 3809 and some of the regulations 
that became final on the last day of the Clinton 
Administration. We, the Women's Mining Coalition, feel that 
much of what is going on is going to be very damaging to our 
lifestyles, our industry, and that it could have very negative 
impacts on everyone in Nevada as well as multiple other states 
throughout the whole nation.
    The Women's Mining Coalition has been very active in the 
long debate over these changes and has submitted many comments 
and documents over the last few years on things. We do not 
believe that these final regulations that were adopted in 
January 2001 fairly address our concerns or reflect our 
comments, and we are very glad that we are having the ability 
now to make more comments on things and to maybe change things 
where they will more fairly address the issues that are 
involved.
    The National Academy of Sciences report was issued and it 
was put out to study the regulations to make recommendations 
based on scientific fact and findings, and they concluded in 
1999 with a report that current regulations were generally 
effective. They recommended a few specific changes, but that on 
the whole the 3809 regulations were effective. They concluded 
that implementation of the existing regulations presented the 
greatest opportunity for improving environmental protection and 
the efficiency of the regulatory process.
    The Women's Mining Coalition appeared before the Committee 
and as a group we were and remain supportive of the NAS 
conclusions and recommendations. A few of the specific 
provisions that we would like to talk about is the mine veto 
provision which I think Chuck has kind of talked about also.
    Mining companies and exploration companies put many, many 
millions of dollars into development of areas looking to see if 
a mine potential is there. And if we don't have any assurance 
and can spend multi-millions of dollars trying to develop 
something only to be told at the end, sorry, too bad, tough 
luck, you can't do this, then we are in a world of hurt.
    We have to have some knowledge and confidence going in that 
if we do everything and follow all of the rules and regulations 
and do everything and at the end it looks to be a good project 
with environmental stewardship at the forefront that, yes, we 
will be given the go ahead.
    Not having any assurances in those positions can be, why 
would we want to spend our money, why would any company want to 
spend money and it is a big problem. People won't spend money. 
I have many friends working overseas who have gone out of the 
industry and that, because companies are going down.
    So I think that it is very, very important that we have 
rules and regulations in place to know that when the money is 
spent and things are done properly that we can be assured that 
things will go on and move forward.
    Another area that I would like to talk about is the 
duplicative standards. We have many, many standards in the 
United States, Federal standards, State standards for air and 
water quality and different things like that. Much of these, 
the new regulations with 3809, want to duplicate those 
standards. They are not doing anything better. They are just 
adding more paperwork.
    We have very large environmental departments at all of the 
mine sites anymore. When I first started in mining, the 
metallurgist was also the environmental engineer and nowadays 
the environmental staffs are oftentimes way larger than the 
metallurgical staffs at the mine.
    We want these people out there watching and making sure 
things are done properly and not sitting in their offices 
filing multiple paperwork over and over, you know, the same 
thing. We want them out doing things to help keep the 
environment clean and safe. And I think that, you know, if we 
have all of these duplicative rules they get sidetracked and 
they are in being paper pushers and not really doing what we 
need for the environment.
    I think sensible changes to the 3809 regulations will 
enhance environmental stewardship, not hurt it, and I know that 
all of the companies I have worked for have always been very 
responsible. And I'm a mother, I'm a grandmother. I believe 
that without mining the United States will not be as strong as 
it should be.
    When I moved to Nevada my son was 4 years old. He is now 21 
and stationed as a corporal in the Army in Kosovo and has been 
in gunfights as recently as a month ago, and I want to know 
that his safety is there, and without a strong mining industry 
we can't be number one as far as protecting people who are 
being taken advantage of.
    We can't be the world power that we are today if we lose 
the mining industry, and I want to know my son has the best 
equipment and bullets and this and that and the other thing and 
that he will be safe over there, or as safe as he can be. And I 
think that the mining industry and our core industries in the 
United States if we lose them and have to depend on outside 
countries to get that we are going to be very, very sorry in 
the long run and it will be by then too late to do something 
about it.
    In conclusion, the Women's Mining Coalition asks that 
Congress continue to support the conclusions and 
recommendations of the National Academy of Science report in 
its entirety. We believe that the regulatory program described 
in the NAS alternative, and then finally I ask on the 3809 
regulations accurately reflect the conclusions and 
recommendations of the report and complies with the 
Congressional directive that the BLM adopt regulations 
consistent with the NAS recommendations.
    We believe that the current regulatory system bolstered by 
the specific recommendations of the NAS Committee will allow 
for environmentally responsible mining on public lands.
    If the Federal Government does not adopt policies that are 
more supportive of mining, we fear that future opportunities 
for women to work in the domestic mining industry will 
evaporate, and not only women, but men, families, everyone will 
be impacted and I think we are seeing these impacts already. 
Thank you.
    [The prepared statement of Debbie Laney follows:]

     Statement of Debbie Laney, President, Women's Mining Coalition

Introduction
    Good afternoon Congressman Gibbons. My name is Debbie Laney and I 
am here today as the President of, and on behalf of the Women's Mining 
Coalition. The Women's Mining Coalition is a grassroots organization 
that supports environmentally responsible mining. Our membership is 
comprised of women working (or looking for work) in many facets of the 
mining industry including geology and exploration, engineering, 
business and management, mining and heavy equipment operation, 
equipment manufacturing and sales of goods and services to the mining 
industry. We have a nationwide membership, with members and 
participants from coal, iron ore, and hard rock mining and 
manufacturing companies, trade associations, and educational 
institutions. Our members have direct, day-to-day experience in the 
industry and with Federal and state regulation of mining and 
exploration.
    I work for Barrick Goldstrike Mines, Inc., near Elko, Nevada where 
I am the Chief Metallurgist for the Process Division. I started working 
for Barrick last fall, and have worked in the mining industry in Nevada 
for seventeen years and have been in the industry for a total of 26 
years working for gold and copper mines across the West. I hold 
undergraduate and graduate degrees in metallurgical engineering and am 
a licensed professional engineer in Nevada.
    While I understand that this hearing is addressing several issues, 
my testimony will discuss only the new 3809 regulations that became 
final on the last day of the Clinton Administration. I will talk about 
the impacts from those regulations and some of the changes that need to 
be made so that the 3809 regulations are legal and practical.
    The Women's Mining Coalition has been an active participant in the 
long debate over changes to BLM's 3809 regulations. We submitted 
detailed written comments on the proposed regulations in 1999, and 
additional comments in February, 2000, after Congress directed the BLM 
to reopen the comment period to allow comments on the report from the 
National Academy of Sciences. We also submitted detailed scoping 
comments to the BLM in 1997. Many individual members attended and made 
statements at public hearings in Nevada and other states. We do not 
believe that the final regulations that were adopted in January, 2001 
fairly addressed our concerns or reflected our comments and we were 
pleased that the National Mining Association and the State of Nevada 
decided to challenge the final rules in court.
    Naturally then, we support the BLM's recent proposal to suspend 
portions of the new rules and will be submitting comments on behalf of 
the Women's Mining Coalition before the May 7, 2001 comment deadline. A 
review of the new 3809 regulations is appropriate for at least two 
reasons: first, some of the final rules exceed BLM's legal authority; 
and second, some provisions of the rules will have significant adverse 
impacts on the mining industry and its employees, in exchange for very 
little environmental benefit.
The National Academy of Sciences Report
    In reviewing the new 3809 regulations, the most important 
information for the Subcommittee and the BLM to consider is the report 
of the National Research Council of the National Academy of Sciences. 
As you know, in 1998, Congress directed the National Academy of 
Sciences to study the effectiveness of the current regulations. The NAS 
convened a Committee of independent scientific and technical experts to 
conduct the study. The Committee held hearings, toured mines, and 
considered a mountain of data and information. The Committee's report, 
issued in 1999, concluded that the current regulations were generally 
effective, but recommended a few specific changes. The NAS Committee 
also concluded that improved implementation of the existing regulations 
presents the greatest opportunity for improving environmental 
protection and the efficiency of the regulatory process. Members of the 
Women's Mining Coalition appeared before the Committee, and as a group 
we were--and remain--supportive of its conclusions and recommendations.
    In 1999 and again in 2000, Congress enacted a law that limited 
BLM's authority to promulgate new 3809 regulations. BLM was allowed to 
write regulations that were ``not inconsistent with the 
recommendations'' in the NAS Report and BLM's other statutory 
authorities. Somehow the Interior Department lawyers read that law to 
give BLM unlimited authority to write the final 3809 rules--even if 
those rules were in conflict with or went beyond the recommendations of 
the NAS Committee. Thus, despite the law passed by Congress, the final 
3809 regulations are not consistent with the recommendations contained 
in the NAS Report.
    I want to address a few specific provisions in the final rules that 
are inconsistent with the recommendations of the NAS Report and which 
will have a significant impact on mining in Nevada and other public 
land states.
The ``Mine Veto'' Provision
    Of course, you are familiar with the economic impacts projected 
from the new 3809 regulations. Even by BLM's own predictions--which 
seriously understate the impacts' the impacts are severe. As a result 
of these regulations, up to 3,200 Nevadans are expected to lose their 
jobs, industrial output in Nevada will decline by between $180 and $540 
million, and Nevadans will lose between $83 and $249 million in 
personal income.
    The Women's Mining Coalition believes that these impacts are 
understated because the BLM never acknowledged the impact that some of 
the provisions--particularly the ``mine veto'' provision--will have on 
mineral exploration and development. Development of a new mining 
property requires significant investment and expenditure before a 
single ounce, pound or ton can be mined and sold. That investment is at 
risk until the mine is fully permitted and becomes operational.
    Under the prior 3809 regulations, mine operators could plan and 
design to meet reasonably objective criteria: water quality standards, 
air quality standards, revegetation and reclamation requirements. We 
were assured that if an operator could meet those standards, as 
evidenced by appropriate Federal and state environmental and 
reclamation permits, that the plan of operations would be approved.
    That assurance is gone. The ``mine veto'' provision injects a 
significant new element of risk into mine permitting by allowing BLM to 
disapprove a mine plan--even a plan that meets all applicable 
environmental requirements--if BLM determines that the impacts may be 
too significant. Mine operators have no standards that will assure an 
approved plan, and investors have no assurance that BLM or an anti-
mining special interest group will not ``discover'' a new resource or 
new impact even after tens of millions of dollars have been invested in 
exploration, engineering and permitting. Prudent investors will 
redirect their investment dollars into less risky investments and the 
flow of money into mineral exploration on public lands in the U.S. will 
simply dry up. Even though the ``mine veto'' provision surfaced for the 
first time last November when BLM published the final rule, we can 
already see the impacts. Mining exploration dollars are moving out of 
the United States--drill rigs, geologists, landmen, and suppliers, in 
Nevada are idle.
    For those of us who live and work in Northern Nevada the impacts 
are obvious. Larger companies have slashed exploration budgets and 
smaller companies may not be doing any exploration this field season. 
Suppliers and businesses that rely on the mining industry are cutting 
back and state and local government revenues are down.
Duplicative Environmental Standards
    A second concern with the new 3809 regulations is the complex and 
lengthy environmental standards that duplicate authority already held 
by Federal and state environmental agencies. In the new 3809 
regulations, BLM has assumed that its role as land manager also gives 
it the authority to second guess or overrule decisions by the Federal 
Environmental Protection Agency, Army Corps of Engineers, and the 
Nevada Division of Environmental Protection. These duplicative 
permitting requirements are wasteful, costly and unnecessary.
    The NAS Committee considered the issue of environmental standards 
and the allocation of permitting responsibilities and concluded as 
follows:
          The overall structure of the Federal and state laws and 
        regulations that provide mining-related environmental 
        protection is complicated, but generally effective. The 
        structure reflects regulatory responses to geographic 
        differences in mineral distribution among the states, as well 
        as the diversity of site-specific environmental conditions. It 
        also reflects the unique and overlapping Federal and state 
        responsibilities.
NAS Report at pages 89-90.
    The NAS Report did not recommend that BLM expand its role in 
environmental permitting or review environmental permitting by other 
Federal and state agencies.
    Many of the performance standards in the final regulations are also 
in conflict with the NAS Report's recommendation that BLM should 
``continue to base . . . permitting decisions on the site-specific 
evaluation process provided by NEPA,'' rather than writing 
``technically prescriptive standards'' into the regulations. NAS Report 
at 108.
    Importantly, BLM did not find fault with the current environmental 
standards or claim that the new environmental performance standards 
will achieve substantial environmental benefits. BLM's Final EIS on the 
final rules acknowledges that the existing laws and regulations in 
Nevada already incorporate most of the performance standards in the new 
regulations. BLM also admits that the new requirements will not result 
in environmental improvements. Instead, the predicted environmental 
benefits from the new regulations result from the fact that there will 
be less mining because of the increased delays and costs of permitting.
Sensible Changes to the 3809 Regulations Will Not Damage the 
        Environment
    I have been disappointed by the response of special interest groups 
and the press (even here in Nevada) to the proposal to reconsider some 
provisions of the 3809 regulations. It is important that the 
Subcommittee understand that sensible changes--changes that will bring 
the regulations in line with BLM's legal authority and the NAS Report'' 
will continue to provide, and even enhance, environmental protection.
    Most importantly, I have read claims that the proposal will repeal 
bonding requirements and allow mining companies to walk away from their 
reclamation responsibilities, leaving Federal and state taxpayers to 
pay reclamation costs. That is not true. Bonding to assure that mined 
lands are reclaimed is required under the prior BLM rules and under 
Nevada law. Those requirements would survive even if the new 3809 
regulations were entirely suspended. However, the new 3809 regulations 
expanded the current bonding requirements in response to 
recommendations of the NAS Committee. The Women's Mining Coalition (and 
almost everyone else in the mining industry) supported those changes 
and will ask BLM to retain the expanded bonding requirements.
    Special interest groups also claim that the proposal could damage 
water quality. That is also untrue. The regulations adopted by BLM in 
1980 require that mine operators comply with all Federal and state laws 
and regulations regarding water quality. That means that all mines are 
subject to the requirements of the Federal Clean Water Act, as well as 
Nevada's laws, regulations, water quality standards and permitting 
requirements. Suspending the new 3809 rules will not change the 
substantive water quality standards that apply to mining. Because the 
1980 regulations were written to incorporate water quality requirements 
by reference, they are constantly and automatically updated when EPA or 
the states change their water quality laws or regulations. The claim 
that the 3809 regulations are ``outdated'' is untrue.
Conclusion
    The Women's Mining Coalition asks that Congress continue to support 
the conclusions and recommendations of the NAS Report--in its entirety. 
For example, we believe that the regulatory program described in the 
``NAS Alternative'' in the Final EIS on the 3809 regulations accurately 
reflects the conclusions and recommendations of the report and complies 
the Congressional directive that BLM adopt regulations consistent with 
the NAS recommendations. We believe that the current regulatory system, 
bolstered by the specific recommendations of the NAS Committee will 
allow for environmentally responsible mining on public lands. If the 
Federal Government does not adopt policies that are more supportive of 
mining, we fear that future opportunities for women to work in the 
domestic mining industry will evaporate.
                                 ______
                                 
    Chairman Gibbons. Thank you, Ms. Laney. And let me assure 
you that your son and his ability to defend this nation is one 
of our top priorities, and that is why when I opened this 
hearing I indicated that this nation, a great deal of its 
ability to not only secure our own national security but others 
who are being threatened directly is related to the viability 
and the existence of a sound mining industry.
    So I hope you will understand and know the heartfelt 
compassion for you and your son out there and we will do 
everything possible to make sure that both this industry and 
the national security and the armed services of this nation are 
well cared for.
    Let me ask a question of Mr. Jensen. You indicated in your 
testimony the Yarnell Opinion of Solicitor Leshy. Can you 
elaborate a little more for not only myself and perhaps the 
people in the audience what the Yarnell Opinion was?
    Mr. Jensen. I would be happy to do that. Yarnell is a mine 
in Arizona. There was an opinion issued late last year, early 
this year, I'm not exactly certain of that, and it had to do 
with the ability to use lode site claims for ancillary 
facilities.
    And while I don't have a personal objection to that part of 
the opinion, what the opinion did say and what I do have a 
problem with is that in the event that any lode claims were 
converted or any kinds of locations or relocations happened, 
then that would trigger a new Plan of Operations to be done. 
And the problem in all of that is then if indeed a new Plan of 
Operations were required, then you would be subject to the 
Millsite Opinion, so it is a very dangerous web of legal 
interpretations that certainly need to be addressed.
    Chairman Gibbons. Let me ask your question to the other 
witnesses as well. The new 3809 regulations and provisions 
thereof, as Mr. Harris, Mr. Jeannes talked about, the mine veto 
rule, how would that, or how do you think permitting of the 
Pipeline and South Pipeline deposits would have been affected 
if they were done under the current 3809 regulations and the 
mine veto provision that is in this regulation?
    Mr. Jensen. I would be happy to start on that conversation 
and then I will turn it over to my colleagues who know the 3809 
issue very much better than I do. It would be hard for me to 
answer very much what might have happened. And what I mean by 
that testimony is that certainly the South Pipeline operation 
is just an amendment to the Pipeline operation. It is an 
extension to the same mineralized body and from that standpoint 
it certainly is not in a sensitive or troubling type of 
setting.
    The Pipeline and South Pipeline deposits are very benign. I 
don't think there is any other mining operation that has the 
benefit quite like we do in that the environmental aspects of 
our property are excellent.
    Having said that, once we get to the stage where the Bureau 
of Land Management would have ultimate authority, what would 
have they said? What would have they found out? I can't answer 
what might have happened then. What I would like to say is it 
does put a dangerous amount of authority in one set of hands.
    Chairman Gibbons. Before I asked that question I was not 
intending to have the other colleagues discuss something that 
is directly related to your business and your company's 
operations, so I apologize for giving the others the impression 
I was going to ask them about something that took place in 
someone else's mine. That would be a bit unfair.
    But let me turn to my old colleague and good friend, 
Richard Harris. You are the leading expert on millsites. In 
fact, BLM has used your work as the role and the model for 
determining and understanding millsite opinions simply because 
you literally wrote the book on millsites and the millsite law.
    But let me ask, Mr. Harris, if you would be willing to 
express an opinion on the provisions in the new 3809 
regulations which redefines, let me quote the terms for you so 
that you know what I want to ask, and the term is unnecessary 
or undue degradation and includes the term substantial 
irreparable harm. Let me hear your opinion on the inclusion of 
those with regard to case law, defined issues that have already 
been looked at with regard to those opinions. Could you give me 
your thoughts on that?
    Mr. Harris. My concern about the regulations is that they 
allow untrammeled administrative discretion, ultimately whether 
a mine shall be allowed or not allowed. I recall an experience 
earlier on in my career, a client of mine had been successfully 
conducting a pumice operation in Northern California for a 
number of years. A new district ranger was assigned to that 
area, and his first statement was that I don't want mining in 
my forest, and that set the stage for very acerbic relations 
for a number of years to the point where my client was very 
nearly put out of business because this one bureaucrat did not 
want mining in his forest.
    Here we have even a broader discretion wherein a series of 
Federal officials can determine whether they want mining in 
their desert or on their property and therein I think lies the 
problem and the danger. Mining is heretofore a certain 
priority. That is to say if you could find it and you could 
permit it, then you could mine it. We no longer have that 
assurance.
    I will echo Mr. Jeannes' comment. I was speaking with a 
president of a mining company the other day. He indicated that 
his company, too, was spending all of its money, exploration 
monies outside the United States. He said, Richard, we think 
that most third world nations offer a greater security of title 
than does the United States of America, and that is the present 
legacy of the Clinton Administration and it poses a great 
threat and hazard. It is a total disincentive to expenditures 
of money as Mr. Jeannes has said.
    Chairman Gibbons. Thank you. In fact, let me turn to Mr. 
Jeannes and ask him a question since he brought up the fact 
that your company, Glamis Gold, is both in United States and in 
Honduras and now spending a lot of its resources in terms of 
its exploration dollars in Central America and Mexico and other 
countries there.
    Can you compare and contrast, if you would for us, the 
differences in permitting in your U.S. Operations versus say 
the Honduran operations for us?
    Mr. Jeannes. Yes, I would be happy to. Actually, it is easy 
to do because we just opened this new mine in Honduras. It only 
has been in commercial production since January 1st.
    The mine is constructed to North American standards. The 
new Honduran mining law essentially requires the same sorts of 
environmental protections that are required in the United 
States in terms of lined leach pad facilities with leak 
detection systems in the ponds and the like.
    The difference and the huge difference is that there is a 
desire among the bureaucrats, the members of the bureaucracy 
that you are working with in Honduras to move this thing along 
and get it done, because they realize how important the outside 
capital investment is to their country.
    Ours is a relatively small mine producing only 120,000 
ounces a year, but we represent almost 6 percent of the gross 
national product. It is a very poor country and so they were 
anxious to work with us and not have things be unnecessarily 
delayed.
    So at the end of the day the permit, and all of the 
necessary approvals, including preparation of a full 
Environmental Impact Statement as we do here, took just over a 
year, as compared to, well, at Imperial we never did get our 
permit. Our latest Marigold expansion Environmental Impact 
Statement took a bit over 3 years and it is not done yet.
    Chairman Gibbons. So each delay costs your company a 
million in terms of not just the investment but the long term 
delay in getting a production going from that investment. After 
all I'm sure there is millions of dollars required in each one 
of those permitting requirements that you have spent.
    Let me ask Ms. Laney, and welcome you, and I'm sure the 
people in the audience are very pleased as we all are to see 
women have a prominent role in mining these days and to realize 
the importance that women have contributed to mining. It is a 
great pleasure to have the Women's Mining Coalition starting to 
take an active role--.
    Ms. Laney. Thank you.
    Chairman Gibbons. --in the public's perception of mining in 
this country. But one of the things I wanted to talk to you 
about, of course, is as a Metallurgical Engineer and somebody 
who probably has in the past dealt with environmental issues of 
a mine, is it your opinion, with the company you work for, that 
they change their environmental practices when they step over 
the boundary of U.S. Territories into another country?
    Ms. Laney. No. Pretty much all of the companies I work for, 
and I have worked in South America and Central America also as 
a Metallurgical Manager. We always went either to the country's 
environmental standards or if we didn't feel they were high 
enough to U.S. Standards, because we want to be in a country a 
long time. We want to have long term involvement with the 
communities and stuff and you can't do that if you are harming 
them.
    Chairman Gibbons. So many claims that we have all read 
about that mining companies are flooding out of the United 
States simply to take advantage of lower environmental 
standards are not true from the standpoint of U.S. Companies 
going there?
    Ms. Laney. No, I don't believe they are. I think it is just 
because you are allowed to follow the rules and make the 
commitments, and then at the end they say yes, go ahead rather 
than, well, gee, we are not sure if you can really do this or 
not. So I think it is the fact that you can go in knowing if 
you do it the right way that ultimately you will get to the end 
goal.
    Here in the U.S., with some of this you don't know if you 
will ever get there even after much money, ample documentation 
and that, and so I think it is more the fact that we have 
assurances and the countries seem to realize the value that 
mining can add to their economies and to their structure and to 
their security.
    Chairman Gibbons. Would all of the three gentlemen there 
agree with her comments or have anything to add with regard to 
the direction of operation going overseas?
    Let me throw in another variable. Let's take the price of 
gold, does the price of gold dictate where you prospect other 
than the permitting requirements in terms of cost of getting 
those permits achieved or you can even throw in the permitting 
costs, does the price of gold add to your decision to go 
overseas versus the United States?
    Mr. Jensen. Well, I would like to respond to the first part 
of your conversation. Having an opportunity to work 4 years in 
Chile, I too have had exactly similar experiences to Glamis in 
Honduras, and we were a very important contributor to the gross 
national product of Chile and it was a very important part of 
their culture to continue.
    We had a project and we still have a project in northern 
Chile by the name of La Copa and there was a new development 
that we brought on in the late 1990's called Chimberos, and 
this was a greenfields project. It took us about nine to twelve 
months to permit, and again full Environmental Impact Statement 
as is done here, but we went beyond in a couple of different 
areas.
    There is a technical thing called acid basis accounting to 
determine whether there is any leachants that might leach out 
of the waste. That was not part of the Chilean requirement for 
the Environmental Impact Statement. We recognize that we 
operate internationally. We have to be held accountable for 
wherever we operate; therefore, we can't afford to cut corners, 
and that is why we did that and other things in the 
Environmental Impact Statement to make sure that we were 
comfortable with what we were doing.
    Frankly, and quite surprisingly, the next time we go to 
permit, those issues will be part of the next permitting 
process, so while there may be some areas that other countries 
are not as completely knowledgeable about, they are learning 
quickly and they will be right up to speed with the mining 
company's help to get there.
    Mr. Jeannes. If I can address the second question, 
certainly, no, the price of gold obviously impacts how much we 
can afford to spend on exploration generally and how much we 
can spend in discretionary spending to try and find new growth 
for our business, but where we spend it is entirely dependent 
upon the kind of risks and business decisions that we make as 
to where is the best way to spend our money.
    And as I mentioned, we have an operation in Nevada, we have 
an operation in California, and we do have some expansion of 
our Marigold Mine in Nevada that is underway, but from a grass 
root standpoint trying to find something brand new and take it 
from discovery to permit and then construction with the kinds 
of policies that we have talked about today, we do not believe 
that the U.S. is the best place to do business.
    Chairman Gibbons. One final question, and I want to turn to 
Ms. Laney for this question. You mentioned in your testimony 
the duplication of regulatory requirements, permitting 
requirements from both the state and the Federal level. Could 
you maybe expand a little bit about that duplication and let us 
in the audience and those of us sitting up here be a little 
more familiar with what duplications you are talking about, if 
you could?
    Ms. Laney. Sure. I think what it is, there are already many 
standards that the Federal Government has set, many standards 
that Nevada has set through air quality and water quality.
    Some of the changes that are being talked about in 3809 
want to set standards again that are already being taken care 
of for air quality and water quality. And if we already have 
rules and regulations in place, it is just enforcing those and 
making sure that all of those are followed, not putting two 
different rules on.
    Nothing was said at all about any of the Federal or state 
rules already being in place. It was almost like they didn't 
know they were there and asking us to do it all over again.
    The National Academy of Sciences found that those rules and 
regulations from the Federal Government and the State 
Government were already comprehensive enough to cover 
everything, and so it is on the air quality, water quality, and 
those issues that were showing duplicative rules.
    Chairman Gibbons. So you are saying that the new 3809 
regulations, and I don't mean to take your testimony and change 
it, but the 3809 regulations would permit the Bureau of Land 
Management or anyone in the Forest Service to add standards to 
air quality, water quality, and other environmental issues 
which could in fact be different from the National 
Environmental Protection Agency, any of the other standards 
that are already established by states, so it would be a third 
set of standards?
    Ms. Laney. Correct. And the other thing, too, is the 
comment had been made in there that possibly the old rules and 
regulations don't keep up. Well, there is always items being 
done for clean air and water. Those standards are updated all 
the time through the Federal and State regulations already, so 
it is a growing and changing thing.
    And as new things are discovered, and new methods of 
measurement and analytical detection limits, things change, and 
so it is a dynamic thing as far as water quality and air 
quality and as we learn more and have better instruments for 
detection of things, these are being updated, so it isn't a 
stagnant document and there already are rules in place that 
should be used.
    Chairman Gibbons. Let me thank all of you for your presence 
here today. I don't mean to cut anybody off from adding any 
comments to this and would say that we may have questions of 
any member of the panel after this hearing. We will submit 
those questions to you in writing, and if you would respond 
appropriately we would greatly appreciate that.
    And we would also like to ask that if any of you have 
comments with regard to improvements that you feel would be 
important to the 3809 regulatory changes that are out there 
that are now in open hearing process for those changes, if you 
would care to submit them for our review to take a look at, we 
would appreciate hearing from you with regard to your comments 
on the 3809 regulations that are now open for public comment as 
well. With that, ladies and gentlemen, let me thank you and I 
appreciate your time and patience for being here.
    And we would like to now call up our third panel, Mr. Dave 
Gaskin, Chief of Bureau of Mining Regulation and Reclamation, 
Nevada Division of Environmental Protection; Mr. Tom Myers, 
Director of Great Basin Mine Watch; Mr. Borden Putnam, 
Principal of RS Investments Management, and Mr. Jonathan Price, 
Director/State Geologist, Nevada Bureau of Mines and Geology.
    Gentlemen, while you are getting comfortable, I do not 
believe I need to remind you of the egg timer rule in our 
Committee and the fact that we try to keep our comments within 
a certain time frame, not necessarily to the minute or to the 
second.
    We certainly would advise you that if you wish to submit 
your complete written testimony to the Committee, you may do so 
and then take this 5 minute time frame to paraphrase and make 
extraneous comments as you may wish that you feel are important 
for this Committee to hear as such. We begin now with Mr. 
Gaskin, welcome to our Committee. The floor is yours. We look 
forward to your testimony.

 STATEMENT OF DAVE GASKIN, CHIEF, BUREAU OF MINING REGULATION 
  AND RECLAMATION, NEVADA DIVISION OF ENVIRONMENTAL PROTECTION

    Mr. Gaskin. Thank you, Congressman Gibbons. My name is Dave 
Gaskin. I'm Chief of the Bureau of Mining Regulation and 
Reclamation with the Nevada Division of Environmental 
Protection, NDEP.
    The mission of our Bureau is to insure that waters of the 
state are not degraded by mining operations, and to ensure that 
land disturbed by exploration and mining are properly reclaimed 
and returned to a productive post-mining land use. Our 
jurisdiction extends to all private and public lands in the 
State.
    As you are well aware, the majority of mining operations in 
Nevada involve public land to some extent. In the course of 
regulating mining activities in the State, NDEP must work 
closely with the Federal land managers, USDA Forest Service, 
and the Bureau of Land Management. We try hard to work together 
as fellow regulators and to enhance cooperation and 
communication between our agencies. Our reclamation regulations 
were crafted to be consistent with BLM's 3809 regulations, and 
we strive to avoid duplication and conflict with the Federal 
agencies whenever we can.
    We have even instituted a Federal liaison position on our 
staff. This person works half the time in our office and half 
the time in the State office of the BLM. Nevertheless, there 
are many challenges posed by this joint regulatory arrangement.
    The State of Nevada has closely monitored BLM's efforts to 
rewrite the 3809 regulations. We commented extensively 
regarding problems we saw with the proposed changes during the 
review and revision process. We worked closely with the Western 
Governors' Association and the National Academy of Sciences in 
an attempt to keep BLM focused on areas that warranted change 
and areas that fall clearly under regulatory authority. I'm 
sorry to say that we were unsuccessful, and finally the State 
of Nevada was forced to resort to legal action when the 
administrative process failed to prevent implementation of the 
new regulations.
    During the 3809 revision process, a great deal of 
contention arose over the interpretation of consistency with 
the National Research Council recommendations and over the 
proper scope and content of revision. The position of the State 
of Nevada is that the revised version of the 3809 regulations 
is not consistent with the findings and recommendations of the 
NRC.
    Due to the fundamental and extensive changes made to 3809 
to reach the final version, it would be extremely difficult and 
impractical to modify the new regulations to achieve 
consistency. Even if BLM were to propose new regulations in 
accordance with the Alternative 5 in the EIS, there are a 
number of critical issues that would cause conflict and would 
need to be resolved prior to promulgation of a final rule. 
These conflicts are due to differences in interpretation of the 
NRC report.
    Therefore, the State of Nevada is recommending that BLM 
suspend the final regulations published on November 21st, 2000 
and reinstate the rules that were in place on January 19th, 
2001. Once the previous version is reinstated, the State of 
Nevada would work with BLM and the other stakeholders to 
develop selective modifications to address the NRC 
recommendations.
    At the State regulatory level, we are facing many of the 
same problems and challenges that BLM is struggling to deal 
with. Increasing uncertainty in environmental requirements and 
continued low metals prices have led to severe stress on the 
security and resources of mining operators.
    At the same time, this stress provides an opportunity to 
detect weaknesses and correct problems in our regulatory 
system. Over the past few years we have made significant 
changes at the State level to address recent concerns in mining 
regulation.
    We revised our regulations to allow us to require financial 
assurance for process fluid stabilization, not just physical 
reclamation. We established an Interim Fluid Management Trust 
Fund to address urgent fluid issues in the event of abandonment 
of mining operations. We are currently in the process of 
reevaluating and revising our policy on corporate guarantees to 
prevent undue financial risk to the State and to the public. 
This is not an extremely pleasant time for many of us, but I'm 
hopeful that we will emerge from this stressful period with a 
much better regulatory system than we had 5 years ago.
    The NRC report emphasized that the existing regulatory 
system is generally effective, and the best way to improve the 
system is to make better use of existing authority while making 
selective changes where needed. Through the recent proposal to 
suspend the new 3809 regulations, the new Administration in 
Washington has sent the message to us that they will listen and 
consider seriously our concerns and recommendations.
    Working together as fellow stakeholders, with open 
communication and cooperation we can develop rules which avoid 
duplication, conflict and needless adverse impacts. We will 
work with BLM to devise a regulatory system which works in 
concert with state, local and other Federal agencies to protect 
the environment while allowing responsible development of our 
natural resources. Thank you.
    [The prepared statement of David Gaskin follows:]

 Statement of David Gaskin, Bureau Chief, Bureau of Mining Regulation 
      and Reclamation, Nevada Division of Environmental Protection

    Madam/Mr. Chairman and members of the Subcommittee, my name is 
David Gaskin, and I am Chief of the Bureau of Mining Regulation and 
Reclamation, with the Nevada Division of Environmental Protection 
(NDEP). The mission of my bureau is to ensure that waters of the State 
are not degraded by mining operations, and to ensure that land 
disturbed by exploration and mining are properly reclaimed and returned 
to a productive post-mining land use. Our jurisdiction extends to all 
private and public land in the State.
    As you are well aware, the majority of mining operations in Nevada 
involve public land to some extent. In the course of regulating mining 
activities in the State, NDEP must work closely with the Federal land 
managers: USDA Forest Service and the Bureau of Land Management. We try 
hard to work together as fellow regulators, and we even provide funding 
for a Federal liaison position. This person works half the time in our 
office and half the time in the State Office of the BLM, and endeavors 
to enhance cooperation and communication between our agencies. Our 
reclamation regulations were crafted to be consistent with BLM's 3809 
regulations, and we strive to avoid duplication and conflict with the 
Federal agencies. Nevertheless, there are many challenges posed by this 
joint regulatory arrangement.
    The State of Nevada has closely monitored BLM's efforts to rewrite 
the 3809 regulations. We commented extensively regarding problems we 
saw with the proposed changes during the review and revision process. 
We worked closely with the Western Governors' Association and the 
National Academy of Sciences in an attempt to keep BLM focused on areas 
that warranted change, and areas that fall clearly under BLM's 
regulatory authority. I'm sorry to say that we were unsuccessful, and 
finally the State of Nevada was forced to resort to legal action when 
the administrative process to prevent implementation of the new 
regulations failed.
    Our lawsuit contains three major points: 1) The new 3809 
regulations are contrary to law because they violate the statutory 
requirement that they be ``not inconsistent with'' the recommendations 
of the NRC Report; 2) The new regulations are in excess of BLM's 
statutory authority under the Federal Land Policy Management Act, 
especially in allowing BLM to disapprove a mining plan of operations if 
the agency determines that it would result in ``substantial irreparable 
harm,'' even though the operation would comply with all Federal and 
state environmental and reclamation requirements; and 3) BLM violated 
key procedural requirements under NEPA and other Federal administrative 
requirements during the revision process.
    Throughout this lengthy process, states including Nevada have 
questioned repeatedly the need for sweeping reform of the existing 
regulations. Our position has been that selective regulatory reform, 
combined with enhanced utilization of existing authority would be a 
much more preferable and effective course of action. The National 
Research Council (NRC) of the National Academy of Sciences, with the 
support of many states and Congress, provided expert and impartial 
analysis of the effectiveness of the existing Federal regulatory 
framework. The NRC developed specific recommendations for the 
coordination of Federal and state regulations to ensure environmental 
protection, increase efficiency, avoid duplication and delay, and 
identify the most cost-effective manner for implementation.
    During the 3809 revision process, a great deal of contention arose 
over the interpretation of ``consistency'' with the NRC 
recommendations, and over the proper scope and content of revision. The 
position of the State of Nevada is that the revised version of the 3809 
regulations is not consistent with the findings and recommendations of 
the NRC. Due to the fundamental and extensive changes made to 3809 to 
reach the final version, it would be extremely difficult and 
impractical to modify the new regulations to achieve consistency. Even 
if BLM were to propose new regulations in accordance with Alternative 5 
in the EIS, there are a number of critical issues that would cause 
conflict and would need to be resolved prior to promulgation of a final 
rule. These conflicts are due to differences in interpretation of the 
NRC Report.
    Therefore, the State of Nevada is recommending that BLM suspend the 
final regulations published on November 21, 2000, and reinstate the 
rules that were in place on January 19, 2001. Once the previous version 
is reinstated, the State of Nevada would be pleased to work with BLM 
and other stakeholders to develop selective modifications to address 
the NRC recommendations.
    At the State regulatory level, we are facing many of the same 
problems and challenges that BLM is struggling to deal with. Increasing 
uncertainty in environmental requirements and continued low metals 
prices have led to severe stress on the security and resources of 
mining operators. At the same time, this stress provides an opportunity 
to detect weaknesses and correct problems in our regulatory system. 
Over the past couple of years, we have made significant regulatory 
changes at the state level to address recent concerns. We revised our 
regulations to allow us to require financial assurance for process 
fluid stabilization, not just physical reclamation. We established an 
Interim Fluid Management Trust Fund to address urgent fluid issues in 
the event of abandonment of mining operations. We are currently in the 
process of reevaluating and revising our policy on corporate 
guarantees, to prevent undue financial risk to the State and to the 
public. This is not an extremely pleasant time for many of us, but I am 
hopeful that we will emerge from this stressful period with a much 
better regulatory system than we had five years ago.
    The NRC Report emphasized that the existing regulatory system is 
generally effective, and the best way to improve the system is to make 
better use of existing authority while making selective changes where 
needed. Through the recent proposal to suspend the new 3809 
regulations, the new Administration in Washington has sent us the 
message that they will listen and consider seriously our concerns and 
recommendations. Working together as fellow stakeholders, with open 
communication and cooperation we can develop rules which avoid 
duplication, conflict and needless adverse impacts. We will work with 
BLM to devise a regulatory system which works in concert with state, 
local and other Federal agencies to protect the environment while 
allowing responsible development of our natural resources. Thank you.
                                 ______
                                 
    Chairman Gibbons. Thank you very much, Mr. Gaskin.
    Mr. Myers, excuse me, I should say Dr. Myers, welcome.
    Mr. Myers. It doesn't matter.
    Chairman Gibbons. Director of Great Basin Mine Watch. The 
floor is yours. We look forward to your testimony.

STATEMENT OF TOM MYERS, PH.D., DIRECTOR, GREAT BASIN MINE WATCH

    Mr. Myers. Congressman Gibbons, thank you for the 
opportunity to testify before you and the Subcommittee. My name 
is Tom Myers and I am the Director of the Reno based mining 
conservation advocacy group, Great Basin Mine Watch.
    Great Basin Mine Watch is a regional conservation group 
operating in six western states. We try to use high quality 
science, environmental law and advocacy to preserve water, air, 
pristine lands, communities and cultural resources while 
supporting a strong, diversified economy that includes a 
healthy hardrock mining industry. That industry should be fully 
subject to the free market with all of the subsidies from 
essentially free use of the public land to pollution 
eliminated.
    We support the claim maintenance fee because it eliminates 
speculation and avoids degradation of the public lands. The fee 
basically internalizes the cost of the BLM's administration of 
the mining program. Without the fee the program would need to 
be funded by Congressional appropriations, and we note that it 
is a part of President Bush's budget for 2002 and he recommends 
its continuation until the year 2006.
    Regarding the fee impact, the State of Nevada concluded it 
was by far the least important issue concerning companies with 
budgets exceeding 1,000, excuse me, one million dollars and 
fourth from the bottom for companies, or for smaller companies.
    Regarding the new 3809 regulations we do support them, 
perhaps most controversially the regulations would codify the 
BLM's current authority to deny a mine that would cause 
irreparable harm. The BLM estimated decreased levels of mining 
in Nevada ranging up to 350 million dollars. That is a lot of 
money.
    The only way, however, in our opinion that Nevada would 
actually see a decrease in mining is if the BLM actually denies 
a mine. It is our opinion that denial would be very rare and 
would occur only in the most pristine areas with low value or 
where the proponent cannot afford the costs of meeting 
performance standards or where the mine would destroy a 
significant Native American site.
    In fact, of the mines I have reviewed on BLM lands in 
Nevada, I can think of no facility where we would have totally 
opposed construction of the project and tried to force the BLM 
to say no under the irreparable harm standard, and for the 
record we would have opposed construction of several Forest 
Service mines, and we do oppose the Imperial Project and the 
Yarnell Project that we have discussed earlier, but in Nevada 
while we have filed some appeals, we would not have, they were 
not, the objective of those appeals was never to completely 
stop the facility.
    We do acknowledge that there is a problem in the current 
system whereby a company can spend tens of millions of dollars 
in exploration only to be told no. I would commit to working 
with anyone in this room to come up with a standard or remedy 
to avoid that kind of commitment of funds and then having the 
problem of being told no in the future.
    However, many of the mines, some of which we have appealed, 
should have had much more stringent environmental performance 
standards regarding dewatering and water pollution control. My 
written testimony mentions a few instances of pollution that in 
our opinion could have been prevented or reduced had the new 
regulations been in effect.
    By emphasizing source control over monitoring and 
treatment, the new regulations will ultimately save the 
industry millions of dollars. The new regulations would also 
change the watering in our opinion by requiring that the impact 
be minimized. Discharge to surface water, reinfiltration into 
the wrong aquifer, and growing alfalfa in no way minimizes the 
impacts. A combination of reinfiltration, reinjection and 
grouting does. Minimizing these impacts would cost 
approximately $18 an ounce.
    The bonding regulations are needed to decrease, to increase 
the BLM's authority to improve existing bonds and eliminate 
corporate guarantees. According to an independent mining 
engineer, current estimates of underbonding in Nevada are 
approximately 20 to 100 percent with a potential public 
liability of 96 to 480 million dollars. The underbonding is 
less in Colorado with a potential public liability of 20 to 50 
million dollars. I had that in there because I thought there 
was going to be a Congressman from Colorado here, I'm sorry.
    In closure I would like to say a few words about President 
Bush's proposed budget, because it affects the mining industry 
as much as anything in the proposed rules. The U.S. Geological 
Survey is going to take a 21 percent hit in the Water Resources 
Division with ten million dollars taken from its Toxic 
Substances Program.
    The BLM and the mining industry use this information every 
time they prepare a NEPA document. When the BLM requires data 
to assess a Plan of Operations, it can either use the USGS data 
or it can ask the industry to go spend two or 3 years 
collecting it. They have to have it, so it is, we should have 
this funding restored.
    I would also note that the Toxic Substances Program is that 
which will be used to test the uranium in wells near Fallon. 
Thank you for considering my testimony and I see my timing was 
perfect. I would be happy to answer any questions when we are 
done.
    Chairman Gibbons. Thank you very much, Dr. Myers.
    [The prepared statement of Tom Myers follows:]

        Statement of Tom Myers, Director, Great Basin Mine Watch

    Chairwoman Cubin, members of the Subcommittee, my name is Tom 
Myers. I am Director of the Nevada based mining advocacy group Great 
Basin Mine Watch. Great Basin Mine Watch has several hundred members, 
mostly Nevadans, who are concerned about the impacts caused by the 
hardrock mining industry on the public's land. We support a strong, 
diversified economy in which hardrock mining plays an important part. 
We also support regulations and policies which require the mining 
industry to internalize their environmental costs.
    Thank you for this opportunity to testify on an issue of immediate 
concern to all of our members and the citizens of the State of Nevada 
and the United States: mining fees and the effects of the new 
regulations.
Claim maintenance fees have protected the public's land
    As a part of their 1993 appropriations bill, Congress allowed the 
BLM to start collecting a $100 per year per claim fee on mining claims 
as a part of their appropriations. This was a two-year authorization. 
During the 1994 appropriations process, the fee was reauthorized 
through September, 1998 and an additional $25.00 location fee was 
added. Finally, the 1998 appropriations reauthorized both fees through 
September, 2001. These fees are in addition to the $10 recording fee 
authorized by the Federal Lands Policy and Management Act in 1976. 
President Bush's current budget proposal calls for renewal of the claim 
maintenance fee at $100/claim/year.\1\
---------------------------------------------------------------------------
    \1\ The Budget for Fiscal Year 2002, page 548.
---------------------------------------------------------------------------
    The maintenance fees (originally called a rental fee) replace the 
requirement for the claimholder to perform $100 of development on the 
claim. Prior to mining, the development was for exploration on the 
site. Annually, the claimholder would provide to the BLM a signed 
affidavit that they had completed this work. In 1872 when $100 was a 
substantial investment, only a serious miner would hold claims. At 
today's prices, a claims holder can barely drive his pickup truck to 
the site for $100. Doing so just damaged the land through off-road 
vehicle traffic.
    The fee legislation provided for a small miner exemption: anyone 
holding less than ten claims could continue to perform maintenance on 
the site. From September, 1998, through August, 1999, 4000 small miner 
waivers were issued in Nevada.\2\ Anyone truly impacted by the fee 
could get an exemption.
---------------------------------------------------------------------------
    \2\ Id., note 6, at 7.
---------------------------------------------------------------------------
    The money collected from these fees goes directly to the mining law 
administration budget of the BLM. It is deposited in a special account 
from which Congress appropriates to the program in the BLM. Any 
additional fees go to the Federal Treasury to help balance the budget. 
The following table shows the amount of money paid nationally for claim 
maintenance and location fees and the appropriation to the BLM from 
this fund.\3\
---------------------------------------------------------------------------
    \3\ Roger Haskins, BLM Washington Office, 5/13/99, personal 
communication.

------------------------------------------------------------------------
            Fiscal year               Fees collected     Appropriations
------------------------------------------------------------------------
1993..............................        $53,200,000  .................
1995..............................         30,700,000        $28,500,000
1996..............................         33,800,000         28,500,000
1997..............................         35,800,000         32,500,000
1998..............................         30,000,000         32,500,000
------------------------------------------------------------------------

    In FY 1998, the claim brought in $13,387,600 in Nevada alone.\4\ As 
the table illustrates, the fee provides an important revenue stream 
that pays for the administration of the program. As mentioned, 
President Bush's current budget proposal calls for renewal of the claim 
maintenance fee at $100/claim/year). ``(1) In section 28f(a), by 
striking the first sentence and inserting, `The holder of each 
unpatented mining claim, mill, or tunnel site, located pursuant to the 
mining laws of the United States, whether located before, on or after 
the enactment of this Act, shall pay to the Secretary of the Interior, 
on or before September 1 of each year for years 2002 through 2006, a 
claim maintenance fee of $100 per claim or site.' '' \5\ Interestingly, 
the President also expects claims to increase from 216,000 in 2001 to 
280,000 in 2002 \6\ with expected revenue to be $32,298,000.\7\
---------------------------------------------------------------------------
    \4\ Steward, L., BLM NV State Office, 5/12/99, personal 
communication.
    \5\ The Budget for Fiscal Year 2002, page 548.
    \6\ Id., at 536.
    \7\ Your Tax Dollars and the Public Lands, a BLM Press Release.
---------------------------------------------------------------------------
    The President recognizes the importance of this fee. Great Basin 
Mine Watch supports making the fee permanent so that the taxpayer is 
never required to pay this program. Without some source of funding, the 
public lands will be damaged and the BLM will not be able to fairly 
administer the Mining Law which will be a negative deterrent to the 
efficient development of the nation's mineral resources.
    Who opposes this fee? For large companies, the amount is a mere 
blip on their annual budget. According to the State of Nevada, the 
Federal claim maintenance was by far the least important issue 
concerning companies with budgets exceeding $1,000,000.\8\ For smaller 
companies, the maintenance fee is more important, but still ranks in 
the bottom four of eleven factors surveyed and on a scale of 1 to 10 
was rated less than 5.\9\ Of the three factors rated less important, 
one, changes in foreign laws, would be irrelevant to most small 
companies. The other two, land exchanges and wilderness study areas, 
have little effect because they just delineate areas that may be 
explored. In fact, land exchanges have resulted in increased 
exploration activity.\10\
---------------------------------------------------------------------------
    \8\ Driessner, D., 2000. Nevada Exploration Survey 1999. Nevada 
Division of Minerals. Carson City. Graph 8, at 18,
    \9\ Id., Graph 9, at 19.
    \10\ In the Pequop Mountains of northeastern Nevada, once a 
completed land exchange was open to activities under the Mining Laws, 
an exploration company immediately filed a large plan of operations. 
Great Basin Mine Watch argues that the BLM should not have permitted 
this exploration because they had never completed required resource 
surveys as required by the Federal Lands Policy Management Act.
---------------------------------------------------------------------------
    The current maintenance fee primarily affect holders of non-
producing Federal mineral claims. They represent only a tiny part of 
the overall costs of an operating mine. For non-producing claims, 
rental or maintenance payments can be avoided by simply abandoning 
those claims that have little prospect of profitable near term 
development. In 1993 in Nevada, the number of registered claims dropped 
from 258,000 on February 28 to 125,700 claims on September 1 while 
nationally claims dropped from 760,000 to 294,000.\11\ This suggests 
that many claims being held prior to the commencement of the fee were 
non-producing. Since the burden of these payments does not fall on 
operating mines with substantial employment, the employment impacts are 
likely small or non-existent. Suggestions that the dropped claims 
somehow represents a decrease in exploration are completely specious; 
any drop coinciding with the changed claims is likely due to changed 
commodity prices.
---------------------------------------------------------------------------
    \11\ Haskins, note 1.
---------------------------------------------------------------------------
    If mining claims are abandoned because profitable future 
development is not imminent, those minerals are not lost. As economic 
conditions change and mining of that land becomes viable, claims could 
be filed again. The primary impact of these rental charges is to 
discourage the indefinite holding of claims to minerals on Federal 
lands for speculative (as opposed to production) purposes. No 
substantial negative employment or revenue impact can be attributed to 
this.
    In conclusion, the only people really hurt by this fee are 
speculators. These are people who stake multiple claims in a minerals 
rich area in hopes of mining the legitimate mining companies who would 
rather buy out a claim than challenge its validity before the Appeals 
Board or in the courts. These speculators may not have the money to pay 
the annual fees and they probably filed fraudulent maintenance reports 
prior to 1993.
New mining regulations are essential for protecting the environment and 
        State and Federal treasuries
    The most obvious recent policy change is the new 3809 regulations, 
if they are not repealed. Great Basin Mine Watch strongly supports the 
new regulations.\12\ We primarily support the regulations because they 
strengthen bonding requirements, institute minimal environmental 
performance standards, eliminate notice level mines, and finally allow 
the BLM to deny a mine that would cause ``irreparable harm''.
---------------------------------------------------------------------------
    \12\ Great Basin Mine Watch has joined with the Mineral Policy 
Center and Guardians of the Rural Environment in litigating to improve 
the regulations and intervening in the litigation promulgated by the 
National Mining Association to protect the regulations' desirable 
aspects.
---------------------------------------------------------------------------
    The new bonding regulations will help to prevent costs from 
accruing to the public. The following is a partial list of mining 
companies and the amounts of their secured and unsecured bond that have 
recently gone bankrupt on BLM lands in Nevada.\13\
---------------------------------------------------------------------------
    \13\ Personal communication, Nevada State Office, Bureau of Land 
Management, 3/30/00. Updated information is that no new bankruptcies on 
land managed by the BLM in Nevada has occurred.

------------------------------------------------------------------------
              Company                  Secured bond      Unsecured bond
------------------------------------------------------------------------
Alta Gold Company.................         $3,976,062  .................
Arimetco, Inc.....................          1,414,000         $4,236,831
Atlas Gold Mining, Inc............          3,192,378  .................
Homestead Minerals Corp...........            124,017            501,121
Jumbo Mining Company..............              3,700  .................
McNamara Buick-Pontiac, et al.....  .................              8,000
Mineral Ridge Resources, Inc......          1,640,086                  0
Mountain Mines, Inc...............  .................  .................
Pruett Ranches....................            154,364             58,770
------------------------------------------------------------------------

    While some of the mines have secured bonds, it is likely that most 
of the amounts are insufficient because most of the money goes to 
fluids management to prevent heaps from overflowing or tailings 
impoundments to leak. Portions of the reclamation bond dedicated to 
heap stabilization are insufficient at this point because they are not 
designed to both manage and close a heap. For example, we understand 
that just pumping the fluids through the heaps at the bankrupt 
Olinghouse and Mineral Ridge Mines cost $80,000 and $50,000 per month, 
respectively. Because the bonds for these facilities was only 1.8 and 
1.6 million, respectively, it is easy to see that several months of 
fluids management that does not lead to ultimate detoxification uses 
substantial portions of the bond. Too often, the costs for fluids 
management decrease the ability of the agency to reclaim other parts of 
the mine. The bankruptcy closure fund proposed in Nevada will be 
grossly insufficient if more than one mine goes bankrupt at the same 
time because of the costs of pumping water through heaps. The new 3809 
regulations provide for bonding for interim stabilization in addition 
to long-term closure.\14\
---------------------------------------------------------------------------
    \14\ 43 CFR Sec. 3809.552. ``The financial guarantee must also 
cover any interim stabilization and infrastructure maintenance costs 
needed to maintain the area of operations . . . while third-party 
contracts are developed and executed.
---------------------------------------------------------------------------
    If the BLM requires full bonding, the public will be protected from 
substantial liability. One independent study indicated that westwide 
the public was potentially liable for up to $1 billion in costs due to 
defaults on underfunded bonds and unsecured bonds. The following table 
documents the potential costs born by the public due to underestimated 
bonds and corporate guarantees:

----------------------------------------------------------------------------------------------------------------
                                                                            Range of
                                                              Range of       public      Corporate    Liability
                          State                            underestimate    liability      bonds        due ($
                                                             (percent)    ($ millions)                millions)
----------------------------------------------------------------------------------------------------------------
Arizona..................................................   50-200        73-292                438  ...........
California...............................................   50-200         17-68        ...........  ...........
Colorado.................................................    20-50         20-50        ...........  ...........
Idaho....................................................   50-400        20-160        ...........  ...........
Montana..................................................    10-25         20-50        ...........  ...........
Nevada...................................................   20-100        96-480                360  ...........
New Mexico \1\...........................................  .............  ............  ...........  ...........
Oregon \2\...............................................  .............  ............  ...........  ...........
South Dakota.............................................    20-50        6.2-15.4      ...........  ...........
Utah.....................................................   20-100        10.2-50.0     ...........  ...........
Washington...............................................   50-100        5.0-10.0      ...........  ...........
Wyoming \2\..............................................  .............  ............  ...........  ...........
----------------------------------------------------------------------------------------------------------------
\1\ Unknown due to new bonding regulations.
\2\ No major hardrock mines.

The estimates are based on a report funded by the National Wildlife 
Federation.\15\ The estimates are based on case studies using industry 
standards compared with actual reclamation cost estimates. The report 
found that:
---------------------------------------------------------------------------
    \15\ Kuipers, J.R., 2000. Hardrock Reclamation Bonding Practices in 
the Western United States. Center for Science in Public Participation, 
Boulder, MT. Mr. Kuipers is a mining engineer with over 20 years of 
experience in millsite management and reclamation.

          The estimated costs for nearly identical tasks can vary 
        significantly between states. The lowest estimated reclamation 
        costs exist in those states and on Federal land where the 
        statues and regulations are general and limited in scope, and 
        afford the regulators substantial discretion as to their 
        interpretation and application. This observation becomes even 
        more dramatic where industry political influence has resulted 
        in apparent underestimation of reclamation costs.\16\
---------------------------------------------------------------------------
    \16\ Id., Summary Report, at 2.

    In other words, the report suggests that states where the 
regulators have more discretion tend to be underbonded. Regarding 
Nevada, the report found that ``[r]eclamation planning . . . fails to 
adequately address recontouring, hydrology, water quality and 
geochemical--acid mine drainage consideration, and fails to consider 
public safety, wildlife habitat, and aesthetic considerations''.\17\ It 
also found that the limitation requiring reclamation to be 
``economically and technologically practicable'' severely limits the 
state's abilities.\18\
---------------------------------------------------------------------------
    \17\ Id., Nevada Bonding Program Summary, at 2.
    \18\ Id., at 3.
---------------------------------------------------------------------------
    The environmental performance standards are the most important of 
the new regulations. These regulations will help to protect the 
public's resources from mining while not imposing undue costs on the 
industry. I will provide just two examples of how the regulations would 
affect mining in Nevada and how this will affect industry or 
governmental budgets.
    Great Basin Mine Watch has documented many currently operating or 
closing mines that are currently or have polluted groundwater. For the 
purpose of this analysis, we only consider mines with monitoring 
reports showing that contaminant concentrations exceed state standards 
and where this exceedence is not due to background levels. To be 
counted as background, the concentrations must have been high at the 
beginning of mine operations and must not have had spikes which would 
be due to the mine. The following is a partial list of mines with 
exceedences based on data obtained from the Nevada Division of 
Environmental Protection:
          Battle Mountain Complex *
          Marigold *
          Pipeline Deposit **
          Cortez
          Toiyabe
          Yerington ***
          Rain ****
          Twin Creeks
          Paradise Peak
          Calvada

    * The BLM has documented in their NEPA documents for expansion 
projects at these facilities the ongoing degradation.
    ** Some of the degradation at this facility has occurred because 
the reinfiltration of dewatering water leaches salts from the 
unsaturated zone into the alluvial groundwater.
    *** The Yerington Mine is being considered for Superfund 
designation by the Environmental Protection Agency. Some of the 
contamination at this facility occurred prior to 1980, but there have 
been plan changes under which the BLM would have been more aggressive 
at cleaning the site.
    **** Contamination at the Rain Mine consists of seepage from waste 
rock and tailings that may be discharging into a surface water source. 
The Nevada Water Pollution Control permit for this facility is 
currently under appeal by Great Basin Mine Watch.

Other mines on Forest Service land also have degraded groundwater. 
Other mines, including Gold Quarry and Lone Tree, have surface water 
discharges that exceed their permit requirements.
    An additional very serious problem concerning the public's 
resources centers on the tendency for a mine to discharge its' heap 
draindown and seepage into the ground near the mine. The State of 
Nevada allows this when depth to groundwater is substantial. Often, 
mines are discharging millions of gallons of water with contaminant 
levels exceeding 100 times the state drinking water standard for 
mercury, arsenic, selenium and silver. The Candelaria Mine is the best 
example: \19\
---------------------------------------------------------------------------
    \19\ The following description comes from the introduction to the 
Notice of Appeal for the closure plan filed by Great Basin Mine Watch. 
The reference to EA means the environmental assessment written for the 
Candelaria Mine Closure Plan. See IBLA No. 2000-366.

          The Candelaria Mine is located approximately 55 and 16 miles 
        southwest of Hawthorne and Mina, NV, totally on public land. 
        The mine began production during November, 1980. While there 
        were occasional shutdowns, the mine operated until January, 
        1997 and final metal recovery from the heaps occurred in 
        January 1999. During this time, the operator created two leach 
        pads. LP-I covers 136 acres and contains approximately 
        25,000,000 tons of ore while LP2 covers 70 acres and contains 
        approximately 14,000,000 tons of ore. EA at 1. The heaps were 
        leached with a cyanide solution to remove the gold and silver 
        from the ore. When formal leaching ended, the heaps contained 
        cyanide solution and metals that were leached from the ore but 
        not recovered in the cyanide circuit. After the end of 
        leaching, the operator began to recirculate the water in the 
        heaps. The BLM estimates that at the end of this recirculation, 
        the initial draindown was anticipated ``to consist of about 
        95.8 million gallons from leach pads LP-1 and LP-2.'' EA at 10. 
        Draindown is the contaminated fluids remaining in the heap 
        after rinsing that moves to the bottom of the heap with time. 
        The majority of these fluids are expected to drain during the 
        first and will be infiltrated into the soil through ``initial 
        infiltration fields'' designed to accept high quantities of 
        water. EA at 14. The amount depends on the time that rinsing 
        ends and the amount of the heaps that were being rinsed at that 
        time. Portions of the heaps no longer being rinsed have had 
        unspecified time periods for water to drain. The rate of 
        draindown is very uncertain.
          Residual draindown from 2000 to 2011 will equal about 
        44,000,000 gallons while long-term seepage will equal about 
        2,300,000 gallons per year. EA at 10. This will be infiltrated 
        in ``residual infiltration fields''. EA at 14.
          Water quality of the draindown was very poor during 1999. 
        Because recirculation has ended, the water quality will remain 
        the same for the duration of draindown. During 1999, the water 
        proposed to be infiltrated exceeds State of Nevada primary and 
        secondary drinking water standards for 13 contaminants as shown 
        below. The totals are the amount of contaminants proposed to be 
        stored in the soil for initial, residual, and annual seepage 
        conditions for both heaps (assuming arithmetic averages of flow 
        from heaps LPI and LP2).

----------------------------------------------------------------------------------------------------------------
                                                                                                       Seepage
             Parameter               NV MCL (mg/  LPI (mg/1)   LP2 (mg/1)    Initial      Residual   mass (tons/
                                         1)                                mass (tons)  mass (tons)     year)
----------------------------------------------------------------------------------------------------------------
Antimony...........................       0.006        0.149        0.068        0.043        0.020        0.001
Arsenic............................        0.05        6.487        2.430        1.782        0.819        0.043
Chloride...........................     250-400      456          522          195.5         89.78         4.693
Manganese..........................    0.05-0.1        2.5          5.63         1.625        0.746        0.039
Mercury............................       0.002        0.27         0.07         0.068        0.031        0.002
Nickel.............................         0.1       11.12        15.59         5.339        2.452        0.128
Nitrate-N..........................          10       42.48        49.43        18.37         8.437        0.441
pH.................................     6.5-8.5        9.47         9.35   ...........  ...........  ...........
Selenium...........................        0.05        0.411        0.258        0.134        0.061        0.003
Silver.............................         0.1        8.628        6.328        2.989        1.373        0.072
Sulfate............................     250-500     5471         8721         2836         1302           68.10
TDS................................    500-1000    10149        13788         4784         2197          114.9
WAD cyanide........................         0.2       25.2         70.8         19.19         8.813        0.461
----------------------------------------------------------------------------------------------------------------

          The mass above represents only the amount expected to drain 
        from the heaps. Because the fluids were recirculated and not 
        detoxified, large amounts of contaminants remain in the heaps 
        to be leached in the future. There are also contaminants in the 
        ore that have not yet dissolved or been leached into the 
        solution.

    The BLM's new regulations would prevent the industry from 
discharging its waste in this way. ``You must conduct operations 
affecting ground water, such as dewatering, pumping, and injecting, to 
minimize impacts on surface and other natural resources, such as 
wetlands, riparian areas, aquatic habitat, and other features that are 
dependent on ground water''.\20\ It is unlikely that, even if the 
contaminants will likely be attenuated in the unsaturated zone, the BLM 
would ever choose to allow this discharge because of the potential 
toxicity to soil ecosystems.
---------------------------------------------------------------------------
    \20\ 43 CFRSec. 3809.420(b)(2)(ii)(C), emphasis added.
---------------------------------------------------------------------------
    The other issue affected by the new regulations would be mine 
dewatering. By the end of mining, the excess of dewatering over 
reinfiltration plus the pit lake volume within the Humboldt River basin 
will be approximately 5,000,000 acre-feet.\21\ Evaporation from pit 
lakes will be at least 3 \22\ percent of the average surface water flow 
in the Humboldt River. The new regulations cover this by requiring that 
dewatering minimize impacts on other surfaces. Only by reinfiltration 
can the impacts of dewatering be minimized. We anticipate that the Gold 
Quarry, Lone Tree and Betze-Post Mines would be required to reinject 
their dewatering water and that the Pipeline Deposit mine would either 
have to reinject into bedrock or into the mountains upgradient from the 
mine. We indicate that reinjection would be necessary because it is 
from bedrock that most of the water is removed. Also, reinfiltration 
may, as has occurred at the Pipeline Deposit mine, leach salts from the 
alluvium and pollute underlying groundwater.
---------------------------------------------------------------------------
    \21\ Myers, T., 1997. Groundwater management implications of open-
pit mine dewatering in northern Nevada. In: Kendall, D.R. (Ed.), 
Conjunctive Use of Water Resources: Aquifer Storage and Recover. 
Proceedings AWRA Symposium, Long Beach, CA. October 19-23, 1997. This 
report documented 4,000,000 acre-feet of deficit. The additional 
1,000,000 acre-feet results from the expansion of the pit at the 
Pipeline Deposit and increased pumpage at that mine and the Leeville 
Project. All other expansions had been accounted for in the original 
calculations.
    \22\ Id.
---------------------------------------------------------------------------
    Considering dewatering, there is an economic and environmental cost 
to dewatering. During 2000, we prepared a report for the University of 
Nevada, Reno, titled ``Economic and Environmental Impacts of Mining in 
Eureka County''. It documents the amount of water pumped per ounce of 
gold produced. The following are relevant parts of the executive 
summary of that report: \23\
---------------------------------------------------------------------------
    \23\ Myers, T., 2000. Economic and Environmental Impacts of Mining 
in Eureka County. Prepared for Dept. of Applied Economics and 
Statistics, College of Agriculture, University of Nevada, Reno. Center 
for Science in Public Participation.

          Gold mining in Eureka County provides most of its current 
        employment and tax dollars. However, mine dewatering may cause 
        long-term deficits that will offset many of the current mining 
        benefits. This report summarizes gold production, mining 
        employment, dewatering rates, and water rights to assist in the 
        assessment of the economic and environmental impacts of mining 
        in Eureka County . . . .
          Total dewatering at mines in or potentially affecting Eureka 
        County, including Newmont's Carlin operations, the Barrick 
        Goldstrike property, and the Pipeline Deposit Mine, since 1990 
        has been approximately 954,000 af. Most of this is effectively 
        lost to future use because of the method of disposal and the 
        need for replenishing the created deficit. During this time, 
        gold production in the county increased to greater than 3.6 
        million ounces per year and currently (1999) stands at about 
        3.1 million ounces. Newmont's Carlin operations and Betze-Post 
        produced 16,300,000 and 12,500,000 ounces of gold, 
        respectively. During the same time, Newmont and Barrick pumped 
        174,110 and 715,353 af of water, respectively. This is 93.6 and 
        17.5 ounces per af, respectively.
          In the future, Gold Quarry will pump 480,000 af to produce 
        13,716,000 ounces of gold, or about 28.6 af/ounce. At the 
        Leeville Mine, Newmont will pump 200,000 af to produce 
        1,796,000 ounces, or 9.0 af/ounce. At the Betze-Post Mine, 
        Barrick will pump 576,000 af to produce 21,200,000 ounces, or 
        36.8 af/ounce, over the next 18 years.
          After mining ceases, there will be a deficit created by 
        dewatering which must be made up in the future. Deficits 
        include the size of the pit lake and the pumpage volume that is 
        lost to the system. Based on current and proposed projects, the 
        total deficit in the Carlin Trend will be about 2,363,000 af. 
        Adding the amount of deficit in the Pipeline Deposit Mine 
        brings the total to 2,663,000 af. There are several smaller 
        mines that have created small deficits in the Tuscarora 
        Mountains which bring the total deficit in mines that may 
        affect Eureka County to 3,000,000 af. Considering just the 
        Carlin Trend, the ratio gold production to deficit is 27.6 
        ounces per af.
          The best current estimate of the impacts of filling the long-
        term deficit is that river and stream baseflow will decrease by 
        up to 10.4 cfs. But there are three major issues that policy 
        makers must consider. Where will the deficit come from? Is it 
        the same aquifer from which the dewatering was drawn? What is 
        the rate of pit lake infilling? This is very sensitive to the 
        hydrogeologic properties of the aquifers near the pit. Finally, 
        what is the connection of these aquifers and the pit lake to 
        surface water sources?
          The most significant impacts to Eureka County water rights 
        may be in Maggie Creek or Boulder Valley. However, there are 
        limited surface water rights on Maggie Creek; in Boulder Flat, 
        the impacts will mostly a decreased depth to water because of 
        the infiltration and irrigation that has been occurring in the 
        valley. The high water table may experience increased 
        evapotranspiration and seepage to the Humboldt River is 
        probably increasing. But there appears to be no deficit created 
        by dewatering that will drain the aquifers in Boulder Valley. 
        Groundwater rights in Crescent Valley could be affected. 
        Currently, a mining company owns the bulk of the rights that 
        could be affected and they propose to replace temporarily the 
        certificated rights with dewatering water. Substantial impacts 
        to any of the groundwater rights in Crescent Valley is not 
        expected.
          Eureka County's gold production does not come without costs, 
        both economic and environmental. To produce a total 66,200,000 
        ounces of gold, over 2,145,000 af of water will have been 
        pumped. A total deficit of about 3,200,000 af will have been 
        created in the Carlin Trend area, most of it in Eureka County. 
        This deficit will be refilled after mining ceases from 
        somewhere. The complex hydrogeology of the area renders 
        estimates of impacts very uncertain. However, it is certain 
        that river and stream flows will decrease, potentially 
        impacting Lahontan cutthroat trout and increasing water 
        pollution levels, and pit lakes will form that may impact 
        groundwater quality. The biggest problem may be that deficits 
        are filling, causing their impacts on surface water flows, 
        after the mines have ceased producing gold. Eureka County will 
        be suffering most of the impacts at a time the county is not 
        enjoying many of the benefits.

    Not being an economist and because I provided this report to the 
Dept. of Applied Economics and Statistics at UNR, I did not perform any 
detailed economic analysis. In Las Vegas, recharge costs between $200 
and $300 per acre-foot. Because it would be deeper in the Carlin Trend, 
costs may be closer to $400 or 500 per acre-foot. It is important to 
realize that most of the cost would be for digging the well as opposed 
to pumping the water; the height of the well would provide the required 
head. At $500 per acre-foot, in the Carlin Trend with 27.6 ounces of 
gold per acre-foot produced, the cost would be about $18.00 per ounce. 
This includes current pumping rates and project future rates for 
existing mines and the proposed Leeville Project.
    At $18.00 an ounce, the effect on the industry would depend on gold 
prices. Some companies operate close to the margin; this additional 
cost might force them to postpone a project. However, most ranchers and 
certainly municipalities pay far more than this for an acre-foot of 
water. Because water that is pumped into the river or that flows into a 
pit lake is not available for future use, a rather small investment 
would assure water for the future.
Budget proposals will help and hurt the industry
    President Bush proposes many changes in fiscal policy and 
administrative direction reflected in his budget that will affect the 
industry. Some of the changes are positive; others are negative. Some 
of the policies may cost the industry.
    We note that regardless of budget levels proposed by the President, 
all environmental laws must be followed. Cutting the budget for 
enforcing the Endangered Species Act does not repeal the Act; it only 
increases the time for Fish and Wildlife Service to complete 
consultation. Decreasing the budget to enforce section 404 of the Clean 
Water Act will only slow the time for permit issuance. Agencies who 
approve projects with faulty permitting will only land themselves and 
the project proponent in court. This will lead to more delays and cost 
the mining industry much more than had they spent an adequate time in 
the first place. To paraphrase one of Murphy's Laws, ``there's never 
enough money to get it right the first time, but there's always enough 
money to do it over''. Doing it over will likely involve industry 
money.
    One very specific concern that we have with the President's budget 
involves budget decreases for the U.S. Geological Survey. Of four USGS 
division, the Water Resources Division takes by far the largest 
decrease, 21.6 percent from $203.5 million in FY 2001 to $159.5 million 
in FY 2002.\24\ The bulk of the reduction would be accomplished by 
eliminating the Toxic Substances Hydrology program (a $10 million 
cut)--despite the fact that it has generated significant information 
about the sources, fate, and persistence of toxic substances in ground 
and surface water--and reducing the National Water-Quality Assessment 
(NAWQA) program by $20 million, halting its next phase. These programs 
provide essential information to the land management agencies for 
decision making purposes. These data include the amount of various 
toxic materials in the rivers and streams of the West. Without this 
data, the BLM will have no choice but to require the mining industry, 
primarily the project proponent, to collect the data. This is because 
there is ample appellate rulings that force the BLM to return plans of 
operation to a
---------------------------------------------------------------------------
    \24\ The Budget for Fiscal Year 2002, at 564. ``A significant 
portion ($30.0 million) of the proposed decreases affects two USGS 
water quality programs that primarily benefit other Federal agencies 
and states. The National Water-Quality Assessment Program (NAWQA) and 
the Toxic Substances Hydrology Program provide extensive data and 
information to state and Federal regulatory agencies such as the 
Environmental Protection Agency (EPA). These entities rely on USGS to 
provide information to help them fulfill their own mission-critical 
responsibilities. The Department and USGS will work with EPA and other 
beneficiaries of both programs in an effort to obtain partnership 
funding to maintain current scope and schedule in both programs.'' USGS 
Press Release: President's FY 2002 Budget for USGS--Contributions to 
Energy Security and America's Environment
---------------------------------------------------------------------------
company for more data.\25\ It would be unfortunate for the project 
proponent and the state revenue stream if the BLM required a 2 year 
delay in a potentially profitable project while the company collected 
data that the USGS would otherwise already have collected if not for 
these budget cuts.
---------------------------------------------------------------------------
    \25\ First of all, the mere filing of a plan of operations by a 
holder of a mining claim invests no rights in the claimant to have any 
plan of operations approved. Rights to mine under the general mining 
laws are derivative of a discovery of a valuable mineral deposit and, 
absent such a discovery, denial of a plan of operations is entirely 
appropriate . . . .
    Moreover, in determining whether a discovery exists, the costs of 
compliance with all applicable Federal and State laws (including 
environmental laws) are properly considered in determining whether or 
not the mineral deposit is presently marketable at a profit, i.e. 
whether the mineral deposit can be deemed to be a valuable mineral 
deposit within the meaning of the mining laws . . . If the costs of 
compliance render the mineral development of a claim uneconomic, the 
claim, itself, is invalid and any plan of operations therefore is 
properly rejected. Under no circumstances can compliance be waived 
merely because failing to do so would make mining of the claim 
unprofitable. Claim validity is determined by the ability of the 
claimant to show that a profit can be made after accounting for the 
costs of compliance with all applicable laws and, where a claimant is 
unable to do so, BLM must, indeed, reject the plan of operations and 
take affirmative steps to invalidate the claim by filing a mining 
contest.
    Finally, insofar as BLM has determined that it lacks adequate 
information on any relevant aspect of a plan of operations, BLM not 
only has the authority to require the filing of supplemental 
information, it has the obligation to do so. We emphatically reject any 
suggestion that BLM must limit its consideration of any aspect of a 
plan of operations to the information or data which a claimant chooses 
to provide. Great Basin Mine Watch, et al., 148 IBLA 248, 256. Bolded 
emphases added, italics in original, citations omitted.
---------------------------------------------------------------------------
    Interestingly, these USGS programs are being cut because they 
primarily benefit entities outside the Department--including other 
Federal agencies, state and local government, and foreign governments. 
In the future, USGS is expected to seek funding from these partners who 
``rely on USGS to provide information to help them fulfill their own 
mission-critical responsibilities.'' It is the Environmental Protection 
Agency that routinely uses this information.
    We are concerned about the decrease in funds available for mining 
law administration. With increasing questions about claim validity, it 
is essential that the BLM be adequately funded to more fully pursue 
questions of validity at each proposed mine. Failure to do so will 
cause the industry substantial delays.
    We support the budget increases for resource protection. This 
should improve the BLM's National Environmental Policy Act 
implementation and decrease delays caused by BLM personnel being called 
to fight fires or administer fire restoration programs. It will also 
hopefully improve the BLM's ability to improve the oversight of NEPA 
documents. Over the past several years, we have read various documents 
which were poorly edited and contained simple factual errors.\26\
---------------------------------------------------------------------------
    \26\ The draft environmental impact statement for Newmont's South 
Operations Area expansion is the best example of this. In our letter to 
the BLM regarding this DEIS, we documented numerous problems with 
technical editing including places where statements in one section did 
not match statements in other sections. In just one section of our 
letter, we point out the following:

      The technical editing of the Groundwater Hydrology section leads 
one to question the quality of analysis that went into this EIS. For 
example, in the description on six hydrostratigraphic units on page 3-
38, there are sentences out of place. After listing five rock types, a 
new paragraph begins to discuss the quartzite that underlies the 
primary water bearing units in the basin. The sentence about siltstones 
being structurally separated from the carbonates should be in the 
preceding paragraph.
      Also, why is there a discussion of `ninety four water wells' 
currently being monitored by Newmont in the middle of a short section 
on floodplains? DEIS at 3-52. It seems substantially out of place.''
---------------------------------------------------------------------------
    However, we have concerns over the budget reductions for both 
wildlife and fisheries management and threatened and endangered species 
management. Because even the old 3809 regulations require the BLM to 
comply with the Endangered Species Act, reducing the budget for 
consultation will result in unnecessary delays. In Nevada where the 
Lahontan cutthroat trout is potentially affected by mine dewatering and 
where the goshawk and sage grouse may soon be listed, these cuts are 
short sighted and will hurt mine permitting and wildlife management.
Conclusion: Claim maintenance fees and new regulation are needed to 
        protect the environment
    Much of this testimony has dealt with the costs to the industry of 
the BLM's claim fees, costs perceived to be caused by new regulations, 
and the impacts of the President's budget proposals. The threat is 
always that mining and exploration will move overseas; that America 
will have to import its minerals because companies cannot afford to do 
business here any more.
    In recent months, overseas regulatory issues have arisen that 
indicate just how unlikely it is for the mining industry to move 
overseas soon. The beleaguered and corruption ridden Indonesian 
government cannot begin to finalize mining regulations, therefore 
Newmont has stopped exploring there because of ``the lack of a clear 
legal framework and mining investment policy. \27\ In South Africa, 
regulatory reform designed to ``redress a century of white dominance of 
the industry'' would ``give mineral resources to the state''.\28\ Along 
with Nevada, South Africa is one of the world's largest producers of 
gold. Newmont and the rest of the industry probably do not want their 
investment to be nationalized or stripped from them in countries that 
do not have constitutionally protected property rights as the U.S. 
does.
---------------------------------------------------------------------------
    \27\ Newmont says Indonesia too unstable for more exploration. Pay 
Dirt #741, March, 2001. At 31.
    \28\ SA rule could hurt mining. Pay Dirt #741, March, 2001. At 31.
---------------------------------------------------------------------------
    While investment and exploration, along with governmental revenues, 
will wax and wane, the number one factor will continue to be commodity 
prices. Neither maintenance fees nor regulations will have any effect 
on prices. In fact, if regulations actually do reduce production, which 
in our opinion is a dubious outcome, the supply decrease should 
increase prices. If gold ever returns to $400 or $600 an ounce, the 
massive increases in exploration and production in Nevada will 
eliminate all of the industry's concerns about fees and regulations.
                                 ______
                                 
    Chairman Gibbons. Now we turn to Mr. Putnam. Welcome, the 
floor is yours and we look forward to your testimony.

     STATEMENT OF BORDEN PUTNAM, PRINCIPAL, RS INVESTMENTS 
                           MANAGEMENT

    Mr. Putnam. Thank you very much. I will apologize in 
advance. I will depart from my written testimony as is my 
option, I believe. I have torn this up three times sitting here 
as I don't think you want to hear me recite things that we have 
heard here again and again.
    I will say that I don't know what more can be said. We have 
heard from many qualified people over many years from both 
sides of this discussion and we find ourselves here today to 
continue this debate. I'm regretfully glad to be here, I guess, 
but I have not brought detailed facts or figures.
    There are many well known and some much heralded cases that 
we have heard about and read about where seemingly unneeded 
regulatory delays and interferences to responsible mining 
procedures being conducted in a lawful manner are crippling our 
industry, me being a mining sympathizer, but I believe I can 
come to this hearing with a somewhat unique perspective having 
had a legitimate career in mining for 23 years before I went to 
the recent career in the financial industry.
    I used to work here in Nevada for Newmont, full disclosure, 
and for Amax before that, before they were taken over by 
whomever took them over.
    Currently I'm employed by a group of mutual funds who try 
to find investment opportunities in the natural resources 
sector. I am there to guide them through the geological risks 
as best I can, and over my 6 years tenure in the financial 
industry I have witnessed a steady corrosion to the viability 
and profitability of the U.S. Mining industry.
    In part, this is due to declining metals prices in real 
terms or inflation adjustment terms, and this has coincided 
with an increasing focus on regulatory permitting and 
environmental issues. This is a natural evolution as 
demographics of the U.S. shift with increasing population 
growth resulting in communities often impinging upon mining 
areas once removed from towns.
    However, there are now appearing to be so many restrictions 
and regulations which can be layered upon in a redundant 
manner, as we heard from the Women's Mining Coalition, upon a 
once healthy and now struggling industry we still expect to 
survive and thrive, and I don't think that is reasonable. I 
believe the proposed revisions to the 3809 regulations are not 
needed, and will unduly handicap an already struggling mining 
industry.
    This turns out to be a discussion that is full of emotions, 
but it is not an emotional issue. It is an issue of economics. 
Mining is quite honestly, and generally, a low return business. 
The net operating margins are typically in the low single 
digits, making investment and reinvestment decisions very 
tough. The risks are high that the investments may never 
generate a return.
    I'm going to ``free-wheel'' here for a second, because as I 
sit here, it occurs to me that we don't need to hear about 
mining anymore. What we need to hear about are analogues where 
investment has been discouraged, as has reinvestment, and where 
the lack of those investments has led to a shortfall in supply. 
Because, we are really talking about supply and demand here. If 
there wasn't a demand for minerals, we wouldn't be mining them. 
We are not doing it for fun. It is because it is a commodity 
that is needed for this country to be strong and self 
sufficient and to produce products that we all use and cherish.
    Let's talk about natural gas. I don't know how much natural 
gas you use in your homes in rural Nevada. I presume you have 
got pipelines, and that lately the cost of gas is an issue 
where it didn't used to be one. It is an issue now because we 
discouraged reinvestment in the past and that lack of 
reinvestment has caught up with us. We are no longer able to 
supply the gas that we have grown into a huge demand for, and 
even worse are forecasting the growing demand for as we use it 
as the fuel of choice in so-called clean burning electric 
generation facilities.
    Gas was regulated. When it became deregulated it set its 
own prices in a natural market; however, the returns were not 
high enough and investments not made and the gas didn't come. 
That is in spite of a natural phenomenon of gas wells, whereby 
they decline on an annual basis. Right now Gulf of Mexico well 
declines are approaching 40 percent annually.
    In the mining sense this is called depletion. As we mine a 
deposit, we deplete it. Mines don't last forever. I'm going to 
need a couple more minutes, thank you. The mines in this 
country are getting old and older, and as we discourage 
reinvestment in them or investment in new ones, we will no 
longer be able, or will be less able, to supply the minerals 
that we are consuming. We will face a growing problem.
    A very similar analogue is provided by electrical power 
which someone spoke about earlier today. The power industry in 
this country has long been regulated, is struggling through 
deregulation in fitful ways, as has been evidenced by the poor 
manner in which California approached it, but the bottom line 
is that in all instances, by regulating those industries, we 
have discouraged investment.
    We are now short of power. This is in spite of a growing 
population base and an economy that has growing energy demands 
on a per capita basis. We consume more goods and we consume 
more power on a per capita basis than most countries abroad, 
yet we don't see the benefits of encouraging investment in 
those things which we need and consume, which is fine, but just 
realize that at the end of the day it will cost us all more.
    It will come from elsewhere if we can get it, but we will 
pay for it and there will be collateral loss of jobs throughout 
other industries in the U.S. This is not a real hard concept to 
comprehend, so I wanted to distract you away from mining, 
because mining is the issue, but there are other analogues 
where we can learn from experience.
    Let me try to wrap this up in a timely manner. Let me see 
if I can get back into the flow of things here. Mining could be 
shuttered in America. We could do that, not intentionally, but 
by over indulgence of good intentions of environmental desires, 
to be even more restrictive of what is done and reducing the 
disturbance on public lands. That is a possibility that 
increases which each move, with each move to further restrict 
access, slow permitting or unnecessarily hinder development. 
But then we as a nation will pay more for raw materials as 
transportation costs grow as a proportion of total costs.
    Reliance upon foreign sources for raw materials is 
unnecessary and in the end will be costly to the economy as a 
whole and is risky, much more risky than environmentally 
responsible mining. Thank you.
    Chairman Gibbons. Mr. Putnam, thank you. That is a 
refreshing approach to the discussion that is before us today, 
and certainly to those of us who are not as well versed in the 
economics of the overall picture appreciate the remarks you 
made and certainly can say thank you for your analysis in 
helping us better understand that issue.
    [The prepared statement of Borden Putnam follows:]

 Statement of Borden R. Putnam III, Principal, RS Investment Management

    Please note that the opinions expressed here are mine alone, and do 
not necessarily reflect the views of RS Investment Management.
Issues presented for my comment:
        1) The effect of existing Federal fees, such as claim 
        maintenance fees, on exploration activity
    The annual claim maintenance fee is intended to encourage 
continuing work progress to advance the understanding of the economic 
potential of the mining claim--to determine if economic returns are 
achievable. This fee is intended to discourage idle claims on Federal 
lands, as idle claims could preclude beneficial advancement work by 
others.
    The claim maintenance fee impacts the exploration process in both 
positive and negative ways. In a positive sense, I believe the fees 
were designed to encourage work to progress on the lands under claim, 
such that lands found not prospective would be dropped to avoid the 
fee. In a negative sense, beyond the ten-claim exemption, the fee does 
nothing to advance the understanding of the economic potential of the 
claim, and becomes a prohibitive expense--an expense that actually 
could prohibit the orderly examination of mineral potential.
    The claim maintenance fee alone adds to excessive, non-work related 
costs that could result in the claims being dropped, and work stopped--
only to be restarted by another prospector without the benefit of the 
results of the former work. This scenario could lead to unneeded 
disturbance. Mineral exploration is a demanding and frustrating effort: 
Diligence and persistence is required, and results are slow coming. 
Conclusions are slower still. Geology is never straightforward, nor is 
it predictable, and results of work must be compiled into a growing 
understanding of the prospectiveness of the claims. This could result 
in a geologically complex claim(s) being successively re-worked but 
never being adequately understood.
    The claim maintenance fee can put a prohibitive cost on holding 
claims, a cost which might discourage adequate and beneficial work. 
Often, the work that is required to validate a prospect is too 
difficult and expensive for an individual to mount, requiring the 
involvement of a larger corporation. However, there has been a tendency 
over the past 5- to 10-years for fewer and fewer companies to be 
willing to fund grass-roots, or prospecting-type exploration work, 
relying instead on individual prospectors to locate mineral ground. If 
mere holding fees become a disproportionate prospecting expense, the 
much-needed ``grass roots'' prospecting won't be done. In many 
instances, this could kill the incipient stages of mining-related jobs. 
So too, might this decline negate the need for much of the staffing of 
the oversight agencies (e.g., BLM).
    One scenario that reveals this prohibitive expense is provided by 
the lengthy delay periods that can and do occur in the process of 
applying for and receiving permits for land disturbance work. During 
this period, holding costs can be prohibitive while the claimant awaits 
needed approval for work plans.
    Mining is historically a low-return business. The industry 
typically averages low single-digits for return on capital employed 
(ROCE), well below their cost of capital--therefore, any increased 
burden on the operators will denigrate already poor returns for the 
industry, driving investors away and slowly killing the industry in the 
U.S. This will drive operators overseas, resulting in loss of jobs and 
tax base for communities and state and Federal agencies.
    Miners have long faced declining metals prices, and increasing 
costs--for equipment, materials and permitting / legal and 
environmental reclamation issues. This crimps operating margins, 
reducing the economic return. This negatively impacts the perceived 
value of and need for exploration, which has seen drastic downturns in 
activity throughout the U.S. This, again, will lead to fewer jobs, and 
less basic industry in the U.S., leading to increased imports of raw 
materials for producing refined products.
        2) The potential effect that proposed mining fees, such as a 
        Federal royalty, would have on state revenues and mining 
        operations.
    The lack of a royalty on minerals mined from Federal lands is a 
controversial issue long thrown in the face of mining protagonists, as 
purported evidence of the irrationality of the 1872 Mining Law. The 
concept of a royalty may seem like a fair participation for the Federal 
or state government for mining done on public lands; however, a royalty 
can have a profound negative impact upon the internal rate of return 
from the series of cash flows a mining operation generates, as follows:
          a) LA top-line, or revenue royalty is impacted only by the 
        selling price of the commodity being recovered, and does not 
        reflect the profitability (or lack thereof) for the mining 
        project.
          b) LOperating costs, including payroll, payroll taxes, 
        equipment, energy and project financing costs, can and do vary 
        over time (they typically escalate), and impact the operator 
        only. The royalty holder is not impacted by either the fixed, 
        or the changing variable costs. Thus, the revenue royalty 
        holder has an unfair financial advantage over the operator, who 
        has taken on all the financial risk to develop the project, and 
        is completely burdened by all costs, and taxes.
          c) LA revenue royalty has the net affect of reducing the 
        value of the material recovered to the mining company. That is, 
        a 5% revenue royalty effectively reduces the revenue from the 
        material recovered to 95% of the in-ground value. This is the 
        same affect as a 5% drop in mined grade, or 5% drop in 
        metallurgical recovery. Thus, a royalty can reduce the life of 
        a mining project resulting in loss of jobs, and tax base for 
        the county, and state. A mining project with a revenue royalty 
        will have a lower rate-of-return which could result in the 
        project not receiving financing, and not being built.
          d) LTypically, the operating margin is quite modest, and not 
        sufficient to support the added burden of a royalty. Otherwise, 
        economically viable projects might not be built.
        3) The probable effects that the new 3809 regulations would 
        have on the environment, state revenues and mining operations.
    In my opinion, existing 43 CFR 3809 regulations promote 
environmentally responsible mining, and require sufficient and 
effective oversight by the BLM. Additional regulations will merely 
serve to add to the already extensive permitting process facing mine 
operators, and would likely dissuade some from pursuing mining in the 
U.S. This would obviously have strong negative affect on local 
communities and state economies that derive livelihood from mining. 
Environmentally, additional regulation is not needed--adequate checks-
and--balances presently exist, and do not need to be improved upon. At 
most, better implementation of existing regulations would seem to fill 
the perceived regulatory gap, which could be aided by additional 
resources at oversight agencies.
        4) The millsite opinion (Leshy, 1997) and its effect on the 
        mining industry.
    The millsite opinion issued during 1997 by Department of Interior 
Solicitor John Leshy is a very odd, in that it assumes a one-to-one 
relationship exists between mining-area disturbance and that area 
needed for facilities and mining spoil piles. However, there can be no 
assurance that such a relationship might exist. The reasons for this 
are many, only a few of which will be commented upon, as follows:
     LFirst, by volume, the recovered minerals constitute a 
very small percentage, of the earth mined. Thus, the processing and 
impoundment areas are necessarily outsized relative to the hardrock 
mining footprint. This makes the tying together of the two claim-types 
ill advised.
     LSecond, the two claim types are of notably different 
shapes, and areas, with the hardrock mining claim being elongate for 
location over a lode, or vein-type deposit. A mill site claim is 
typically equilateral (square), intended for location on the valley 
floor adjacent to the lode(s). Mill sites are intended to host mining-
related equipment, facilities and materials contained within 
environmentally secured areas. Attempting to tie the two differing 
areas to each other, is not logical.
     LThird, the need to contain mining-related facilities and 
spoils piles, while obvious, may in certain conditions or irregular 
terrain, necessitate land of differing area even for like-operations in 
more level settings. This variability could certainly hold for 
operations of different age, due in-part to changed operating 
parameters or even improved environmental requirements. This could not 
have been anticipated for, and obviates the call for a one-to-one 
relationship existing between the two claim types.
    Further, the logic may follow, that if an operator were needing 
additional millsite acreage to comply with, for instance, discharge 
permit requirements, but the need would cause the operator to exceed 
the ``Leshy 1997 millsite opinion'' that operator might be inclined 
(perhaps even mandated) to locate additional lode claims merely to 
maintain the proposed ``one-for-one'' stipulation. Clearly, this is not 
the intent, and could tie-up locatable minerals that might be 
prospected by other parties.
    Operators plan their facilities for long-term operation, to allow 
environmental security, and operational flexibility. The operator must 
anticipate the ultimate need, and prepare the necessary ground for the 
long-term use by the operation. Tying the millsites acreage to equal 
that of the lode claims could limit the flexibility of the operator, 
and might introduce unnecessary environmental risk, buy confining 
facilities into inadequate areas.
Concluding remarks
    The continued attacks upon the mining law of 1872, and corrosion to 
the already weakened economics of mining in America, will continue the 
already established trend of pushing the industry overseas. The push of 
mining offshore is inevitable until such a time as we view mining as a 
necessary industry, in the strategic interest of the U.S. An industry 
that provides needed raw materials for a healthy and independent 
democracy, and as well provides much needed job diversity in an economy 
trending evermore toward providing only ``service'' industry. Mining is 
being, and can continue to be done in an environmentally responsible 
manner. We must look for ways to help, not hinder the industry. 
Investors are already few in number, and without a promising outlook 
for a healthy, viable industry, the mining industry will not be able to 
compete for, or attract capital.
                                 ______
                                 
    Chairman Gibbons. I turn now to Dr. Price for your 
comments. Welcome, and the floor is yours.

  STATEMENT OF DR. JONATHAN PRICE, DIRECTOR/STATE GEOLOGIST, 
               NEVADA BUREAU OF MINES AND GEOLOGY

    Mr. Price. Thank you. My name is Jon Price. I'm the Nevada 
State Geologist and Director of the Nevada Bureau of Mines and 
Geology. I thank you, Congressman Gibbons, for this opportunity 
to testify.
    My written testimony includes a number of facts and figures 
that led to some of my opinions with regard to the regulatory 
burdens that have been disincentives for exploration in the 
U.S., but I would like to use the oral testimony opportunity to 
focus on the National Academy of Sciences report.
    I served as a member of the National Research Council 
Committee on Hardrock Mining on Federal Lands. Please recognize 
that I'm testifying today not on behalf of the National 
Research Council, but in my capacity as the Nevada State 
Geologist.
    Congress requested that the National Resource Council 
assess the adequacy of the regulatory framework for hardrock 
mining on Federal lands. The overarching conclusion of the 
Committee was that the existing regulations are generally well 
coordinated, although some changes are necessary.
    The overall structure of the Federal and State laws and 
regulations that provide mining-related environmental 
protection is complicated, but generally effective. The 
structure reflects regulatory responses to geographical 
differences in mineral distribution among the states as well as 
the diversity of site-specific environmental conditions. 
Improvements in the implementation of existing regulations 
present the greatest opportunity for improving environmental 
protection and the efficiency of the regulatory process.
    In other words, the system that was in place prior to the 
changes in January are generally working well to protect the 
environment and to allow for development of mineral resources. 
In my opinion the only regulatory changes that are necessary 
beyond what was in effect on January 19th of this year are 
those that are identified in the NRC report.
    Chapter 4 of the NRC report contains the significant 
conclusions and recommendations, and for clarity those key 
recommendations were shortened to one sentence in bold face 
text; these are also in the executive summary. And accompanying 
each of those recommendations in that Chapter 4 are 
explanations of why the Committee felt the recommendation was 
justified, a discussion about the implications of the 
recommendation, and further statements on how the 
recommendation should be implemented. In my opinion, the full 
recommendations are this entire chapter, not just the bold face 
text.
    In its final EIS, BLM offered five alternatives. The fifth 
one was to make changes as recommended in the NRC report; 
however, I have not looked at that fifth alternative in great 
detail and I therefore favor BLM's going back to the status quo 
that existed on January 19th and carefully crafting rules that 
recognize the overarching conclusion of the NRC report.
    Our office here at the Nevada Bureau of Mines and Geology 
has noticed some significant downturn in exploration in the 
last couple of years and we believe that much of that is due in 
part to decreased gold prices, but also in part to some of the 
disincentives that are in the regulatory system.
    I would like to now focus a little bit on some of the 
recommendations in the NRC report that were not specifically 
related to BLM's 3809 regs. I wanted in particular to identify 
the Forest Service regulations that said they should allow 
exploration disturbing less than five acres to be approved or 
denied expeditiously similar to those used by BLM.
    Currently we are seeing that the exploration companies are 
able to get in on BLM land commonly in a period of a few weeks, 
whereas on Forest Service land the typical time frame is in a 
range of 8 months to maybe as much as 2 years.
    There are a number of other regulations that we addressed 
in that report and I will draw those to your attention in the 
written testimony. One of them had to do with the Good 
Samaritan Rules and a need for Congress to take another look at 
the Clean Water Act and CERCLA in terms of company liabilities 
with regard to abandoned mine lands, recommendations with 
regard to the appropriate role of the Federal Government in 
terms of mining related environmental research, and several 
other recommendations that again are referred to in the written 
testimony. I will be more than happy to answer questions again. 
Thank you.
    Chairman Gibbons. Well, I can tell you, Dr. Price, that 
between Dr. Myers and yourself you both have demonstrated a 
high degree of timeliness,both of you, in finishing your 
testimony. You were right on the bell, so perhaps it is due to 
the fact that you both have Ph.D.'s and can beat the clock.
    [The prepared statement of Jonathan Price follows:]

Statement of Jonathan G. Price, Director/State Geologist, Nevada Bureau 
                          of Mines and Geology

    My name is Jonathan Price. I am the Nevada State Geologist and 
Director of the Nevada Bureau of Mines and Geology, which is the state 
geological survey and a research and public service unit of the 
University and Community College System of Nevada. Thank you for this 
opportunity to testify on the effect of Federal mining fees and mining 
policy changes on state and local revenues and the mining industry.
    Mining on Federal lands is critical to the Nation and to the State 
of Nevada. The economic impacts of mining in Nevada are significant. 
Gold production in Nevada boosts the overall earth-resource industry in 
our state to nearly $3 billion worth of product per year. We are in the 
midst of the largest gold boom in U.S. history, and, thanks in part to 
mining on Federal lands, the United States is a net exporter of gold, 
one of few mineral and energy resources for which we are not a net 
importer.
    Nevada leads the nation in the production of gold, silver, barite, 
lithium, mercury, and the specialty clays, sepiolite and saponite. 
Other major commodities produced in Nevada include construction 
aggregate (sand, gravel, and crushed stone), geothermal energy, lime, 
diatomite, gypsum, cement, silica (industrial sand), and magnesia. 
Local economies also benefit from mining. Construction of new homes, 
casinos, other businesses, schools, and roads continues the strong 
demand for local sources of sand, gravel, crushed stone, gypsum, and 
cement, all of which are abundant in Nevada. According to figures 
compiled by the Nevada Department of Employment, Training, and 
Rehabilitation, the mining industry directly employs approximately 
11,000 people, and the industry is responsible for another 36,000 jobs 
related to providing the goods and services needed by the industry and 
its employees.
    I served as a member of the National Academy of Sciences - National 
Research Council (NRC) Committee on Hardrock Mining on Federal Lands, 
which wrote the 1999 report with the same title. Congress requested 
that the NRC assess the adequacy of the regulatory framework for 
hardrock mining on Federal lands. The specific charges to the Committee 
were to identify Federal and state statutes and regulations applicable 
to environmental protection of Federal lands in connection with mining 
activities; consider the adequacy of Federal and state environmental, 
reclamation and permitting statutes and regulations to prevent 
unnecessary or undue degradation; and draw conclusions and make 
recommendations regarding how Federal and state environmental, 
reclamation and permitting requirements and programs can be coordinated 
to ensure environmental protection, increase efficiency, avoid 
duplication and delay, and identify the most cost-effective manner for 
implementation.
    The overarching conclusion of the NRC Committee was that ``Existing 
regulations are generally well coordinated, although some changes are 
necessary. The overall structure of the Federal and state laws and 
regulations that provide mining-related environmental protection is 
complicated, but generally effective. The structure reflects regulatory 
responses to geographical differences in mineral distribution among the 
states, as well as the diversity of site-specific environmental 
conditions. . . Improvements in the implementation of existing 
regulations present the greatest opportunity for improving 
environmental protection and the efficiency of the regulatory 
process.''
    In other words, the regulatory system that was in place through 
January 19, 2001, prior to the new rules that were published on 
November 21, 2000, generally works well to protect the environment and 
allow for development of mineral resources. In my opinion, the only 
regulatory changes that are necessary, beyond what was in effect on 
January 19, 2001, are those identified in the NRC report.
    Chapter 4 of the NRC report on Hardrock Mining on Federal Lands 
contains several significant conclusions and recommendations. For 
clarity, the key recommendations were shortened to generally one 
sentence of bold-faced text. Accompanying each recommendation are 
explanations of why the NRC Committee felt the recommendation was 
justified, a discussion about the implications of the recommendation, 
and further statements on how recommendations should be implemented. In 
my opinion, the full recommendations are this entire chapter, not just 
the bold-faced text.
    In its final environmental impact statement (EIS) on Surface 
Management Regulations for Locatable Mineral Operations (43 CFR 3809), 
dated October 2000, the Bureau of Land Management offered five 
alternatives. The fifth alternative was to make changes as recommended 
in the NRC report. However, this was not the preferred alternative of 
the previous administration when it published its final rules on 
November 21, 2000. I believe that BLM should follow the full 
recommendations in the NRC report. Although I favor BLM's going forward 
with implementing those changes that were recommended by the NRC, I 
have not fully analyzed the fifth alternative in the EIS to make sure 
that it is fully consistent with the NRC report. I therefore favor 
BLM's going back to the status quo as it existed on January 19, 2001 
and carefully crafting new rules that recognize the overarching 
conclusion of the NRC report: ``Existing regulations are generally well 
coordinated, although some changes are necessary.''
    BLM estimated in the EIS that, with their course of action, there 
would be substantial losses of mine production and related jobs, and 
that 70% of the losses would be in Nevada.
    Our office has noticed a significant downturn in exploration 
activity in Nevada, as measured in the last two years by 20 to 40 
percent decreases in sales of topographic base maps, geologic maps, and 
reports used by exploration geologists. Although some of this can be 
attributed to relatively low prices for gold and other metals, results 
of a survey (conducted by the Nevada Division of Minerals and published 
in September 2000) of companies exploring in Nevada suggest that the 
regulatory environment (including such issues as permitting times, 
uncertainties about Mining Law reform, Federal claim-maintenance fees, 
and land withdrawals) has become a significant disincentive for 
exploration.
    Another measure of exploration activity is the number of active 
claims held on Federal lands. According to the Bureau of Land 
Management, the number declined from 1999 to 2000 by approximately 8 
percent, to 105,555. This number is substantially lower than the 
figures of about 400,000 active claims each year during the period from 
1989 to 1992, after which a new claim-holding fee was imposed by the 
Federal Government. The numbers dropped to below 150,000 active claims 
in each year since 1992.
    The decrease in exploration activity is particularly troublesome, 
because the deposits found today will become the mines of the future, 
and because the expertise needed to find these deposits is leaving the 
United States. Quoting from the 2001 NRC report on Evolutionary and 
Revolutionary Technologies for Mining, ``The United States is both a 
major consumer and a major producer of mineral commodities, and the 
U.S. economy could not function without minerals and the products made 
from them. In states and regions where mining is concentrated, this 
industry plays an important role in the local economy.'' I believe that 
is important that the U.S. maintain an environmentally responsible 
mining industry and train professionals to find and mine the mineral 
deposits that we will need in the future.
    The NRC report on Hardrock Mining on Federal Lands made several 
recommendations that were not directly relevant to BLM's ``3809'' rules 
governing mining operations on public lands, but which can help 
encourage environmentally responsible mineral-resource development. I 
would like to highlight a few of those by quoting from the report.
    ``Recommendation 3: Forest Service regulations should allow 
exploration disturbing less than five acres to be approved or denied 
expeditiously, similar to notice-level exploration activities on BLM 
lands.
        Under the current system for notice-level exploration 
        activities affecting five acres of land or less, BLM has 15 
        days to respond and notify the operator if extraordinary 
        measures are needed for the planned activities. In contrast, 
        Forest Service officials reported that essentially identical 
        exploration activities on Forest Service lands often require 
        eight months lead time and sometimes as long as two years to 
        obtain approval, although some approvals for exploration are 
        obtained more quickly.''
    ``Recommendation 7: Existing environmental laws and regulations 
should be modified to allow and promote the cleanup of abandoned mine 
sites in or adjacent to new mine areas without causing mine operators 
to incur additional environmental liabilities.
        To promote voluntary cleanup programs at abandoned mine sites, 
        Congress needs to approve changes to the Clean Water Act and 
        the Comprehensive Environmental Response, Compensation, and 
        Liability Act to minimize company liabilities.''
    ``Recommendation 8: Congress should fund an aggressive and 
coordinated research program related to environmental impacts of 
hardrock mining.''
        The 1999 NRC report contains suggestions for implementing this 
        recommendation and an appendix on research needs. In addition, 
        a new NRC report, published in 2001 and titled Evolutionary and 
        Revolutionary Technologies for Mining, further addresses 
        research needs in mining, including environmental issues.
    ``Recommendation 10: From the earliest stages of the National 
Environmental Policy Act (NEPA) process, all agencies with jurisdiction 
over mining operations or affected resources should be required to 
cooperate effectively in the scoping, preparation, and review of 
environmental impact assessments for new mines. Tribes and 
nongovernmental organizations should be encouraged to participate and 
should participate from the earliest stages.
        The lack of early, consistent cooperation and participation by 
        all the Federal, state, and local agencies involved in the NEPA 
        process results in excessive costs, delays, and inefficiencies 
        in the permitting of mining on Federal lands.''
    ``Recommendation 13: BLM and the Forest Service should identify, 
regularly update, and make available to the public, information 
identifying those parts of Federal lands that will require special 
consideration in land-use decisions because of natural and cultural 
resources or special environmental sensitivities.
        BLM and Forest Service should identify natural or cultural 
        resources or environmental sensitivities on Federal lands that 
        require special consideration in land use planning, including 
        that related to hardrock mining. The agencies should use their 
        land use planning processes to (1) identify these lands that 
        should be withdrawn from hardrock mining or may require special 
        considerations in permitting, (2) give specific consideration 
        to hardrock mining as a potential land use, and (3) establish 
        guidelines for reclamation and mitigation that apply to mining. 
        This can be accomplished through the land use plans for Federal 
        lands required by the Federal Land Policy and Management Act 
        and the National Forest Management Act.''
    ``Recommendation 16: BLM and the Forest Service should plan for and 
implement a more timely permitting process, while still protecting the 
environment.
        The permitting process is cumbersome, complex, and 
        unpredictable because it requires cooperation among many 
        stakeholders and compliance with dozens of regulations for a 
        single mine. As a result, there is a tendency for the process 
        to drag on for years, even a decade or more.''
    Some of these recommendations will require congressional action, 
and some will require changes in Federal regulations. I would be happy 
to attempt to answer any questions you may have about the NRC report or 
my personal opinions concerning mining policies. Thank you.
                                 ______
                                 
    Chairman Gibbons. I want to thank all of you for being here 
again, too, and certainly appreciate the time you have all 
taken to be here for this hearing.
    Let me ask Mr. Gaskin a question. As I listened to your 
testimony and in talking about the State of Nevada and its 
Interim Fluid Management Trust Fund, can you tell us, and I'm 
sure you heard Dr. Myers' testimony about his concerns for 
reinjection and drainage problems, tell us a little more if you 
could or elaborate for us how that came to be under the 3809 
regulations and what has been the impact of that trust fund.
    Mr. Gaskin. Well, in the past number of years we have 
experienced an increase in bankruptcies and other financial 
problems in mining, operations in the state resulting in some 
site abandonments, often quite sudden, and at a lot of these 
mines there are fluid management issues. They have process 
solutions that are constantly being recirculated in the 
facility, and if the pumps are just turned off and the people 
walk away, the ponds will overflow and release often cyanide 
solution to the environment. It is a possibility that concerned 
us very much, so we have been taking a great number of steps to 
prevent that from happening and we have prevented that from 
happening in the state to this point.
    One of the problems we saw was that when there is a 
bankruptcy, we have to act quickly to recover the bond for that 
site so we can have funds available to go out and manage those 
fluid systems on a site quickly, and that is difficult to do 
with a lot of the bonding mechanisms that are currently in 
place. So what we wanted to establish was a liquid fund of 
financial resources to be able to send people out immediately 
as needed, and so we work closely with the industry to come up 
with a strategy whereby mining fees would be collected and 
placed into a trust fund under the State's control that would 
allow us to arrange for a contract. We have a specific 
contractor selected who is ready on a moment's notice to go out 
to any site that may require urgent fluid management.
    Chairman Gibbons. So this is a concept and a program which 
was developed at the State level in coordination with the 
private industries. Is it funded completely by private industry 
fees that are made to it or are general taxpayer monies 
contributed?
    Mr. Gaskin. We revised our regulations to require fees from 
industry, it is totally funded by industry fees.
    Chairman Gibbons. And it has been an effective program to 
this date?
    Mr. Gaskin. We haven't had to use it up to this point and 
we hope to never use it, but it is there in case we do need it.
    Chairman Gibbons. Dr. Myers, let me first thank you again, 
too, for being here today, and I do agree with you about the 
studies, the USGS studies and the funding in the budget for 
studying toxic minerals, et cetera, and I will work to assure 
that funding remains in the USGS budget for that provision, so 
I just wanted to thank you for your attention to that issue as 
well.
    And let me ask just basically a question that perhaps you 
can help us, because you obviously take a very personal 
interest in what is going on in the mining industry throughout 
the State of Nevada and possibly in the California boundary 
areas as well since the Great Basin covers more than just the 
State of Nevada. In your review tell me and tell us which mines 
are doing a good job that you can be proud of today?
    Mr. Myers. Boy, let's put me on the spot here. There are, 
there is good reclamation at some facilities. Gold Quarry has 
some decent reclamation, although I have some problems with 
their dewatering, for example. There are good and bad things, 
things that I will like and things that I will dislike at many 
of the facilities.
    Marigold, Mr. Jeannes was sitting here awhile ago, they had 
some good reclamation on I think it was tailings impoundment, 
but they also have a leak, so we have a little problem with 
that.
    Let's see, there is good reclamation I think, I think there 
is a pretty good reclamation ongoing at Little Bald and the 
Bald Mountain Mine, Placer Dome's facility. I just received a 
closure plan for it yesterday and I want to reserve judgment on 
what I think about the closure plans, what they are doing with 
the heaps, something you just asked Dave Gaskin about a minute 
ago. I want to reserve judgment on that.
    I think the Meikle Mine of Barrick Gold Mines is one of the 
best run mines in the state, although in general an underground 
mine. The environmental community, one of the attacks of the 
environmental community in the future will be to encourage more 
underground facilities and fewer above ground because there is 
less disturbance, there is less dewatering required, there is 
less pit lake created, so those would be the ones that come to 
mind.
    Chairman Gibbons. Let me ask maybe even a broader 
philosophical question you might be able to help us with. As we 
look at the process, the political process of identifying lands 
and which lands should or should not be available for mining, 
how do we, how can we avoid closing lands that contain valuable 
mineral deposits to mineral development? How can we avoid that?
    Mr. Myers. I know, you know the miners will say, friends of 
mine who are miners will say gold is where you find it, but you 
have to be able to mine where you find it. There are other 
places, there are places where you find gold that the 
environmental community would say this is too nice, the values 
of the wilderness, open space, biodiversity exceed the value of 
the mineral that you would withdraw.
    For example, if you found a major gold deposit under the 
peak at Arc Dome in the Toiyabe wilderness, there is little 
question to most people that we should probably forego that. It 
becomes more difficult. One of the mines that I said I would 
probably have opposed and I mentioned before on Forest Service 
land was Jerritt Canyon and that is not because of anything 
they are doing specifically, but because it was such pristine 
wilderness and that is a place where had I been around in '82 I 
think when it was permitted, that, I mean the broader, in 
answer to your broader question it is really hard in setting a 
standard as to where that would be.
    And I think we do need to have, we are looking at it 
through wilderness processes and monument designations and 
things like that and it is hard to set a broad standard and I 
don't think I'm giving you a very good answer to the broad 
philosophical question, but I'm trying.
    Chairman Gibbons. Well, let me turn in the time we have 
here to some of the other panelists on the questions we have 
here today. Maybe Mr. Putnam can help us understand the 
political environments and the effect of political 
environments, the stable political environments, what would 
that have on the prediction or the decision making process to 
an investor?
    Mr. Putnam. The answer I think would be twofold. First is 
ownership rights, which is not what this panel is about to a 
large degree, so I won't speak to that, but I will speak to 
what is called the risk premium, and that being as I evaluate 
or as any investor would evaluate and the company would 
evaluate the series of cash flows that are forecast from that 
operation, to understand the value of those in present day 
dollars you apply a discount rate. The Federal Reserve just 
reduced the discount rate to 4 percent. The Fed's funds rate is 
presently four and a half percent.
    The risk-free premium is sort of treasury bills, excuse me, 
treasuries. What I would do in evaluating an investment 
opportunity in a foreign country is try to judge first of all 
what is the risk free rate in that country, which is generally 
larger than 5 percent or higher than 5 percent, and then to 
that we would add a risk premium. And that means our 
expectation is that for us to put our capital at risk, or our 
shareholders' capital at risk, in a foreign investment, we want 
to guarantee a rate of return that exceeds what we think is the 
risk free rate of that country, with a premium attached to it 
to justify the exposure of that capital.
    Chairman Gibbons. So what you are saying--.
    Mr. Putnam. I hope that is clear.
    Chairman Gibbons. Yes. What you are saying is that before 
many of these mining companies, which do not usually dip into 
their own pockets because they don't have the resources, the 
financial capability to invest, they come to a financial market 
like yourself and ask for funding of some type to help them 
with this investment. You make those decisions and those 
predictions before you lend them the money with regard to any 
investment they may make or development they may use of those 
capital funds they have gotten from the financial industry and 
the financial markets.
    What then would be your considerations as a financial 
analyst on say the effects of royalty when you compare it to a 
commodity-based product, the effects of royalty on a mining 
operation, and how can a mining operator adjust for royalty in 
his, either his profit predictions, et cetera, when that is 
there?
    Mr. Putnam. There is sort of two themes there, maybe three 
questions.
    Chairman Gibbons. And all very unclear, I'm sure, but you 
will sort them out.
    Mr. Putnam. On the first one, let me address you. When a 
company would come to us and ask us if we would help them 
finance an operation in a foreign country or anywhere, we would 
discuss with them what their cost of capital is, which first 
you look at the balance sheet on their debt component, that is 
a pretty easy number to determine because it is the interest 
coupons on their debt instruments, but then we add to that an 
equity component which is what we expect to make on a similar 
investment.
    It is an opportunity cost if you studied finance. If I take 
a dollar and put it in this operation, I'm taking that dollar 
away from another opportunity and it is that opportunity that 
we are judging against this, so that opportunity, or cost 
decision, is where we really hammer them, and we want to make 
sure their ability to return or exceed their cost of capital as 
they judge it is something that will exceed the opportunity 
cost that we are passing up to make that investment. Sometimes 
that is a high number-like 15 percent, after tax.
    Your second question about royalties, I touched on 
royalties in my written testimony. Royalties are a very 
interesting thing and they can often be thrown out as a 
solution to help the Federal Government or the public 
participate in the benefits of the mining operation. However, 
royalties are a double-edged sword.
    While they do allow participation in the revenue line, and 
you do need to understand an income statement and be aware they 
impact the operating income and the cash flow. The royalty as 
is being discussed, is called a revenue royalty. It is right 
off the top line, so it has a linear relationship to the value 
of the minerals.
    If it is say a 5-percent royalty, it means the value of the 
minerals being extracted are now only 95 percent what they 
originally were to the operator, so he needs to adjust his 
model for only recapturing 95 percent of what is called the in 
situ value.
    The problem with that is, and as I think Dr. Myers touched 
upon here, there is a difference between underground mines and 
open pit mines and that is not a decision made by engineers, 
necessarily. It is a decision that comes out of the style of 
the ore deposit.
    To understand an ore deposit, an ore reserve is like a 
cloud, and clouds are sort of lumpy and diffuse all at the same 
time. As you apply a royalty to that cloud you are putting a 
higher requirement for return on that decision.
    What happens, is the grade or, if you will, the density of 
the cloud needs to be more, so the diffuse parts of the cloud 
start to disappear from being economically extracted. The other 
part of the sword, the other edge, is that mines may not get 
built at all because the royalty may take away that very small 
profit margin that exists in the first place.
    When a royalty is imposed over a deposit that could bear 
it, and I'm not sure many can, much of the deposit may fall 
away and not be economic at current or reasonably forecast 
commodity process. So, a royalty is a very dangerous thing. And 
it is sort of unfair, because the royalty holder does not have 
any capital at risk, and yet they have full participation at 
the revenue line, but share no risks for costs, no risk for 
taxes, etc.
    Chairman Gibbons. Let me ask a question that was drafted 
here by some of the staff that wants to take advantage of your 
expertise and wisdom and perhaps you can help us with this, and 
I will read this. It says that former Interior Secretary 
Babbitt valued some undeveloped land in Arizona that he 
patented to Asarco, one of the World's largest mining companies 
at the time, at three billion dollars. That is the value he 
placed on the land. Yet the stock market valued the entire 
company at $750 million.
    And Senator Dale Bumpers valued the undeveloped land in 
Montana patented to Stillwater Mining Company at $38 billion 
and at the time Wall Street valued that company at about $850 
million. In fact, I think at the time Wall Street probably 
valued the entire hardrock mining industry in North America at 
something less than 38 billion dollars.
    I guess my question would be what is Wall Street missing 
that Senator Bumpers and Secretary Babbitt see, and maybe I 
should have asked is Secretary Babbitt another Warren Buffet?
    Mr. Putnam. That is an interesting conclusion to the 
question. I don't mean to be flip, but I think that Warren 
Buffet would pay attention to the balance sheet and to the debt 
obligations and to the expenses required to bring those 
resources to development.
    I can't speak to where those numbers came from. Clearly 
there is no development costs or interest expense against the 
debt you would raise, or other, existing debts from other 
mining enterprises which I would deduct from the valuation that 
I'm willing to pay for them or, if you will, I add it to what 
is called an enterprise value, and subtract the cash on the 
balance sheet.
    I can only presume that he used some forward price that 
assumes a very optimistic, ever-escalating on a compounding 
basis price for the commodity to be extracted. We don't work 
that way. I work on a flat, nonescalating price deck as it is 
called; however, I escalate costs according to what my view of 
inflation is.
    Inflation doesn't go away. Commodity prices seem to 
decline, so we are always fighting an ever narrowing margin. 
But I would say that Warren Buffet looking at those things 
first of all, he probably doesn't own mining shares, I don't 
believe he owns that silver either, as I think he sold that, 
but I also think he would understand the costs that would be 
required and the debt that would be burdened on the company to 
bring those resources to development for the good of the 
taxpayers.
    Chairman Gibbons. We will turn to Dr. Price who has been 
very patient in listening to all of this and I appreciate the 
time that you have dedicated to this. You talked about finding, 
the findings of the Hardrock Mining on Federal Lands report 
that you were part of.
    Tell me or let me hear from you what some of the findings 
on the adequacy of the environmental protections were by that 
Committee, by that report on the then existing regulations. Did 
they find that the, to summarize what I'm trying to say, did 
they find the regulations need to vastly change the dimensions 
in order to protect the environment?
    Mr. Price. Not at all. As a matter of fact, the charge from 
Congress was specifically to look at the existing framework. We 
didn't actually look at the proposed 3809 regs in any great 
detail. We just looked at the way things were at the time and 
that overarching conclusion was that things are working pretty 
well. We did identify a few areas where some changes seemed 
appropriate, but overall the environment is being protected.
    Chairman Gibbons. By the then existing 3809 regulations?
    Mr. Price. Correct.
    Chairman Gibbons. That was prior to the new changes made in 
the last Administration as of what, January 20th?
    Mr. Price. Correct.
    Chairman Gibbons. Of this year. You talked about mine 
reclamation, the Good Samaritan issue. Explain for us what that 
is about and why that is imperative that we address the Good 
Samaritan issue.
    Mr. Price. Essentially many mines are being put into 
operation in old mining districts and there is an opportunity 
for a company that comes in to an old district to clean up some 
of the problems of the past. However, if that particular 
property is on somebody else's abandoned area, for example, if 
it is on a BLM section that is not part of the control of the 
mining operation, but the mining company would like to come in 
and be a Good Samaritan and clean it up, the current 
regulations would make that company liable if they stepped in 
and tried to clean up that particular area, so all future 
environmental problems that may occur on that land would then 
be the liability of that company.
    That is part of the way CERCLA, Superfund Legislation, 
works and that is an issue that doesn't have anything to do 
with the 3809 regs, but would require you folks to go back into 
Super Fund Legislation and allow for this Good Samaritan 
activity to take place.
    Chairman Gibbons. Well, I do believe and I'm sure many 
Nevadans believe that as we look at the abandoned mines that 
are around this state and other states as well that we have to 
pay attention to what has happened with these mines and make 
sure that we address the problems that were created in some of 
those instances as we talked about earlier. The World War II 
effort which had different technology and different viewpoints 
about what we know today during the then existing operations. 
Addressing the abandoned mine issues I think is a very critical 
part of the future of mining, not just for what we have going 
today, but I think down the road.
    The abandoned mine process then according to your 
recommendations and the Good Samaritan provision would permit 
companies to use their private resources to go in and address 
these environmental problems that were existing prior to their 
arrival on the scene, and without accumulating the liability 
for the prior existing environmental problems, which therefore 
is the Good Samaritan issue that you are talking about there.
    What were the recommendations from the National Academy of 
Sciences about, well, let me just go back before I, strike 
that, and ask the question about what were the National Academy 
of Sciences criteria for selecting a panel for this Committee?
    Mr. Price. The NRC goes through a fairly rigorous process 
of trying to get experts who understand the issues. They try to 
get representation from the elite body of the National Academy 
of Sciences and National Academy of Engineering, experts that 
don't necessarily know the particular subject but are generally 
smart people, and they also try to get a good balance of 
opinion, so that there is a balance of the bias.
    They try not to have any conflict of interest within the 
Committees, but they do allow for a balance of bias, so this 
particular Committee was viewed, I think in the end, as having 
a good balance across the board in having people that had clear 
linkages and viewpoints in favor of the mining industry as well 
as some people that had clear views opposing some of the mining 
activities.
    The process allows for coming to a consensus, so in many 
cases individuals may want to push a recommendation in one 
direction, where other individuals were pushed in another 
direction, but every attempt is made to come to the consensus 
of opinions and that usually boils down to a little bit more 
emphasis on fact and scientific process rather than opinion.
    Chairman Gibbons. Congress required you to provide this 
report from the National Research Council, this book here that 
you have referenced, Hardrock Mining on Federal Lands, as a 
study of what was needed to modify and change the 3809 
regulations.
    Is it your opinion that the Bureau of Land Management or 
the Department of Interior, excuse me, the Department of 
Interior took the suggestions from this book as the basis or 
the guidelines for which they made their 3809 changes?
    Mr. Price. I will speak in my own personal opinion here, 
no, it is not. I believe the recommendations that they came up 
with are not nearly as consistent with the NRC report as they 
could have been.
    Chairman Gibbons. That is strange, because as I recall what 
Secretary Babbitt at that time said, that within 24 hours after 
receiving this report the study ratifies everything, and I 
quote, ratifies everything I have seen and have been trying to 
do for the last 6 years, which makes it questionable why if it 
ratified everything that he had proposed and attempted to do 
why he didn't follow it with regard to the recommended changes 
in the 3809 regulations.
    Gentlemen, I see that we have kept you here the requisite 
amount of time and I want to thank you as well for your 
participation and turn you loose and thank you again for 
everything.
    And I will call up our Panel IV for this afternoon, Mr. 
Lyle Taylor, President and CEO of Geotemps; Mr. Frank Lewis of 
F.W. Lewis, Incorporated, and please excuse me if I 
mispronounce your name, Bill, Mr. Bill Kohlmoos, President of 
Barium Products and Mining Company.
    Chairman Gibbons. Gentlemen, welcome. While you are getting 
comfortable I will remind you we are trying to keep it in time 
limits we have available and remaining. If you wish, your full 
and written statement will be entered into the record. You may 
summarize in a verbal presentation. With that I will turn to 
Mr. Lyle Taylor. Good afternoon and welcome. The floor is 
yours. We look forward to your testimony.

 STATEMENT OF THOMAS LYLE TAYLOR, PRESIDENT AND CEO, GEOTEMPS, 
                              INC.

    Mr. Taylor. Good afternoon, Congressman. Thank you very 
much for wanting us to appear and talk to you. Before I start, 
my oral statement is in fact a summary of what I gave to you as 
a statement, and I would like to preface it just by saying it 
is more on the side of an emotional summarization of the heart 
of what is going on.
    Just before I came in here today, I ran into one of my 
former employees who is now working at the County, Washoe 
County. He had been working in the mining industry for quite a 
number of years, a graduate geologist and finally came into me 
and said I'm not going to put up with the layoffs anymore, get 
me out of the industry, whereupon we got him a job with the 
County. He asked me--
    Chairman Gibbons. It may not be a good choice knowing what 
we know about the revenues coming into counties today.
    Mr. Taylor. He asked me what I was doing here and I 
explained to him that I was coming to testify at the hearing 
and his comments were, Lyle, give them hell. So if you will 
excuse me, I will try and do that.
    My brief statement to this hearing reflects my perspective 
as an employer of thousands of westerners in the mining 
industry over a 30 some odd year career, especially in the last 
16 years as President of Geotemps, Incorporated, a Nevada 
corporation.
    I have become personally associated with my employees and 
their families over these years and I have become increasingly 
saddened by the unrelenting pressure from the Government to 
eliminate U.S. mining as a viable way of earning a living. In 
Nevada we used to have three, four and often five generations 
of mining families, grandfathers, fathers, wives, cousins, 
daughters, sons, granddaughters working around the west, the 
northwest, the southwest for prospering companies, silver 
companies, gold, lead, mercury, aggregates, molybdenum, you get 
the picture.
    The pressure on Government comes from the most (it seems to 
me) politically correct, a group of people who seem to hate 
business and appear to despise capitalism who have made a 
religion out of ``Environmental Activism.''
    Ladies and gentlemen, the good miners who I have worked 
with who have worked in, on, around, under the earth coaxing 
from the soil our planet's vital materials are true 
environmentalists. They are the conservationists of the natural 
resources of the world. No, they won't preserve the world in 
the state you see it now. They will mold the minerals of this 
nation into the materials that are basic, that are essential to 
our American way of life, to the quality of life that exists in 
America to the envy of every other country in the world.
    The earth is not in stasis. We are in a period of warming 
since the last ice age and will probably return to another ice 
age or some other state of uninhabited planetary form brought 
on by the eternal motions of tectonic plates, vulcanism or 
meteors or whatever. That is what happens over geologic time. 
There is no global just right. There is only global change.
    No matter what some shortsighted true believers acting like 
chicken little say, every man-made edifice is going to be 
naturally eradicated. We can conserve and wisely use our 
resources in multiple ways, but they will not stand forever and 
we will be long gone before we conquer mother nature.
    As to a problem currently in the news pretty much 
everywhere, mining doesn't create arsenic. It exists naturally 
in our soil after 65 or so million years of hot springs 
percolating through the earth's mantel along with other, every 
other type of toxic element you ever heard of.
    A baseline study similar to the Natural Uranium Resource 
Evaluation, NURE, would show the folly of continually blaming 
all toxins on industry pollution. The distribution of naturally 
occurring toxic metals and other elements is ignored and/or 
misunderstood by the public.
    The employees on whose behalf I speak are asking you to see 
this time in your governmental oversight as a crossing, perhaps 
like a railroad crossing. We would like you to stop trying to 
regulate us out of existence because of ignorance and political 
pressure. To look at the body of knowledge accumulated on any 
mine site, there is no lack of intelligence evident in mining 
camps and no desire to kill our children, our families, or our 
friends for the sake of a salary.
    Listen to the combined wisdom of earth scientists that make 
up the management of mining companies and to the common miners 
who love the earth, the weight of the rock, the smell of the 
ground, the thrill and the sight and taste of discovery.
    America cannot maintain a civilized way of life without the 
products that result from mining and we are not crazed 
polluters. We are hard-working responsible citizens who want to 
be treated fairly. We don't mind being the most regulated 
industry in the west. We just want fair scientifically based, 
thoughtful, evenhanded treatment.
    Stop reacting to the politically driven uninformed. Look at 
all sides of the issues. Listen to your constituents who resist 
being turned into burger flippers. Help us help America. We 
will conserve resources. We will protect our communities from 
pollution. We want to be productive and we need your help. 
Thank you very much, Congressman.
    Chairman Gibbons. Thank you very much. I can tell you have 
some supporters in the audience, probably some of your 
Geotemps.
    [The prepared statement of Thomas Lyle Taylor follows:]

    Statement of Thomas Lyle Taylor, President & CEO, Geotemps, Inc.

    As the largest niche marketed personnel service specializing in the 
mining industry, with offices in Reno, Elko, Ely and Winnemucca, Nevada 
and Tucson, Arizona we are constantly in touch with mining industry 
employees looking for work or looking for people. We have seen the 
exploration sector of mining decline disproportionately to the 
commodity price since the maintenance fee system was instituted. Work 
that required people doing jobs earning money and caring for their 
families has been reduced in Nevada alone from estimates of 20 million 
dollars per year to about 10 million dollars a year for a loss of +129 
million dollars to our economy.
    There has been a dramatic change in the nature of our business and 
in the demand for labor in the mining industry in the western United 
States. A decade ago, GEOTEMPS' labor supply was nearly 100% focused on 
mineral exploration-related jobs, i.e., exploration geologists, claim 
stakers, geotechnicians, drill helpers, landmen, reclamation crews, 
etc. By 1997, labor for exploration work entailed roughly 40% of our 
business, but in the past three years, and in particular during this 
past year, there has been a near complete collapse. It is my estimate 
that in the coming year, 2001, almost none of our clients will be 
requesting mineral exploration-related labor. I estimate that the near 
total demise of grass roots exploration in 2001 in the western United 
States will prevent GEOTEMPS from placing hundreds of individuals in 
jobs in the exploration sector in the upcoming year. Over the years 
many exploration geologists and other exploration laborers have come to 
depend on GEOTEMPS to provide them with steady, long-term work. On a 
personal level it is devastating to me that many of those formerly 
productive, well-skilled people will have to change industries or 
careers altogether and give up the way of life they love.
    GEOTEMPS has been forced to adjust to this changing climate, now 
focusing almost solely on providing personnel to our clients at 
operating existing mines where the initial exploration investments were 
already made a decade or more ago. GEOTEMPS recently has been forced to 
close four of its offices due to the bottoming out of the exploration 
labor market, including our Denver office, which supplied mostly 
exploration labor. In Reno, nearly 90% of the exploration offices of 
the major mining companies have also closed in the past two years.
    I can attest that the cause of this dramatic decline in mining 
exploration in the western United States is the increasingly difficult 
and burdensome regulatory scheme implemented by our Federal Government. 
My clients increasingly perceive regulatory compliance as a moving 
target, with the Bureau of Land Management (``BLM'') and other Federal 
agencies gradually imposing a nearly never-ending regulatory process 
with substantially increased risk to investments. A striking example of 
this came in March 1999, when the Interior Department and the 
Agriculture Department jointly took an unprecedented action to revoke 
the plan of operations for the Crown Jewel Project in the State of 
Washington, after the plan of operations had been reviewed over a 
period of years and approved by the BLM and the U. S. Forest Service, 
and even reviewed and upheld by the Federal district court in Oregon. 
That action sent shockwaves throughout the mining industry and served 
to substantially reduce the willingness of companies to make new 
exploration and mine development investments on Federal public lands in 
the United States. The rulemaking to increase the stringency of the 43 
C.F.R. Subpart 3809 regulations, which Secretary Babbitt initiated in 
January of 1997, acted as a further disincentive to new mineral 
exploration and mine development investments.
    Based on my discussions with numerous mining industry 
professionals, it is nonsense to suggest that lower gold prices are the 
dominant cause of the recent declines in U.S. mineral exploration 
investment. As stated above, it is my firm view that the increasingly 
stringent U.S. regulatory policies and practices are the dominant 
cause, and the recently released final revisions to the 43 C.F.R. 
Subpart 3809 regulations that were published in the Federal Register on 
November 21, 2000 are the latest and most devastating manifestation of 
this trend. Essentially, the new final 3809 regulations will spell the 
demise of the domestic exploration industry, already crippled by BLM's 
and other agencies' recent tightening grip. These final regulations 
will essentially kill the remaining limited incentives for the new 
mineral exploration and mine development investments.
    The near total lack of grass roots exploration, which I expect will 
prevail during 2001 and beyond I believe will be caused by the threat 
of a Federal royalty scheme, the millsite opinion, the claim 
maintenance fees and in large part by the new final 3809 regulations. 
These actions by the Government are having an irreversible adverse 
impact on future mineral production and mining jobs associated with 
operating mines. Without any new grass roots exploration in the western 
United States, there can be no future development of new mines. Absent 
relief from these regulations production and employment levels will 
exist for years to come at substantially lower levels due to the 
dramatic decline in grass roots exploration occurring now.
                                 ______
                                 
    Chairman Gibbons. Mr. Lewis, welcome to an old friend and 
colleague, glad to have you here. We look forward to your 
testimony.

       STATEMENT OF FRANK LEWIS, OWNER, F.W. LEWIS, INC.

    Mr. Lewis. Thank you, Congressman Gibbons. My name is Frank 
Lewis for the record. Thank you very much for allowing the 
privilege of testifying before you. I have been a miner and 
prospector in Nevada since 1954. At one time we had over a 
thousand stake mining claims accumulated over the years, mostly 
in eastern Nevada. All of my working life I spent most of the 
money I earned exploring in Nevada, and my wife didn't like it 
either.
    I was one of the more successful individual mine property 
developers. My company accumulated patented as well as 
unpatented claims. Since the hundred dollar fee went into 
effect, we have not staked one mining claim.
    When Congress passed the $100 fee and greatly expanded the 
bonding and other new regulations removing all or almost all of 
the small miners like myself out of the business of exploration 
in Nevada on unpatented claims, it does not pay anymore to 
explore in Nevada hoping you can find a company to lease your 
property after you have made a discovery. We have dropped 
almost all of our unpatented claims, keeping only my patented 
claims.
    About 18 years ago I financed my son, a metallurgical 
engineer, in the development of an assay laboratory, 
metallurgical testing laboratory and a mine supply business 
here in Nevada. We employed between 20 and 25 people here in 
Reno on property and a building, which I purchased.
    For the last 2 years the lab lost money due to a lack of 
customers. He had to lay off most of his employees, close down 
our laboratory, and sell off the laboratory equipment. As they 
are finding out in California, if a company does not make money 
they can't hire people and pay their bills.
    There is very little exploration being done in Nevada now 
except as expansion of existing good mines. My companies have 
all, many companies have already declared bankruptcy in this 
state and many more are going to be bankrupt before this is 
over.
    Most of the mines are going to have to lay off their 
employees. Only a handful of the existing mining companies in 
Nevada are actually reporting company profits. I have 
personally paid hundreds of thousands of dollars to the State 
of Nevada in net proceeds of mine taxes over the years. 
Nevada's net proceeds income tax is a principal source of 
income to the state.
    It is true that it is not just the $100 fee that is the 
problem. The reasons for pending doom in the mining business 
are cumulative. Bonding has hurt, having to spend millions of 
dollars and hundreds of millions of dollars to clean up to make 
a few acres that a cow can live on a few days or a few jack 
rabbits is money spent that should have been left in the 
company to reinvest in and find another mine to keep people 
working. We need a friendly government to encourage us, one 
that believes in private property rights.
    To give another example, we spent hundreds of thousands of 
dollars a few years ago on a group of unpatented claims near 
Battle Mountain, Nevada. We did develop a small fairly high 
grade gold deposit. We then spent $50,000 hiring engineers to 
do a near feasibility study to accompany our patent 
application.
    We applied for a patent and the U.S. Government mining 
engineer Mineral Examiner approved it after holding it a few 
years. The Reno BLM office approved it and sent it to 
Washington, which is where it now sits as it has been for years 
and it hasn't been signed. There is one claim in my patent.
    The least that should be done if you want to help get this 
industry on its feet would be to eliminate or lower the fee to 
$5. The $5 is about what would pay for the BLM office work, 
which is a senseless duplication of the exact same work the 
counties already do for one dollar. They have done it for over 
100 years. Thank you very much, sir.
    Chairman Gibbons. Thank you, Mr. Lewis. I don't think he 
was clapping to get you to stop, though.
    [The prepared statement of Frank Lewis follows:]

         Statement of Frank W. Lewis, Owner, F. W. Lewis, Inc.

    Members of the Committee. My Name is Frank W. Lewis. Thank you very 
much for allowing me the privilege of testifying before you.
    I have been a miner and prospector in Nevada since 1954. My first 
mining venture was with my now deceased father in law in Ely, Nevada. 
Our equipment consisted of picks and shovels. We hand trammed gold and 
silver flux ore to our ore bin. Then with an old 5-ton truck we hauled 
our ore to the McGill smelter. For any of you who have been to Ely and 
know the large ``WP'' on the mountain behind Ely, that's where our mine 
was.
    Over the years my little company, F. W. Lewis, Inc. has purchased 
many patented mines in Nevada, and Colorado. We also staked literally 
thousands of unpatented claims which we explored and sometimes mined. 
Mostly we explored developing targets for interested companies.
    My first problem with the Federal Government was while I was in the 
Army in 1955. In the old days when you owned an unpatented mining claim 
you also owned the surface rights. Then environmentalists and Forest 
Service influenced Congress to take away surface rights to mining 
claims.
    I was drafted into the service training at Ford Ord, California 
basic training camp. I found myself sitting on my bunk reading a 
registered letter from the Forests Service telling me they were taking 
my surface rights to my mining claims away from me back in White Pine 
County, Nevada.
    I hired Jon Collins, an Ely Attorney to represent me sending him 
half of the ninety dollars a month I was being paid to serve my 
country.
    Then it dawned on me I would never make it on just my Army pay 
trying to fight the United States Government.
    I wrote about my difficult problem to the late house member Walter 
Baring. God Bless his soul! He sent a Government Mining Engineer out to 
examine my claims. The engineer reported back to Walter Baring that my 
claims definitely were legitimate and mineralized. He made the Forest 
Service leave me alone, and acknowledged the legitimacy of my property.
    At one time we had over a thousand staked mining claims accumulated 
over the years, mostly in Eastern Nevada. All my working life I spent 
most of the money I earned exploring in Nevada. I was one of the more 
successful individual mine property developers. My company accumulated 
patented as well as unpatented claims. Since the hundred dollar fee 
went into effect we have not staked even one mining claim.
    Then Congress passed the hundred-dollar fee and greatly expanded 
the bonding and other new regulations removing all or almost all of the 
small miners like myself out of the business of exploration in Nevada. 
It does not pay any more to explore in Nevada hoping you can find a 
company to lease your property to after you have made a discovery.
    We have dropped almost all of our unpatented claims keeping only my 
patented claims.
    About 18 years ago I financed my son a metallurgical engineer in 
the development of an assay laboratory, metallurgical testing 
laboratory and a mine supply business by the name of Legend, Inc. We 
employed between twenty and twenty-five people here in Reno in a 
property and building, which I purchased.
    For the last two years the lab lost money due to a lack of 
customers. We have had to lay off most of our very good and loyal 
employees, close down our business and sell off our equipment.
    As they are finding out in California if a company does not make 
money they can't hire people and pay their bills. It's impossible to 
explore for minerals or do and work on a mine if you are not making 
money.
    There is very little exploration being done in Nevada now except as 
expansion of existing good mines.
    Many companies have already declared bankruptcy in this state and 
many more are going to be bankrupt before this is over. Most of the 
mines are going to have to lay off their employees. Only a handful of 
the existing mining companies in Nevada are actually reporting company 
profits now.
    I have myself personally paid hundreds of thousands of dollars to 
the State of Nevada in net proceeds of mine taxes over the years. 
Nevada's net proceeds income tax is a principal source of income to the 
state coffers
    It is true that it is not just the hundred-dollar fee. The reasons 
for the pending doom in the mining business are cumulative. Bonding has 
hurt, having to spend millions of dollars in clean up to make a few 
acres that a cow can live on or a few jack rabbits is money spent that 
should have been left in the company to reinvest in and find another 
mine to keep people working.
    We need a friendly government to encourage us, one that believes in 
private property rights.
    To give another example: We spent hundreds of thousands of dollar a 
few years ago on a group of unpatented claims near Battle Mountain, 
Nevada. We did develop a small fairly high gold deposit. We then spent 
fifty thousand dollars hiring engineers to do a near feasibility study 
to accompany our patent application.
    We applied for patent and the U.S. Government Mining Engineer 
Mineral examiner approved it. The Reno BLM office approved it and sent 
it to. Washington where it now sits, or perhaps it has been thrown 
away. It has sat now there for years and years with no signature. There 
is one claim in my patent pending and at this rate I'll probably be 
long dead before it is ever signed. All that money spent and an 
uncaring Government doing everything they can to harm the mining 
industry. A government that seems to no longer want mineral production 
in America. A government that dislikes the notion of private property 
ownership.
    The least that should be done if you want to get this industry on 
its feet would be to eliminate or lower the hundred dollar fee to 5 
dollars. The five dollars would be five times as much as the counties 
charge for doing exactly the same job. This five dollars would pay for 
the BLM office work, which is a senseless duplication of the exact same 
work the counties already do, and have done for a hundred years or 
more.
    Thank you again for listening to me. I would answer any questions 
as best I can.
                                 ______
                                 
    Chairman Gibbons. Bill Kohlmoos, welcome. I apologize if I 
mispronounced your name, but we are anxious to hear your 
testimony.

  STATEMENT OF BILL KOHLMOOS, PRESIDENT, BARIUM PRODUCTS AND 
                         MINING COMPANY

    Mr. Kohlmoos. You pronounced it correctly and thank you 
Honorable Jim Gibbons for having this hearing and inviting us 
to present our testimony. I'm representing two entities, the 
Nevada Miners & Prospectors Association, which is made up of 
the independent miner, not the major companies, but the 
independent like Frank Lewis, who was one of the originators of 
that, and I'm also representing my mining company, Barium 
Products & Mining Company.
    I have been in the business for 50 years. For 50 years, or 
back up, for 30 years I made a living. The last 20 years I 
haven't, and I, as of last week, I was losing claims, dropping 
claims, losing leases. Mining companies that had a lease on one 
of my properties would drop it and go out of business or go 
overseas. I was losing until I had one property left, a good 
gold mine leased to a large company.
    The reason is many things, but governing mining we have the 
market price. We have seen the price of gold go down and it has 
hurt. We also have the rules and regulations. Now, when FLPMA 
was passed in 1970's, it was policy, and policy is not exact, 
precise at all.
    A policy says this is what we think and the bureaucrats can 
go ahead and make their rules and regulations and say, ``Oh, it 
is policy.'' We have come up against that many, many times. It 
is policy, if that means anything, so we have the market price, 
we have the rules and regulations, and the rules end up as 
costs. We have the costs of operating, buying fuel, and paying 
our employees, so there are many things to running a mine, but 
the rules and regulations now are the more dominant of all of 
our costs.
    Now, we also have a problem with the people we deal with 
that are enforcing these rules and regulations. The report 
prepared by the National Academy of Sciences was mentioned. It 
was a good report. They said (and I attended their meeting here 
in Reno) they said that the laws do not need to be changed. 
There are several changes they recommended in the way things 
were done, but they didn't have any new laws to propose. It was 
a good meeting, well attended.
    The next day, the very next day, there was another meeting 
(and the National Academy of Sciences as it was pointed out 
were prestigious people, professors and knowledgeable people in 
the business) and the very next day there was a second meeting 
held at the University, and that was held by Solicitor Leshy, 
and he started the meeting by standing up in front of the crowd 
and saying, ``My name is John Leshy. I'm a lawyer. I'm a 
Harvard lawyer. I'm a Harvard lawyer who is a Solicitor of the 
Department of Interior. I'm here to tell you what we are 
doing.''
    He said that the NAS report was an excellent report and we 
are going to make every change they recommend. We are going to 
change the laws. We are going to do this, we are going to do 
that.
    And then he said now one of the things we are doing is 
stopping the patenting of mining claims. He said, ``We put a 
bill before Congress to change the mining law and Congress was 
made up of Republicans who couldn't understand and so we went 
around them. We passed a moratorium on patenting mining claims, 
and this moratorium expired after a year and we renewed it, and 
we renewed it again last year, and we are going to renew it 
every year.''
    And then Leshy bragged, he said, ``That is how we get 
around Congress. That is how we bypass the laws. We just put a 
moratorium on it.''
    Leshy is typical of what is causing a lot of our problems 
in mining. It is the people we are dealing with. We have to 
have better communications and better people in the jobs.
    Two years ago we saw how Gloria Flora was complaining to 
the press everyday about how the public hated the Forest 
Service and how they couldn't get a motel room, they couldn't 
buy gasoline if they were a Forest employee, and she went on 
and whined and complained and cried for months and everyday the 
newspaper put it on the front page.
    She was agitating a situation. She was making it ten times 
worse. It wasn't that bad at the beginning. Sure, there might 
have been an individual case where somebody got snubbed, but so 
what, that is life, but she made a big thing out of it and then 
she finally left. But at the same time she was doing that, I 
had a Forest Ranger in uniform in a Forest Service truck try to 
kill me two times.
    That is what was happening. We are dealing with people and 
we have to have better communications, get along a little 
better and understand each other. We can't have people crying 
that everybody is against them. We can't have people like that 
ranger. We have to work together and bring things out.
    So, anyway, I never mentioned that before and I don't know 
that I should have now. We are opposed to the current and/or 
proposed new rules and regulations and additional fees. It used 
to be you could stake a mining claim, pay a few dollars to 
record it, and the annual fee was $100 which you put into the 
ground developing the claim, exposing ore, getting the property 
ready to mine. That was your annual fee. You did work on the 
ground.
    Now we have to pay $100 to the BLM. The first year, the 
very first year that went into effect, they made it retroactive 
for $100 for the year before and $100 for the coming year, so 
you had to pay $200. I had 1,100 claims. I would have had to 
pay $220,000 out of my pocket to the BLM just to hold those 
claims. I couldn't do it. There was no way.
    Some of my claims were leased to companies and they paid 
for part of the fee, when that started I dropped most of my 
properties. Since then I have dropped all of them. I had been 
earning a living in mining for 30 years. The last 20 years, 
nothing.
    Last week I had just one property leased out. Yesterday I 
got a certified letter, the company was going out of business. 
They dropped the lease. I don't get any payment this year. I 
have got the claims back. If I want to keep them, I have to go 
pay $100 per claim on 80 claims. I can't do it.
    The company is gone. My income is zero. That is the end. 
That is all there is for people like us. I heard the fat lady 
sing. But please tell us she was wrong, we are going to start 
all over again and do it right.
    [The prepared statement of Bill Kohlmoos follows:]

     Statement of William B. Kohlmoos, President, Nevada Miners & 
       Prospectors Association, Barium Products & Mining Company

    A learned treatise on minerals exploration, mining, milling, and 
smelting was written in the year 1556 by a man named Georgius Agricola. 
He reviewed mining work done by the Greeks and Romans, and the ancients 
before them. He wrote:

          The art is one of the most necessary and the most profitable 
        to mankind. Without doubt, none of the arts is older than 
        agriculture, but that of metals is not less ancient; in fact 
        they are at least equal and coexistent, for no mortal man ever 
        tilled a field without implements. In truth, in all the works 
        of agriculture, as in the other arts, implements are used which 
        are made from metals, or which could not be made without the 
        use of metals; for this reason the metals are of the greatest 
        necessity to man. When an art is so poor that it lacks metals, 
        it is not of much importance, for nothing is made without 
        tools.

    In a popular book titled ``Stones of Destiny'', author John Poss 
takes the reader from the time of man in prehistory to man on the moon, 
and shows how world history has been influenced most dramatically by 
man's quest for minerals and metals. It is a book of conquerors--
Caesar, Charlemagne, Cortes, and Pizarro, spurred on by visions of 
gold, silver, and base metals. Wars were fought for land which 
contained metals. In 490 B.C. the Persians, Greeks, and Asiatic hordes 
were constantly at war over the riches of the mines of Laurium, owned 
by Athens.
    A U.S. Congresswoman from Manhattan, Carolyn Maloney, introduced a 
bill in 1993 designating 16.3 million acres of wilderness to be locked 
up in Montana, Idaho, Wyoming, Washington, Oregon as ``unoccupied bison 
habitat.'' A group of mining supporters visited her office to protest 
the bill and were told unsympathetically by the congresswoman's aide, 
``I know that mining is important to you out West, but we don't use 
much metal in New York. In fact, most of us don't even own a car.''
    Several years ago I attended a three-day world-wide symposium on 
chromium held at Pullman, Washington. Representatives from all over the 
world, including Africa, Turkey, and Russia, attended and presented 
papers. It was emphasized in the symposium that very little is known of 
the subject here in the United States by industry, by the U.S. Bureau 
of Mines, and by the U.S. Geological Survey. It was also pointed out 
that the U.S. is totally dependent on South Africa for its chromium, 
and should that source be denied there would be grounding of U.S. Air 
Force planes and commercial airliners within two weeks. The metal is 
essential to the heat resistance of the blades in a jet engine. The 
metal is classified both Strategic and Critical. I own a large deposit 
of this mineral but have been restricted in its development by Federal 
regulations.
    During World War II the mining industry in the United States was 
active and quite essential to country's survival. After the war, major 
mining companies, small mining companies, and individuals were able to 
prospect for minerals, stake mining claims on mineralized areas, and 
mine for ore if discovered. This continued through the 1950s and 1960s. 
In the 1970s the atmosphere began to change.
    Starting in the mid 1960s a bill proposing absolute bureaucratic 
control of all Federal lands was proposed in Congress. It was defeated. 
Each year the bill was re-introduced and defeated. After a while the 
ideas being proposed appeared to be neither new nor radical, and 
finally in 1976 the bill passed. It is known commonly as FLPMA, 
pronounced ``flipma''. The proper name is Federal Lands Policy and 
Management Act, 43 U.S.C. 1712.
    That bill set policy. Policy is a broad, all-encompassing license 
for bureaucrats to do whatever they want and pass rules and regulations 
at will. They merely justify their actions by saying, ``It's policy.''
    The resulting new rules and regulations have had a severe impact on 
the production of the natural resources so vital to the people of the 
nation.
    Many ridiculous new rules were developed as a result of FLPMA. For 
example, I owned a large barite deposit named ANN at Northumberland, 
Nevada. Barite is vital to the oil well drilling industry. Dresser 
Minerals, a major barite producer, and I had spent a total of $5.5 
million dollars in developing the 11 million ton barite ore body. There 
were 30 miles of roads and 277 drill holes of six-inch diameter by 400 
feet deep. The holes were plugged by large cement cones and covered 
smoothly with dirt. A Forest Service Ranger, Don Crompton, said in a 
written citation that he wanted all holes plugged solid with cement 
from top to bottom. He had found one hole where he could insert a stick 
the size of a pencil, between the cement plug and the side of the hole. 
He said a mouse could fall down the hole and get killed, and he was 
here to protect the environment and that included the mice. He also 
wanted a pile of dirt 6 feet high by 20 feet long across the road, 
every 50 feet, all along the entire 30 miles of road! That would make 
3,168 such piles, for a total of 2 million cubic feet of dirt piled up. 
Not only would his demands have obliterated $5.5 million worth of 
development work, but it would cost me an estimated $850,000 to 
accomplish. I asked him how I could get into the property to mine the 
ore if the roads were blocked. He said he didn't want to see me mine 
it.
    I had to go to my congressmen, the Mountain States Legal 
Foundation, and the President of the United States to get the USFS 
stopped.
    The Forest Service couldn't let me get the upper hand so they 
falsely charged me with a bunch of violations of rules on the Spencer 
claims near Pete Summit. Included were unauthorized bulldozing of 
roads, cutting open trenches, failure to cap drill holes, and wanton 
destruction of the environment.
    In a meeting in the Austin USFS office, District Ranger Mont E. 
Lewis stated that he had driven to my ``Bronco Mine'' the previous 
month and inspected the property. I had a tape recorder sitting on the 
edge of his desk in plain sight and with his permission. I asked him 
how he drove to the mine. He said up the one and only road into the 
mine. He said he had driven to the mine and examined the ground before 
I started my work. It was on the tape twice. In a meeting with higher 
USFS officials in the Reno office several weeks later I played the tape 
and then I pointed out to Ranger Lewis that the road to the mine had 
been washed out and was impassable for the past two years, and 
therefore he was lying. It didn't faze him a bit. This is the kind of 
people we were dealing with.
    In 1976 the brand new Environmental Protection Agency, wanted to 
flex their muscles and show the country how powerful they were. They 
needed publicity. The EPA decided to close down Kennecott Copper 
Corporation's mine, mill, and smelter near Ely, Nevada. For 70 years 
this open pit mine had produced 10% of the nation's copper and it still 
had proven reserves for another 50 years of production. The EPA claimed 
that the sulfur dioxide in the smelter stack emissions was causing a 
high incidence of pulmonary illness among the residents of McGill and 
also was destroying vegetation within a 50-mile radius.
    Kennecott's lawyers fought a good battle, and Nevada's congressmen 
came to their aid, but the EPA had the power of a Congressional act 
behind them. They held public hearings in Ely, but their hearing 
officers rudely talked, read magazines and newspapers or slept and 
snored during the giving of testimony.
    The EPA refused to listen to testimony from third generation 
residents of McGill that they suffered no unusual pulmonary illnesses, 
and that they considered the sulfur to have beneficial medicinal 
values. The EPA also refused to accept testimony or physical evidence 
that there were lush fields of alfalfa, vegetable gardens, lawns, and 
flowers growing within the immediate vicinity of the smelter. They 
refused an invitation to drive 10 miles to see the vegetation 
themselves. Their response was like the old saying, ``I know what I 
want to believe. Don't confuse me with the facts.''
    In the formal hearings before the courts the EPA submitted 
completely falsified reports, and when challenged as to the validity of 
their statements, they merely submitted additional false data. The 
Environmental Protection Agency used a voluminous report by a medical 
doctor who had studied the people living near smelters in Tooele, Utah, 
and McGill, Nevada. The report proved that people living near smelters 
suffered increased rates of pulmonary diseases and cancer, and had 
shorter life expectancies than people in other areas. The statements in 
the report were backed up by detailed medical records and statistics.
    During the hearings Kennecott lawyers introduced evidence which 
proved that the learned doctor had never left Washington, D.C., had no 
field workers, and had gathered no facts. The entire report had been 
concocted in his office back East and was nothing but lies. The medical 
records had been completely falsified.
    The ``Arizona Republic'', Phoenix, Arizona, reported,

          The story of Dr. John F. Finklea, a former research official 
        in the Environmental Protection Agency, reads like a Grade-B 
        movie about a mad scientist. And it's no less chilling.
          It casts doubt on all the research of the EPA and on all the 
        EPA regulations . . . the monster that Dr. Finklea created is 
        going to cost the nation $11 billion. . . . A group of 
        scientists at such prestigious universities as Harvard, 
        Columbia, and MIT joined in a report which said that many EPA 
        regulations are not only costly but unrealistic, as well, and 
        that many will do more harm than good.
          If there is one zealot like Dr. Finklea in the EPA, which, 
        incidentally, has become the largest regulatory agency in the 
        government, . . . .

    The matter was hushed up, but the damage by inference had been 
done. The EPA leaders persevered, and in 1978 Kennecott's smelter was 
shut down, never to open again. A town of 12,000 people went into 
shock, and poverty. Within a couple of years most of the other smelters 
and all of the foundries in the U.S. were also shut down by the EPA. 
And the United States turned to overseas to buy more of the copper it 
needed. But first it had to pay the dictators of the small countries to 
produce it. Agreed, we had long bought copper from Chile, but now we 
bought more. And then the Chilean government run by President Allende 
stole the copper mines from the American owners.
    In March of 1989 I attended a public meeting of the Geological 
Society of Nevada where the keynote speaker was a prominent attorney 
speaking on the injustices being imposed upon us by the courts in the 
name of environmental protection. He said that the General Accounting 
Office (GAO), which is supposed to be an ``Auditing and reporting 
Committee'' of Congress, was actively running, managing, and dictating 
to various departments of the government, including the BLM and USFS. 
At the same meeting there were many comments voiced that we are 
surpassing Soviet Russia in the volume and severity of bureaucratic 
injustices.
    I have been in the mining business for 48 years. My business has 
been to prospect for and discover a mining property and then improve 
and develop it for sale to a major company. Over the years I acquired 
41 good properties. Millions of dollars have been spent on geologic and 
geochemical mapping, drilling, and development work, getting these 
properties ready to mine. And now I am being literally taxed out of 
business. Mining in the United States is rapidly dying. Many major 
companies are moving overseas. The incentive to do business in the U.S. 
has been removed.
    The ``War For The West'' read the cover of Newsweek magazine, 
September 30, 1991. It said of cowboys, ``They've assaulted the entire 
system of nature.'' and ranchers are ``--the enemies of the 
environment.'' Logging, it said, is guilty of excessive denuding of the 
forests, and mining is stripping the gold from the land and not paying 
the government anything for it.
    The author stated that miners are ``saturating'' the ground with 
cyanide and using their mining claims to grow marijuana. The power 
companies are killing the salmon on the Columbia River just so they can 
send electricity to Disneyland and make a big profit. Even the ski 
resorts were criticized for using the land.
    The 22 pages of attacks concluded with the comment that the West 
must learn to cooperate (with the government and environmentalists), 
and ``When that day comes, the West will be won.''
    ``The Great Gold Scandal'' was emblazoned across the cover of the 
U.S. News & World Report October 28, 1991, less than a month after 
Newsweek's declaration of war. The magazine's senior editor, Michael 
Satchell, wrote that, for a pittance the mining companies can extract 
billions of dollars worth of minerals from public land--and that there 
are no requirements for environmental protection and reclamation, and 
that one can buy all the land he wants for $2.50 per acre. It was all 
gross, blatant lies. Nothing he said was correct or true. It was 
obvious that Mr. Satchell knows nothing whatsoever about the subject 
which he so eloquently lambasted.
    It would seem that it is no unrelated coincidence that two major 
magazines come out with two major feature stories on the same subject 
at the same time and with each presenting the same lies in the same 
manner.
    The statement that miners can buy land for $2.50 per acre is 
repeated frequently by the environmentalists. If that were true why 
haven't they bought it all and made a big park? According to a paper 
prepared by the U.S. Bureau of Land Management, the truth is that you 
must spend approximately $45,000 in preliminary study, mapping, 
environmental study, and other paper work over a period of several 
years before you can acquire one single acre of land. And there must be 
a proven deposit of minerals on the land. It is only the final paper 
document which costs $2.50.
    Monday, November 8, 1999: In Reno, Nevada, there was a presentation 
of a report on a two-year study conducted by the National Academy of 
Science, Washington D.C. The report's title was: ``Hard Rock Mining on 
Federal Lands.'' Perry Hagenstein was the Chairman of Committee and 
also Chairman of this meeting. In summary, the report concluded that 
all current mining laws were working satisfactorily and only a few 
minor changes in procedure were recommended.
    Tuesday, November 9, 1999: A meeting was held at the Orvis School 
of Nursing, University of Nevada, Reno. It was conducted by John Leshy, 
Solicitor, Dept. of Interior. I sat in the meeting and took notes:
    He said, ``Ahhhmmm a lawyer. Ahhhmmm a Harvard graduate. Ahhhmmm a 
lawyer, a Harvard graduate. Ahhhmmm a lawyer, a Harvard graduate, summa 
cum laude.
    ``Ahhhh worked with Udall and we tried to defeat the 1872 Mining 
Laws but Congress was controlled by the Republicans and they couldn't 
understand.
    ``Ahhhh worked with President Carter and we tried to defeat the 
1872 Mining Laws but Congress was controlled by the Republicans and 
they couldn't understand.
    ``Ahhhhm working now with President Clinton and Udall and we tried 
to defeat the 1872 Mining Laws but Congress was controlled by the 
Republicans and they couldn't understand.
    ``One thing we did manage was to stop all patenting of mining 
claims. Congress wouldn't change the law so we put a moratorium on all 
patenting and each year we renew that moratorium and we will continue 
to do so into the future. It's not right that a mining company, 
especially one from Canada, can patent a mining claim for $2.50 and 
then take $10 billion out of the ground and pay us nothing for it.
    ``That report by Perry Hagenstein, (Hard Rock Mining) was right on. 
They suggested a number of changes to be made and we will do that by 
passing the necessary rules and regulations.''
    It's no coincidence that Solicitor Leshy was going around the 
country giving these talks wherever, and one day later than where 
Hagenstein presented the National Academy of Science report on Hardrock 
Mining which said the 1872 law is OK. Leshy admitted that he was 
circumventing Congress and the law. In fact, he bragged about it.
    Today, in the year 2001, there are numerous state and Federal 
requirements on mining activities. Some are necessary. Some duplicate 
each other. Others are excessive or unnecessary. The Federal forms 
include:
          Purchase, Transport, or Storage of Explosives
          Use of BLM-Administered Land
          Use of BLM-Administered Land Under Wilderness Review
          Temporary Use of BLM-Administered Land
          Right of Way for Electric Transmission on BLM-Administered 
        Land
          Road Access (R/W) on BLM-Administered Land
          Notification of Commencement of Operation
          All Uses of National Forest System Land
          Activities in Wetlands and/or Waters of the U.S.
            (Includes Dry Washes, Creeks, Lakes, Etc.)
          Endangered Species Act Compliance
          Building Permit
          Business License
          General Plan
          Special Use Permit
          Zoning Change

    Special studies must be made before any activity can be started:
          Archeology Study
          Wildlife Study--and many more.
    Today we are told that mining is not necessary. Three branches of 
the government, the U.S. Forest Service, the Bureau of Land Management, 
and the Environmental Protection Agency, have set so many policies, 
rules, and regulations that all but a few of the mining operations 
which had been operating in Nevada have been forced to shut down or 
have moved overseas.
    The General Accounting Office occasionally puts pressure on the 
USFS and the BLM and forces them to get tougher on mining. The GAO 
ostensibly acts as a watchdog for Congress by overseeing how the 
departments handle their budgets. In real life they tell the Forest 
Service, BLM, and other departments how to do their job by first 
advising the department what it should do. If the response is not 
satisfactory, the GAO blasts the department with a barrage of caustic 
press releases, criticizing the department for its ``misconduct''.
    A collection of several dozen such press releases which appeared 
during the one single year of 1989 revealed a strong pattern of 
enforcement, usually with immediate results. Several of the directives 
of the GAO demanded large increases in fees and stricter rules and 
regulations to more tightly control free enterprise.
    For example, the Forest Service and BLM were told by the GAO to cut 
farther back on grazing allotments, and they did so. The BLM was 
ordered to charge the mining industry exorbitant fees for items which 
had never before been subject to fees.
    During those years, if a property were sold, the fee to file one 
single piece of paper which did nothing but transfer title to the 
claims would cost $4,000.00, even though the claims may have just been 
staked and proof of an economical body of ore had not yet been 
established.
    The changes which had been wrought were dismaying. The U.S. Forest 
Service was ruling with complete unreasonable control, and there had 
been a large increase in the number of their employees. Many of the new 
people were inexperienced, young college graduates who had been born 
and raised in the cities of the East, and had no comprehension of what 
the West was like. These young Forest Rangers were now in charge of a 
tremendous area of Federal land. There were so many of them around that 
when I drove down the highway between Austin and Tonopah every third 
vehicle I passed was a government pickup. I would make a written list 
as I drove along, and as I'd only pass 25 vehicles in a 100-mile trip, 
it was easy to do. On Saturdays and Sundays there was never a single 
government truck.
    Nevada is 87% Federal land, and only 13% private. Most of the 
private ground is around the cities, or is railroad land. That means 
that wherever one goes out in the hills, he is most likely on land 
controlled by either the BLM or the USFS.
    To get around in the back country one must use a four wheel drive 
and travel on an extensive system of old dirt roads. Many of these 
roads had been constructed and put into use in the 1860's and 1870's. 
They have been in use for 130 to 140 years. Now, in order to keep 
people off the land, the Forest Service has closed many of the dirt 
roads. This was illegal. They denied the use of bulldozers or graders 
to repair roads after they washed out. No maintenance, no road. They 
required miners to submit a ``Plan of Operations'' to do any work on 
their claims, even for that work which was required by law as 
assessment work. When a miner submitted a plan and it was approved, the 
Forest Service stipulated that when the work was done the miner would 
have to dig up and destroy the access road. This was done regardless of 
who owned the road, or even though it was a public road which had been 
in use for 140 years. By using this method the Forest Service 
obliterated many established and useful roads from the public domain. 
With the submittal of an Operating Plan was required the posting of a 
cash bond, sometimes as much as several hundred thousand dollars. The 
USFS put gates and barricades on roads. They declared large areas to be 
closed to off-road travel, and then they published maps which did not 
show the existing dirt roads. Thus the entire area was closed off. The 
rules forbade travel in many areas, even by bicycle. One could not go 
to the toilet in some areas, but had to carry his excrement off in a 
bag. Even the droppings of your horse had to be picked up and removed. 
Grazing of cattle was no longer permitted.
    The houses and homes of miners were burned, even though they had 
been on the property for several generations and were antiques. The 
Forest Service destroyed a beautiful 100 year old cabin on my property 
at Topaz. They destroyed my cabin at Belmont, and a third at the 
Bellview property near Elko.
    The Forest Service now has a large number of Rangers carrying guns, 
and they arrest anybody they find violating their rules. In California 
there were several cases where a party of miners stood their ground and 
had a shooting war with dozens of Forest Rangers across the river. 
These incidents were never reported by the press, but were covered in 
the trade journals and the California Mining Journal.
    At a public meeting in Austin in 1988, Larry Raley, the Forest 
Service Ranger, told the people to carry notebooks and write down and 
report the names or license numbers of any people whom they saw 
violating USFS rules. Raley threatened that if we didn't do this spying 
on each other, he would close off more large areas. As he talked to the 
group he had two armed guards standing one on each side of him, for 
protection from possible violence. The guards stood there wearing two 
sixshooters each, with feet spread apart, arms folded, and glaring at 
the audience. Raley was fearful for his safety. A week later in a 
meeting with the Forest Service in Reno, he lied, denying that he had 
any armed guards at the meeting, or that he had threatened us with 
additional closures if we didn't snitch on our friends. I had it all on 
a video tape, and 40 witnesses saw it happen.
    In October of 1992, after I had already done several tens of 
thousands of dollars of required and beneficial assessment work on my 
mining claims in Nevada, the Bureau of Land Management (BLM) abruptly 
changed the rules of the game. They said that in order to keep mining 
claims valid for the coming year all claim holders would have to pay a 
$200 per claim tax before October 1, 1993. I had more than 1,100 claims 
at the time, and would have to pay $220,000 just to keep my claims. I 
didn't have that much money, and if I did, some of the claims needed a 
lot of exploration work to prove that they were worth that much. This 
new tax came with no advance warning for budgeting purposes. It was 
discriminatory and it was retroactive. We had been paying the BLM an 
annual fee of $5.00 per claim. Now, all of a sudden, we have to pay 
$200. That's an increase of 4,000 percent!
    Everybody in the business was in shock. Nobody, not even the major 
mining companies, could afford to keep all their claims. When the time 
to pay arrived, I kept only a few claims plus those that were leased 
out. I dropped everything else. Some of the large companies dropped up 
to 50% of their claims.
    In 1993 the BLM in Tonopah, Nevada, issued a new Management Study/
Environmental Impact Statement (EIS) according to which they would more 
strictly control the land. The report states that they would take 
private land from the owners, including the Locke family home with 
their private cemetery. The BLM would take water rights from the 
ranchers, stop grazing, close dirt roads, and strictly control or stop 
mining. Much of the plan was to set policy.
    Although the date on the first page of the plan was June 4, 1993, 
very few people were privileged to see a copy or even be aware of its 
existence until September or October.
    The BLM held a public hearing in Tonopah on August 26, 1993 to 
present the plan. If there were no objections the plan would be 
implemented immediately. I heard about the meeting by accident just ten 
minutes before it started.
    I knew all of the forty-two people who attended the hearing. 
Included were ranchers, small miners, major mining companies, 
construction companies, equipment operators, sportsmen, hunters, 
fishermen, outdoor enthusiasts, off road vehicle operators, and others 
from many walks of life. Many were second and third generation Nye 
County residents and property owners.
    A number of people present said that they had only received a copy 
of the report or heard about the meeting the day before, and then by 
word of mouth and only by accident. They felt that if proper notice had 
been given there would have been 500 people present to oppose the plan. 
One mining man in Tonopah whom I knew told me that he was told by a BLM 
official the day before the meeting, `` Oh, it's just a small meeting. 
It's insignificant. You don't need to bother attending.'' And he 
didn't.
    The two inch thick, bound report offered four separate alternative 
plans. Plan 1 supposedly proposed no changes. Plans 2 and 3 contained 
drastic new bureaucratic controls. Plan 4 was presented as a moderate 
program offered as a compromise. However, Plan 1 and 4 each contained 
fine print and clever wording which made them as dangerous as 2 and 3.
    The ranchers present were violently opposed to plans of the BLM to 
take away their water rights and land, but they were not allowed enough 
time to say all they wanted to say. The BLM only allowed a person to 
speak for three and one half minutes and many were cut off in the 
middle of a sentence. When the moderator stopped Joe Fallini from 
speaking after he called them a ``bunch of damned liars, liars, 
liars'', the entire audience stood up and stomped their feet and 
yelled, ``Let him talk.'' Many were shouting obscenities and threats of 
physical violence. One person yelled, ``If you take my land you'll have 
to come shooting.'' Almost the entire group was extremely emotional and 
strongly opposed to the plan. There were many complaints that the maps 
were of poor quality and concealed many things, and that there were no 
maps of land status, water rights, or roads.
    Most of the people who took the floor demanded a six month 
extension of the deadline of October 1 for submitting comments. Of 
those present, every single one who requested the opportunity to speak 
was strongly opposed to the plan.
    The BLM had deliberately avoided press coverage of the meeting. No 
report of the meeting was ever issued, so only those who were present 
knew what happened. Except for the few people in attendance, the 
general public was never made aware of the plan or the meeting's 
comments and emotions.
    Prospectors in the field may search for a lifetime and find 
nothing. Or, they may find one or two prospects but after years of hard 
development work determine that they cannot produce a profit. Only a 
very few prospectors have the ability, skills, eye, and luck to 
discover a profitable mine. And only one in many thousands of these 
mines will subsequently develop into a winner.
    Following is a list of mining properties located, mined, or 
abandoned by myself since 1952. This list is presented in order to show 
that even with luck and skill the profit is elusive.
    (Note: In mining circles, the term ``point 0 three'' means that in 
one ton of ore there is only 0.03 of an ounce of gold.)
    Belleview Gold--Plus one million tons 0.03 oz. gold. Leased for 25 
years to a mining company for royalty. Never mined because of 
government regulations.
    Betty--Large gold anomaly blocked out. Spent $3,000,000 in geochem 
and drilling. Leased to major mining company. Dropped lease due to 
government regulations.
    Delsa Mercury--Large high-grade mercury deposit. Mined by Kohlmoos 
1956 to 1962. Invested $30,000. Very small profit.
    Ingie Gold--Extensive exploration on property. Drilled by major 
international mining company. Large area of high gold values. Dropped 
due to government rules and regulations.
    Kay Barite--Leased to major company. One million tons barite 
drilled and blocked out. Possible 10 million tons, plus unknown gold 
values. Never mined due to regulations.
    Long Claims--1968: Kohlmoos was the first to originally discover 
and stake claims in an area which subsequently developed into the 
famous producer, the ``Sleeper'' mine. Extremely rich and large. 
Kohlmoos lost the property to a large mining company with a team of 
lawyers. Although the assessment work had been performed, a mistake was 
made in the county filings.
    Northumberland Barite--Ann claims. Major company spent + $5.5 
million in drilling over 15 year period. Blocked out 11 million tons 
barite Possible 50 million tons reserves. Estimated gross value of ore 
in the ground: $1 Billion. Never mined because the U. S. Government 
allowed China to ship barite to U.S. duty free.
    Northumberland Gold--Rated 7th largest gold mine in U.S. several 
years. Sold to major mining company.
    Nura Uranium--1952: Mined and shipped 1.3% ore. No profit.
    Oil Lease--New oil field, Eagle, Alaska. Sold to Texaco. $10,000 
profit.
    Summit Canyon Barite--1965: 300,000 tons barite shipped. Small 
profit.
    Verde Cobalt/Chrome--The Verde claims (Betty et al group) contain a 
vein of nickel, cobalt, and chrome. Vein is between 100 and 1,000 feet 
wide by 4\1/2\ miles long and more than 300 feet deep. Invested more 
than $3,500,000 in drilling. This ore is classified as both Strategic 
and Critical. No companies interested due to Federal rules and 
regulations.
    Various Prospects--Ace, Spencer, Wash, Roy, Gold Thrust, Chip, 
Frenchman, PAL, and other gold prospects. No work done because of 
Federal rules on permitting, bonds, and studies of archaeology, 
wildlife, environment, water, and much more.
    In conclusion, the United States of America is dependent on 
minerals to provide its people with food, clothing, homes, schools, 
transportation, highways, airplanes, military forces, books, 
television, and everything else we have beyond our bare skin. The 
mining industry provides all of this. Many people are not capable of 
understanding the complex system of supply and demand.
    The Federal Government has seriously damaged the minerals industry 
by passing rules and regulations which:
          --Close roads;
          --Declare millions and millions of acres of mineralized 
        ground as wilderness areas thereby preventing human activities;
          --Require numerous detailed studies costing millions of 
        dollars and years of time before a rock can be moved;
          --Post bonds amounting to hundreds of thousands to millions 
        of dollars;
          --Submit an excess of plans, programs, maps, and detailed 
        data; and so on.
    And then, after many years of exploration to find a target, develop 
it and prove an orebody, and then spending big money to take all of the 
above steps, the project can be denied because of a technicality. The 
individual prospector can't do all of this, and neither can the small 
to medium size mining companies. That is why they are all shut down and 
out of business. This leaves it to the few wealthy major companies. And 
today, many of them are moving overseas.
    In closing, what will happen when the U.S. goes to war again? It's 
not ``if'', but ``when'' we do. When that happens we will have no 
minerals production to depend upon.
    The minerals industry is a large, sleeping giant. It can't be 
turned on and off at will. It could take many years to find mines, 
build mills and smelters, find experienced people (if there are any 
left), and get into production.
    A healthy mining industry is essential to the health of the nation.
                                 ______
                                 
    Chairman Gibbons. Thank you. We always save the best for 
last, don't we? Let me again thank you and ask a few questions. 
We have to be out of here at 3:30 when we only have this 
building from 12:30 to 3:30 and we are rapidly approaching that 
time, and before I end this I wanted to just make some brief 
questions to these three witnesses.
    Mr. Taylor, I do not take your testimony to say that we 
should abandon the efforts we made so far to minimize 
environmental damage with mining. I don't think that was your 
direction and I think you made it very clear that mother nature 
is going to probably even out everything over the long run 
through some geologic occurrence, but I do think that you were 
saying that it is sound science that we have today and 
evolution of science helps us work within the environment, 
helps us work within mother nature for the development of these 
mines to keep them active, keep people employed, keep this 
country in the financial state that it is in today. Did I 
characterize your testimony?
    Mr. Taylor. That is correct. I think what we have done is 
good and what we will do in the future will be better, but 
there is no sense trying to put us completely out of business.
    Chairman Gibbons. Right.
    Mr. Taylor. Using nonscientific emotions.
    Chairman Gibbons. Your job is to provide temporary geologic 
or technical help for some of these companies, and tell me what 
you see is the opportunity, and if you are providing temporary 
technical services to say Latin American countries right now, 
and in them would you tell me what the prospects are if you are 
for the, in the experience, for say women geologists getting 
employed in Latin America.
    Mr. Taylor. One of the questions that used to be top on our 
list when interviewing people for full-time, short term 
assignments, whatever, was where they went to school and what 
kind of degree they had, and that has changed to Se Habla 
Espanol, you know.
    The prospect in the exploration side where we started our 
business, we do now mostly mine site work, has essentially gone 
away. One of our clients was describing to me that major mining 
companies, he felt that about 40 percent of their budget for 
exploration had completely evaporated, 40 percent was being 
spent in Latin America and the 20 percent left might be spent 
in the United States.
    That 40 percent opportunity that has evaporated pretty much 
wipes out the, any kind of possibility of growth in the 
American mining market. The 40 percent that is now being spent 
in Latin America and other countries, we as a mining industry 
have a responsibility to those countries to hire indigenous 
people and to help them. It is their country. That very 
drastically curtails the opportunities for the American miner, 
so it is caught there.
     And the last part, as you heard Bill, if they don't kill 
us, we may starve to death, so I would like to say something 
was extremely bright and happy, but as you can read from 
Borden's testimony I believe we have, we reached a point where 
the investor has no real reason to invest in us because we 
can't guarantee we will ever make a penny, that we will ever 
get there. It is too much of a moving target.
    The employees are extremely disheartened. It is very, very 
difficult, and the only thing I think we can look forward to is 
the natural resiliency of the folks that have always worked in 
the mining industry and hope we can weather through what is the 
worst thing that happened to us in the last 35 years.
    Chairman Gibbons. Mr. Lewis, you and Mr. Kohlmoos are 
probably some of the last remaining independent small mining 
individuals left in the state. Let me ask because you are a 
quote/unquote small miner are you exempted from any of the 
environmental regulations on any activities that you do as a 
small miner?
    Mr. Lewis. Fortunately, some 40 years ago I started 
purchasing patented mines and there is a five-acre exemption, 
which they are trying to do away with, by the way, that you can 
go in and do some exploration on your private patented property 
that has been very helpful to me over the years.
    I'm not doing any exploration now of any consequence. I 
have got some property optioned out where exploration is going 
on. But I have got an exit strategy. When I bought these patent 
properties, I realized I can always sell them. I can sell them 
to people to build cabins on or just to hold a piece of land.
    And if I do that what does that do to the mining industry? 
How are you going to go back into these areas in the various 
places that I own these various properties if somebody builds a 
house on it? You are going to ruin the mining business if I do 
that, and I'm trying to avoid doing that because I love the 
mining business, it has been mine and my wife's life, so--.
    Chairman Gibbons. Well, let me ask a question from you with 
regard to both you and Bill and this $100 claim maintenance 
fee, does the small miner exemption work?
    Mr. Lewis. No, it doesn't, because with 10 claims you 
don't, you can't have a mine. The only thing you can have is 
kind of a toy, and that is what they have become in places 
where I have observed them. They are a way for people in 
eastern Nevada that wanted to fool with it to keep those.
    And I'm not all that much in favor of it, because in order 
to have a mine you need nowadays at least 100 claims, that is 
what the companies would demand, or 300, and so I don't think 
that that does work, and I'm not, I have not become aware of 
anybody who held 10 claims that have been able to benefit from 
it.
    Now, there probably are some, but I don't know who they 
are, and it wouldn't help me anyhow, because I have several 
properties where I have several hundred claims that are 
optioned out to other people, and so they are paying these 
fees, but not for long, because I can see the handwriting on 
the wall, and I was there, when I first started in this 
business years ago, there were no exploration companies at all 
in the state. They were all in South America. I reach back that 
far.
    Now, my father-in-law was an old time prospector, my wife's 
father, and I didn't know it wasn't any good, so I got into it 
and I loved it ever since until recently.
    Chairman Gibbons. Bill, would you recommend repealing or 
lowering the mine maintenance fee claim for small miners or 
changing it or modifying it in a way that would take into 
consideration some of the financial considerations that you 
have already expressed?
    Mr. Kohlmoos. Absolutely. The claims I just got back from 
that company, the letter I got yesterday, it is 86 claims. I 
can't afford to pay $100 each on them. I have a barite 
property. Now, we produced barite for many years, Barium. It is 
used in oil well drilling.
    When anybody gets some gasoline or you see a jet plane 
flying over burning jet fuel or a diesel truck going down the 
highway, that fuel can be traced back to it being helped out of 
the well or the well being drilled by barium. Barium is 
essential to drilling a deep well.
    I have a large barite deposit, possibly the biggest one in 
the world. It takes 120 claims to cover it. I can't sell a 
pound of barite today because the Government gave China duty 
free import privileges. China ships barite into the U.S., so we 
don't mine barite anymore. I can't mine it and I can't pay the 
$100 fee per claim to keep more than 100 claims.
    Fortunately, I have got by with having some lessees who 
have paid the fee and done the work, but we are getting to 
where that is ending and without any production for years.
    But, no, as an individual and a small company, (Barium 
Products is a small company) we can't afford that $100 and then 
turn around and add another hundred dollars into developing the 
ground.
    Chairman Gibbons. Let me wrap this up, because we just 
passed the time and ask one final question to Mr. Lewis. You 
oftentimes hear the $100 claim maintenance fee stops 
exploration or development by small miners. Does that in any 
way suspend your ability to access your land, to do any 
development work if you could afford it?
    Mr. Lewis. I think that it is, as far as the smaller person 
is concerned the $100 fee prohibits them from even considering 
doing any exploration. I mean, it is just a punitive, it is a 
punitive thing.
    The money we used to get in turning an unpatented property, 
the Federal Government now gets it all, because that is it. You 
might have got $100 a claim and that is about what you got as a 
down payment if you had a good property. And it is about what 
you could get per year as a small payment while the exploration 
went forward, and so if you pay it all, if you pay that basic 
fee to the Federal Government, the individual has no incentive 
to go out and try to do it.
    Chairman Gibbons. Well, what I was asking was, the $100 
does not prevent you from going out upon your claim and driving 
your truck out there if you wanted and doing the development 
work, drilling it if you had to, if you went through the 
permitting process?
    Mr. Lewis. That is true, I agree with you.
    Chairman Gibbons. It is just an added expense.
    Mr. Lewis. If you want to, but it is just an added expense 
that takes the incentive out of the whole--we had a system 
here. We had a system here where the individual prospectors or 
geologists would go out and find a likely spot, looking in the 
old holes as I call it, and that is what I did all of my life. 
I looked in somebody else's old hole and find a mineralized 
area and stake your claims and then you can do your work. But 
now it is not logical to do that anymore because of the hundred 
dollar fee and these bonding and these other rules and 
regulations.
    Chairman Gibbons. Let me ask you, gentlemen, all of you, 
and, for example, anybody who has testified here earlier if you 
wouldn't mind writing to us with your recommended changes that 
would be considered or should be considered for making the 
changes to these regulations that you think would be helpful to 
maintain the small miner and how the small miner exemption 
should be amended so that it could work or does work for small 
mining, and with that let me again thank you, gentlemen, and 
thank you.
    I know this hearing has been long and what my concern is, 
is for Corrie here, who has spent the last 3 hours diligently 
sitting there typing away and making sure that this hearing is 
heard. And I know there are some individuals in the audience 
that want to have their testimony heard as well, but let me 
assure you that if you will submit your testimony to us, we 
will incorporate every word of it in our report as having been 
given in this hearing and it will be part of our report just as 
well.
    I know there are a lot of people out there that would have 
liked to have the time to do this, unfortunately we are limited 
both in our time and our resources and ability to do this, so 
if you would like--
    Bernice Lalo. Well, I understand, but I don't think that 
there has been any Native Americans speak here. I believe that 
it has been mostly one sided. I would like to speak at least 2 
minutes of your time, just 2 minutes, and I can give you--.
    Chairman Gibbons. Let me ask Corrie, do you think you can 
endure 2 minutes? We are due out of here at 3:30.
    Bernice Lalo. I understand that.
    Chairman Gibbons. In great deference to you I will do that 
and I appreciate that, and also if you have written testimony 
you want to submit, we would be happy to take that as well.
    Bernice Lalo. Okay.
    Chairman Gibbons. So if, you know, if you want to take the 
mike, we will certainly extend this for you and appreciate your 
coming and if you will identify yourself for the record so that 
we can have it incorporated.
    Bernice Lalo. Bernice Lalo, New Western Shoshone. (Native 
American language was spoken).
    I'm Bernice Lalo. I'm Western Shoshone. We have lived on 
this land for thousands of years. I want to address the 
Congressman, distinguished audience, and Americans in general.
    The Western Shoshone people have a culture that has lasted 
thousands, millions of years, and we started and we have lived 
through many genocidal Federal acts, such as the Boarding 
School Act, the Relocation Act, the Military Act, and we were 
finally given citizenship in 1924 in a land where we had and 
have had for thousands of years.
    And let's talk about the stories that belong to the land. 
Let's talk about religion and this has been foo-fooed like it 
was not anything to base any kind of decision on, but let's 
talk about irreparable damage. Let's talk about genocide, 
because this is very hard, very much a part of us.
    Let's talk about America the beautiful that everyone puts 
their hand over their heart and says purple mountain majesties. 
Well, when the mines come and when they go we have reclaimed 
hills. We no longer have purple mountain majesties.
    So is this the kind of future that you want to leave for 
your children where there will be reclaimed hills and not the 
purple mountain majesties that is sung in your song of America 
the Beautiful? Let's talk about the future and talk about how 
will you be responsible. Will you be responsible or part of the 
people that are responsible for genocide?
    When we, when the Euro, European people stepped on this 
land we were a billion in number. Now we are merely a thousand. 
Let's talk about the difference in cultures. We do not go to a 
religious site, only on Sunday. This is part of who we are, and 
our stories and things that we call, things that European 
Americans call mythology is part of us. It is our beliefs. We 
don't call your Bible mythology, so you should have the same 
kind of respect for us.
    When the mining people leave, there are holes in the 
ground. The mountains are no longer there. We are left with 
degradation. We are left with polluted lands. We are left with 
nonexistent cultural sites, and we are left with the burials 
that have been taken out of the ground and they are shipped to 
State Museums where we have to go and claim them as 
unaffiliated remains.
    This has been Shoshone country for centuries, so I want to 
bring your attention to the fact that we are a nation. We would 
like to be able to respect other people as nations, but we like 
for you as American people to respect the things. We don't 
expect you to leave this untouched like we have been, like 
people say we do. They say we want to leave it unclaimed.
    We want you to be responsible. We want those waters where 
we can drink them, where we can swim in them, and that does not 
mean just Western Shoshone people. It means American people in 
general. That means everyone that is within this room, so when 
we are talking about 3809, it is not like some of the people 
said in here. It is uninformed people.
    We speak your language. We have gone to your schools, but 
we still remain native, and those purple mountain majesties 
should mean as much to you as it does to us, so I'm leaving you 
with that, and I know I didn't take more than 20 seconds, I 
didn't take 2 minutes, but I will tell you a story.
    A long time ago I was born on a ranch near Bald Mountain 
and there was a rancher that came by and my folks were out in 
the fields. They probably now would call that child abuse, but 
we were independent, and so when this rancher came by and he 
probably said, oh, where is your mother and father? When are 
they coming home? And I said, oh, they will be back later. And 
when my folks came home, I told them you are not (Native 
American language was spoken), and you know what that means? 
That says I was the only one talking with white man. And you 
know I sounded like I really carried on a conversation, but 
that is part of who I am.
    Right now I'm still the person that says (Native American 
language was spoken), but I would like for you to take that 
message to heart, and we do, we would like for the 3809 to be, 
contrary to everyone in this room probably, but we would like 
for it to remain, because you also and you especially have a 
commitment to the Native Americans and Euro-Americans and 
Mexican Americans and whatever kind of Americans you have, you 
have that commitment to keep a responsible mining.
    We are not asking that you stop. We are asking for 
responsible mining, and we don't have to want to live with our 
children or our grandchildren up the road to say that we cannot 
swim in that river. We cannot drink from that river. We cannot 
go to that spiritual site. We want to be able to have that, but 
we also want to have it for the other Americans as well, 
because without those it is irresponsible mining. Thank you 
very much.
    Chairman Gibbons. Thank you. We thank all of you for that. 
Clearly we gathered some very important information here today 
and it is going to help our Committee do its job better, I 
guess better legislators in effect, and to all of you who spent 
the time here today this afternoon listening diligently and 
contributing to this hearing, I want to thank you and with that 
this hearing is at a close.
    [Whereupon, at 3:44 p.m., the hearing was adjourned.]

    [Additional material supplied for the record follows:]

    1. Letter from Courtney Ann Coyle, Attorney at Law, on 
behalf of the Quechan Indian Nation of Fort Yuma, California, 
submitted for the record.

    2. Letter from William Kohlmoos, President, Nevada Miners 
and Prospectors Association, submitted for the record.
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[GRAPHIC] [TIFF OMITTED] T1816.009

               Nevada Miners and Prospectors Association
                              PO Box 50300
                             Reno NV 89513

April 27, 2001

Congresswoman Barbara Cubin
Subcommittee on Energy and Mineral Resources
1324 Longworth House Office Building
Washington DC 20515

Re: Written comments--April 20, 2001, Reno Field Hearing

Dear Congresswoman Cubin,

    I am President of the Nevada Miners and Prospectors Association, 
and I would like to provide some additional comments for your 
consideration. I attended the Field Hearing on April 20, which was 
chaired by our Congressman Jim Gibbons. Our Association had a meeting 
on the following Saturday, and we would like to make an additional 
statement for your consideration and for the record.
    1. L$100 BLM Maintenance Fee-Reduce the fee from $100 to $10 per 
claim. This high fee has literally stopped any claim staking and filing 
by our members. It is too high for the limited resources that we have 
for such activities, so we don't prospect any more.
    2. LSmall Miners Exemption-We would like to see this eliminated 
because it is very confusing and several of our members have lost their 
claims due to misunderstandings with the BLM on appropriate assessment 
work. We would rather pay the money than lose our claims.
    3. L3809 rules-Continue to review the 3809 rules and take into 
account the National Academy of Sciences recommendations. Please hold 
field hearings on any new changes recommended. Throw out the January 20 
revisions that Clinton instituted.
    4. LNational Mineral Policy-We recommend that you pursue a National 
Mineral Policy that would assure the country the minerals that will be 
needed in the future, secure self-sufficiency, and the well being for 
our children.
    Thank you for allowing our organization the opportunity to comment 
on these very important issues.

Sincerely

/signed/

William Kohlmoos
President

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