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47-609 PDF 2009

H.R. 699, HARDROCK MINING 

AND RECLAMATION ACT OF 2009 

LEGISLATIVE HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND 

MINERAL RESOURCES 

OF THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

Thursday, February 26, 2009 

Serial No. 111-5 

Printed for the use of the Committee on Natural Resources 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

or 

Committee address: http://resourcescommittee.house.gov 

(II) 

COMMITTEE ON NATURAL RESOURCES 

NICK J. RAHALL, II, West Virginia, Chairman 

DOC HASTINGS, Washington, Ranking Republican Member 

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Neil Abercrombie, Hawaii 

Frank Pallone, Jr., New Jersey 

Grace F. Napolitano, California 

Rush D. Holt, New Jersey 

Rau ́l M. Grijalva, Arizona 

Madeleine Z. Bordallo, Guam 

Jim Costa, California 

Dan Boren, Oklahoma 

Gregorio Sablan, Northern Marianas 

Martin T. Heinrich, New Mexico 

George Miller, California 

Edward J. Markey, Massachusetts 

Peter A. DeFazio, Oregon 

Maurice D. Hinchey, New York 

Donna M. Christensen, Virgin Islands 

Diana DeGette, Colorado 

Ron Kind, Wisconsin 

Lois Capps, California 

Jay Inslee, Washington 

Joe Baca, California 

Stephanie Herseth Sandlin, South Dakota 

John P. Sarbanes, Maryland 

Carol Shea-Porter, New Hampshire 

Niki Tsongas, Massachusetts 

Frank Kratovil, Jr., Maryland 

Pedro R. Pierluisi, Puerto Rico 

Don Young, Alaska 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Jeff Flake, Arizona 

Henry E. Brown, Jr., South Carolina 

Cathy McMorris Rodgers, Washington 

Louie Gohmert, Texas 

Rob Bishop, Utah 

Bill Shuster, Pennsylvania 

Doug Lamborn, Colorado 

Adrian Smith, Nebraska 

Robert J. Wittman, Virginia 

Paul C. Broun, Georgia 

John Fleming, Louisiana 

Mike Coffman, Colorado 

Jason Chaffetz, Utah 

Cynthia M. Lummis, Wyoming 

Tom McClintock, California 

Bill Cassidy, Louisiana 

James H. Zoia, Chief of Staff 

Rick Healy, Chief Counsel 

Todd Young, Republican Chief of Staff 

Lisa Pittman, Republican Chief Counsel 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES 

JIM COSTA, California, Chairman 

DOUG LAMBORN, Colorado, Ranking Republican Member 

Eni F.H. Faleomavaega, American Samoa 

Rush D. Holt, New Jersey 

Dan Boren, Oklahoma 

Gregorio Sablan, Northern Marianas 

Martin T. Heinrich, New Mexico 

Edward J. Markey, Massachusetts 

Maurice D. Hinchey, New York 

John P. Sarbanes, Maryland 

Niki Tsongas, Massachusetts 

Nick J. Rahall, II, West Virginia, ex officio 

Don Young, Alaska 

Louie Gohmert, Texas 

John Fleming, Louisiana 

Jason Chaffetz, Utah 

Cynthia M. Lummis, Wyoming 

Doc Hastings, Washington, ex officio 

(III) 

CONTENTS 

Page 

Hearing held on Thursday, February 26, 2009 ..................................................... 1 

Statement of Members: 

Hastings, Hon. Doc, a Representative in Congress from the State of 

Washington .................................................................................................... 14 

Prepared statement of ............................................................................... 15 

Lamborn, Hon. Doug, a Representative in Congress from the State of 

Colorado ......................................................................................................... 6 

Prepared statement of ............................................................................... 9 

Rahall, Hon. Nick J., II, a Representative in Congress from the State 

of West Virginia ............................................................................................ 11 

Prepared statement of ............................................................................... 13 

Statement of Witnesses: 

Eklund-Brown, Sheri, Chair, Elko County Board of Commissioners, 

Nevada ........................................................................................................... 52 

Prepared statement of ............................................................................... 54 

Heller, Hon. Dean, a Representative in Congress from the State of 

Nevada ........................................................................................................... 15 

Prepared statement of ............................................................................... 17 

Leshy, John D., Solicitor General, Department of the Interior (1993- 

2001), Harry D. Sunderland Distinguished Professor, University of 

California, Hastings College of the Law ..................................................... 21 

Prepared statement of ............................................................................... 23 

Nazzaro, Robin M., Director, Natural Resources and Environment, U.S. 

Government Accountability Office ............................................................... 31 

Prepared statement of ............................................................................... 32 

Reynolds, James T. (‘‘J.T.’’), Superintendent (2001-2008), Death Valley 

National Park, California, National Park Service ..................................... 41 

Prepared statement of ............................................................................... 42 

Starr, Hon. Jim, County Commissioner, Gunnison County, Colorado ......... 49 

Prepared statement of ............................................................................... 51 

Additional materials supplied: 

Congressional Research Service memorandum dated February 24, 2009, 

to Honorable Doc Hastings entitled ‘‘Wages of workers in the mining 

and tourism industries’’ submitted for the record ...................................... 7 

List of documents retained in the Committee’s official files ......................... 60 

National Mining Association, Statement submitted for the record .............. 3 

(1) 

LEGISLATIVE HEARING ON H.R. 699, TO MODIFY THE REQUIREMENTS APPLICABLE TO 

LOCATABLE MINERALS ON PUBLIC DOMAIN 

LANDS, CONSISTENT WITH THE PRINCIPLES 

OF SELF-INITIATION OF MINING CLAIMS, 

AND FOR OTHER PURPOSES. ‘‘HARDROCK 

MINING AND RECLAMATION ACT OF 2009’’ 

Thursday, February 26, 2009 

U.S. House of Representatives 

Subcommittee on Energy and Mineral Resources 

Committee on Natural Resources 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:05 a.m. in Room 

1324, Longworth House Office Building, Hon. Jim Costa [Chairman 

of the Subcommittee] presiding. 

Present: Representatives Costa, Lamborn, Heinrich, Rahall [ex 

officio], Lummis and Hastings [ex officio]. 

Mr. COSTA. The legislative hearing for the Subcommittee on 

Energy and Mineral Resources will now come to order. The Subcommittee meeting today is to hear testimony on H.R. 699 as introduced by Chairman Nick Rahall from West Virginia. 

This bill is not new. It is an effort that the Chairman has actually been a part of for some 30 years. The Hardrock Mining Law, 

frankly, in some instances one could argue, withstood the test of 

time since it was set into law and signed by President Ulysses S. 

Grant in 1872. It is my understanding that it has not been 

changed. 

The purpose of the bill, therefore, is to modify the requirements 

in the original law as it relates to minerals on the public domain 

of lands, consistent with principles that Chairman Rahall believes 

are involved with the self-initiation of mining claims, and other 

purposes as it relates to ensuring that that resource is treated appropriately. 

Clearly, no one could argue that a lot has changed since 1872. 

I have some ministerial functions with regard to the Subcommittee 

that I need to complete first. 

2 

Under Rule 4[g], the Chairman and the Ranking Member make 

opening statements. If any other Members have statements, they 

can be included in the hearing record under unanimous consent. 

Additionally, under Rule 4[h], any material submitted for inclusion in the hearing record must be submitted no later than 10 days 

following the hearing, and that includes questions. 

As I said at the outset, this hearing is about a 137-year-old 

mining law that has been under consideration for a number of 

decades. The reform of the Hardrock Mining Law on public lands 

is not a new issue to this Subcommittee or to the full Committee. 

In the past two decades, I have researched—the Committee or 

the Subcommittee has held almost 40 hearings on it during that 

time period. As the Subcommittee Chair for the second term, the 

One Hundred and Tenth, and now One Hundred and Eleventh 

Congress, I have actually chaired three hearings on the reform of 

the law, two here in our Nation’s Capital, and one in Elko, Nevada, 

in our Congressman Heller’s district. 

It was a very informative hearing that we held, and we are 

pleased that Representative Heller is here today to give us his 

thoughts. 

This bill before us, that has been reintroduced by Chairman 

Rahall, is nearly identical to the one that the House of Representatives passed in 2007. The only changes have been minor and technical, and conform with changing the date of the bill from 2007 to 

2009. 

So it is in essence the same bill. Let me say in conclusion that 

obviously we are in a financial crisis, and that raises the question 

whether or not it is an appropriate time to consider new fees and 

requirements on the mining industry. 

Let me just mention a few considerations that I think Members 

of the Subcommittee and the full Committee should take into account as the Chairman makes a determination when he wants to 

move on his measure. 

Should taxpayers be on the hook obviously for a multi-multibillion dollar cleanup cost that is impacting 160,000 hardrock abandoned mines in the West, especially since there are no royalty for 

gold removed from public lands. 

Abandoned mines pose significant health hazard problems and 

safety issues. The 2008 Inspector General’s Report of the Department of the Interior identified that 33,000 of the 160,000 abandoned mines, in fact, pose serious safety and health hazards. 

That cleanup, obviously, if left unattended, then goes to the cost 

of Federal taxpayers, and many states and communities bear the 

burden also of those cleanups, or the risks when those cleanups do 

not take place. So reclamation jobs obviously provide a reason for 

reform of the mining law, as opposed to a retreat on this comprehensive reform. 

Unfortunately, the National Mining Association was unable to 

testify today, but they have submitted written testimony, or we had 

asked them to testify, and they have been very involved, of course, 

in the last Congress, and as they will in this Congress, on this important issue. 

3 

I would ask unanimous consent that their testimony be included 

for the record, and we look forward to continuing to work with 

them. 

[The statement submitted for the record by the National Mining 

Association follows:] 

Statement submitted for the record by the National Mining Association 

The National Mining Association (NMA) appreciates the opportunity to provide 

this statement to the Committee. NMA is the principal representative of the producers of America’s coal, metals, industrial and agricultural minerals; the manufacturers of mining and mineral processing machinery, equipment and supplies; and 

the engineering and consulting firms, financial institutions and other firms that 

serve our nation’s mining industry. 

Our members have a significant interest in the exploration for and development 

of minerals on federal lands. The federal lands are an important source of minerals, 

metal production and reserves that are critical to the nation’s economic security and 

well-being. Mining on federal lands creates high-wage jobs, contributes to the economic vitality of local communities and is essential for meeting the nation’s resource 

needs and to rebuilding America. 

NMA supports reasonable amendments to the Mining Law. However, provisions 

of the ‘‘Hardrock Mining and Reclamation Act of 2009’’ (H.R. 699) would put thousands of high-paying mining jobs and mining-dependent communities throughout 

the West at risk. American mining needs a predictable legal and regulatory framework to provide the long-term certainty and stability needed to protect existing investments and to attract new capital. H.R. 699’s royalty would make U.S. mining 

non-competitive, and other provisions of H.R. 699 that are duplicative of other U.S. 

laws and regulations would create uncertainty that causes investment capital and 

jobs to go off-shore. 

EIGHT PERCENT GROSS ROYALTY IS CLEARLY BAD PUBLIC POLICY 

NMA supports a fair return to the public through imposition of a royalty. The 

‘‘key is to achieve a royalty that most mines can bear and still make reasonable 

profits.’’ (Oct. 2, 2007, testimony of James Otto before the House Natural Resources 

Committee.) H.R. 699, however, imposes the same 8 percent gross royalty that, according to the economic experts who testified during the 110th Congress, would 

wreak destruction on domestic mining industry., An 8 percent gross royalty made 

no sense when the U.S. economy was thriving—it is even worse public policy when 

we are in a recession. An 8 percent royalty on minerals produced on federal lands 

would be the world’s highest government imposed royalty on minerals. 

Since the imposition of a royalty has the potential to have significant economic 

consequences on existing and future mining operations, the type of royalty, the rate 

and its application to existing claims are all critical variables that must be considered. An 8 percent gross royalty does not properly balance a fair return to the public 

and the need to encourage the substantial capital investments required to explore 

for and develop minerals that provide the resources needed by our economy. Mining 

operations require long-term and substantial commitments of capital and years of 

development before investors realize positive cash flows. A royalty rate, that is the 

highest government-imposed rate in the world, will have a negative impacts on returns on investment, our ability to create good paying jobs here at home and our 

ability to meet more of our own needs for minerals. As noted by the World Bank: 

A mining country that relies on private firms to find and exploit its mineral 

resources must compete with other countries for investment. Its investment 

climate, which reflects how attractive the country is to domestic and foreign 

investors, depends ultimately on two considerations: first, the expected rate 

of return the country offers investors on their investments in domestic 

projects, and second, the level of risk associated with those projects. 

Otto, James et al., Mining Royalties: A Global Study of Their impact on Investors, 

Government, and Civil Society. World Bank, 2006, p. 183. 

The primary weakness of a gross royalty ‘‘is that low profit mines will have the 

same royalty basis as high profit mines, and this may impact them with regard to 

decisions about mine life, ore cut-off grade, and whether to continue operations 

when prices are low.’’ (Oct. 2, 2007 Otto testimony) Because it is applied regardless 

of mine profitability, a gross royalty fails to take into account the cyclical and often 

volatile nature of commodity prices. 

As demonstrated by extremes in highs and lows for commodity prices over the last 

couple years, the prices of hard rock minerals have historically been subject to great 

4 

fluctuation. (See Attachment A—Five year overview of select commodity prices.) The 

addition of a royalty can: 

turn a profitable mine into valueless rock with a sudden downturn in the 

market...Simply put, as commodity prices decrease the rate of return required to justify a mining investment increases more dramatically under a 

gross royalty than under a net royalty. Because the other costs of the mining operation are relatively fixed, the gross royalty takes a bigger bite out 

of the shrinking income pie as prices decrease. 

Oct 2, 2007, testimony of James Cress before the House Natural Resources Committee. 

A gross royalty would require a mining company to continue paying a royalty 

even when it is operating at a loss, and that royalty could even cause the loss. No 

mine can be operated long at a loss. The result would be that some mines shut down 

prematurely, jobs would be lost, federal state and local taxes would not be paid, and 

suppliers of goods and services would suffer. A net royalty, in contrast, does not 

cause mining operations to operate at a loss. A net royalty automatically reduces 

during periods of low prices and increases again when prices are higher, permitting 

mining operations to weather periods of low commodity prices and maximize the recovery of marginal ore during periods of high prices. Due to the cyclical nature of 

demand for mineral commodities, there have been and will always be periods of 

lower commodity prices. A net royalty provides the best incentive to explore for minerals on federal lands throughout economic cycles so that the nation’s needs can continue to be met. 

Because the commodities affected by H.R. 699 are sold on a world market, U.S. 

costs must be competitive to attract the investment needed to promote domestic 

mining. Obviously, the royalty will impact U.S. costs and, if not carefully crafted, 

will put U.S. mining projects at a competitive disadvantage. A high gross royalty 

ignores the fact that: 

The United States corporate tax rate of 35% is virtually the highest corporate tax rate in the world. This, combined with many high state levies, 

provide a significant negative incentive for future investments. Its major 

trading partners continue to lower their rates putting American corporations in increasingly uncompetitive situations. 

Behre Dolbear, 2009 ‘‘Where Not to Invest.’’ 

U.S. IS BECOMING INCREASINGLY RELIANT ON FOREIGN SOURCES OF 

MINERALS 

Despite reserves of 78 important mined minerals, however, the United States currently attracts only eight percent of worldwide exploration dollars. As a result, our 

nation is becoming more dependent upon foreign sources to meet our metal and 

minerals requirements, even for minerals with adequate domestic resources. The 

U.S. Geological Survey (USGS) reported that America now depends on imports from 

other countries for 100 percent of 18 mineral commodities and for more than 50 percent of 43 mineral commodities. USGS Minerals Commodity Summaries, 2009, p. 7. 

This increased import dependency is not in our national interest. Increased import 

dependency causes a multitude of negative consequences, including aggravation of 

the U.S. balance of payments, unpredictable price fluctuations, vulnerability to possible supply disruptions due to political or military instability, the loss of good-paying jobs and out-sourcing of downstream economic activity including fabrication and 

related technologies. 

Our over-reliance on foreign supplies is exacerbated by competition from the surging economies of countries such as China and India. As these countries continue to 

evolve and emerge into the global economy, their consumption rates for mineral resources are ever-increasing; they are growing their economies by employing the 

same mineral resources that we used to build and maintain our economy. As a result, there exists a much more competitive market for global mineral resources. 

MINING WILL PLAY A CRITICAL ROLE IN REBUILDING OUR ECONOMY 

Mining can help rebuild America and American communities with high-paying 

jobs and needed resources in these tough economic times. More than 50,000 Americans are employed at U.S. metals mines. They meet half of this country’s manufacturing needs and can do more. Another 200,000 jobs are created because of U.S. 

metals mines—generating $12.5 billion in payroll and $4.2 billion in personal income and payroll taxes. In fact, the U.S. produces more than $25 billion in metal 

mining products generating nearly $60 billion in economic output. These operations 

truly are the economic engines that drive countless communities across the West. 

Mining’s average annual wage of $59,000 is 33 percent higher than the combined 

annual average for all industrial jobs. These are jobs and operations that can play 

5 

a vital role in rebuilding America, but they cannot shoulder the world’s highest royalty and remain competitive in the international marketplace. 

The importance of the domestic mining to our economy, our way of life and our 

national security cannot be ignored. Indeed, it is irresponsible for us to ignore the 

vast mineral resources we have within our nation’s boundaries when our domestic 

needs are so great. The United States needs robust minerals production to help 

meet the needs of American consumers, the largest users of mined materials. U.S. 

mining provides nearly 50 percent of the metals American manufacturers need to 

operate, including iron ore, copper, gold, phosphate, zinc, silver and molybdenum. 

All aspects of modern society are made possible through mining. We rely on metals 

and minerals to meet our electronic, telecommunications and national security 

needs. 

Furthermore, minerals will play a key role as we investigate renewable and alternative energy sources to help our nation reduce its reliance on foreign sources of 

oil. For example, while the average car requires up to 50 pounds of copper, hybrid 

plug-in cars will require an additional 25-50 pounds of copper for the battery, cabling harness and other components. Wind turbines such as the Vestas V90—3.0 

MW require approximately 335 tons of steel; 4.7 tons of copper; 3 tons of aluminum; 

13 tons of glass fiber; and 1,200 tons of reinforced concrete. Minerals are also critical components of projects that are part of the economic stimulus package signed 

by President Obama on Feb. 17, 2009. No infrastructure project, including bridges, 

buildings or transportation can move forward without minerals and metals. 

THE ENVIRONMENTAL PROVISIONS OF H.R. 699 ARE UNNECESSARY 

AND DUPLICATIVE OF EXISTING STANDARDS 

H.R. 699 directs the Secretaries of the Interior and Agriculture to promulgate 

new environmental and reclamation standards for mineral activities on Federal 

lands. Such requirements are totally unnecessary since they would be duplicative 

of the standards that are already in place. Under current law, a mineral exploration 

or mining operation on federal lands is subject to a comprehensive framework of federal and state environmental laws and regulations including: the Clean Water Act; 

the Safe Drinking Water Act; the Clean Air Act; the National Environmental Policy 

Act; Toxic Substances Control Act; the Resource Conservation and Recovery Act; the 

Endangered Species Act; and the Bureau of Land Management (BLM) and Forest 

Service surface management regulations for mining. These laws and regulations are 

‘‘cradle to grave,’’ covering virtually every aspect of mining from exploration through 

mine reclamation and closure. According to the 1999 report on issued by the National Academy of Sciences (NAS) panel of experts convened by Congress, this existing framework for mining is ‘‘generally effective’’ in protecting the environment. 

Hardrock Mining on Federal Lands, National Academy of Sciences, National Academy Press, 1999, p. 89. 

That 1999 NAS report also found that ‘‘improvements in the implementation of 

existing regulations present the greatest opportunity for improving environmental 

protection....’’ Id. at 90. Notably, the Department of the Interior’s 2000 and 2001 regulations governing mining and reclamation on BLM lands significantly strengthened 

the standards for mining on federal lands, including new provisions on guaranteeing 

reclamation through financial assurances. 

Importantly, the NAS panel of experts cautioned against applying inflexible, technically prescriptive environmental standards stating that ‘‘simple ‘‘one-size-fits-all’’ 

solutions are impractical because mining confronts too great an assortment of sitespecific technical, environmental, and social conditions.’’ Id. Furthermore, recognition of the existing comprehensive framework of federal and state environmental 

and cultural laws that already regulate all aspects of mining from exploration 

through mine reclamation and closure avoids unnecessary and expensive duplication. Additional standards or enforcement mechanisms are not needed to protect the 

environment. 

Similarly, existing laws and authorities are adequate to close certain ‘‘special 

places’’ to mining activity. Congress has closed lands to mining for wilderness, national parks, wildlife refuges, recreation areas, and wild and scenic rivers. Congress 

also has granted additional authority to the Executive Branch to close federal lands 

to mining. The Antiquities Act authorizes the president to create national monuments to protect landmarks and objects of historic and scientific interest. Finally, 

Congress authorized the Secretary of the Interior to close federal lands to mining 

pursuant to the land withdrawal authority of the Federal Land Policy and Management Act. As a result of these laws and practices, new mining operations are either 

restricted or banned on more than half of all federally owned public lands. These 

existing laws and authorities are adequate to protect special areas. New closures of 

public land, based on vague and subjective criteria without congressional oversight, 

6 

as contemplated in H.R. 699 would arbitrarily impair mineral and economic development. 

CONCLUSION 

U.S. metals mining is needed to rebuild America. NMA supports responsible updates to the General Mining Law to keep U.S. mining strong, but H.R. 699 is the 

wrong medicine for our economy. NMA appreciates the opportunity to provide this 

testimony. 

Mr. COSTA. We now have before we get to our witness from 

Nevada, our colleague, an opening statement from the Ranking 

Member of this Subcommittee, Representative Doug Lamborn of 

Colorado. 

STATEMENT OF THE HONORABLE DOUG LAMBORN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF 

COLORADO 

Mr. LAMBORN. I thank you, Mr. Chairman, and I look forward to 

working with you and the other Members of this Committee on a 

lot of important issues as we go forward. 

Today we are meeting for the first of what I hope will be several 

hearings on mining in America. There are a number of critical 

issues which we hopefully will be addressing in this Committee. 

We should hold a hearing focusing on the importance of an expanded domestic mineral supply. According to the USGS, we are 

more than 50 percent dependent on, quote, 43 mineral commodities, and 100 percent import reliant for 18. 

This reliance threatens our economic security. On Tuesday night, 

the President called upon America to expand our domestic renewable resource manufacturing. That expansion will depend heavily 

on the mineral resources of America to provide the raw materials 

for that manufacturing. 

The President specifically highlighted the manufacturing of lithium batteries. The United States is currently 50 percent dependent 

on foreign sources of lithium. 

We will not be able to rely on foreign imports forever. I would 

like to offer for the record a recent article highlighting a move by 

Bolivia to nationalize its lithium mines. 

NOTE: The New York Times article entitled ‘‘In Bolivia, 

Untapped Bounty Meets Nationalism’’ dated February 3, 

2009, has been retained in the Committee’s official files. It 

can be found at http://www.nytimes.com/2009/02/03/world/ 

americas/03lithium.html?lr=1&th&emc=th. 

Mr. LAMBORN. We should hold other hearings on how to best improve abandoned mine lands and how to streamline the permitting 

process. Hopefully in future hearings we can have experts from industry give us that important perspective. 

Updating the mining law has been an elusive task. We can constructively explore many of the same principles, discussing a reasonable royalty going forward, using a portion of the proceeds from 

locatable minerals to help pay for improving abandoned mine 

lands, and presumably maintaining a vital domestic mining industry. 

However, just as with the debate on oil and gas development in 

the outer continental shelf, environmental activists make what 

7 

should be a simple task extremely difficult. It is reflected in the 

legislation that we will be discussing today. 

Many witnesses at the hearings held in 2007 told us this legislation, if enacted, would decimate the domestic hardrock mining industry, sending some of the highest paying jobs in the American 

west overseas, and making the United States even more dependent 

on foreign sources of mined materials. 

Members from western states like mine will fight vigorously to 

keep these jobs, because the West cannot survive on tourism alone. 

I would want to submit for the record at this point a recent CRS 

report comparing the salaries of workers in the mining industry 

versus those in the tourism industries. 

Mr. COSTA. Without objection. 

[The CRS Memorandum follows:] 


47609.009.eps
8 

Mr. LAMBORN. Thank you, Mr. Chairman. If the past is any indication, we are going to hear some real rhetorical language about 

the 1872 mining law here today. We will hear, quote, the law was 

passed in 1872 and is 137 years old. 

Simply because something is old does not mean that it is inherently bad. Yellowstone National Park was also created in 1872. The 

fact is the Congress that passed the law that created Yellowstone 

National Park, and a few days later passed the mining law, recognized that while we need to protect special areas, we also need to 

use some of our lands to supply the raw materials to develop a 

growing nation. We may hear the law allows public lands to be purchased $2.50 or $5 per acre. In reality, while those are the statutory fees included in the law, there has been a moratorium on patenting since 

1994. 

We may hear that the mining law needs modern environmental 

laws. Modern mining operates under the same strict environmental 


47609.010.eps
9 

laws that Americans rely on to protect their air, water, and quality 

of life, and those include the following: the Clean Air Act, the 

Clean Water Act, the Endangered Species Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation Liability Act, CERCLA, Toxic Substance Control Act, NEPA. 

All these laws provide for public notice and comment opportunities, citizen lawsuit provisions, and various appeal processes, that 

allow the public and affected communities to fully participate in 

the mine permitting process. 

In fact, all of these opportunities to challenge mining projects 

have served to draw out the permitting process for projects on Federal lands, and today it can take 12 years or more to get a final 

approval to operate a mine. 

Mr. Chairman, two years ago when the House considered very 

similar legislation, we were in a very different economy. For example, copper prices were over $3 per pound, and global demand was 

resulting in record prices for recycled copper. 

This demand for recycled copper led to an epidemic of copper 

theft across the United States. In California, thieves stole copper 

wire from irrigation pumps, which left farmers incapable of watering their crops. 

However, that economy is not the economy we have today. Today, 

we are struggling to rebuild America’s economy and create jobs. 

This bill as drafted would do irreparable harm to that recovery. 

We need the raw materials we get from mining to expand our 

economy and build the infrastructure we need, and we need mining 

jobs, many of which are unionized, and which are some of the highest paying jobs in the country. 

If we want to become the world leader in lithium battery production, for instance, we need to mine more lithium. If we want to lead 

the world in the manufacturing of solar panels, then we need to 

produce more silicon and titanium. 

If we want to lead the world in the manufacturing of water turbines, we need more zinc. Finally, if we want a smart grid electrical system, and hybrid cars, we must have copper. 

All of these resources must be mined. Building the mines to supply the resources, and building the factories that use those resources, will put Americans to work in the private sector. 

Like off-shore oil, this is a debate about using American resources to create American jobs and wealth. There is much that we 

can agree on, Mr. Chairman, and I hope that going forward with 

additional hearings, we can examine many of these areas, and craft 

a bill which will grow, not shrink, America’s economy. 

Thank you for this time I look forward to hearing from our witnesses, and I would also ask for unanimous consent for the Ranking Member of the full Committee to also make an opening statement at the proper time. 

[The prepared statement of Mr. Lamborn follows:] 

Statement of The Honorable Doug Lamborn, a Representative in Congress 

from the State of Colorado 

Thank you, Mr. Chairman. Today we are meeting for the first of what I hope will 

be several hearings on mining in America. There are a number of critical issues 

which we should be addressing in this committee. 

10 

HEARINGS 

We should hold a hearing focusing the importance of an expanded domestic mineral supply. According to the USGS, we are more than 50% dependent on ‘‘43 mineral commodities and 100% import reliant for 18.’’ This reliance threatens our economic security. Tuesday night the President called upon America to expand our domestic renewable resource manufacturing. That expansion will depend heavily on 

the mineral resources of America to provide the raw materials for that manufacturing. 

The President specifically highlighted the manufacturing of lithium batteries. The 

United States is currently 50% dependent on foreign sources of lithium, We may not 

be able to rely on foreign imports forever. I would like to offer for the Record a recent article highlighting a move by Bolivia to nationalize its lithium mines. 

We should hold other hearings on how to best improve abandoned mine lands and 

how to streamline the permitting process. Hopefully, in future hearings we can actually have experts from industry give us that important perspective 

MINING LAW 

Updating the Mining Law has been an elusive task. We agree on many of the 

same principles: reasonable royalty going forward, a portion of the proceeds from 

locatable minerals to help pay for improving abandoned mine lands, and presumably 

maintaining a vital domestic mining industry. However, just as with the debate on 

oil and gas development in the outer continental shelf, environmental activists make 

what should be a simple task extremely difficult. 

It is reflected in the legislation we will be discussing today. Many witnesses at 

the hearings held in 2007 told us this legislation, if enacted, would decimate the 

domestic hard rock mining industry sending some of the highest paying jobs in the 

American West overseas, and making the U.S. even more dependent on foreign 

sources of mined materials. 

Members from Western States like mine will fight vigorously to keep these jobs 

because the West cannot survive off of tourism alone. I want to submit for the 

record at this point a recent CRS report comparing the salaries of workers in the 

mining industry versus those in the tourism industries. 

If the past is any indication, we are going to hear some real rhetorical whoppers 

about the 1872 Mining Law here today. We will hear that: ‘‘The law was passed 

in 1872 and is 137 years old’’. Simply because something is old, doesn’t mean that 

it is inherently bad, Yellowstone National Park was also created in 1872. The fact 

is the Congress that passed the law that created Yellowstone National Park and a 

few days later passed the Mining law recognized that while we need to protect special areas we also need to use some of our lands to supply the raw materials to develop a growing nation. 

We may hear that: ‘‘The law allows public lands to be purchased for $2.50 or 

$5.00 per acre’’. In reality while those are the statutory fees included in the law, 

there has been a moratorium on patenting since 1994. 

We may hear that: ‘‘The Mining Law needs modern environmental laws.’’ Modern 

mining operates under the same strict environmental laws that Americans rely on 

to protect their air, water, and quality of life. 

• The Clean Air Act (CAA); 

• The Clean Water Act(CWA); 

• The Endangered Species Act (ESA); 

• The Resource Conservation and Recovery Act (RCRA); 

• The Comprehensive Environmental Response Compensation Liability Act 

(CERCLA), otherwise known as superfund; 

• Toxic Substance Control Act, and 

• National Environmental Policy Act (NEPA). 

All these laws provide for public notice and comment opportunities, citizen lawsuit 

provisions, and various appeal processes that allow the public and affected communities to fully participate in the mine permitting process. In fact all of these opportunities to challenge mining projects have served to draw out the permitting process 

for projects on federal lands and today it can take 12 years or more to get a final 

approval to operate a mine. 

CLOSING 

Mr. Chairman, two years ago when the House considered this legislation we were 

in a very different economy. For example, copper prices were over $3 per pound and 

global demand was resulting in record prices for recycled copper. This demand for 

recycled copper led to an epidemic of copper theft across the United States. In California, thieves have stolen copper wire from irrigation pumps which left farmers incapable of watering their crops 

11 

However, that economy is not the economy which we have today. Today we are 

struggling to rebuild America’s economy and create jobs. This bill as drafted would 

do irreparable harm to that recovery. We need the raw materials we get from mining to expand our economy and build the infrastructure we need. And we need mining jobs, many of which are unionized, and which are some of the highest paying 

in the country. 

If we want to become the world leader in lithium battery production, we need to 

mine more lithium. If we want to lead the world in the manufacturing of solar panels, than we need to produce more silicon and titanium. If we want to lead the world 

in the manufacturing of wind turbines, we need more zinc. Finally, if we want a 

smart grid electrical system and hybrid cars, we must have copper. All of these resources must be mined 

Building the mines to supply the resources, and building the factories that use 

these resources will put American’s to work in the private sector. 

Like offshore oil, this is a debate about using American resources to create American jobs and wealth. There is much we can agree on Mr. Chairman and I hope that 

going forward with additional hearings we can examine many of those areas and 

craft a bill which will grow, not shrink, America’s economy. 

Thank you for this time, and forward to hearing from our witnesses. 

Mr. COSTA. Thank you. I thank the gentleman from Colorado for 

his comments, and I would now like to defer to the Chairman of 

the full Committee, whose legislation that we are hearing testimony on today, a gentleman who has been tirelessly attempting to 

bring the hardrock mining law in reflection to today’s challenges 

and modern circumstances that we face, Chairman Nick Rahall 

from West Virginia. 

STATEMENT OF THE HONORABLE NICK J. RAHALL, II, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST 

VIRGINIA 

Chairman RAHALL. Thank you, Chairman Costa. I appreciate you 

holding these hearings once again, and to the Ranking Member, 

Mr. Lamborn, and to the Ranking Member of the full Committee, 

Mr. Hastings, and to our colleague from Nevada, Mr. Heller. 

I appreciate all of you presenting testimony today, and in particular I want to recognize the first witness that is on panel number two, Mr. John Leshy. John has been around this issue longer 

than—well, I won’t go there, but anyway, he—— 

Mr. COSTA. Longer than you? 

[Laughter.] 

Chairman RAHALL. Well, Mr. Lamborn has said with age things 

are not harmed any, but I am still—— 

Mr. COSTA. They get better. 

Chairman RAHALL. They are still in need of redo, as is the Mining Law of 1872. 

[Laughter.] 

Chairman RAHALL. But to Mr. Leshy, he is really considered the 

guru of the mining law reform, and I really appreciate the books 

that he has written on the issue, and the trusted counsel he has 

been for so many decades, and I know that his testimony will be 

very worthy of this Committee’s consideration. 

The old saying that the more things change, the more they stay 

the same, may be particularly appropriate to the mining law reform. Nearly everything has changed about mining since 1872 

when Congress enacted the mining law, including the following: 

how we mine, and the environmental impacts of those mile-wide 

12 

pits, what we mine, and how we use hardrock minerals like uranium for nuclear power, and iridium for solar p.v. cells, the value 

of what we mine, like gold, which is today nearly $1,000 an ounce. 

Record highs. 

The fact is that in every other country, companies pay a royalty 

to mine hardrock minerals, but they do not pay such a royalty in 

the United States of America. The legacy is 161,000 abandoned 

hardrock mines in the West. 

Yet, the mining law has not changed in 137 years. Even the 

Grand Canyon, which was established as a national park 90 years 

ago today, has changed. Today our goals for mining policy simply 

are no longer what they were in 1872. 

The bill that I have introduced, which passed the House by an 

overwhelming majority last Congress, support on both sides of the 

aisle, reflects a need for a comprehensive overall. 

In recent years its industry profits soared, mining analysis have 

glowingly titled their annual reports, quote, mining, as good as it 

gets. And, quote, again, riding the wave. 

Meanwhile, Congress continues to allow companies with lucrative activities on public land to escape paying a fair return to the 

American people, the true owners of the land, for the gold, copper, 

and other metals and minerals. 

Over the years, actually the decades, that I have been involved 

in this effort, we have developed a lengthy record endorsing a gross 

income royalty as the best choice for the government to ensure a 

fair return for use of our resources from hardrock mining. 

Even in these days of economic crisis, I believe that is still true. 

As the Congressional Research Service has determined, and I 

quote, the vast majority of mining activity on Federal lands is gold 

mining. 

This is significant because although other mineral prices have 

fallen, gold prices, which I already referred to, fare pretty well, and 

profits might even go up. Earlier this month the mining sector 

analysis of precious metal costs predicted that an unprecedented 

rate of cost deflation will boost the economy, the economics of gold 

mines, and gold projects. 

According to a New York Times article in January, and I quote, 

industry lobbyists did not complain when the Nevada legislature 

passed a measure in early December requiring mining companies 

to pay $28 million in ’09 taxes early to help the State patch its 

shortfall in revenue. 

Finally, we should remember that for some communities the 

need to change the mining laws right to mine and lack of environmental protections simply cannot afford delay. The basic environmental standard and the basic ability to protect resources like 

water is just common sense. 

In this time of economic crisis let us not be mislead into letting 

an outdated boondoggle hang on the books. We are only adding to 

our list of financial woes and the environmental challenges facing 

our western communities. 

And I dare say that the mining industry itself would like to see 

this cloud removed from over its head, and would like the certainty 

and continuity of planning for the future that any business enterVerDate Nov 24 2008 16:13 May 28, 2009 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 L:\DOCS\47609.TXT Hresour1 PsN: KATHY
13 

prise would want to do so that they can continue to provide the 

jobs for their people. 

Coming from a mining state as I do, I certainly recognize that 

certainly in the future that all industry needs in their financial 

planning. So, again, Chairman Costa, and Subcommittee Members, 

I thank you for holding this hearing. I yield back. 

[The prepared statement of Mr. Rahall follows:] 

Statement of The Honorable Nick J. Rahall, II, Chairman, 

Committee on Natural Resources 

Mr. Chairman, thank you for holding this hearing on H.R. 699, legislation I have 

introduced to reform the Mining Law of 1872. The old saying, ‘‘the more things 

change, the more they stay the same’’ may be particularly appropriate to Mining 

Law Reform. 

Nearly everything has changed about mining since 1872 when Congress enacted 

the Mining Law, including: • How we mine and the environmental impacts of those mile-wide pits. • What we mine and how we use hardrock minerals—like uranium for nuclear 

power and indium for solar PV cells. • The value of what we mine—like gold, which today is nearly $1,000 an ounce. • The fact that in nearly every other country, companies pay a royalty to mine 

hardrock minerals, but they do not in the United States. • The legacy of 161,000 abandoned hardrock mines in the West. 

Yet the Mining Law has not changed in 137 years. Even the Grand Canyon, 

which was established as a national park 90 years ago today, has changed. 

Today, our goals for mining policy simply are no longer what they were in 1872. 

The bill that I have introduced—which passed the House by an overwhelming majority last Congress—reflects the need for comprehensive overhaul. 

In recent years, as industry profits soared, mining analysts have glowingly titled 

their annual reports ‘‘Mining: As Good as It Gets’’ and ‘‘Riding the Wave.’’ Meanwhile, Congress continued to allow companies with lucrative activities on public 

lands to escape paying a fair return to the American people for gold, copper, and 

other metals minerals. 

Over the years, actually, the decades that I have been involved in this effort, we 

have developed a lengthy record endorsing a gross income royalty as the best choice 

for the government to ensure a fair return from hardrock mining. 

Even in these days of economic crisis, I believe that is still true. 

As the Congressional Research Service determined, ‘‘the vast majority of mining 

activity on Federal lands is gold mining.’’ This is significant because although other 

mineral prices have fallen, gold continues to fare well—and profits might even go 

up. 

Earlier this month, a mining sector analysis of precious metals costs predicted 

that ‘‘an unprecedented rate of cost deflation’’ will boost the economics of gold mines 

and gold projects. According to a New York Times article in January: ‘‘[I]ndustry 

lobbyists did not complain when the Nevada legislature passed a measure in early 

December requiring mining companies to pay $28 million in 2009 taxes early to help 

the State patch its shortfall in revenue.’’ 

Finally, we should remember that for some communities, the need to change the 

Mining Law’s ‘‘right to mine’’ and lack of environmental provisions simply cannot 

afford delay. A basic environmental standard and a basic ability to protect resources 

like water, is just common sense. The way the Mining Law works now, BLM officials and communities who question a proposal to mine have little influence. According to BLM, among the 486 plans of operation for hardrock mines that were submitted in the past 10 years, only 2.4% were rejected. 

In a time of economic crisis, let us not be misled into letting an outdated boondoggle hang on the books. We are only adding to our list of financial woes and the 

environmental challenges facing Western communities. 

Again, Chairman Costa and Subcommittee Members, thank you for holding this 

hearing. 

Mr. COSTA. Thank you very much, Chairman Rahall, for your 

focus, and for your tenacity, and for the expertise that you lend to 

not only this issue, but all the issues that we deal with in the Natural Resources Committee. 

14 

We have our Ranking Member, Doc Hastings, from Washington 

State, who I understand also has a statement that he would like 

to make. 

STATEMENT OF THE HONORABLE DOC HASTINGS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF 

WASHINGTON 

Mr. HASTINGS. Thank you very much, Mr. Chairman, and I will 

make my comments very brief. But I simply want to reiterate two 

important points made by Mr. Lamborn. And that is, first, we need 

to recognize the significant role that minerals and metals play in 

our economy, and how important they are to the manufacturing 

jobs, especially to developing alternative sources of energy that Mr. 

Lamborn laid out. 

Mining creates thousands and thousands of jobs across this country, and it is the very economic foundation of many communities 

across the country. The minerals and metals mined in America are 

vital for the broad array of American industries. 

We can produce minerals here in our country and create jobs for 

Americans, or we can drive these jobs overseas and become dependent on China and other nations for the raw materials needed to 

sustain manufacturing jobs. 

During the first week of this administration, we have seen the 

Interior Department take action after action that is costing us the 

creation of new jobs. Yesterday’s announcement on oil shale R&D 

leases was Secretary Salazar’s third announcement this month regarding delays in America’s energy development. 

From withdrawing land leases in Utah, to halting off-shore drilling, and now oil shale, the administration is walking away from 

utilizing America’s resources to become less dependent on foreign 

countries. 

Our economy cannot afford to have the Federal Government keep 

saying, no, no, no, to the creation of new energy and production 

jobs. I think this same principle applies to mining. 

We must be honest that the jobs of American workers are at risk 

if the Federal Government imposes excessive and costly regulations 

and fees on mining in America. With our shaky economy, Congress 

needs to be extremely thoughtful and act very carefully in the consideration of mining law changes. 

And that brings me to the second point that was made by Mr. 

Lamborn that I want to emphasize, and that is that this 

Committee must not rush to judgment or attempt to speed through 

changes without taking the time to examine the impact and costs 

of such proposals. 

Mining law reform has been on the table for some time as has 

been said several times this morning, but the new Members of the 

House, and the new Members of the Senate, need the opportunity 

to review and consider this issue, and the new administration, especially deserve to have their views heard. 

So as Mr. Lamborn said, this needs to be the first of several 

hearings, and thank you very much for your consideration. 

[The prepared statement of Mr. Hastings follows:] 

15 

Statement of The Honorable Doc Hastings, a Representative in Congress 

from the State of Washington 

My comments will be brief. I simply want to reiterate two very important points 

made by Mr. Lamborn. 

First, we need to recognize the significant role that minerals and metals play in 

our economy, how important they are to manufacturing jobs, and especially to developing alternative sources of energy. 

Mining creates thousands and thousands of jobs across this country, and the very 

economic foundations of many communities are mining jobs. The minerals and metals mined in America are vital for a broad array of American industries. 

We can produce minerals here in our country and create jobs for Americans, or 

we can drive these jobs overseas and become dependent on China and other nations 

for the raw materials needed to sustain American manufacturing jobs. 

In the first weeks of this Administration, we’ve seen the Interior Department take 

action after action that is costing us the creation of new jobs. 

Yesterday’s announcement on oil shale R-and-D leases was Secretary Salazar’s 

third announcement this month regarding delays in American energy development. 

From withdrawing land leases in Utah, to halting offshore drilling and now oil 

shale, the Administration is walking away from utilizing American’s resources to become less dependent on foreign countries. Our economy can’t afford to have the federal government keep saying no, no, no to the creation of new energy production 

jobs. 

This same principle applies to mining. We must be honest that the jobs of American workers are at risk if the federal government imposes excessive and costly regulations and fees on mining in America. With our shaky economy, Congress needs 

to be extremely thoughtful and act very carefully in the consideration of mining law 

changes. 

This brings me to the second point made by Mr. Lamborn that I want to emphasize, and that’s that this Committee must not rush to judgment or attempt to speed 

through changes without taking the time to examine the impacts and costs of such 

proposals. 

Mining law reform has been on the table for some time, but the new Members 

of the House and Senate need the opportunity to review and consider this issue. 

And the new Administration especially deserves to have their views heard. As Mr. 

Lamborn said, this needs to be the first of several hearings. 

Mr. COSTA. I thank the gentleman from Washington State very 

much for your comments. We will now have our first witness, Representative Dean Heller from Nevada. I misstated in my earlier 

comment that the hearing that we held in his district in Elko, 

Nevada, was last year. 

I was reminded that it was in 2007. It seemed like it was last 

year, but how time flies, but it was a very informative trip for the 

Subcommittee, and we appreciated the hospitality, and I think we 

all came away with a much greater appreciation for the work that 

takes place there. 

Representative Heller, would you please make your opening 

statement. We would like to keep it to five minutes. We do have 

another panel that follows, and today is obviously a busy day with 

other hearings as well, but we do appreciate you coming, and we 

know of your great interest on this issue. 

STATEMENT OF THE HONORABLE DEAN HELLER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEVADA 

Mr. HELLER. Thank you very much, Mr. Chairman, and I will tell 

you that I do appreciate your trip, whether it was last year or the 

year before. In fact, I am still getting very positive feedback on 

your interests and the time that you spent in Elko. 

So it has not gone unnoticed. In fact, I will be in Elko tomorrow 

night, and I am certain that it will come up again. 

16 

Mr. COSTA. I liked Elko. It is a good community. When is the 

cowboy poetry festival coming up? 

Mr. HELLER. It just passed. You just missed it. 

Mr. COSTA. I just missed it? Well, one of these years. 

Mr. HELLER. So I want to thank you very much for the opportunity to testify. I want to thank the Ranking Member Lamborn 

also for the opportunity to be here. Chairman Rahall, thank you for 

your time and effort on this issue. 

I know you said that this is something that you have spent decades dealing with. Rumor has it you were a witness to the original 

signing of this piece of legislation. 

[Laughter.] 

Mr. HELLER. So I don’t know how many decades that may be, 

but—— 

Chairman RAHALL. And it won’t be forgotten, despite my age. 

[Laughter.] 

Chairman RAHALL. I am well preserved. 

Mr. HELLER. Yes. I want to introduce one of my constituents, 

County Commissioner Sheri Eklund-Brown, is here from Elko, 

Nevada. She will be here to testify on the importance of the mining 

industry and the impact that it has on her community. So I just 

want to thank her for being here today, and she will be on the second panel. 

As I mentioned, Mr. Chairman, you were kind enough to come 

to Elko to hold a field hearing, and witness first-hand the importance of hardrock mining and the industry to my district. 

You were also able to see the effect of stewardship, and strong 

sense of community responsibility of the operators in my district. 

I know that because of your visit you are familiar with the provisions of H.R. 699, and I believe it jeopardizes the livelihood of my 

rural constituents. 

Let me be clear. The onerous mining law reform proposed by my 

colleague will not only threaten the domestic viability of large mining companies. It will also hurt small independent businessmen 

and women in Nevada that support the mining industry. 

And we can ill-afford to lose any jobs in Nevada, or anywhere 

else for that matter. Nevada currently has the highest and has had 

the highest foreclosure rate in the Nation for 23 straight months. 

7.3 percent of all housing in Nevada has received at least one 

foreclosure notice. Clark County, taking in Las Vegas, has had almost 9 percent of its properties affected. Washoe County, which is 

the largest county in my district, has seen a 153 percent increase 

in foreclosures since 2007. 

In fact, local industry experts estimate that Clark County has a 

25,000 home inventory, or an estimated four year supply. However, 

there are bright spots in Nevada’s economy that are still thriving, 

and those are the areas where mining activity is taking place. 

To put it into context, Nevada has a statewide unemployment 

rate of 9.1 percent, while in Elko, the micropolitan areas, the rate 

is 4.9 percent. The most recent statistics show that in Nevada mining directly employs 11,690 people, at an average wage of over 

$63,000 per year. 

17 

An additional 51,000 jobs are made possible by activities related 

to the mining industry, largely in rural communities. Mining is 

also an important contributor to local and State tax revenue. 

In 2007 the mining industry in Nevada paid $200 million in 

taxes. That is enough to pay for more than forty-seven hundred 

teachers’ annual salaries in Nevada. As we have debated, it is important to remember that unlike other businesses, mineral prices 

are set on the commodities markets. 

So they are forced to absorb all of the costs imposed by this legislation. My fear after consulting with my constituents is that the 

cost imposed by this legislation will put them out of business, 

which will consequently increase economic problems in my state. 

We all acknowledge that there have been irresponsible practices 

in the past, but those days are long gone in Nevada. The companies, both large and small, in my district have made great progress, 

and are committed to good stewardship and community responsibility. 

The minerals mined in Nevada are an important part of our 

daily lives. We need gold for electronics, barite to make rubber, 

tungsten for heavy equipment, lithium for advanced battery technology, silica for glass, molybdenum to make steel alloys. 

Without minerals mined in Nevada, our military won’t be as 

strong. Our economy will be compromised, and we will have to rely 

on foreign countries for the minerals that power our economy, just 

as we are reliant on them for fuel. 

While I applaud my colleague’s effort to modernize mining law, 

I am concerned about the consequences of this bill as written. It 

would be a shame if we made changes to the mining law that favored importing mineral resources from foreign countries, while exporting the benefits. 

I hope that we can work together to improve opportunities for domestic mining, while addressing some of the outstanding issues associated with the historic mining activities conducted prior to the 

creation of the strict environmental laws and regulations that govern mining activities today. 

My primary concern is that changes made to the mining law 

should not serve to increase our dependence on foreign sources of 

mineral resources that our nation needs, and certainly should not 

increase unemployment in my state. 

We have to get our mineral resources from somewhere, and I believe that we should get them in a responsible manner from domestic resources mined by American workers. With that, Mr. Chairman, I will conclude. 

[The prepared statement of Mr. Heller follows:] 

Statement of The Honorable Dean Heller, a Representative in Congress 

from the State of Nevada 

Mr. Chairman, thank you for giving me the opportunity to testify today. As you 

know, H.R. 699, the Hardrock Mining and Reclamation Act will have a direct and 

substantial impact on Nevada and my constituents if it becomes law. 

In fact, one of my constituents, Commissioner Sheri Eklund-Brown, is here from 

Elko, Nevada to testify about the importance of the mining industry in our most 

vibrant mining community. I would like to thank her for being here today. 

Mr. Chairman, you were kind enough to come to Elko to hold a field hearing and 

witness firsthand the importance of hardrock mining industry to my district. You 

18 

were also able to see the effective stewardship and strong sense of community responsibility of the operators in my district. 

I know that because of your visit, you are familiar with the provisions of H.R. 699 

that I believe jeopardize the livelihood of my rural constituents. 

Let me be clear, the onerous mining law reform proposed by my colleague will 

not only threaten the domestic viability of large mining companies, it will also hurt 

the small, independent businessmen and women in Nevada that support the mining 

industry. 

And we can ill afford to lose any jobs in Nevada, or anywhere else for that matter. 

Nevada has had the highest foreclosure rate in the nation for 23 straight months. 

7.3 percent of all housing in Nevada has received at least one foreclosure notice. 

Clark County, taking in Las Vegas, has had almost 9% of its properties affected. 

Washoe County, which is the largest county in my district, has seen a 153% increase in foreclosures since 2007. In fact, local industry experts estimate that Clark 

County, Nevada has a 25,000 home inventory—an estimated 4 year supply. 

However, there are bright spots in Nevada’s economy that are still thriving, and 

those are the areas where mining activity is taking place. 

To put it into context, Nevada has a statewide unemployment rate of 9.1%, while 

the Elko Micropolitan area’s rate is 4.9%. 

The most recent statistics show that in Nevada, mining directly employs 11,690 people at an average wage of over $63,000 per year. An additional 51,000 jobs are 

made possible by activities related to the mining industry, largely in rural communities. 

Mining is also an important contributor of local and state tax revenue. In 2007 the mining industry in Nevada paid $200 million in taxes. That is enough to pay 

for more than 4700 teachers annual salaries in Nevada. 

As we have this debate, it is important to remember that unlike other businesses, 

mineral prices are set on the commodities market, so they are forced to absorb all 

of the costs imposed by this legislation. My fear, after consulting with my constituents, is that the costs imposed by this legislation will put them out of business, 

which will consequently increase economic problems in my state. 

We all acknowledge that there have been irresponsible practices in the past, but 

those days are long gone in Nevada. The companies—both large and small—in my 

district have made great progress and are committed to good stewardship and community responsibility. 

The minerals mined in Nevada are an important part of our daily lives. We need 

gold for computers and electronics, barite to make rubber, tungsten for heavy equipment, lithium for advanced battery technology, silica for glass, and molybdenum to 

make steel alloys. 

Without minerals mined in Nevada, our military won’t be as strong, our economy 

will be compromised, and we will have to rely on foreign countries for the minerals 

that power our economy, just as we are reliant on them for fuel. 

While I applaud my colleague’s efforts to modernize mining law, I am concerned 

about the consequences of his bill as written. 

It would be a shame if we made changes to the mining law that favored importing 

mineral resources from foreign countries while exporting the benefits. I hope we can 

work together to improve opportunities for domestic mining while addressing some 

of the outstanding issues associated with the historic mining activities conducted 

prior to the creation of the strict environmental laws and regulations that govern 

mining activities today. 

My primary concern is that changes made to the mining law should not serve to 

increase our dependence on foreign sources of mineral resources that our nation 

needs and certainly should not increase unemployment in my state. We have to get 

our mineral resources from somewhere and I believe we should get them in a responsible manner from domestic resources mined by American workers. 

Mr. COSTA. Thank you very much, Representative Heller, for 

your comments. Any questions or comments to the gentleman from 

Nevada? Yes, Mr. Lamborn. 

Mr. LAMBORN. Thank you, Mr. Chairman. Representative Heller, 

do you have a perspective on how industry would be affected if a 

royalty is imposed on a gross basis, as opposed to a net basis? 

I know that there are possibly some serious tax differences, depending on which of those is chosen ultimately. 

Mr. HELLER. Yes. 

19 

Mr. LAMBORN. But do you have a perspective on that? 

Mr. HELLER. Well, we shared some of them in the past, the impact of gross taxes, as opposed to a net tax. In fact, I believe one 

of my amendments in the past was to impose a five percent net 

tax, as opposed to the eight percent gross, because the obvious impact an eight percent gross would have. 

And I would like to encourage the Committee to reconsider and 

to take a look at that again. Certainly it will have a major impact 

on business as we see it in the mining industry in Nevada. 

Currently, mining prices, and I think it is well established, are 

doing well, and it is not unusual for a very weak economy to have 

very strong gold prices. It is very cyclical. 

It wasn’t long ago, just within the last couple of years, that you 

saw mining under $300 an ounce. If this economy grows, if you believe what the President is telling us in his speeches that we are 

going to get out of this, and I truly do believe that is going to happen, I don’t think we are going to see sustained gold prices. 

Mr. COSTA. It is countercyclical. 

Mr. HELLER. Yes, absolutely, and I am betting on the economy, 

which I am sure most, if not all, here in this room are doing so. 

Mr. COSTA. Yes. 

Mr. HELLER. And so that will have an impact. To double that the 

Nevada legislature is currently in session, and they are also taking 

a look at the mining industry. So it is going to be a double hit I 

think the industry’s concern is. 

And again I think that question perhaps would be better laid in 

front of the association, or perhaps Ms. Eklund-Brown, when she 

comes and testifies in the second group, specifically the impacts an 

eight percent gross would have over perhaps something closer to a 

five percent net. I think that question should be and could be out 

there. 

Mr. COSTA. The gentleman from West Virginia has a question or 

a comment. 

Chairman RAHALL. Just to follow up on that point, as the gentleman from Nevada and the Chairman are all involved in this 

issue know, we have had various proposals on the royalty rate in 

the past, and at every stage, let us say, the process has been different, and proposals offered on the royalty rate. 

And I am not adverse to considering a variable, a variable—excuse my accent. It is not because of my age—a variable rate royalty, because as you mentioned, today gold is up, and tomorrow it 

could be down. Copper is down today, and tomorrow it could be up. 

Every one of the minerals has that variable rate, depending on 

the recyclical rate, depending on what the economy is doing. So 

perhaps, and I ask for the gentleman’s thought on this, the Secretary maybe should have the discretion of adjusting rates according to the cyclical nature of the economy. Your thoughts? 

Mr. HELLER. Yes. I would love to sit down and discuss that with 

you and have an open conversation about that. I do think there is 

room. I do think this is a good time to take a look at the mining 

law. I even think the industry agrees that there needs to be some 

movement for something that was signed into law many, many 

years ago. 

20 

So certainly I would love to have that discussion and see if there 

are some options available to move in that direction. 

Chairman RAHALL. Thank you. 

Mr. COSTA. Thank you, the gentleman from West Virginia. A follow-up question to his point and your point, and your statement 

about obviously I think we all want to maintain the viability of the 

hardrock mining industry in this country for all the reasons that 

have been stipulated. 

What is your thought—and, I mean, you just acknowledged that 

industry, and they have told me, and you and I have had conversations over the past two years, where do you think is the critical 

change that needs to be made with trying to provide some revenue 

stream on the health and safety on the abandoned mines? 

I mean, where are the critical areas that you think need to be 

addressed that are deficient? 

Mr. HELLER. According to my discussions with industry experts, 

they are expecting to see some changes, and would love to see 

changes in that particular area. I think some of the other changes 

that I discussed was to make sure that the revenues that were 

raised, that a certain percentage of it goes back to the areas where 

in fact they were mined so that they can be used for the specific 

purposes that you are talking about, and that is to mitigate the 

abandoned mine issues that we have throughout the State of 

Nevada. 

And I think I had an amendment a year ago or two years ago 

that did just that, that did increase the percentage that would 

come back to help with the abandoned mine issues. 

I think even the industry is eager to discuss this. I think they 

are eager to discuss perhaps what the revenue stream may be that 

would come out of a piece of legislation like this. 

But I don’t think they are closing the doors to negotiate by any 

means. I am not sitting here saying that we can’t have a bill by 

any means. I think that we do need to discuss mitigation issues 

from the past, and I think we need to discuss if a revenue stream 

is available, what can the industry itself absorb. 

Mr. COSTA. Thank you very much. Any further questions? Hearing none, why don’t we go to our full panel. 

Mr. HELLER. Thank you. 

Mr. COSTA. Thank you for your patience, and the individuals that 

we have today have well established experience and expertise on 

this subject matter. We have Mr. John Leshy. We have Ms. Robin 

Nazzaro, Mr. James Reynolds, and The Honorable Jim Starr, and 

The Honorable Sheri Eklund-Brown. 

So these distinguished individuals, we look forward to your testimony, and please come forward, and it looks like it will be the 

Ranking Member and myself here. So we won’t be too lonely. 

I will take them in the order that they are listed here. So I believe all of you are familiar with this process, but just to remind 

you that we have a five minute rule on your stated testimony. 

There is a light there in front of you. It has green, yellow, and 

red. The green is on for the first four minutes. The yellow goes on 

when you have one minute left, and then the red light goes on 

when the five minutes have expired. 

21 

The Chairperson truly appreciates when those testifying stay 

within the five minute limits. Actually, the Chair has been known 

to give extra bonus points when those come under the five minutes. 

But we do appreciate your testimony. 

Obviously, if you have a more detailed analysis that you would 

like to provide us, we appreciate that, and that is submitted in a 

written form for the benefit of Committee Members, as well as our 

staffs. 

So obviously we take your written testimony that is more detailed, and any graphs or charts that you might have that can be 

included. So we will go through the following five witnesses in our 

second panel, and then open it up for questions or comments that 

Members of the Subcommittee may have. 

With that understood, let us begin with Mr. John Leshy, who has 

already been acknowledged. He is the former Solicitor General for 

the Department of the Interior. He also has part of his resume and 

background as a Professor at the University of California at Hastings College of Law, and I suspect that part of his professorship 

as a law professor deals with mining law, I suspect. I just suspect 

that. So, Mr. Leshy, would you please open on our testimony. 

STATEMENT OF JOHN D. LESHY, SOLICITOR GENERAL, 

DEPARTMENT OF THE INTERIOR [1993-2001], HARRY D. 

SUNDERLAND DISTINGUISHED PROFESSOR, UNIVERSITY OF 

CALIFORNIA, HASTINGS COLLEGE OF THE LAW 

Mr. LESHY. Thank you. Thank you, Mr. Chairman, and I appreciate the Chairman’s remarks at the beginning, and I appreciate 

the Chairman’s tenacity in pursuing this issue. I will do my best 

to earn bonus points here. 

There is a certain ritual quality to these hearings, but it is an 

important set of issues, and deserves airing, and I am glad that it 

is being aired again today. Old is not necessarily bad. But the Mining Law of 1872 is really totally out of step with fundamental principles that have guided national policy for many, many decades. 

Mining companies, and it bears repeating, pay no rental. They 

pay no royalty. They make no other payment to the Federal treasury that recognizes that the people of the United States own the 

minerals that they are mining. 

Their position is unique in two distinct ways. All other users of 

the Federal lands, whether it is oil and gas companies, coal developers, timber harvesters, energy companies that run transmission 

lines, cattle grazers, and even these days hunters, anglers, and 

other recreationists, pay the government something, and in most 

cases something like market value for the publicly owned resources 

that they are using or removing. 

And, second, practically everywhere else in the world that 

hardrock mining companies operate, on state and private lands in 

the United States, and just about everywhere abroad, they pay 

something to the government and to others who own the minerals 

for the privilege of extracting them. 

And so it is long past time that Congress close this loophole. The 

justifications that were once offered for this kind of public giveaway of public property when gold has strategic value, and the 

22 

West was sparsely settled back after the Civil War, those justifications, of course, have long since disappeared. 

About 85 percent of the gold mined today is used to make jewelry, and the West has long been the fastest growing region of the 

country, and in terms of gold strategic value, I would remind the 

Committee that in World War II, at a time of national emergency, 

gold mines were shut down by the government because the mining 

effort took away from the war effort and did not support it. 

Attached to my written statement are statistics, very interesting 

statistics, on the gold production in the United States over time, 

and the fact that it has tremendously accelerated in the last 30 

years, and also statistics on the price of gold. 

And this illustrates well I think that the industry can absorb a 

modest royalty payment, such as is contained in H.R. 699. 

Second, the mining law results in inadequate protection of the 

environment and other uses of the public lands, and here again all 

other users of the public lands who can cause significant environmental disruption are subject to a straightforward regulatory system that requires them to minimize their environmental effects, 

and clean up any mess that they create. 

And all other users of the public lands are subject to the fail-safe 

authority of the government to prevent proposed activities that 

threaten major environmental harm that cannot be mitigated appropriately. 

Mining is a dirty business and needs to be carefully controlled. 

When things go wrong, history teaches in hardrock mining, the 

costs to repair the damage can be enormous. 

Well over a century of mining under the Mining Law of 1872 has 

saddled the nation’s taxpayers with the cleanup costs for thousands 

of abandoned mines that approaches something like $50 billion. 

And it bears emphasizing that despite the fact that the Clean 

Water Act and some of these other modern environmental laws do 

apply to hardrock mining, bad mines still fall through the regulatory gaps. 

There are a number of major modern mines that have opened 

under modern regulatory controls that have failed, and the government and the taxpayer are on the hook to clean them up, and it 

is long past time to close these loopholes. 

Finally, reforming the mining law will not as some maintain 

bankrupt or put an end to the domestic mining industry. Every 

year, as this Committee is aware, Canada’s Fraser Institute surveys mining industry executives, and ranks jurisdictions around 

the world on who is favorable to mining, including factors such as 

regulatory controls and political stability, and every year the American west is at the top or near the top of those rankings. 

Gold prices skyrocketing means the industry is thriving as never 

before, and the cost of a modest royalty can be readily absorbed. 

The basic objective of H.R. 699 is to put in place practices and policies that oil and gas operators, coal miners, electric utilities, ski 

areas, and other intensive users of the Federal lands have operated 

under quite successfully for decades. 

I have no doubt that this industry, which contains a number of 

innovative, progressive companies that have flourished around the 

world will adapt readily to such reforms, just like other users have 

23 

successfully adapted to similar requirements imposed on them over 

the last many decades. And I thank you for your attention, and I 

look forward to any questions you may have. 

[The prepared statement of Mr. Leshy follows:] 

Statement of John D. Leshy, Harry D. Sunderland Distinguished Professor, 

University of California, Hastings College of the Law 

I appreciate your invitation to testify today, and I applaud your subcommittee 

once again taking the initiative to address reform of the Mining Law of 1872. There 

is no more important task among the constellation of issues raised by our public 

lands. 

I am the Harry D. Sunderland Distinguished Professor of Law at the University 

of California, Hastings College of the Law, and was Solicitor of the Department of 

the Interior from 1993 until 2001. I appear here today as a private citizen, expressing my own views, and not representing any group. I have worked on Mining Law 

issues for thirty-five years, in academia, in government and in the nonprofit sector. 

I have testified many times on the subject of Mining Law reform. I am appending 

to this statement my testimony before this subcommittee nineteen months ago. 

Rather than simply repeat that testimony, in this statement I will address four 

specific issues: 

1. The profitability of the industry and its ability to compensate the American 

public for the privilege of extracting the public’s minerals. 

2. Determining what adequate compensation is. H.R.699 would require those extracting hardrock minerals from federal land to pay a royalty. But many large 

hardrock mining operations in the west extract no or very little ore from federal lands. This is because the ore bodies have been previously patented under 

the Mining Law and become private property. Yet these same operations use 

large tracts of federal lands for waste dumps and tailings piles. Under current 

law, they pay the federal government nothing for that privilege, and it is possible they would continue to be exempt from significant payments under 

H.R. 699 as it is currently written. 

3. The so-called ‘‘right to say no’’ issue; namely, whether reform legislation should 

unambiguously authorize the federal government to reject proposals to locate 

mines on federal lands if they pose unacceptable environmental damage or sacrifice other important values found on federal lands. 

4. Whether uranium, currently governed by the Mining Law for the most part, 

should be made leasable under the principles of the Mineral Leasing Act. 

On the first issue, profitability, gold is by far, by every measure, the most important hardrock mineral governed by the Mining Law of 1872. Exhibit A charts U.S. 

gold production since 1840. The vast majority of that production is found on federal 

or formerly federal lands. As it shows, during the 1980s, production greatly increased above historical levels and has remained high ever since. This increase resulted from two factors: high gold prices, and development of heap-leach techniques 

to recover gold from disseminated low-grade deposits, particularly in Nevada. It is 

also worth noting that this increase coincided with the federal government’s first serious efforts to control hardrock mining to protect the environment. 

Today, the U.S. is the fourth largest gold-producing country in the world (behind 

Australia, South Africa and China). The vast majority of U.S. production (more than 

80%) comes from gigantic open pit mines in Nevada. Only those other three countries and Peru produce more gold than is produced in the state of Nevada. 

Exhibit B charts the price of gold over the past forty years. It shows a rapid increase in price in the late 1970s and the relative high values since then. Indeed, 

since April 2001 gold has more than tripled in value against the U.S. dollar, and 

it has been hovering around $1000 an ounce. While in real dollar terms this is well 

below the January 1980 peak, many investors have long tried to preserve assets by 

investing in precious metals in times of serious economic difficulty like we face 

today, and therefore many observers expect the price of gold to remain high for the 

foreseeable future. 

The costs of mining that gold are well under one-half of the current gold price. 

See, e.g., the 2006 Economic Overview of Nevada Mining. This report, which may 

be found at http://www.nevadamining.org/position/economy, shows a 2006 average 

cost of production of $365 to $435 per ounce, depending upon whether non-cash 

costs like depreciation, reclamation are included). A February 2008 white paper by 

Standard & Poor’s showed that Barrick and Newmont, the two largest gold mining 

24 

companies in Nevada, had company-wide cash costs of between $282 and $377 per 

ounce. https://www.compustatresources.com/support/pub/whitepapers/pdf/Mining.pdf 

Gold is, and has been for quite a long time, a very profitable industry. Its current 

position is indeed enviable in comparison to the economic carnage currently being 

visited across much of the American economy. It can readily absorb the modest royalties levied in H.R. 699. 

On the second issue, making sure the government is adequately compensated, the 

royalty in H.R. 699 would apply, according to section 102, to the ‘‘production of all 

locatable minerals from any mining claim located under the general mining laws 

and maintained in compliance with this Act.’’ This means the royalty would presumably apply only to mineral ore extracted from federal lands. It would not, in other 

words, include any kind of charge for the use of federal lands to support the extraction of minerals from formerly federal lands. 

Many, perhaps most, of the very large hardrock mining operations in the West 

which comprise the bulk of domestic production are on lands in a mixture of ownerships—private, state and federal. The ore body itself may not include any federal 

lands, or at most mere slivers or odd-shaped parcels intermixed with others. Very 

often, in other words, all or most of the actual ore body is on non-federal land, usually because it has already been patented under the generous terms of the Mining 

Law. See, e.g., Mineral Resources: Value of Hardrock Minerals Extracted From and 

Remaining on Federal Lands (GAO/RCED-92-192, August 1992). 

Even where the U.S. no longer owns any part of the ore body, the federal lands 

usually play a key role in bringing the ore body into production—by providing lands 

for mineral processing, for dumping waste rock and mine tailings, and so forth. It 

is not unusual for the ore body of a large mine to be 90% or more in private ownership (having been previously patented under the Mining Law, at a price of $2.50 

or $5.00 per acre). Yet that same mining operation may occupy thousands of acres 

of nearby federal land as waste rock dumps and tailings piles, which are a permanent and exclusive use, as the land is of little use for things like wildlife habitat. 

Under current administration of the Mining Law, the U.S. receives no compensation for the use of its land for waste dumps and tailings piles, if they are claimed 

as ‘‘millsites.’’ Yet mining companies were required to secure access to federal land 

for these purposes under Title V of the Federal Land Policy and Management Act 

of 1976—which would be the case if this were a power plant, a transmission line, 

a water recharge project, or a factory—they would be required to pay fair market 

value for the land. 

Mine operators who permanently encumber thousands of acres of federal land as 

dumping grounds for waste ought to be required to pay a fee that reflects the value 

these federal lands contribute to the entire mining operation. 

I am not comfortable that H.R. 699 addresses this important issue clearly 

enough. It provides, in section 304, that a mining company securing an operations 

permit can conduct that mine on ‘‘any valid mining claim, valid millsite claim, or 

valid tunnel site claim,’’ and may also use ‘‘such additional Federal land as the Secretary may determine is necessary to conduct the proposed mineral activities, if the 

operator obtains a right-of-way permit for use of such additional lands under Title 

V of [FLPMA] and agrees to pay all fees required under that title for the permit 

under that title.’’ This language leaves room for the industry to argue that it can 

locate and accumulate unlimited numbers of 5 acre millsites, and thereby secure the 

right to occupy thousands of acres of federal land at a token cost, and not have pay 

the federal government fair market value, as it would if it used the permit process 

of FLPMA Title V for that purpose. 

Whether the Mining Law allows the accumulation of an unlimited number of millsites has never been finally and definitively resolved. When I was Solicitor of the 

Department of the Interior in 1997, my office prepared a legal opinion affirming a 

long-standing legal interpretation that mining claimants were limited to one millsite 

per lode or placer mining claim. My successor in the Bush Administration signed 

an opinion in 2003 disagreeing with that conclusion. No federal court has squarely 

addressed this disagreement. The reference in the current legislation to ‘‘valid’’ millsites may be read as endorsing the 1997 Opinion, but a more forthright declaration 

of that principle would be welcome, because the American public which owns these 

lands ought to be fairly compensated for their use. 

On the third issue, the right to say no, the hardrock mining industry has argued 

that the government already has sufficient authority to protect the environment and 

25 

other values of the federal lands from hardrock mining operations. Yet they resist 

saying so in any Mining Law reform legislation. 

The record is clear that existing standards and practices are not adequate to protect multiple uses of the public lands and a healthy environment, and clarifying and 

upgrading environmental standards is a principal reason to reform the Mining Law. 

Looking first at the Bureau of Land Management’s current ‘‘Part 3809’’ regulations governing surface management of hard rock mining on BLM-managed lands, 

early on the George W. Bush Administration weakened these regulations significantly, removing a number of key provisions that had been added by the Clinton 

Administration. Compare 65 Fed. Reg. 69,998 (2000) with 66 Fed. Reg. 54,837 

(2001). One of the most important was to eliminate the federal government’s explicit 

authority to disapprove proposed hardrock mines on federal lands that threatened 

devastating, uncontrollable harm on other important natural and cultural resources. 

The Bush Administration acted on the basis of a Solicitor’s Opinion issued by my 

successor, which overruled an opinion I had issued in 1999. These dueling legal 

opinions differed on how to interpret a key phrase in the Federal Land Policy and 

Management Act of 1976 (FLPMA), in which Congress expressly amended the Mining Law to require the Interior Secretary to protect the public lands from ‘‘unnecessary or undue degradation’’ (emphasis added). 43 U.S.C. § 1732(b). 

My legal opinion was that ‘‘or’’ means ‘‘or,’’ so that BLM has a responsibility to 

regulate hardrock mining on the public lands to protect against ‘‘undue’’ degradation, even if that degradation is regarded as ‘‘necessary’’ to mining. My successor’s 

legal opinion was that ‘‘or’’ is better understood as meaning ‘‘and.’’ Thus, in his view, 

BLM has no authority to prevent hardrock mining that causes ‘‘undue’’ degradation 

if such degradation is ‘‘necessary’’ to mining. 

Environmental groups asked a federal court to settle this dispute. After full briefing, the court ruled that my reading of FLPMA was correct. Somewhat bizarrely, 

however, the court decided not to set aside the Bush Administration’s removal of 

that express authority from the Part 3809 regulations. Conceding the question was 

‘‘indeed extremely close,’’ the court was persuaded by the Department of Justice’s 

argument that—even conceding that the Bush Administration’s Solicitor was wrong 

on the law—those regulations need not articulate that authority in so many words. 

Mineral Policy Center v. Norton, 292 F. Supp. 2d 30, 46 n. 18 (D.D.C. 2003). Neither 

side appealed this ruling. 

The counterpart U.S. Forest Service regulations (36 C.F.R. Part 228) are even 

weaker. This is not surprising, for the Forest Service was long reluctant to regulate 

hardrock mining. Congress gave it express authority to regulate mining to prevent 

destruction of the national forests way back in 1897 (see 16 U.S.C. §§ 478, 551), but 

it did not exercise this authority for more than three-quarters of a century. The regulations it finally adopted in 1974 were relatively tepid and have changed little 

since, despite vast ensuing changes in hardrock mining technology and practices. 

The Forest Service regulations require mining operations to ‘‘minimize,’’ ‘‘where 

feasible,’’ environmental impacts on national forest resources, 36 C.F.R. § 228.8 (emphasis added), and to take only ‘‘practicable’’ measures to ‘‘maintain and protect 

fisheries and wildlife habitat which may be affected by the operations,’’ id., at 

228.8(e) (emphasis added). In other words, the Forest Service, like the Interior Department, currently takes the position that the government cannot turn down a proposal to locate a hardrock mine on lands it manages even if it threatens dire environmental harm. The courts have refused to overturn this position. Okanogan Highlands Alliance v. Williams, 236 F.3d 468 (9th Cir. 2000). 

Also in this connection, the hardrock industry sometimes tries to draw a distinction between environmental regulation standards and standards to protect other 

land resource values. This distinction is very hard to draw, and is not useful in this 

context. Environmental standards are imposed to protect other resource values. For 

example, the government controls air and water pollution in part to protect 

viewsheds and wildlife habitat found on federal lands. 

Every decision made to allow a particular use of public lands ought to consider 

the impact of that use on other uses and values. The government routinely does that 

when it decides whether to authorize any and all other uses of the federal lands. 

There is no persuasive reason to give proposals to open hardrock mines an 

exemption. 

H.R. 699 properly recognizes that this is too important a matter to be left ambiguous. It states, in section 301, that the operative principle is that the government 

will ‘‘not grant permission to engage in [hardrock] mineral activities’’ if it determines that ‘‘undue degradation would result from such activities.’’ The public interest requires no less. Every other user of the public lands—oil or coal company, forest 

products company, electric utility, rancher, hunter, angler, or hiker—is held to that 

common-sense standard. Hardrock mining, which has the potential to cause more 

26 

serious disruption than practically any of these others, deserves no special 

exemption. 

On the fourth issue, whether uranium should be made a leasable mineral, the answer seems to me is clearly yes. All the other energy fuels—coal, oil and gas, tar 

sands, oil shale, and geothermal resources—are governed by leasing systems, most 

dating back to 1920. Leasing enables the government to better protect the public’s 

fiscal and environmental interests. Past and current controversies about uranium 

mining around such national treasures as the Grand Canyon only underscore how 

ill-suited the Mining Law is to govern uranium development. Indeed, some federal 

uranium is already subject to leasing rather than to the Mining Law—a result of 

post-World War II withdrawals of some federal land on the Colorado Plateau that 

vested the old Atomic Energy Commission with jurisdiction, now exercised by the 

Department of Energy. 

There is, moreover, no justification for continuing to subsidize the domestic uranium industry (and with it the civilian nuclear power industry) by allowing publiclyowned uranium to be mined without a royalty or other payment to the Treasury. 

As with hardrock mining, past uranium mining and milling has left a big cleanup 

bill for the taxpayer. The government is currently spending many millions of dollars, 

for example, to move a large mill tailings pile away from the banks of the Colorado 

River adjacent to Moab, Utah, on top of much public money it has already spent 

cleaning up uranium mines and mills. And there is more to do. Consumers of uranium should pay these bills, not general taxpayers. Finally, there is no strategic argument for subsidizing domestic uranium production when the friendly countries of 

Canada and Australia have abundant uranium resources. For all these reasons, I 

believe the idea of simply putting uranium under the Mineral Leasing Act ought 

to be given very serious consideration. It would be a welcome part (but only a part) 

of Mining Law reform. 

Conclusion 

Once again, I applaud your taking up this important issue of public policy, and 

I stand ready to advance this effort any way I can. 


47609.001.eps
27 

ATTACHMENT A 

STATEMENT OF JOHN D. LESHY

AT THE

HEARING ON H.R. 2262, THE HARDROCK MINING AND RECLAMATION ACT OF 2007 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

COMMITTEE ON NATURAL RESOURCES

U.S. HOUSE OF REPRESENTATIVES

JULY 26, 2007 

I appreciate your invitation to testify today, and I especially appreciate this subcommittee taking the initiative to address reform of the Mining Law of 1872. There 

is no more important task among the constellation of issues raised by our public 

lands, which encompass nearly one-third of the Nation’s real estate and a much 

larger portion of its valuable natural resources, including minerals. 

I appear here today as a private citizen, expressing my own views, and not representing any group. I have worked on Mining Law issues for thirty-five years, in 

academia, in government and in the nonprofit sector. I hope in this testimony to 

provide some larger perspective on the effort you have initiated with the introduction of H.R. 2262. 

Calls to reform the Mining Law date back to a few years from its passage, and 

have been made by many U.S. Presidents, from Republicans like Theodore Roosevelt 

and Richard Nixon to Democrats like Jimmy Carter and Bill Clinton. Almost forty 

years ago, as Stewart Udall was stepping down after eight years as Secretary of the 

Interior, he called its repeal the biggest unfinished business on the Nation’s natural 

resources agenda. 

Signed into law by President Ulysses S. Grant four years before the telephone was 

invented, this antiquated relic is the last statutory survivor of a colorful period in 


47609.002.eps
28 

the Nation’s history that began with discovery of gold in the foothills of the Sierra 

Nevada in 1848. The mining ‘‘rushes’’ that ensued accelerated the great westward 

expansion of settlement. And they swept to statehood California (the golden state), 

Nevada (the silver state), Montana (the treasure state), Idaho (the gem state) and 

eventually Arizona (the copper state). The same era witnessed the enactment of numerous other laws filling out the framework for that great movement—laws like the 

railroad land grant acts and the Homestead Act of 1862. A generation later, Congress followed up with landmark laws like the National Forest Organic Act in 1897 

and the Reclamation Act of 1902, and a generation after that, with the National 

Park Organic Act of 1916 and, in 1920, the Mineral Leasing Act and the Federal 

Power Act. 

All of those other laws have long since been repealed, replaced, or fundamentally 

reformed, often more than once. Today the public lands and resources are managed 

under laws like the Federal Land Policy & Management Act of 1976, the Federal 

Coal Leasing Amendments of 1976, the Surface Management Control and Reclamation Act of 1977, the National Forest Management Act of 1978, the Reclamation Reform Act of 1982, and the Federal Oil and Gas Leasing Reform Act of 1987. 

Amazingly, despite the fact that, since 1872, the population of the U.S. has grown 

more than seven-fold (from less than forty million to more than 300 million), the 

population of the eleven western states plus Alaska (where the Mining Law principally applies) has grown from about one million to nearly 70 million, and our society and economy have changed in ways beyond comprehension, the Mining Law has 

escaped fundamental overhaul. 

It is not for lack of trying. It has long been recognized that the Mining Law is 

thoroughly out of step with evolving public resource management principles. Indeed, 

the first Public Land Commission created by Congress to assess public land policies 

recommended in 1880 that it be thoroughly rewritten. That recommendation has 

been echoed by many blue-ribbon commissions since. There is widespread agreement 

that the Law’s three most important shortcomings are as follows: 

First, the Mining Law allows privatization of valuable public resources, at 

bargain-basement rates. This so-called patenting feature is the last vestige 

in federal law of nineteenth century public land disposal policy. Much 

abused for purposes that have nothing to do with mining, it has resulted 

in an area of federal land larger than the state of Connecticut passing into 

private ownership, much of it in scattershot inholdings that continue to 

complicate land uses throughout the West to this day. While Congress has 

since 1994 enacted appropriation riders to forestall new applications for 

patents, it must do so each year, or patenting resumes. 

The fragility of these riders was driven home in the fall of 2005 by the nowinfamous Pombo-Gibbons legislative proposal that would have lifted the 

moratorium on new patents and greatly liberalized the terms of patenting. 

That ill-conceived proposal—which passed the House but then died under 

a storm of protest—could have resulted in the privatization of more millions 

of acres of federal lands. 

As long as privatization remains a core feature of the Mining Law, the 

temptation remains for future mischief-makers to try similar stunts. Patenting is not necessary to mine; indeed, the Supreme Court recognized in 

1884 that the ‘‘patent adds little to the security of the party in continuous 

possession of a mine he has discovered or bought.’’ Many large mines are 

found at least partly on un-patented federal lands. It is time for Congress 

to repeal, once and for all, the Mining Law policy allowing willy-nilly 

privatizing of the federal lands. 

Second, the Mining Law fails to produce any direct financial return to the 

public. Mining companies are charged no rental, pay no royalty, and make 

no other payment that recognizes that the people of the U.S. own the minerals being mined. This is unique in two ways. First, virtually all other 

users of the public lands—oil and gas and coal developers, timber harvesters, energy companies that run transmission lines across the federal 

lands, cattle graziers, and even, these days, hunters, anglers and other 

recreationists—pay the government something (in most cases, something 

like market value) for the publicly-owned resources being used or removed. 

Second, everywhere else hardrock mining companies operate on this 

earth—on state or private lands in the U.S., and just about everywhere 

abroad—they pay royalties to the governments and others who own the 

minerals. 

It is time for Congress to close this glaring loophole. Whatever justification 

might once have been offered for such a giveaway of public property—such 

29 

as when gold had strategic value and the West was sparsely settled—has 

long since disappeared. Today 85% of the gold mined is used to make jewelry, and the West has long been the fastest-growing region of the country. 

Third, the Mining Law results in inadequate protection of the environment 

and other uses of the public lands. All other users of the public lands who 

can cause significant environmental disruption are subject to a straightforward system of regulation which requires them to minimize the environmental effects of their activities and clean up any mess they create. And 

all other users are subject to the fail-safe authority of the government to 

say no to proposed activities that threaten major environmental harm 

which cannot be prevented or mitigated appropriately. 

The Mining Law itself is utterly silent on environmental regulation. While 

it is the case that operations carried out under it no longer escape regulation, thanks to laws like the Clean Water Act, these other laws do not comprehensively address the myriad of environmental threats posed by 

hardrock mining (such as groundwater depletion and pollution and disruption of wildlife habitat), nor do they weigh the value of mining against 

other values and uses of the public lands. The hardrock mining industry 

has long used the silence of the Mining Law on such issues to stoutly contest the reach of the government’s authority over its activities. 

The industry has long had powerful allies in the government on these matters. For example, just within the last few years my two immediate successors as Solicitor of the Interior Department issued legal opinions agreeing 

with the industry that the Mining Law hamstrings government authority. 

One concluded that the government lacks authority to say no to Mining 

Law hardrock mining operations proposed for the public lands even if they 

pose huge threats to the environment. Another concluded that the Mining 

Law gives the mining industry the right to use as much public land as it 

thinks it needs as a dumping ground for the residue of its vast hardrock 

operations—operations which these days can involve hundreds of millions 

of tons of waste from gigantic open pits several miles across and a mile or 

more deep. It is no wonder that the federal land management agencies continue to feel cowed when they contemplate exercising regulatory controls 

over this industry. 

Mining is a dirty business, and must be carefully controlled to prevent environmental disasters. History teaches not only that things can go bad with 

hardrock mining operations, but when they do, the costs to repair the damage can be enormous. Well over a century of mining under the Mining Law 

of 1872 has saddled the Nation’s taxpayers with a cleanup cost for thousands of abandoned mines that, according to some estimates, approaches 

fifty billion dollars. While the industry is now subject to some regulation, 

bad things still happen. Montana and U.S. taxpayers are paying millions 

of dollars to clean up the Zortman-Landusky mine in Montana—a mine 

which was approved under so-called ‘‘modern’’ regulatory standards that 

the industry argues are adequate and don’t need strengthening. 

It is long past time to close these regulatory loopholes and eliminate these 

ambiguities so as to make clear to all in the industry—as well as to federal 

land managers—that the hardrock mining industry will be held to the same 

standards, and be subject to the same kinds of regulatory authority, that 

apply to all other users of the public lands. 

About fourteen years ago, the House of Representatives handily approved a comprehensive reform proposal introduced by Chairman Rahall and others. That effort 

nearly succeeded, failing in the last hours of the 103rd Congress. In the years since 

then, much has changed. Today, Mining Law reform is both more imperative and, 

in my judgment, more achievable. I’d like to take a few moments to explain why. 

First, the industry structure, operations and economic impact have evolved considerably. The domestic hardrock industry now produces much more gold than it ever 

did—the U.S. is the third leading producer in the world. And the industry is heavily 

concentrated, with many fewer companies and many fewer mines than ever before. 

More than four-fifths of U.S. gold production now comes from a single state—Nevada. The four largest mines, all in Nevada, account for well over half the total domestic production. The thirty biggest mines (more than half in Nevada, including 

twelve of the fifteen largest) yield 99% of total production. Barrick Gold, a Canadian 

company, is the biggest, accounting for about 40% of domestic U.S. (and 8% of 

world) gold production. Production of copper and other precious metals are similarly 

30 

concentrated. Moreover, the hardrock industry now operates with such ruthless efficiency that it employs far fewer people than it used to. Its workers may be relatively 

well-paid, but they are far fewer in number and much more geographically concentrated than they ever were. 

In the meantime, the economies of the western states have evolved rapidly away 

from their historic roots dependent on resource extraction. Today the regional economy where the Mining Law applies—the western states in the lower 48 plus Alaska—has changed dramatically. While mining used to be a dominant industry in 

many western locales, today in most places its impact is small, even minuscule. The 

west is now the most urban and fastest growing region in the country. Moreover, 

its dynamic growth and economic health are fundamentally linked to the quality of 

life provided by the open spaces and recreational amenities of the public lands. 

As a result, the politics of the region have changed at the ground level. Westerners are increasingly unsympathetic to the idea that the hardrock mining industry deserves these special exemptions from the laws and policies that apply to everyone else. It is not surprising, then, that when the mining industry seeks to exploit 

its favored position under the Mining Law, more and more local people—ranchers, 

hunters, anglers, retirees, land developers, tourist industry officials, municipal 

water providers and other local government officials—are asking why this nineteenth century policy still exists. And their concerns are growing because soaring 

mineral prices, particularly for gold, copper and uranium, have led to a new rush 

of claimstaking under the Mining Law in areas with high values for other uses. 

People in the west are also more familiar than most with the consequences of failing to control the industry. They live with the thousands of abandoned mines scattered throughout the region, and are familiar with the sorry legacy of polluted 

streams and disrupted landscapes that will require billions of dollars to repair. And 

they resent the fact that, under the current regime, the dollars to pay for this cleanup will come more from taxpayers than from the industry that created the mess. 

Another noteworthy change in recent years is that, for the first time, the hardrock 

mining industry is facing some pressure to reform from the demand side—the jewelry industry that consumes much of its product. With leadership from Tiffany and 

other major jewelers, this movement has helped persuade some major mining companies, concerned about their reputations as well as their impacts, to work to improve their practices and make other accommodations to modern social and environmental values. In short, the industry is no longer so monolithic and so reflexively 

hostile to change. 

It bears repeating that the H.R. 2262’s reforms do no more than put in place 

practices and policies that oil and gas operators, coal miners, electrical utilities, ski 

areas, and other intensive users of the federal lands have operated under quite successfully for decades. I have no doubt that the innovative, progressive companies in 

this industry—and there are some, who have flourished around the world by being 

so—will adapt readily to such reforms, just like other public land users have. 

I am also confident that reforming the archaic Mining Law will not—as some industry spokespeople have ritually maintained—put an end to the domestic hardrock 

mining industry. Every year Canada’s Fraser Institute surveys mining industry executives and uses the results to rank the most favorable jurisdictions in the world 

for hardrock mining, considering a variety of factors, including political stability. 

The American West is always at or near the top of the rankings. Furthermore, skyrocketing mineral prices means the industry is thriving as never before, and any 

modest increase in production costs that might result from reforms like H.R. 2262 

can readily be absorbed. 

Once again, I commend your leadership for taking up this important issue. You 

have the best opportunity in a generation to achieve a landmark legacy in public 

land policymaking. I stand ready to help any way I can to move this forward, and 

I would be happy to answer any questions you may have. 

Mr. COSTA. Thank you again, Mr. Leshy, Professor Leshy. 

And our next witness is Ms. Robin Nazzaro, Director of the 

Natural Resources and Environmental Division of the U.S. 

Government Accountability Office. Ms. Nazzaro, please open on 

your testimony. 

31 

STATEMENT OF ROBIN M. NAZZARO, DIRECTOR, NATURAL 

RESOURCES AND ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. NAZZARO. Thank you, Mr. Chairman, and Mr. Lamborn. I am 

pleased to be here today to discuss GAO’s work on several hardrock 

mining issues that are central to the debate on reforming the General Mining Act of 1872. 

The Act helped open the West by allowing individuals to obtain 

exclusive rights to billions of dollars worth of gold, silver, and other 

hardrock minerals from Federal lands without having to pay a royalty. 

Most of these lands are managed by the Department of the Interior’s Bureau of Land Management, and the Department of Agriculture’s Forest Service. In addition to not requiring operators to 

pay royalties prior to 1981, the BLM did not require them to reclaim the Federal land they used, leaving environmental and physical safety hazards. 

In 1981, BLM began requiring mine operators to reclaim the 

BLM land disturbed by these operations, and in 2001, began requiring operators to provide financial assurances to cover reclamation costs before they began exploration or mining. 

My testimony today focuses on the royalty states charge, the 

number of abandoned hardrock mine sites and hazards, and the 

value and coverage of financial assurances operators use to guarantee reclamation costs. 

All 12 western states assess royalties on hardrock mining operations on state lands. In addition, each of these states, except Oregon, assesses taxes that function like a royalty, which I will refer 

to as functional royalties, on the hardrock mining operations on 

private, state, and Federal lands. 

The royalties the states assess often differ depending on land 

ownership. For example, for private mining operations conducted 

on Federal, state, and private land, Arizona assesses a functional 

royalty of 1.25 percent of net revenue on gold mining operations, 

and an additional royalty of at least two percent of gross value for 

gold mining operations on state lands. 

In addition, 9 of the 12 states assess different types of royalties 

for different types of minerals. Wyoming, for example, employs 

three different functional royalties for all lands; net smelter returns for uranium, a different net smelter return for trona, and a 

gross revenue for all other minerals. 

The royalties the states assess often differ in the allowable exclusions deductions and limitations as well. In Colorado, a functional 

royalty on metallic mining excludes gross incomes below $19 million; whereas, in Montana, a functional royalty on metallic mining 

is applied on all mining operations after the first $250,000 of revenue. 

The actual amount of assessed for a particular mine may also depend on other factors, such as mineral’s processing requirements, 

mineral markets, mine efficiency, and the mine location relative to 

markets. 

Prior estimates on the number of abandoned hardrock mine sites 

have varied widely, in part because there is no generally accepted 

definition of a hardrock mine site. Using a consistent definition 

32 

1GAO, Hardrock Mining: Information on State Royalties and Trends in Mineral Import and 

Exports, GAO-08-849R (Washington, D.C.: July 21, 2008); and GAO, Hardrock Mining: Information on Abandoned Mines and Value and Coverage of Financial Assurances on BLM Land, GAO08-574T (Washington, D.C.: Mar. 12, 2008). 2 Under U.S. mining laws, minerals are classified as locatable, leasable, or saleable. Locatable 

minerals include those minerals that are not leasable or saleable, for example, copper, lead, zinc, 

magnesium, gold, silver, and uranium. Only locatable minerals continue to be ‘‘claimed’’ under 

the Mining Act. For the purposes of this report, we use the term ‘‘hardrock minerals’’ as a synonym for ‘‘locatable minerals.’’ Leasable minerals include, for example, oil, gas, and coal. The 

Mineral Leasing Act of 1920, 41 Stat. 437 (codified at 30 U.S.C. § 181) created a leasing system 

for coal, gas, oil and other fuels, and chemical minerals. Saleable minerals include, for example, 

that we provided to the 12 western states, as well as South Dakota, 

estimated the number of hardrock mine sites in their states. 

From this information, we estimated a total of at least 161,000 

abandoned hardrock mine sites in these states on state, private, 

and Federal lands. These sites have at least 332,000 features that 

may pose physical safety hazards, such as open shafts, or unable, 

or decayed mine structures, and at least 33,000 sites have degraded the environment by, for example, contaminating surface 

water and ground water, or leaving arsenic-contaminated tailings. 

Between Fiscal Years 1998 and 2007, BLM and the Forest Service have spent a total of about $260 million in 2008 constant dollars to reclaim abandoned hardrock mines. As I noted earlier, all 

operators are provided to provide financial assurances to guarantee 

funding for reclamation costs if the operator did not complete the 

task. 

However, according to BLM’s information on financial assurances, 52 of the 1,463 hardrock mining operations on its lands had 

financial assurances valued at about $28 million less than needed 

to fully recover estimated reclamation costs. 

We determined that the assurances for these 52 operations should more accurately be reported at about $61 million less than 

needed for full coverage. The difference between GAO and BLM’s 

estimated shortfall occurs between BLM calculated its shortfall by 

comparing the total value of financial assurances in place with the 

total estimated reclamation costs. 

This approach effectively offset the shortfalls in some operations 

with the financial assurances of others. GAO has followed up with 

BLM and has taken steps to correct its reporting on the adequacy 

of financial assurances. 

In conclusion, for decades GAO has reported on the need to reform the General Mining Act of 1872. Assessing a royalty on 

hardrock minerals would ensure that the public is compensated for 

hardrock minerals extracted from Federal lands as more recent enacted laws require for oil, gas, and other minerals. 

Mr. Chairman, this concludes my prepared statement. I would be 

happy to respond to any questions. 

[The prepared statement of Ms. Nazzaro follows:] 

Statement of Robin M. Nazzaro, Director, Natural Resources and 

Environment, U.S. Government Accountability Office 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss our 2008 work on several hardrock mining issues that are central to the debate on reforming the General Mining Act of 

1872: royalties, abandoned mines, and financial assurances. 1

As you know, since the passage of the General Mining Act of 1872, mine operators 

have extracted billions of dollars worth of silver, gold, copper, and other hardrock 

(locatable) minerals from federal lands without having to pay a royalty. 2 Most of 

33 

common sand, stone, and gravel. In 1955, the Multiple Use Mining Act of 1955, 69 Stat. 367 

(codified at 30 U.S.C. § 601) removed common varieties of sand, stone, and gravel from development under the Mining Act. 3The other 11 western states are Arizona, California, Colorado, Idaho, Montana, Nevada, New 

Mexico, Oregon, Utah, Washington, and Wyoming. 4For purposes of this testimony, cleanup refers to the mitigation of environmental impacts 

at mine sites, such as contaminated water, and the reclamation of land disturbed by hardrock 

operations. 5GAO, Hardrock Mining: BLM Needs to Better Manage Financial Assurances to Guarantee 

Coverage of Reclamation Costs, GAO-05-377 (Washington, D.C.: June 20, 2005). 

these lands are managed by the Department of the Interior’s Bureau of Land Management (BLM) and the U.S. Department of Agriculture’s Forest Service. Assessing 

a royalty on hardrock minerals would ensure that the public is compensated for 

hardrock minerals extracted from federal lands, as more recently enacted laws require for oil, gas, and other minerals. 

The vast majority of the federal lands where hardrock mining operations occur are 

in 12 western states, including Alaska (hereafter referred to as the 12 western 

states). 3 These western states have statutes governing hardrock mining operations 

on lands in their state. However, unlike the federal government, these states charge 

royalties that allow them to share in the proceeds from hardrock minerals extracted 

from state-owned lands. In addition, most of these states charge taxes, such as severance taxes, mine license taxes, or resource excise taxes, on hardrock mining operations that occur on private, state, and federal lands. For the purposes of this report, we use the term ‘‘functional royalty’’ to refer to taxes that function like a royalty in that they permit the state to share in the value of the mine’s production. 

Although states may use similar names for functional royalties they assess, there 

can be wide variations in their forms and rates. 

In addition to not requiring hardrock mining operators to pay royalties, prior to 

1981, BLM did not require them to reclaim the federal land they used. Consequently, hardrock mining operators have left thousands of acres of federal land 

disturbed through mineral exploration, mining, and mineral processing. Some of 

these disturbed abandoned mine lands pose serious environmental and physical 

safety hazards. These hazards include environmental hazards such as toxic or acidic 

water that contaminates soil and groundwater or physical safety hazards such as 

open or concealed shafts, unstable or decayed mine structures, or explosives. Cleanup costs for these abandoned mines vary by type and size of the operation. 4

To curb further growth in the number of abandoned hardrock mines, BLM issued 

regulations, effective in 1981, that required all mining operators to reclaim BLM 

land disturbed by hardrock mining. In 2001, BLM began requiring all mining operators to provide financial assurances before beginning exploration or mining operations on BLM land. These financial assurances must cover all of the estimated reclamation costs for a given hardrock operation. Having adequate financial assurances 

to pay reclamation costs for BLM land disturbed by hardrock operations is critical 

to ensuring that the land is reclaimed if the mining operators fail to do so. In June 

2005, we reported that some current hardrock operations on BLM land do not have 

financial assurances, and some have no or outdated reclamation plans and/or cost 

estimates on which the financial assurances should be based. 5

My testimony today focuses on the (1) royalties states currently charge on 

hardrock mining operations, (2) the number of abandoned hardrock mine sites and 

number of associated hazards, and (3) value and coverage of the financial assurances operators use to guarantee reclamation costs on lands managed by BLM. 

To address these objectives, we interviewed staff at BLM and the Forest Service; 

examined agency documents and data; and reviewed relevant legislation and regulations. To identify the types of royalties, including functional royalties that the 12 

western states assess on hardrock mining operations, we reviewed state statutes 

and regulations pertaining to royalties on hardrock mining operations. To aid in understanding general patterns in state royalties, we consulted academic and industry 

sources and then we categorized each royalty according to how it is assessed. To assess the number of abandoned hardrock mine sites, we asked the 12 western states 

and South Dakota—which have significant numbers of abandoned hardrock mining 

operations—to determine the number of these mine sites in their states. We asked 

the states to use a consistent definition, which we provided, in estimating the number of abandoned mine sites and associated features that pose a significant hazard 

to public health and safety and the number of sites that cause environmental degVerDate Nov 24 2008 16:13 May 28, 2009 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6621 L:\DOCS\47609.TXT Hresour1 PsN: KATHY
34 

6We defined an abandoned hardrock mine site as all associated facilities, structures, improvements, and disturbances at a distinct location associated with activities to support a past operation under the general mining laws. 7Data for Alaska are not maintained in LR2000 and not reported in the Bond Review Report. 

8GAO-08-849R and GAO-08-574T. 

9For a full discussion of the definition and formula for each type of royalty, see GAO-08-849R. 

10For a complete listing of exclusions, deductions, and limitations, see GAO-08-849R, encl. II, 

table 3. 11Gross income is the value of ore immediately after its removal from the mine and does not 

include any value added subsequent to mining by any treatment processes. 12Gross value of product, less first $250,000; Gross value is the receipts received from the sale 

of concentrates or metals extracted from mines or recovered from the smelting, milling, reducradation. 6 We specified that states should only include hardrock (also known as 

locatable), non-coal sites in this estimate. From these data, we estimated the number of features that pose physical safety hazards and the number of sites with environmental hazards in the 12 western states. We also summarized six selected survey efforts by federal agencies and organizations to document differences in estimates, definitions, and methodologies. To assess the value and coverage of financial 

assurances in place to guarantee reclamation, we reviewed BLM’s Bond Review Report. This report provides information on financial assurances for 11 western 

states. 7 This Bond Review Report is generated from BLM’s automated information 

system—LR 2000. Although the LR2000 data are of undetermined reliability, our 

limited assessment of these data indicates that they are appropriate as used and 

presented in this testimony, and we do not base any conclusions or recommendations on them. This testimony is based on prior GAO reports whose work was conducted in accordance with generally accepted government auditing standards. 8

Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. 

The 12 Western States Assess Multiple Types of Royalties, Including 

Functional Royalties, on Mining Operations 

Twelve western states assess royalties on the hardrock mining operations on state 

lands. In addition, each of these states, except Oregon, assesses taxes that function 

like a royalty, which we refer to as functional royalties, on the hardrock mining operations on private, state, and federal lands. To aid in the understanding of royalties, including functional royalties, the royalties are grouped as follows: 

• Unit-based is typically assessed as a dollar rate per quantity or weight of mineral produced or extracted, and does not allow for deductions of mining costs. 

• Gross revenue is typically assessed as a percentage of the value of the mineral 

extracted and does not allow for deductions of mining costs. 

• Net smelter returns is assessed as a percentage of the value of the mineral, but 

with deductions allowed for costs associated with transporting and processing 

the mineral (typically referred to as mill, smelter, or treatment costs); however, 

costs associated with extraction of the mineral are not deductible. 

• Net proceeds is assessed as a percentage of the net proceeds (or net profit) of 

the sale of the mineral with deductions for a broad set of mining costs. The particular deductions allowed vary widely from state to state, but may include extraction costs, processing costs, transportation costs, and administrative costs, 

such as for capital, marketing, and insurance. 9

• Royalties, including functional royalties, often differ depending on land ownership and the mineral being extracted, as the following illustrates: 

• For private mining operations conducted on federal, state, or private lands, Arizona assesses a net proceeds functional royalty of 1.25 percent on gold mining 

operations, and an additional gross revenue royalty of at least 2 percent for gold 

mining operations on state lands. 

• Nine of the 12 states assess different types of royalties for different types of 

minerals. For example, Wyoming employs three different functional royalties for 

all lands: (1) net smelter returns for uranium, (2) a different net smelter returns for trona—a mineral used in the production of glass, and (3) gross revenue for all other minerals. 

Furthermore, the royalties the states assess often differ in the allowable exclusions, deductions, and limitations. 10 For example, in Colorado, a functional royalty 

on metallic mining excludes gross incomes below $19 million, 11 whereas in Montana 

a functional royalty on metallic mining is applied on all mining operations after the 

first $250,000 of revenue. 12

35 

tion, or treatment of such ores. Receipts received is defined as the payment received, less allowable deductions. 

Finally, the actual amount assessed for a particular mine may depend not only 

on the type of royalty, its rate, and exclusions, but also on such factors as the mineral’s processing requirements, mineral markets, mine efficiency, and mine location 

relative to markets, among other factors. 

Table 1 shows the types of royalties, including functional royalties, that the 12 

western states assess on all lands, including federal, state, and private lands, as 

well as the royalties assessed only on state lands. 


47609.003.eps 47609.004.eps
36 

13For a full discussion of these six studies, see GAO-08-574T, app. III. 14 BLM and Forest Service, Abandoned Mine Lands: A Decade of Progress Reclaiming 

Hardrock Mines (September 2007). 

Prior State Estimates of the Number of Abandoned Hardrock Mine Sites 

Vary Widely, but Our Data Show at Least 161,000 Sites, with Many 

Posing Hazards 

It has been difficult to determine the number of abandoned hardrock mine sites 

in the 12 western states, and South Dakota, in part because there is no generally 

accepted definition for a hardrock mine site. The six studies we reviewed relied on 

the different definitions that the states used, and estimates varied widely from 

study to study. 13

Furthermore, BLM and the Forest Service have had difficulty determining the 

number of abandoned hardrock mines on their lands. In September 2007, the agencies reported an estimated 100,000 abandoned mine sites, 14 but we found problems 

with this estimate. For example, the Forest Service had reported that it had approximately 39,000 abandoned hardrock mine sites on its lands. However, this estimate includes a substantial number of non-hardrock mines, such as coal mines, and 

sites that are not on Forest Service land. At our request, the Forest Service provided 

a revised estimate of the number of abandoned hardrock mine sites on its lands, 

excluding coal or other non-hardrock sites. According to this estimate, the Forest 

Service may have about 29,000 abandoned hardrock mine sites on its lands. That 

said, we still have concerns about the accuracy of the Forest Service’s recent estimate because it identified a large number of sites with ‘‘undetermined’’ ownership, 

and therefore these sites may not all be on Forest Service lands. 

BLM has also acknowledged that its estimate of abandoned hardrock mine sites 

on its lands may not be accurate because it includes sites on its lands that are of 

unknown or mixed ownership (state, private, and federal) and a few coal sites. In 

addition, BLM officials said that the agency’s field offices used a variety of methods 

to identify sites in the early 1980s, and the extent and quality of these efforts varied 

greatly. For example, they estimated that only about 20 percent of BLM land has 

been surveyed in Arizona. Furthermore, BLM officials said that the agency focuses 

more on identifying sites closer to human habitation and recreational areas than on 

identifying more remote sites, such as in the desert. Table 2 shows the Forest Service’s and BLM’s most recent available estimates of abandoned mine sites on their 

lands. 

37 

15Tailings are a combination of fluid and rock materials that are left behind after the minerals are extracted. Tailings are often disposed of in a nearby pile. 

To estimate abandoned hardrock mine sites in the 12 western states and South 

Dakota, we developed a standard definition for these mine sites. In developing this 

definition, we consulted with mining experts at the National Association of Abandoned Mine Land Programs; the Interstate Mining Compact Commission; and the 

Colorado Department of Natural Resources, Division of Reclamation, Mining and 

Safety, Office of Active and Inactive Mines. We defined an abandoned hardrock 

mine site as a site that includes all associated facilities, structures, improvements, 

and disturbances at a distinct location associated with activities to support a past 

operation, including prospecting, exploration, uncovering, drilling, discovery, mine 

development, excavation, extraction, or processing of mineral deposits locatable 

under the general mining laws. We also asked the states to estimate the number 

of features at these sites that pose physical safety hazards and the number of sites 

with environmental degradation. 

Using this definition, states reported to us the number of abandoned sites in their 

states, and we calculated that there are at least 161,000 abandoned hardrock mine 

sites in their states. At these sites, on the basis of state data, we estimated that 

at least 332,000 features may pose physical safety hazards, such as open shafts or 

unstable or decayed mine structures. Furthermore, we estimated that at least 

33,000 sites have degraded the environment, by, for example, contaminating surface 

and ground water or leaving arsenic-contaminated tailings piles. 15 Table 3 shows 

our estimate of the number of abandoned hardrock mine sites in the 12 western 

states and South Dakota, the number of features that pose significant public health 

and safety hazards, and the number of sites with environmental degradation. 


47609.005.eps
38 

16Data for Alaska are not maintained in LR2000 and not reported in the Bond Review Report. 

BLM Estimates That Operators Have Provided About $982 Million in Financial Assurances—About $61 Million Less Than Needed to Cover 

Estimated Reclamation Costs 

As of November 2007, hardrock mining operators had provided financial assur- ances valued at approximately $982 million to guarantee the reclamation cost for 

1,463 hardrock mining operations on BLM land in 11 western states, according to 

BLM’s Bond Review Report. 16 The report also indicates that 52 of the 1,463 hardrock mining operations had inadequate financial assurances’’e i95about $28 

million less than needed to fully cover estimated reclamation costs. We determined, 

however, that the financial assurances for these 52 operations should be more accurately reported as about $61 million less than needed to fully cover estimated reclamation costs. Table 4 shows total operations by state, the number of operations 

with inadequate financial assurances, the financial assurances required, BLM’s calculation of the shortfall in assurances, and our estimate of the shortfall, as of November 2007. 

The $33 million difference between our estimated shortfall of nearly $61 million 

and BLM’s estimated shortfall of nearly $28 million occurs because BLM calculated 

its shortfall by comparing the total value of financial assurances in place with the 


47609.006.eps 47609.007.eps
39 

total estimated reclamation costs. This calculation approach has the effect of offsetting the shortfalls in some operations with the greater than required financial assurances of other operations. However, the financial assurances that are greater 

than the amount required for an operation cannot be transferred to an operation 

with inadequate financial assurances. In contrast, we totaled the difference between 

the financial assurance in place for an operation and the financial assurances needed for that operation to determine the actual shortfall for each of the 52 operations 

for which BLM had determined that financial assurances were inadequate. 

BLM’s approach to determining the adequacy of financial assurances is not useful 

because it does not clearly lay out the extent to which financial assurances are inadequate. For example, in California, BLM reported that, statewide, the financial assurances in place were $1.5 million greater than required as of November 2007, suggesting reclamation costs are being more than fully covered. However, according to 

our analysis of only those California operations with inadequate financial assurances, the financial assurances in place were nearly $440,000 less than needed to 

fully cover reclamations costs. BLM officials agreed that it would be valuable for the 

Bond Review Report to report the dollar value of the difference between financial 

assurances in place and required for those operations where financial assurances 

are inadequate and have taken steps to modify LR2000. 

BLM officials said that financial assurances may appear inadequate in the Bond 

Review Report when 

• expansions or other changes in the operation have occurred, thus requiring an 

increase in the amount of the financial assurance; 

• BLM’s estimate of reclamation costs has increased and there is a delay between 

when BLM enters the new estimate into LR2000 and when the operator provides the additional bond amount; and 

• BLM has delayed updating its case records in LR2000. 

Conversely, hardrock mining operators may have financial assurances greater 

than required for a number of reasons; for example, they may increase their financial assurances because they anticipate expanding their hardrock operations. 

In addition, according to the Bond Review Report, there are about 2.4 times as 

many notice-level operations—generally, operations that cause surface disturbance 

on 5 acres or less—as there are plan-level operations on BLM land—generally operations that disturb more than 5 acres (1,033 notice-level operations and 430 planlevel operations). However, about 99 percent of the value of financial assurances is 

for plan-level operations, while 1 percent of the value is for notice-level operations. 

While financial assurances were inadequate for both notice- and plan-level operations, a greater percentage of plan-level operations had inadequate financial assurances than did notice-level operations—6.7 percent and 2.2 percent, respectively. Finally, over one-third of the number of all hardrock operations and about 84 percent 

of the value of all financial assurances are for hardrock mining operations located 

in Nevada. 

Mr. Chairman, this concludes my prepared statement. I would be happy to respond to any questions that you or Members of the Committee may have. 

40 

Mr. COSTA. Very good. Thank you very much for your testimony, 

and we will move on to the next witness, Mr. James ‘‘J.T.’’ 

Reynolds, former Superintendent of Death Valley National Park, in 

California. 

We are pleased that you are here, Mr. Reynolds, and would love 

to hear your comments. It is a part of California that I am a little 

bit familiar with, and it is truly one of California’s and our Nation’s 

important treasures. So, please open on your testimony. 


47609.008.eps
41 

STATEMENT OF JAMES REYNOLDS, SUPERINTENDENT [2001- 

2008] DEATH VALLEY NATIONAL PARK, CALIFORNIA, 

NATIONAL PARK SERVICE 

Mr. REYNOLDS. Good morning, Mr. Chairman, Members, and others. I am honored to have the opportunity to share with you why 

H.R. 699 will be the much needed law to help managers like me 

in protecting park resources and protecting the visitors who come 

to enjoy these resources. 

Death Valley has over 1,700 mining claims within five miles of 

its boundary, and over twenty-six hundred within ten miles. The 

total number around National Park Service areas within five miles 

is approximately seventy-one hundred, and within ten miles, approximately 12,000, and many of these are within the boundaries 

of National Park Service areas. 

My written testimony includes quite a bit more information 

about how over 100 years of mining history has been included in 

the mission of the National Park Service in parks like Death Valley 

and other Park Service areas. 

I often advise folks, especially middle-school kids, and their 

teachers, that National Park Service areas include the libraries 

and cathedrals that tell the stories of our country’s history, the 

places where real artifacts are housed and books are written about 

these things. 

One of the National Park’s missions is to preserve and protect 

these artifacts for future generations. Death Valley is one of those 

places where this mining history is housed. 

I will also advise that the dedicated employees do the best that 

they can with the inadequate funds and the staff. The outdated 

laws and policies only make this job even more difficult, even when 

we partner with others and share resources. 

As you have heard from others, the 1872 Mining Law is inadequate and do these historic artifacts and visitors great harm. If 

we pass H.R. 699, this bill will ensure that our country’s mining 

history, past and present, will be better protected. 

It will also ensure that we will protect the millions of visitors 

who come to learn and enjoy these resources and their environment. Section 309 specifically addresses national parks and national monuments. 

It will ensure that if mining activities impair scenic cultural and 

natural resources, and other assets like water and air quality, 

these mining activities will not be allowed. 

This bill also includes sections in all five titles that will improve 

how we do business, and better protect our resources, as well as 

protect our citizens and other visitors from the hazards created 

from over 100 years of mining activities. 

The techniques used in these mining activities, past and present, 

create unstable slopes on mountains, the mining shafts collapse 

under the weight of vehicles and people. The techniques to extract 

gold and silver from the ore leaves cyanide, lead, mercury, and 

other toxic chemicals in the soil and on the ground to be washed 

away to contaminate surface and ground water. 

The wind blows these contaminants, therefore polluting the air 

that visitors and employees breathe. Many of the historic mining 

42 

features that tell the stories, and become more unstable, where 

many collapse due to rot and lack of maintenance. 

Our visitors are moving about these unsafe areas, and some are 

injured, and some die. If we had a more consistent funding source 

dedicated to stabilizing, cleaning up, and reclaiming these sites, we 

could provide the more safe and enjoyable place for visitors to 

enjoy, and for future generations to learn about their history. 

The reclamation fund proposed in H.R. 699 is a great start in 

protecting our history for our kids. In closing, I want to stress that 

these resources need our help yesterday. Our generation must step 

up and ensure that we do not let our future generations down, and 

that they will not have to visit these unsafe issues again, at least 

anytime soon. 

Park areas, tribes, and town citizens are being subjected to the 

hazards of mining activities as we speak. I just want to thank you 

all for allowing me to share, and I hope that my written and oral 

testimony will add value to the process, and why it is imperative 

that H.R. 699 is passed. 

[The prepared statement of Mr. Reynolds follows:] 

Statement of James T. Reynolds, Superintendent (2001-2008), 

Death Valley National Park, California 

On this 26th day of February 2009, I James T. Reynolds, a member of the Coalition of National Park Service Retirees, former superintendent of Death Valley National Park, and recently retired, 2 January 2009, am here to testify before the Subcommittee on Energy and Mineral Resources Legislative Hearing on H.R. 699, the 

Hardrock Mining and Reclamation Act of 2009. 

Good Morning Mr. Chairman, members of the committee, and others. I am honored to share information to add value that will be most beneficial to the Committee 

who will draft a final bill that will reform the governance of hardrock mining on 

public lands, as carried out under the Mining Law of 1872. 

The Death Valley Region is recognized for its rich natural and cultural diversity. 

Native people have inhabited this region for thousands of years, and their descendents continue to live and call this area home. In the mid to late 1800’s, native peoples were pushed out of the area by mining companies and the federal government. 

The remnants of this history still exist today. This human history is enveloped by 

beautiful extremes, craggy soaring peaks, deep chasms, golden sand dunes, a variety 

of unusual wildlife and uncommon plants, and a myriad of other hidden treasures 

to experience. 

The mining industry helped to establish Death Valley as a national monument. 

Due to the mining activities, a monument was established rather than a national 

park. Horace Albright, head of the National Park Service, drew boundaries for what 

he wanted President Herbert Hoover to declare an American treasure. Hoover eventually designated Death Valley as a National Monument, an act that became official 

on February 11, 1933. It took over six decades for the Monument’s status to be upgraded to National Park status in 1994, California Desert Protection Act. 

Its significance is identified in the park’s enabling legislation and general management plan which states that the park ‘‘has an extensive and well-preserved mining history representing over 100 years of mining technology.’’ Death Valley is a little unusual because some of the earlier national parks were established with the 

assistance of the railroad industry, artist, painters and photographers. 

The California Desert Protection Act, 1994 also describes how Death Valley 

(DEVA) will be protected and how it will mandate the preservation of historical and 

cultural values of the California desert associated with ancient Indian cultures, patterns of western exploration and settlement, and sites exemplifying the mining, 

ranching and railroading history of the Old West. 

Many of these mines have important and irreplaceable historic mining artifacts, 

buildings and other cultural resources on site that are being looted or deteriorating 

at an alarming pace. Using discretionary operating funds or occasional project funds 

cannot begin to deal with the issue effectively and responsibly. 

Current topographic maps indicate that there are approximately 3,500+ known 

mine features within the park, though there may be over 10,000. Certain mining 

43 

districts/sites are visited frequently by park visitors. Many of the shafts are several 

hundred feet deep—the safety concern for the unwary visitor is real. The staff of 

Death Valley and other NPS areas tries to address the significant safety hazards 

and the preservation of habitat for rare bat species associated with selected mine 

sites. 

The National Park Service also educates visitors that mining and abandoned mineral lands are often part of the park scene. Mining interpretive displays and presentations are part of the program at several parks. In other parks, special regional 

events such as discoveries and local gold rushes are commemorated. Visitor centers 

often have books on mining history and folklore. Educators have recognized that 

parks make excellent classrooms that bring this rich mining history alive and programs are developed for selected mining districts and sites. Mining-related topics 

are used to enhance school curricula in history, geography, science, and even art. 

Some national parks and state agencies offer school outreach programs, including 

abandoned mineral lands safety information for children. 

Many parks boast rich mining histories and are active in preserving and even reconstructing mining-related historic structures and landscapes. Three park units 

were established with the specific purpose of preserving the American mining heritage: Klondike Gold Rush National Historical Park, Yukon-Charley Rivers National 

Preserve, and Keweenaw National Historical Park. The first two of these parks commemorate the Alaskan gold rush of 1898, and the latter, established in 1992, celebrates the internationally significant copper mines in the upper Michigan peninsula. 

Evidence of earlier mining can also be viewed in the National Park System. Alibates 

Flint Quarries National Monument in Texas and Wupatki National Monument in 

Arizona preserve the remains of prehistoric extraction sites, and Pipestone National 

Monument in Minnesota protects the pipestone (red mudstone) quarries of the 

Yankton Sioux. 

In 1849, gold was discovered in California and a rush began into the state. It is 

estimated that 80,000 people came to California looking for gold. As gold, silver, 

borax, and other minerals were discovered in Death Valley and many other areas, 

even miners who feared these areas, returned to look for the gold and silver potential they had seen during their nightmarish ordeal. 

Beatty, Nevada, northeast of Death Valley National Park, is a good example of 

a modern town that went through a ‘‘boom and bust’’ period (Barrick Bullfrog Mining Site), over a decade ago, and may again go through something similar if a new 

mining company receives a permit to extract precious minerals from public or private land in the area. Many citizens may resist the mining activities that may cause 

some impacts. However, many will welcome the new jobs despite the consequences. 

Death Valley includes many remains of towns that went through ‘‘boom and bust’’ 

periods during the late 1800’s and the early 1900’s. The following descriptions describe Death Valley’s rich mining history, and it also describes the results of mining 

activities on the surrounding areas. 

Now a ghost town, the Keane Wonder Mine (1906) was one of the most successful 

gold mines in Death Valley. Miners were following a rich vein of ore that was deposited in fractures in the metamorphic rock. Tunnels were excavated, side tunnels 

were added, always removing as much ore as possible. Eventually the mine became 

a series of chambers supported by pillars. So much material was removed that the 

entire mountain slope above became unstable and started to collapse. Besides the 

obvious danger of entering a crumbling mine, just being on the surface above or 

near the mine has become a safety hazard (Toxic Waste). 

To extract the gold from the ore, cyanide and other toxic chemicals were used at 

the mill site. Not far from the visitor parking area are the remains of tanks used 

in the cyanide process and fine tailings that remained after processing. Preliminary 

testing has shown elevated levels of lead and mercury in these tailings. Erosion is 

constantly exposing this material and wind blows the dust around. 

The historic structures of Keane Wonder Mill and tramway are suffering from rot, 

rust, and decay. These structures are in danger of collapse and need to be stabilized. 

Until the site can be made safer—while also preserving the historic features of 

the site and protecting those areas used by wildlife—the National Park Service has 

decided to close this popular ghost town and surrounding area to public access. 

Ballarat came into being in 1897 with many gold strikes in the Panamint Mountains. The Radcliffe mine alone produced 15,000 tons of gold ore from 1898-1903. 

The town was named after a famous Australian gold camp and was home to 400 

people in 1898. Several legendary Death Valley figures lived in town. Ballarat is 

now privately owned and contains the ruins of several adobe buildings. The town 

site is located off the Panamint Valley road west of Death Valley proper. 

Chloride City became a town in 1905 when the Bullfrog strike brought people into 

the area to re-work old mining claims. It became a ghost town the following year. 

44 

There are numerous adits and dumps in the area and one grave of a James McKay, 

of whom nothing is known. In addition, there are remains of 3 stamp mills. It is 

located off a four wheel drive road 3.5 miles east of Hell’s Gate or off the dirt road 

7 miles further east at the Park boundary. 

Greenwater was built around a copper strike made in 1905. Water had to be hauled into the town and was sold for $15 a barrel. The town grew to a population 

of 2,000 and was known for its lively magazine, The Death Valley Chuckwalla. By 

1909 the mining had collapsed without ever showing a profit and people left for 

other areas. There are no ruins left in Greenwater, which is located south of Dante’s 

View off the Greenwater Valley gravel road. 

Originally the town of Harrisburg was to be named Harrisberry after the two men 

who found the gold that launched it in 1905. Shorty Harris later took credit for the 

strike and changed the name of the town to Harrisburg after himself. Nevertheless, 

Pete Aguereberry, one of the original strike finders, spent 40 years working his 

claims in the Eureka gold mine. Harrisburg was a tent city that grew to support 

a population of 300. Today nothing remains of the town but Pete’s home and mine 

which are located to the right two miles down the dirt road to Aguereberry Point. 

Copper and lead claims had been filed in the Leadfield area as early as 1905 but 

it wasn’t until 1926 that the area was heavily mined. In February of that year, 

Charles C. Julian, a flamboyant California promoter, became president of the town’s 

leading mining company, the Western Lead Mines. Julian’s promotions were responsible for bringing great numbers of people into the area and in April, 1926 the town 

was laid out with 1749 lots. 

The financial downfall of Charles Julian and the playing out of lead in one of the 

main mines, led to the end of the town. The area is scattered with mines, dumps, 

tunnels and prospect holes. There are remains of wood and tin buildings, a dugout 

and cement foundations of the mill. The town is located on the Titus Canyon road. 

This is a one way high clearance unpaved road that sometimes requires 4-wheel 

drive. 

Panamint City was called the toughest, rawest, most hard-boiled little hellhole 

that ever passed for a civilized town. Its founders were outlaws who, while hiding 

from the law in the Panamint Mountains, found silver in Surprise Canyon and gave 

up their life of crime. In 1874 the town was at the height of its boom with a population of 2,000 citizens. By the fall of 1875 the boom was over, and in 1876 a flash 

flood destroyed most of the town. The chimney of the smelter is the most prominent 

remnant of the town’s heyday. The site of Panamint City is accessible via a 5 mile 

hike from Chris Wicht’s Camp, which is located 6 miles northeast of the ghost town 

of Ballarat. Mining in the area continued on a sporadic basis up until recent times. 

The ruins of old Panamint City were added to Death Valley National Park in October of 1994. 

Rhyolite, the ‘‘Queen City’’, was the largest town in the Death Valley area with 

a population of 5,000-10,000 people. During its heyday, from 1905-1911, it contained 

2 churches, 50 saloons, 18 stores, 2 undertakers, 19 lodging houses, 8 doctors, 2 dentists, a stock exchange and an opera. The town contains numerous ruins including 

the Bottle House, Senator W.A. Clark’s train depot, remains of a 3-story bank building, and the jail. It is on BLM land and is accessible by passenger car. Rhyolite is 

located 4 miles west of Beatty and 35 miles from the Death Valley Furnace Creek 

Visitor Center. 

Skidoo was founded in 1906 when two prospectors, on their way to the Harrisburg 

strike, found gold. The town reached a population of 700 and became famous as the 

site of the only hanging to take place in Death Valley. It occurred when Hootch 

Simpson, a saloon owner who had fallen on hard times, tried to rob the bank, was 

foiled in the attempt, and later went back and killed the owner of the store in which 

the bank was located. During the night the townspeople hanged Hootch. According 

to legend, he was hanged twice. The second hanging was to accommodate news photographers who missed the first hanging. No one was ever arrested for the hanging. 

Skidoo is located off the Wildrose road on an unpaved high-clearance road not recommended for automobiles. 

One of the most well known but short lived mines was the Harmony Borax Works, 

which was active from 1883-1888. This mine was made famous not for its ore deposits, but by the 20 Mule Team Wagons and the ad campaigns for the Death Valley 

Days radio and television programs. To help the public become familiar with the 

desert area, in late 1930 the Borax Company began airing its radio show, Death 

Valley Days. The program remained on the air for 14 years. The show’s run did not 

end there. It ultimately became a popular TV program, which was televised for an 

additional 16 years, 1952 to 1968—an impressive run by virtually any standard. 

And the program’s most famous host, Ronald Reagan, introduced it until he was 

elected governor of California. 

45 

On May 10, 1872, Congress passed a law that encouraged people to go West, locate hardrock minerals and stake mining claims on federal lands, and remove treasure troves of gold, silver, copper, and platinum from the public domain—for free. 

The General Mining Law of 1872, or the ‘‘experiment,’’ as some of our predecessors 

named it, has endured for more than one and a third centuries—a total of 137 

years. Today, we can resoundingly assert that the experiment has lasted long 

enough. 

To Support current National Park Services (NPS) and Department of the Interior 

(DOI) goals to reduce Comprehensive Environmental Response Compensation and 

Liability Act (CERCLA) liability at park facilities, Phase I Environmental Site Assessments (ESAs) must be conducted to determine whether or not any hazardous 

waste sites or contamination exists. To facilitate this process we seek assistance in 

conducting a Phase I ESA consistent with requirements set forth under 40 CFR 312 

(the All Appropriate Inquiry (AAI) standard), and requirements in the current 

American Society for Testing and Materials (ASTM), which is ASTM 1527-05. 

The Phase I ESA is also completed to determine if a site is safe for visitors. The 

Phase I ESA includes an analysis of current and historical conditions at the site 

with respect to site contaminants and potential for CERCLA liability. The goal of 

the site assessment is to identify potential liabilities under CERCLA before mitigation activities or transactions take place so that costs can be incorporated into land 

transactions or clean-up. These measures are required so that individual park facilities do not end up bearing the brunt of the cost of CERCLA clean-up. Phase I ESAs 

must be conducted by an Environmental Professional (EP) as described under the 

AAI standard. 

An interagency agreement (IA) exist between the NPS and BLM that defines the 

responsibilities of the Bureau of Land Management (BLM), Department of the Interior, and the National Park Service (NPS), Department of the Interior, in the administration of the Mining Law of 1872, as amended, on lands in the National Park 

System. 

The BLM is responsible for developing and promulgating the regulations and policies to be followed in the administration of the mining laws pertaining to location, 

annual maintenance, and patenting of mining claims. The BLM regulations that 

provide for proper location, maintenance, and patenting of mining claims are the definitive executive branch position on such matters. The BLM regulations, instruction 

memoranda, manuals, and handbooks contain the standards and procedures to be 

used by the BLM and the NPS for examining the validity of mining claims and preparing mineral reports. 

The BLM, in conjunction with the Office of the Solicitor (SOL), Department of the 

Interior, evaluates and interprets the mining law as construed by the Office of Hearings and Appeals, Department of the Interior, and the courts. Such interpretations 

are the definitive executive branch position on mining law matters. The BLM is responsible for reviewing and approving all mineral reports. The BLM initiates contest actions on behalf of NPS before the Office of Hearings and Appeals (OHA). 

The NPS is responsible for ensuring that operations associated with the exercise 

of valid existing rights on patented and unpatented mining claims in the National 

Park System are conducted in a manner that preserves and protects park resources 

and values. The NPS administers these operations in accordance with applicable 

laws, including the National Park Service’s Organic Act (16 U.S.C. §§ 1 et seq.), the 

Mining in the Parks Act (16 U.S.C. §§ 1901-1912), and NPS implementing regulations (36 C.F.R. Part 6 and Part 9, Subpart A). 

The NPS conducts validity examinations on mining claims located in units of the 

National Park System, including those claims for which a patent application has 

been filed, to determine if such mining claims are valid and/or all patenting requirements have been met. NPS mineral examiners or NPS-designated representatives 

will serve as expert witnesses when the government’s case is presented before OHA, 

including those cases where NPS has employed a mineral examiner under a contract. 

Procedures for Determining the Validity of Mining Claims: As used in the Interagency Agreement, the terms ‘‘validity examination’’ and ‘‘mineral report’’ refer to 

examinations and reports prepared for the purpose of either determining mining 

claim validity or processing mineral patent applications. The NPS has a National 

Park Service Programmatic Agreement with the California State Historic Preservation Office (SHPO) titled ‘‘A Plan to Minimize the Impacts of Physical Safety Hazard 

Mitigation Treatments at Abandoned Historic Mines’’ (California AML PA). The 

California AML PA was developed by cultural resources specialists, biologists, and 

mining engineers for the purpose of creating an agreement that allows for closure 

of historic mining features for public safety reasons, without irreversibly harming 

cultural resource and wildlife values. While this document has not yet been apVerDate Nov 24 2008 16:13 May 28, 2009 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6621 L:\DOCS\47609.TXT Hresour1 PsN: KATHY
46 

proved by the California SHPO, we would like to find out if it would be worthwhile 

for the Nevada National Parks to develop a similar document. 

Determination of Claim Validity: The NPS, or its designated contractors operating 

under the direction of certified NPS mineral examiners, will conduct validity examinations on mining claims in units of the National Park System, and will prepare 

mineral reports detailing the findings of validity examinations, making appropriate 

recommendations to the BLM. The mineral reports will conform to the standards 

set out in BLM manuals, handbooks, and instruction memoranda. The BLM will review NPS-prepared mineral reports to determine if they meet BLM standards. Reports that meet BLM and NPS standards will be approved. Reports that are inadequate for the recommended action will be returned to the author with an explanation of what steps must be taken to correct the document. 

In 2007 the National Park Service and the Bureau of Land Management underwent an audit conducted by the Inspector General for the Department of the Interior. The audit reviewed the management and treatment of abandoned mine lands 

by these agencies. The Inspector General concluded that the agencies are putting 

public safety at risk because many physical and environmental hazards have not 

been addressed for decades. It was noted that at Death Valley National Park, the 

public was invited to visit sites that had not been adequately mitigated. Specifically 

mentioned was the Keane Wonder Mine, which was the site of a fatality in 1984. 

While the auditor was at the mine site, he witnessed a three-year-old child exiting 

from a collapsing adit while his family explored other openings. Park staff has spoken with visitors at the Keane Wonder site who freely admit that they see the warning signs about mine hazards but disregard them. 

Another hazard at the Keane Wonder includes the historic tramway system. Wood 

members have deteriorated, which, combined with a collapsed tower near the upper 

terminal, leads to increased strain on the entire tramway. A third issue involves elevated levels of mercury and lead in the tailings left from processing operations. The 

tailings are very fine and easily become windborne; further testing is needed to determine if the levels of lead and mercury are hazardous to humans or wildlife. 

The combination of the physical hazards at the mine, the deterioration of the 

tramway, and the environmental hazards of the tailings led the park to close the 

site to public access and non-essential employees in September 2008. 

We agree that this is one of the more spectacular hikes within Death Valley National Park and that the site is an excellent example of mining activity in the early 

20th century. Our goal is to reopen this site to the public when the human-caused 

safety issues have been addressed. The Keane Wonder Mine and mill site is being 

nominated for inclusion in the National Register of Historic Places. 

Death Valley National Park has received funding through the Vanishing Treasures program for work on the historic tramway, which will begin in 2009. Funding 

has also been requested for testing of heavy metals in the tailings; the results will 

determine if contamination cleanup will be needed. Additional funding has been requested for mitigation of the hazards of the mine openings. The treatments will consider the cultural and natural resource values, and while they will prevent people 

from entering the mine openings, they will preserve the most significant features 

of the site and provide for continued use by wildlife, particularly bats. 

Abandoned Mineral Lands: 

Abandoned mineral lands (known as AML) are one of many types of disturbed 

lands in the National Park System. AML sites are 1) underground and surface 

mines, 2) placer and dredge sites, and 3) oil, gas, and geothermal wells. Commodities mined at these sites ranged from soft rocks such as coal and sand/gravel to 

hard rock minerals such as gold, lead, and copper. Sites can contain waste rock (unprocessed rock), tailings (processed rock), abandoned roads, fuel storage tanks, 

drainage diversions, buildings such as mills and assay shops, deteriorating structures such as head frames and tramways, and abandoned heavy equipment. 

Not surprisingly, the legacy of abandoned mineral lands spans North America. 

Mining for flint, obsidian, and native copper for tools and weapons, turquoise for 

jewelry, and clay for pipes began with the arrival of prehistoric peoples. During the 

16th century, expectation of mineral wealth drove Coronado’s conquistadors beyond 

the edge of civilization to the heart of an unknown continent. Later, the lure of gold 

and the prospect of great wealth were responsible for Europeans settling in the 

western United States. With the beginning of the industrial age, the young nation, 

hungry for energy, exploited its mineral resources of coal, oil, gas, and uranium, and 

this too left its mark on the land. Deserted, these sites stand in silent testimony 

to those who pioneered this country in search of mineral wealth. 

An estimated 3,100 abandoned mineral sites can be found in the National Park 

System, in all 7 regions of the system, and in 45 states. This number translates to 

47 

8,400 mined features, 700 oil and gas wells, 1,000 quarries, and 33,000 disturbed 

acres. Additionally, the National Park Service estimates that 5,000 miles of abandoned access roads exist. Abandoned mineral lands are lands that were disturbed 

by mineral extraction—underground mining, surface mining, dredging, and oil and 

gas exploration—and then abandoned. Abandoned mineral lands can be underground with numerous mine openings such as adits and shafts or on the surface 

in the form of strip mines, quarries, open wells, or pits. Abandoned mineral lands 

are not only the actual mine or well but include access roads and trails, historic 

buildings such as mills and company towns, tailings and waste rock piles, and abandoned machinery such as ore carts, steam engines, and pump jacks. 

Falling down vertical openings is the most common cause of death and injury in 

abandoned mines. Darkness, loose debris, and false floors can hide vertical openings. Weathered rock at the edge of an opening can break away and slide into the 

hole under the weight of a person. Unstable adits and structures are common hazards at abandoned mines. 

Lethal concentrations of methane, carbon monoxide, carbon dioxide, and hydrogen 

sulfide can accumulate in underground passages. Pockets of still air with little or 

no oxygen can be encountered. By the time persons feel ill, they are no longer able 

to react. 

Mines can cave in at any time! The effects of blasting and weathering destabilize 

once-competent bedrock through time. Support timbers, ladders, cabins, pump jacks, 

tanks, and other related structures may seem safe but can easily crumble under a 

person’s weight. 

Sand and gravel pits make up a significant portion of the abandoned mineral 

lands in the national park system. Unused or misfired explosives are deadly. Because old explosives become unstable, minimal vibrations from a touch or footfall 

can trigger an explosion. 

Vertical cliffs—also called highwalls—from which material was extracted are common features of open pit mines and quarries. These highwalls can be unstable and 

prone to collapse. 

Many abandoned mines become flooded. Shallow water can conceal sharp objects, 

drop-offs, and other hazards. 

Some of the materials that were mined, such as uranium and thorium, are radioactive. Because the effects of radiation exposure are cumulative through a lifetime, 

any can be harmful or fatal to humans, wildlife, and plants. 

Mines were constructed and maintained to be safe only while they were in operation. When the miners departed in search of more lucrative deposits, they often 

left vertical openings uncovered and removed the water pumping and ventilation 

systems. Support structures, timbers, and ore pillars were removed or left to rot. 

Caves are formed naturally over thousands or even millions of years. Mines, in 

contrast, are formed in comparatively short periods of time through blasting, a process that fractures and destabilizes the wall and roof rocks. Most underground mines 

do not have natural ventilation and consequently can have lethal air traps. Even 

experienced cavers can die exploring mines. Mine rescues are extremely hazardous. 

Mine rescue teams, despite their extensive training, are at significant risk every 

time they enter an abandoned mine. The tragic and unfortunate reality is that most 

mine rescues turn into body recoveries. 

Abandoned mineral lands can have detrimental effects on soils, water, plants, and 

animals. The extent of the effects in National Park System units is not known. Inventories are incomplete and parks are still evaluating sites. 

Water is one of the resources most frequently harmed by abandoned mines and 

wells. Water is also the main vehicle that carries abandoned mineral land impacts 

beyond the immediate site. Elevated concentrations of metals and increased 

amounts of suspended sediment, acidity, petroleum, and brine threaten surface and 

underground water quality and aquatic habitats. Acid is created as metals oxidize 

in sulfide ore and waste rock. Acid allows toxic metals to dissolve and wash into 

streams and lakes. Acid mine drainage occurs at only a few of the abandoned mines 

in the National Park System. At some of these sites, the water coming out of the 

mines is so acidic that it can actually burn a person’s skin. 

Mining metals requires extracting ore from the ground, crushing the ore to the 

size of sand grains, and removing the desired mineral. Often the excess material— 

tailings—is deposited on the surface. During storms and snow melts, water flows 

over and through the tailings. The tailings still contain relatively large amounts of 

metals such as lead, zinc, copper, and cadmium. The water interacts with the metals and transports them to nearby streams. Some metals, at concentrations as small 

as a few parts per million, can damage or kill aquatic plants and animals. 

Disturbed lands and unprotected slopes are susceptible to erosion. Uncontrolled 

surface drainage can remove soils and may make large areas unstable. Every year, 

48 

sediments from mine sites cause significant damage to downstream resources. Although some mine and wells are historically significant, most are eyesores. Piles of 

trash and debris, open pits, waste rock piles, and access roads blemish the otherwise 

pristine landscapes of the parks. Surface mines and quarries often have the greatest 

impacts on scenic vistas. In some cases, hundreds of thousands of cubic yards of material have been removed, making restoration extremely difficult. 

Mining often stripped away not only the vegetation but also the topsoil that is 

needed to reclaim the site when mining operations cease. The area left behind is 

barren and incapable of supporting plant and animal life. Bare soil continues to 

erode and is carried away from the site to nearby streams and rivers. Here, the 

sediment clogs stream channels, reducing fish habitat and interfering with natural 

flow patterns. Even when these effects seem minor at first glance, they may impair 

larger ecological communities. Soils and water contaminated with heavy metals or 

chemicals from mineral processing may be harmful to wildlife. These contaminants 

can become increasingly concentrated in animals higher up the food chain in a process called biomagnification. Affected animals could die or become unable to reproduce. 

Abandoned mines do not always have negative consequences. They sometimes 

provide habitat for wildlife including some rare or endangered species. Some 

woodrats, bats, salamanders, and owls use mines as habitat. In many parks, special 

mine closures protect critical habitat and correct safety hazards. Some bat species, 

which are endangered because their native habitats were destroyed, have begun to 

inhabit abandoned mine openings. When conditions are suitable, bats can use mines 

for summer roosts, winter hibernation, nurseries for raising young, and a stopover 

during migration. Of the 43 bat species native to the United States, 29 rely on 

mines for a portion of their habitats. The continued survival of several bat species 

may depend on the few mines and remaining caves that meet the habitat needs of 

these animals. 

The mitigation and reduction of hazards from abandoned mineral lands are often 

complicated and expensive procedures. The National Park Service establishes the 

priority for mitigation by considering the level of danger and potential for resource 

damage. Each site is unique. The chosen method for mitigating a hazardous site depends on several things: available materials at the site, the type of rock, the difficulty of reaching the site, and money. Parks use a variety of methods to close hazardous mine openings. Because of limited funding, parks can usually afford only to 

fence the hazard and post signs, temporary solutions. Other common mine closure 

techniques include backfilling, blasting, expandable foam, rock and mortar walls, 

and bat gates. Virtually all mineral activities require access roads. The erosion and 

visual scars related to abandoned roads impact park resources. 

Scars on the land may last thousands of years even if mined areas stabilize and 

the vegetation recovers. Carefully planned reclamation can restore natural processes 

and greatly speed site recovery. Reclamation in the National Park System focuses 

on reestablishing landscapes and environments that mimic the surrounding undisturbed lands. Mine structures such as mills, shops, headframes, and others of historic value are stabilized and preserved. Otherwise, the pre-mine condition is restored wherever possible. Reshaping the surface stabilizes slopes and drainages, 

waste rock piles, tailings ponds, highwalls, and access roads. This reshaping often 

requires the use of heavy equipment to contour the land to look and function like 

the surrounding undisturbed lands. The restoration of stream channels also provides for the reintroduction of plants and animals that were lost because of mining. 

The same type of earthmovers that created the mineral extraction scars are often 

the best suited to remove them. 

Cleanup or treatment of toxic materials prevents further impairment of the environment. Small quantities of mining related materials, such as chemicals or fuels 

used in mining and milling are completely removed. Large quantities of naturally 

occurring materials, such as unweathered waste rock that produces acids, may be 

treated on-site. Applications of lime may provide a buffer to prevent the generation 

of acids. In more severe cases, limestone drains or artificial wetlands filter heavy 

metals and reduce acidity. 

The goals for revegetation of mine sites in the National Park System are the restoration of native plant populations and patterns. The first consideration is the suitability of the soil for revegetation. In harsh conditions, topsoils, compost, or specific 

nutrients can be added. Specialized nurseries may be needed to propagate suitable 

plant materials. Sometimes, revegetation work is focused on establishing pioneering 

species to allow for natural succession. Time and nature then restore the natural 

productivity in the site. 

The National Park Service closes between 10 and 100 mine openings and plugs 

5 abandoned oil and gas wells each year. In 1993, the estimated cost of reclamation 

49 

of all remaining abandoned mineral land sites in the National Park System was 

$200 million. 

The Death Valley Mine Closure Alliance was formed in 2006 with Rio Tinto Minerals, California Department of Conservation AML program, Bat Conservation 

International, and Death Valley National Park. The Alliance has surveyed over 200 

of an estimated 600 borax mines; identified mines that have significant usage by 

bats; and are prioritizing closures. 

As a final comment, Death Valley estimates there are 6000+ mines within the 

park, more than any other unit in the National Park Service. Many of these sites 

have been documented and mitigated in various forms over the last 20 years but 

many more are left. Most of the mines in Death Valley are historic cultural resources spanning over 100 years of mining, and range in size from mines worked 

by the ‘‘single-blanket’’ prospector to mines commercially operated by Fortune 500 

companies. While many mines are hazards, the safety mitigations should be designed to be sensitive to the cultural significance, interpretive values, and accommodate wildlife uses. This will require a systematic and methodical approach and can 

be accomplished through a consistently funded program. 

I believe the Subcommittee on Energy and Mineral Resources, H.R. 699, the 

Hardrock Mining and Reclamation Act of 2009, legislation will end the financial and 

environmental abuses permitted by the 1872 Mining Law—archaic provisions that 

fly in the face of logic, and are not what taxpayers, sportsmen, conservationists, and 

western communities want or need. 

[NOTE: U.S. Department of the Interior memo dated October 2, 2008, ‘‘Mitigating 

High-Risk Abandoned Mine Land Features’’ and U.S. Department of the Interior 

Office of Inspector General Audit Report ‘‘Abandoned Mine Lands in the Department of the Interior’’ dated July 2008, have been retained in the Committee’s 

official files.] 

Mr. COSTA. Thank you, Superintendent Reynolds, for your very 

timely testimony, and your insight as the superintendent of one of 

our—and as I mentioned—national treasures. 

Obviously your own experience and your written testimony will 

be helpful to the Committee, and so again I thank you. 

Our next witness is Mr. Jim Starr, the County Commissioner for 

Gunnison County, in the great State of Colorado. County Commissioner Starr, please open on your testimony. 

STATEMENT OF THE HONORABLE JIM STARR, COUNTY 

COMMISSIONER, GUNNISON COUNTY, COLORADO 

Mr. STARR. Thank you and good morning. First let me start by 

thanking The Honorable Chairperson, Congressman Costa, and 

Members of the Subcommittee for this opportunity to testify regarding the Hardrock Mining and Reclamation Act of 2009. 

I am Jim Starr. I am and have been a county commissioner in 

Gunnison County, Colorado, for the past 10 years. My comments 

today are not directed toward any specific project considered by the 

board of county commissioners, and should not be construed to be 

made in a quasi-judicial capacity. 

Gunnison County is a rural Western Colorado county consisting 

of some 15,000 persons and located 230 miles southwest of Denver. 

We encompass thirty-three hundred square miles, and approximately 87 percent of our land is owned by the Federal and state 

governments. 

There are four points that I intend to make. We recognize that 

hardrock minerals are valuable natural resources that should be 

extracted and put to beneficial use. 

Second, it is undeniable that the 1872 Mining Law is antiquated 

and in need to immediate and wholesale reform. The patent mechanism at the core of the 1872 Mining Law is not the appropriate 

50 

mechanism currently to make Federal lands available for private 

hardrock exploration and extraction. 

Finally, any new mechanism must include robust presumptive 

protections so that exploration and operation in special areas and 

negative impacts to special areas cannot occur. 

There is a preface to my presentation that is essential for me to 

state explicitly, and which will put my comments into context. 

First, my county and I recognize that hardrock minerals are valuable natural resources that should be extracted and put to beneficial uses. 

Second, we recognize that there are impacts, positive, negative, 

environmental, social, economic, and otherwise, caused by extraction of these resources. 

Third, it is only fair and prudent that a mechanism that Congress adopts to make Federal lands available to private hardrock 

extraction explicitly include measures to ensure the negative impacts be avoided or minimized both by the Federal Government 

and the operators. 

The timeliness of this much needed reform is evident. In 1872 

when President Grant signed the legislation into law, the interior 

west was largely unsettled by people other than Native Americans, 

and the Federal Government was doing everything in its power to 

encourage immigrant settlement and to assist in the industrialization of our country. 

An acre of land could be, and still can be, claimed and eventually 

patented. This provides the claimholder with title to public land for 

as little as $5 per acre, the current day cost of a gallon of milk. 

Today, the Rocky Mountain West is largely inhabited, hardrock 

mineral resources have been and are being developed there and 

throughout the world, and communities of all sizes have located 

near mineral resource areas in the West. 

In short, 127 years later, mineral extraction may no longer be 

the highest and best use for Federal laws. Many former mining 

communities have now developed economies which are incompatible with industrialized mining, and water quantity and quality 

have become issues of utmost importance in the West. 

I respectfully suggest that Congress carefully examine first 

whether the patent process itself remains a viable, healthy tool, or 

whether a different process to make Federal lands available to private mineral extraction would better serve the country and still accomplish the mission. 

The patent process was a tool appropriate for 1872, when the 

Federal Government was encouraging not only mineral exploration, 

but also the wholesale settlement of the West. A similar tool of 

more than a hundred years ago, Railroad Land Grants, such as the 

Pacific Railroad Act of 1862, has a similar impetus and is similarly 

currently outdated. 

These grants helped build transcontinental railroads, but resulted in millions of acres of Federal land being divested and 

placed in private ownership. Would one do the same today to encourage the building of private toll roads? I suggest not. 

Section 202 of this legislation, which allows for a selective withdrawal of Federal lands from entry must be retained and made an 

affirmative presumption. Rebutting this presumption should reVerDate Nov 24 2008 16:13 May 28, 2009 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 L:\DOCS\47609.TXT Hresour1 PsN: KATHY
51 

quire a demonstration by clear and convincing evidence that there 

are no other locations where the desired minerals can be extracted. 

For instance, municipal watersheds are critically sensitive areas 

that deserve the protection of such a presumption of withdrawal. 

Available high quality water is already a rapidly dwindling resource in the arid west, and the availability of this water will likely 

decrease because of climate change. 

We have long recognized that significant natural resources such 

as our national parks must not be open for location and entry. Before it is too late, it is imperative that we now also recognize the 

local and national importance of protecting our municipal watersheds. 

Accordingly, we respectfully request that Congress act as expeditiously as possible to consider these proposals and to pass House 

Resolution 699, including meaningful and workable withdrawal 

language. Thank you. 

[The prepared statement of Mr. Starr follows:] 

Statement of Jim Starr, County Commissioner, Gunnison County, Colorado 

Good Morning. 

First, let me start by thanking The Honorable Chairperson, Congressman Costa, 

and the members of the Subcommittee for this opportunity to testify regarding the 

Hardrock Mining and Reclamation Act of 2009. 

I am Jim Starr. I am, and have been, a County Commissioner in Gunnison County, Colorado for the past 10 years. My comments today are not directed toward any 

specific project being considered by the Board of County Commissioners of Gunnison 

County and should not be construed to be made in a quasi-judicial capacity. 

Gunnison County is a rural Western Colorado county consisting of some 15, 000 

persons and located 230 miles southwest of Denver. We encompass approximately 

3,300 square miles and approximately 87% of our land is owned by the federal and 

state governments. 

There are four points I intend to make: 

• We recognize that hardrock minerals are valuable natural resources that should 

be extracted and put to beneficial use. 

• It is undeniable that the 1872 Mining Law, and its particulars, are antiquated 

and in need of immediate and wholesale reform. 

• The patent mechanism at the core of the 1872 Mining Law is not the appropriate mechanism, currently, to make federal lands available for private 

hardrock exploration and extraction; 

• Any new mechanism must include robust presumptive protections so that exploration and operation in special areas (and negative impacts to special areas) 

cannot occur. 

There is a preface to my presentation that is essential for me to state explicitly, 

and which will put my comments into context. First, my County and I recognize 

that hardrock minerals are valuable natural resources that should be extracted and 

put to beneficial uses. Second, we recognize that there are impacts—positive, negative, environmental, social, economic and otherwise—caused by extraction of these 

resources. Third, it is only fair and prudent that a mechanism that Congress adopts 

to make federal lands available to private hardrock extraction explicitly include 

measures to ensure the negative impacts be avoided or minimized both by the federal government and the operators. 

The timeliness of this much needed reform is evident. In 1872 when President 

Grant signed the legislation into law, the interior west was largely unsettled by people other than Native Americans and the federal government was doing everything 

in its power to encourage immigrant that settlement and to assist in the industrialization of our country. An acre of land could be, and still can be, claimed and eventually patented. This provides the claimholder with title to public land for as little 

as $5.00 per acre, the current day cost of a gallon of milk. Today, the Rocky Mountain West is largely inhabited, hard rock mineral resources have been and are being 

developed throughout the world, and communities of all sizes have located near 

mineral resource areas in the West. In short, 127 years later, mineral extraction 

may no longer be the highest and best use for federal lands, many former mining 

communities have now developed economies which are incompatible with industriVerDate Nov 24 2008 16:13 May 28, 2009 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6621 L:\DOCS\47609.TXT Hresour1 PsN: KATHY
52 

alized mining, and water quantity and quality have become issues of utmost importance in the West. 

I respectfully suggest that Congress carefully examine, first, whether the patent 

process itself remains a viable, healthy tool—or whether a different process to make 

federal lands available to private mineral extraction would better serve the country 

and still accomplish the mission. The patent process—which results in fee simple 

ownership of federal land by private owners—was a tool appropriate for 1872—when 

the federal government was encouraging not only mineral exploration but also the 

wholesale settlement of the West. A similar tool of more than 100 years ago—Railroad Land Grants (e.g. the Pacific Railroad Act of 1862) had a similar impetus and 

is similarly currently outdated. These grants helped build transcontinental railroads—but resulted in millions of acres of federal land being divested and placed 

in private ownership. Would one do the same today to encourage the building of a 

private toll road? I suggest not. 

There IS currently a tool available that results in federal encouragement of exploration and use of federal lands for mineral extraction—long term LEASING of federal lands for oil and gas exploration and operations. While this leasing regime has 

its own flaws, one thing that it does NOT do is transfer fee simple ownership of 

federal land to private parties. A second benefit of a federal lease mechanism would 

be that the federal government will remain as a steward of its own land—enhancing 

its obligation and ability to protect those lands. A further benefit of a non-fee-simple 

patent transfer is avoidance of the unintended but realistic consequence of public 

land going into private but foreign ownership. I would respectfully request that Congress examine such a lease approach. 

Section 202 of this legislation which allows for selective withdrawal of federal 

lands from entry must be retained and made an affirmative presumption. Rebutting 

this presumption should require a demonstration by clear and convincing evidence 

that there are no other locations where the desired minerals can be extracted. For 

instance municipal watersheds are critically sensitive areas that deserve the protection of such a presumption of withdrawal. Available, high quality water is already 

a rapidly dwindling resource in the arid West and the availability of this water will 

likely decrease because of climate change. We have long recognized that significant 

natural resources, such as our natural parks, must not be open for location and 

entry. Before it is too late, it is imperative that we now also recognize the local and 

national importance of protecting our municipal watersheds. 

Accordingly, we respectfully request that Congress act as expeditiously as possible 

to consider these proposals and to pass House Resolution 699, including meaningful 

and workable withdrawal language. 

Thank you. 

[NOTE: Gunnison County Board of Commissioners’ Resolution No. 03-63 

submitted for the record has been retained in the Committee’s official files.] 

Mr. COSTA. Thank you very much, Mr. Starr. Unfortunately, I 

can’t give you the same bonus points I gave Superintendent Reynolds. You did go a little past your time, but we do appreciate your 

testimony nonetheless, and your focus on the specific nature of the 

legislation. 

Our last witness, but certainly not the least, is The Honorable 

Sheri Eklund-Brown, who chairs the Elko County Board of Commissioners in the State of Nevada, the wonderful State of Nevada. 

And I want to thank the Chairperson for the wonderful hospitality they extended the Subcommittee back in 2007 when we visited your wonderful community, and had a chance to see firsthand 

all the efforts that go on with regards to hardrock mining, and the 

nice folks of Elko, Nevada. Please open with your testimony. 

STATEMENT OF THE HONORABLE SHERI EKLUND-BROWN, 

CHAIR, ELKO COUNTY BOARD OF COMMISSIONERS, NEVADA 

Ms. EKLUND-BROWN. Chairman Costa, and Members of the 

Committee, we certainly appreciate you coming out and viewing 

the mining process. I think it was a very worthwhile effort, and I 

53 

look forward to having the whole Committee back if possible. 

Thank you for—— 

Mr. COSTA. I know that there is some good Basque restaurants. 

Ms. EKLUND-BROWN. Great Basque restaurants, yes. Well, we appreciate this opportunity to share thoughts on mining law reform 

with you, and I doubt that I will get bonus points either. 

But with you and your colleagues, we appreciate your interest in 

hearing from those like me who live and work in mining communities. 

It is often said that Nevada has a love affair with mining. At the 

county level, it is more like a marriage. I am currently the Chair 

of the Elko County Commission, and Elko County is the heart of 

gold mining country in the United States. 

I represent the county commission to all Federal agencies mining 

EISs, and cooperating agencies, and natural resources, and mining 

in general. I have lived in Elko for 46 years, through the booms 

and the busts. I have been a businesswoman, a realtor, and deeply 

involved in the youth of our community for many years. 

I know firsthand how dependent our county is on mining, and 

this morning I want to convey to you the implications of that dependency. 

Elko County is the fourth largest county in the continental 

United States. About 70 percent of our county consists of public 

lands, land that is especially rich in minerals and metals. 

In fact, Nevada is the world’s fourth largest gold producing region, producing 82 percent of the nation’s gold production, and Elko 

County accounts for 50 percent of the State’s gold mining employment. 

The county, as well as mining companies, have a very close working relationship with Federal agencies charged with oversight of 

public lands. Our economy, therefore, relies on multiple use of public lands and stewardship of public lands, and the county actively 

engages in coordination and cooperative agency status with both 

the Forest Service and BLM. 

Elko County has historically been a mining center since the first 

settlers appeared about the time of the American Civil War. Today, 

we are home to some of the biggest and best mineral mining operations in the world. 

Gold, silver, and cooper are among the minerals mined in our 

community, with some of the most advanced and environmentally 

friendly mining practices. Our community cares about clean air and 

clean water every bit as much as any of the members of this board 

do, or anyone in any urban area. 

We raise our children in Elko County. We live in Elko County, 

and the mining companies live in Elko County. They go above and 

beyond practices demanded by law with mercury emissions, wildlife 

mitigation on habitat, and wetland conversation work. 

If mining companies were not taking care of the environment, 

they would not be able to operate in our community today. They 

would not have the quality workforce that they have today. 

It is easy to support the mining industry based on all the benefits they bring to our county. Obviously they are a sustainable industry. Over the decades mining has literally put food on the table, 

54 

clothes on the backs, and roofs over the heads of hundreds-of-thousands of Nevadans. 

Mining, like real estate, has its ups and downs as the economy 

waxes and wanes, but like the homes we sell in real estate, the 

minerals and metals produced by our mines never go out of style. 

America’s basic industries, its armed forces, its consumer products, 

and all of us in this hearing room use metals and minerals every 

day from our Nation’s natural resources. 

As America needs the metals that mining produces, communities 

like Elko need the jobs that mining produces. These are the highest-wage jobs in the State of Nevada, 185 percent more than the 

average Nevada worker. 

They are jobs with benefits, paying wages that can sustain a 

family, and no community today can have enough high-wage jobs, 

jobs that allow hard-working people to pay their mortgages and 

bills, send their kids to college, and keep cars in the garage. 

Take away these jobs and you take away far more than income. 

You weaken the economic stability of our way of life. Suddenly, a 

lifestyle that one working parent could support now takes two. 

The loss of these jobs obviously cannot be replaced by local businesses, and in short, without mining, it would be a short distance 

between a thriving community that I came from yesterday and a 

failing one in need of Federal support, much like many others in 

today’s society. 

For Elko, the good life becomes endangered if mining becomes 

endangered, and I see that I am getting kind of close. I have several more pages, but I will conclude with that. 

Mr. COSTA. We sure would appreciate that. 

Ms. EKLUND-BROWN. This bill is not good for us as it is. We are 

aware, and the industry is aware, that reform is needed, but not 

with gross income. You know, they are already paying five percent 

net proceeds to the State. 

I think that everyone feels that a net income base is much more 

beneficial, but if this bill goes through our community will not be 

striving, and we will be back for a stimulus package for Elko County. So please consider the impact of this bill in your decisions when 

you make them as you go forward. Thank you. 

[The prepared statement of Ms. Eklund-Brown follows:] 

Statement of Sheri Eklund-Brown, Chair, 

Elko County Board of Commissioners, Nevada 

Thank you for this opportunity to share my thoughts on mining law reform with 

you and your colleagues. I appreciate your interest in hearing from those like me 

who live and work in mining communities. 

I’m the chair of the county commission and have lived in Elko 46 years—through 

the booms and the busts. I’m also a businesswoman, a realtor, and have been deeply 

involved in the youth of our community for many years. I know first-hand how dependent our county is on mining—and this morning I want to convey to you the implications of that dependency. 

Elko is the fourth largest county in the continental United States. About 70 percent of our county consists of public land—land that is especially rich in minerals 

and metals. In fact, Nevada is the world’s fourth largest gold producing region—producing 82 percent of the nation’s gold production. And Elko accounts for the great 

majority of the state’s total. The county, as well as the mining companies, has a 

very close working relationship with federal agencies with oversight responsibilities 

for public lands. Our economy therefore relies on multiple use of public lands 

Elko has historically been a mining center since the first settlers appeared there 

about the time of the American Civil War. Today we are home to some of the biggest 

55 

and best mineral mining operations in the country. Gold, silver and copper are 

among the minerals mined in our community—with some of the world’s most advanced and environmentally friendly mining practices. 

Our community cares about clean air and clean water every bit as much as people 

in San Francisco or Boston do. After all, we raise our children in Elko. We don’t 

just make a living there, we make our life there. In fact, mining companies have 

voluntarily performed wildlife and wetland conservation work and have adopted 

higher standards of mercury emission controls than required by state law. If mining 

companies were not taking care of the environment, they would not have the quality 

workforce they have today. 

Obviously, mining is a sustainable industry. Over the decades, mining has literally put food on the table, clothes on the backs and roofs over the heads of hundreds of thousands of Nevadans. Mining, like real estate, has its ups and downs as 

the economy waxes and wanes. But like the homes we sell in real estate, the minerals and metals produced by our mines never go out of style. America’s basic industries, its armed forces, its consumer products and all of us in this hearing room use 

metals and minerals every day. 

As America needs the metals that mining produces, communities like Elko need 

the jobs that mining produces. These are the highest-wage jobs in the state of 

Nevada. They are jobs with benefits, paying wages that can sustain a family. And 

today no community can have enough high-wage jobs—jobs that allow hard-working 

people to pay their mortgage—pay medical bills—buy things for the kids—and keep 

a car in the garage. 

Take away these jobs and you take away far more than income. You weaken the 

economic stability of our way of life. Suddenly, a lifestyle that one working parent 

could support now requires two working parents. The loss of these jobs obviously 

could not be replaced by local businesses in our community. In short, without mining, it would be a short distance between a thriving community and a failing one 

need of federal support. 

For Elko, the good life becomes endangered if mining becomes endangered. 

What is true for our families is true for our country. As a county commissioner, 

I know our schools, roads, community services, health care—all are built and maintained with the help of mining revenue. Considering direct and indirect employment, the livelihoods of 11,000 people plus their families—with a payroll totaling 

more than $735 million—depend on mining. Mining contributes more than $2.9 billion annually to the local economy. 

In Elko, you don’t have to be an economist or a county official to know that we 

need the tax revenue and the community support that mining provides. 

I wanted to drive home this point today because I am fearful that our mining industry may no longer be sustainable. Not if we are going to burden it with what 

experts describe as the highest tax or royalty on minerals found anywhere in the 

world. Let’s not forget our mining companies already operate in the highest cost 

country of the world. They are attracted to counties like ours because we have the 

minerals—we have the skilled workforce—and we have laws that make orderly business possible. 

But if the cost of conducting this business reduces the earnings from current investments—and discourages new mining investment—then we will begin to see the 

end of an industry and, before long, the end of our community. This is an industry 

that has sustained itself for more than a century in our community. It’s an industry 

that has even thrived in a competitive global economy. 

It would be unforgivable if—especially now in a time of economic crisis—this industry was damaged or destroyed by well meaning but misguided officials from our 

own government. At a time when those without jobs despair of finding them and 

those with jobs worry about keeping them. 

In my community, and maybe in yours, we often hear people wondering: why are 

Americans losing high-wage jobs? Why are industries that support them moving off 

shore? 

Well, here’s one example: thoughtless regulation is driving them offshore. The unintended consequences of this bill will inflict far-reaching harm on communities like 

mine, sending our jobs overseas. Please keep this in mind as consider the mining 

industry and its future in this country. 

Thank you for allowing me to share my views from Elko County. I will be happy 

to answer any questions I can. 

[NOTE: University of Nevada, Reno Center for Economic Development Technical 

Report UCED 2008/09-04 submitted for the record entitled ‘‘Analysis of Economic 

and Occupational Skill Impacts of the Hard Rock Mining Sector on the Elko 

Micropolitan S.A. Economy’’ has been retained in the Committee’s official files.] 

56 

Mr. COSTA. We will, and thank you for representing not only the 

community of Elko, but the mining industry throughout Nevada. 

We have two new Members that have joined us here, new Members 

to the Subcommittee; Representative Heinrich from New Mexico, 

and Representative Lummis from Wyoming. 

As the Chair, we are going to be called for votes in about 10 or 

15 minutes, and so I would appreciate—I am going to go quickly 

around, and I think I have one question for three of the panel, and 

see if we can conclude here before the votes are called so we don’t 

have to come back. 

Let me quickly ask for you to explain why the environmental 

provisions, Mr. Leshy, under H.R. 699 is still needed. Mr. Lamborn 

mentioned in his opening statement a number of laws that have 

been introduced over the last three or four decades that protect the 

environment, and are applicable to the hardrock mining, and why 

those are not sufficient. 

Mr. LESHY. Excuse me, Mr. Chairman, I appreciate the question. 

It is an important one. We have a panoply of environmental laws 

that apply to hardrock mining, but they apply in ways that leave 

very important gaps. 

They do not regulate, for example, ground water quality. They do 

not give the government the right to weigh the proposed mining operation against other uses and values of the Federal lands. 

And they create kind of an aura and a culture in the regulatory 

agencies that the companies have a right to mine, and the government has no right to stop them. That is the sort of basic ethos of 

this process. 

And the results I think are quite clear, because as I pointed out 

in my opening statement, there are major mines that have opened 

under all of these regulatory controls that the industry says is sufficient that have created environmental problems and contaminations that go on and on, and require taxpayers to clean them up. 

Mr. COSTA. Yes. You made that in your statement. Thank you. 

Ms. Nazzaro, on your highlights and findings with regards to royalty analysis, what other things do you think we in terms of findings based on your experience do you think we should keep in mind 

as we work on H.R. 699, gross versus net as such? 

Ms. NAZZARO. Well, certainly the issues that we have been raising as far as the number of abandoned mines that are out there. 

If you look over a 10-year period, the BLM and the Forest Service 

spent $260 million to clean these up. The legislation as proposed, CRS estimates would give us $500 

million to start addressing that problem, of which it is my understanding that EPA underestimates that it is a $50 billion problem. 

So we certainly do need revenues to try to figure out how to handle this problem, and it is unfair that the American taxpayer continues to be taxed basically to clean up these mines. 

It is a continuing problem. It is not something that the legislation has taken care of in the past. We continue to have abandoned 

mines and we could continue to clean them up. 

Mr. COSTA. I appreciate that. I think my questions in the last 

hearing we had on this, I wanted to try to get some prioritization, 

in terms of how you triage in terms of those that are in the greatest need of cleanup. 

57 

Mr. Starr, how does the growth occurrence of hunting and fishing 

in your region, which my colleague and classmate, Congressman 

Salazar, always brags about, compare in terms of the role—and 

compared to the analysis on mining in Gunnison County? 

Mr. STARR. It is difficult, because mining tends to be an exclusive 

use of the land where it takes place. the economy that we have now 

in Gunnison County is primarily a hunting, tourism, fishing economy, and to the exclusion of those economies is how mining occurs. 

So if there are areas that are very important to that economic 

industry that we now have in Gunnison County, those should be 

withdrawn from mineralization so that the economy that we have 

had for the past 30 years continues to thrive. 

Mr. COSTA. My final question, Superintendent Reynolds, you 

talked about the amount of claims around Death Valley, and its 

impacts. The provision that is included in this bill that there would 

be no exploration or operations permits issued if mineral activities 

would impair the resources or lands of the national park, why do 

you support that provision? 

Mr. REYNOLDS. I support that because presently with regard to 

some of the mining activities, and the hazards that are left, the 

ground water, the surface water, have been polluted. 

We have not had an opportunity to clean these up, whether it be 

on adjacent BLM lands or Forest Service land, and we are subjecting visitors, as well as employees, to these hazards. 

So I think those particular sections would be supporting some of 

the activities that we have been trying to do all along. 

Mr. COSTA. Thank you very much. I want to stay within my time 

limit. The gentleman from Colorado, Mr. Lamborn, is recognized 

for five minutes. 

Mr. LAMBORN. Thank you, Mr. Chairman, and Mr. Starr, it is 

good to have someone from Colorado here, and I would recommend 

to everyone within the sound of our voices to visit Gunnison County. It is a beautiful place. 

Mr. STARR. Thank you. 

Mr. LAMBORN. To move right along to stay within the time frame 

here, because we are about to have votes, Ms. Eklund-Brown, how 

serious would be the consequences to your county if domestic mining were to move off-shore because of onerous tax or other laws? 

Ms. EKLUND-BROWN. Our county is 50,000, and 11,000 jobs are 

directly and indirectly attributed to mining. So the 11,000, plus 

their families, basically make up the core of our county’s population. 

Mr. LAMBORN. Would you call the companies in your community 

good neighbors? 

Ms. EKLUND-BROWN. I would say they are the best neighbors 

anyone could have, and they participate from United Way’s biggest 

donor, contributions to the colleges, the schools, the boys and girls 

clubs. 

They sit on city councils. They are the most actively involved 

partner from every extreme or angle that any community could 

want. 

Mr. LAMBORN. OK. Thank you. Mr. Leshy, I have several questions for you, and if I can’t finish the questions, would you be able 

to respond in writing if I give you questions as a follow-up? 

58 

Mr. LESHY. Of course. 

Mr. LAMBORN. OK. Thank you for that. Now, you mentioned that 

the Federal Government did not receive direct payments to the 

treasury. You are aware, I am sure, that there are claim maintenance and location fees that are paid directly to the Federal Treasury by mining concerns? 

Mr. LESHY. Yes, those are claim location fees, but they don’t pay 

rentals, and they are not based on the acreage, for example. 

Mr. LAMBORN. And just so people listening will be aware of the 

full picture, you are aware that most states, if not all states, do impose severance taxes or royalties even if the Federal Government 

does not? 

Mr. LESHY. That is right, and I should point out that for oil, and 

gas, and coal, and other Federal minerals, the states may also tax 

the production of those, but a Federal royalty is still imposed on 

those. So the mining law is different in that respect. 

Mr. LAMBORN. OK. Now you referred to the royalties that would 

be imposed in this bill as modest if I remember your terminology. 

How would you square that with the testimony that we heard in 

the last Congress that said that the eight percent gross royalty 

that this bill calls for, or the similar bill called for was, quote, the 

highest ad valorem type royalty in the world, in terms of all minerals as a whole, and then went on to say that this particular witness, when you get above five percent, most countries have experienced a very great decline in levels of exploration taking place. So 

that you have a short term increase of revenue, but a long term 

decrease. 

Mr. LESHY. Well, there are various ways to measure and compare royalties against each other, and many countries of the world 

have various kinds of arrangements that they don’t call royalties, 

but that they call profit sharing, or something else. So it is a very 

tricky business to compare. 

If you compare the royalties in this bill, H.R. 699, versus the 

royalties that the United States charges coal companies, oil and 

gas companies, those are usually 12, 15, 18 percent. So that was 

a basic source of why I said they were modest. 

Mr. LAMBORN. Let us see. You referenced the 2006 study, the 

Economic Overview of Nevada Mining, for the conclusion that you 

stated, that gold mining was a very profitable industry. 

However, in that same study—and I am going to quote from it— 

when one looks at industry average profitability over the long run, 

rather than focus on an individual mine or mining company in a 

short period of time, what they will find is that the precious metals 

mining industry is in fact not particularly profitable. 

Mr. LESHY. Well, it depends on how, I suppose, you define long 

run to some extent, but if you look at today, I mean, there is economic carnage everywhere as we know. The mining companies, 

gold mining companies, are still a very profitable industry, and the 

outlook is bright by everything that I read about from industry analysts and financial analysts. 

In part, because gold prices stay high in economic recessions and 

depressions, such as we are encountering. So it is a profitable industry currently, and I think its future is bright. 

59 

Mr. LAMBORN. Thank you for that. I will have a couple of followup questions, but I want to thank you all for being here today, and 

I yield back, Mr. Chairman. 

Mr. COSTA. Thank you very much. The Chair will recognize the 

gentleman from New Mexico. 

Mr. HEINRICH. Thank you, Mr. Chairman, and Mr. Starr, I will 

start with you. I wanted to ask how widespread, and forgive me if 

I missed part of this before I arrived, but how widespread is the 

sort of historical contamination of water in Southern Colorado from 

mining activities? 

Mr. STARR. It is unfortunately very widespread, and that is one 

of the major concerns that we have at the county level. The fact 

those quality waters that serve our communities, that serve as the 

headwaters of the drinking water supplies clear down to California 

and through the COMPAC states, are very susceptible to pollution 

because of these mining activities. 

And I think really vividly points out the need for the funding 

that is proposed in this bill for reclamation efforts. 

Mr. HEINRICH. What sort of revenue streams are available to 

your county right now to clean up those water supplies? 

Mr. STARR. Virtually none. I had the opportunity to be very involved in the cleanup of a former mill site and mine outside of 

Crested Butte over the past five years. Those monies came from a 

number of sources, a land trust, some State money, some EPA 

funds, but it was very difficult to have that cleanup process come 

to fruition because of the lack of funding. 

Mr. HEINRICH. Thank you. Ms. Nazzaro; am I saying your name 

correctly? 

Ms. NAZZARO. Yes. 

Mr. HEINRICH. With the pace and scale of cleanup at the current 

level and the funds that you mentioned for cleanup, how many 

years would it take to address the current problems that we have 

with necessary cleanup on public lands around the West? 

Ms. NAZZARO. I don’t know if I can quickly calculate it in my 

head, but as I said, EPA estimates the problem currently at over 

$50 billion. So the last time that we looked at it, the Federal agencies—— 

Mr. HEINRICH. So are we talking about years, decades? 

Ms. NAZZARO. We are talking decades, decades beyond that, yes. 

The agencies over a 10 year period only spent $250 million. So definitely it is going to take a long time to clean this up, and the funds 

just have not been available. 

It has gotten to the point where the agencies have not really 

even cataloged all the problems because they know that they will 

never get to them, and so why spend the time cataloging them, and 

they go to the higher risk areas. You know, places that they are 

aware of, such as Death Valley, where they know it is a definite 

threat to the general public. 

Mr. HEINRICH. Gotcha. OK. Ms. Eklund-Brown, I just have one 

quick question for you. How do you sort of reconcile the different 

playing fields? You know, we have hardrock mining obviously in 

New Mexico, but we also have oil, and gas, and coal. 

60 

The different treatment that hardrock mining receives when it 

comes to royalties in general, versus these other public resources 

that are being extracted from our public lands? 

Ms. EKLUND-BROWN. Myself, I think it needs to be a fairness 

issue with all the other extractions, but it also needs to take into 

account the costs of the development of the mine, and the expense 

in extraction of taking coal right out of the ground, and being able 

to use it, and oil and gas, and taking it right out of the ground, 

and being able to use it. 

Where with mining, or for any locatable mineral, it is tons and 

tons of ore to get one ounce of gold, or the other types of minerals. 

So they are not similar. They are not parallel processes, and they 

need to be treated as such. 

Mr. HEINRICH. Thank you. I was actually born in Fallon, Nevada, 

and my father worked for Anaconda Copper. My grandfather was 

a gold miner, and I very much appreciate the perspective of the 

State. I think it is one of the great states in our Union. 

That said, I do think that maybe the regulatory and legal framework that was appropriate for mining in the 1800s may have 

changed in the ensuing hundred-and-some years. So, thank you all 

for being here today. 

Mr. COSTA. I thank the gentleman from New Mexico. We have 

11 minutes left before the vote. So I am going to recognize the gentlewoman from Wyoming for five minutes of questioning, and then 

we will close the hearing, and we thank the witnesses again. 

For the record, I would like unanimous consent to submit—I 

think I mentioned the National Mining Association’s testimony; the 

State of Alaska, the Department of Natural Resources testimony; 

the Office of the Mayor of the City of Boise, Idaho’s written letter 

to the Subcommittee; and any other written testimony that the 

Ranking Member, without objection, provides, and we will ask for 

unanimous consent that they be submitted for the record. 

[NOTE: The documents listed below have been retained in the 

Committee’s official files.] 

• Bieter, David H., Mayor, Boise, Idaho, Letter submitted for the record 

• Borell, Steven C., Alaska Miners Association, Comment submitted for the record 

on H.R. 699, Hard Rock Mining & Reclamation Act 

• Eklund-Brown, Sheri, Chair, Elko County Board of Commissioners, Nevada, 

University of Nevada, Reno, Center for Economic Development Technical Report 

UCED 2008/09-04 entitled ‘‘Analysis of Economic and Occupational Skill 

Impacts of the Hard Rock Mining Sector on the Elko Micropolitan S.A. 

Economy’’ submitted for the record 

• Irwin, Thomas E., Commissioner, State of Alaska, Letter submitted for the 

record 

• Keith, Jason, Statement submitted for the record on behalf of the Outdoor Alliance 

• Moe, Richard, President, The National Trust for Historic Preservation, National 

Register of Historic Landmarks managed by the Bureau of Land Management 

• Moe, Richard, President, The National Trust for Historic Preservation, List of 

National Historic Landmarks managed by the USDA Forest Service 

• Moe, Richard, President, The National Trust for Historic Preservation, List of 

National Historic Landmarks with Federal Ownership from the National Register Information System 

• Moe, Richard, President, The National Trust for Historic Preservation, Statement submitted for the record 

• Parshley, Jeffrey V. and Struhsacker, Debra W., Northwest Mining Association, 

Paper on ‘‘The Evolution of Federal and Nevada State Reclamation Bonding Requirements for Hardrock Exploration and Mining Projects,’’ submitted for the 

record 

61 

• Pueblo of Laguna Tribe, Laguna, New Mexico, Statement submitted for the 

record on the Mining Law of 1872 • Reynolds, James T., Former Superintendent, Death Valley National Park, 

California, U.S. Department of the Interior memorandum to Regional Directors/ 

Associate Directors dated October 2, 2008, on ‘‘Mitigating High-Risk Abandoned 

Mine Land Features’’ submitted for the record • Schaumberg, Peter J., Beveridge & Diamond, P.C., ‘‘Opinion on Whether 

H.R. 2262’s Imposition of a Royalty on Mineral Production From Existing Valid 

Unpatented Mining Claims Is Unconstitutional,’’ submitted for the record • Skaer, Laura, Northwest Mining Association, Statement submitted for the 

record on Legislative Hearing on H.R. 699—Hard Rock Mining and Reclamation Act, • Starr, Jim, Commissioners, Gunnison County, Colorado, Resolutions and documents submitted for the record • State of Alaska Position Paper on H.R. 2262 dated September 26, 2007, submitted for the record 

Mr. COSTA. All right. Very good. You are up, and we have to vote. 

So the gentlewoman from Wyoming. 

Ms. LUMMIS. Thank you, Mr. Chairman, and I want to thank you 

all for joining us today. My first question is for Mr. Leshy. I am 

from Wyoming. We are the number one uranium producing state 

in the nation. We are also number one in reserves. 

So I do take issue with your statement that we should be importing more uranium from friendly countries, such as Canada and 

Australia. Have you analyzed the economic impact to western production, and states in the western United States that would occur 

from moving these jobs elsewhere? 

Mr. LESHY. Congresswoman Lummis, thank you for the question. 

I did not advocate moving uranium jobs offshore. What my testimony said was that uranium should be subject to the same regime, 

regulatory regime, that coal, oil, and gas, and oil shale, and other 

fossil fuels, and geothermal resources are subject to. 

That is, a leasing system, as opposed to the hardrock mining system. It is kind of an accident. Of course, when the Mining Law of 

1872 passed, uranium was not valuable for anything or even 

known as a mineral. 

And so it was kind of an accident that it was treated under the 

Mining Law, rather than under a leasing system, which was adopted in 1920 for all these other energy minerals. 

So it seems like some sort of loophole frankly that uranium is not 

subject to leasing like these other energy fuels. Subjecting it to 

leasing would not necessarily involve moving any jobs offshore. 

In fact, uranium is substantially already subject to a leasing system in the uranium bearing areas of western Colorado under a 

kind of a quirk. After World War II, and the atomic bomb, and Hiroshima, the government withdrew a lot of Federal land in western 

Colorado as a source of uranium, and put it under a leasing system, which is administered by the Department of Energy. 

And that is in fact where historically a lot of uranium production 

has come from under this leasing system. So I think moving it to 

a leasing system is actually a very logical move, and would not affect production. 

I only pointed out the fact that the world’s by far largest producers of uranium, Australia and Canada, are friendly to the 

United States. So there is really no strategic argument about if we 

don’t mine uranium, it will go to unfriendly countries offshore. I 

think we would continue to mine uranium under a leasing system. 

62 

Ms. LUMMIS. Mr. Chairman, following up on that, you mentioned 

modest royalties that can be readily absorbed by the mining industry. But as my colleague from Colorado mentioned earlier, there is 

a study that shows that an eight percent gross royalty would be the 

highest ad valorem type royalty in the world, in terms of all minerals. 

So how do you consider setting a new royalty ceiling as a modest 

action? 

Mr. LESHY. Congresswoman Lummis, there are a lot of different 

ways to calculate royalties, especially when you go to countries 

abroad. They have various ways of sort of taxing or recouping some 

of the costs or some of the value of mining to the government, 

whether they call it a royalty or not. 

I used the adjective modest primarily by considering hardrock 

mining, and the eight percent in H.R. 699l, compared to other royalties that other miners pay the Federal Government under current 

law, such as coal pays eight percent, oil and gas, 12-to-18 percent 

currently, and by those standards it is a modest royalty. 

Ms. LUMMIS. Thank you, and my next question is for Ms. 

Eklund-Brown. I understand that Elko County’s unemployment 

rate is about 4.9 percent, while Nevada’s statewide unemployment 

rate is 9.1 percent. 

And that foreclosures on homes in Elko County is a fraction of 

that in Clark County, in Las Vegas, and a fraction of that in Carson City. What economic differences exist in these Nevada communities that would explain such a disparity? 

Ms. EKLUND-BROWN. Gold mining. That is the only basis that 

makes up the difference in those circumstances. We have tourism, 

and our tourism is as good as Gunnison County’s. 

Our recreation is as good, and as strong is our hunting. It is a 

balanced economy, and a diverse one as much as we can make it, 

but it is gold mining dependent, and the gold belt, all of the regions 

that have lower employment have gold mining at this time. 

Ms. LUMMIS. Well, Mr. Chairman, I would comment also that my 

State of Wyoming has the lowest unemployment rate in the Nation 

right now as well, and it is due to the fact that our mining, oil, and 

gas, and coal industries are healthy. 

So I want to thank the county commissioner for being with us 

today, and all of the other panelists as well. Thank you very much. 

Mr. COSTA. We are pleased that things are good in Wyoming. We 

wish that for the rest of the country obviously. This concludes the 

testimony and the questions by the Members of the Subcommittee 

on Energy and Mineral Resources. 

I want to thank the Ranking Member and staff for their hard 

work, and for the Members who were able to make the hearing. I 

also want to thank our witnesses, both on this panel and our colleague, Representative Heller, for their desire to want to better inform the Committee as to what we ought to consider as this measure moves forward. 

So, at this point in time, we have five minutes left to make our 

vote, and the Subcommittee is now adjourned. 

[Whereupon, at 11:34 a.m., the Subcommittee was adjourned.] 

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