U.S. GOVERNMENT PRINTING OFFICE

42–787 CC WASHINGTON : 1997

HARDROCK MINING OPERATIONS

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY

AND MINERAL RESOURCES

OF THE

COMMITTEE ON RESOURCES

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

FIRST SESSION

ON

Final Bonding Rule for Hardrock Mining

Operations

JUNE 19, 1997—WASHINGTON, DC

Serial No. 105–24

Printed for the use of the Committee on Resources

(
(II)

COMMITTEE ON RESOURCES

DON YOUNG, Alaska, Chairman

W.J. (BILLY) TAUZIN, Louisiana

JAMES V. HANSEN, Utah

JIM SAXTON, New Jersey

ELTON GALLEGLY, California

JOHN J. DUNCAN, JR., Tennessee

JOEL HEFLEY, Colorado

JOHN T. DOOLITTLE, California

WAYNE T. GILCHREST, Maryland

KEN CALVERT, California

RICHARD W. POMBO, California

BARBARA CUBIN, Wyoming

HELEN CHENOWETH, Idaho

LINDA SMITH, Washington

GEORGE P. RADANOVICH, California

WALTER B. JONES, JR., North Carolina

WILLIAM M. (MAC) THORNBERRY, Texas

JOHN SHADEGG, Arizona

JOHN E. ENSIGN, Nevada

ROBERT F. SMITH, Oregon

CHRIS CANNON, Utah

KEVIN BRADY, Texas

JOHN PETERSON, Pennsylvania

RICK HILL, Montana

BOB SCHAFFER, Colorado

JIM GIBBONS, Nevada

MICHAEL D. CRAPO, Idaho

GEORGE MILLER, California

EDWARD J. MARKEY, Massachusetts

NICK J. RAHALL II, West Virginia

BRUCE F. VENTO, Minnesota

DALE E. KILDEE, Michigan

PETER A. DEFAZIO, Oregon

ENI F.H. FALEOMAVAEGA, American

Samoa

NEIL ABERCROMBIE, Hawaii

SOLOMON P. ORTIZ, Texas

OWEN B. PICKETT, Virginia

FRANK PALLONE, JR., New Jersey

CALVIN M. DOOLEY, California

CARLOS A. ROMERO-BARCELO ́ , Puerto

Rico

MAURICE D. HINCHEY, New York

ROBERT A. UNDERWOOD, Guam

SAM FARR, California

PATRICK J. KENNEDY, Rhode Island

ADAM SMITH, Washington

WILLIAM D. DELAHUNT, Massachusetts

CHRIS JOHN, Louisiana

DONNA CHRISTIAN-GREEN, Virgin Islands

RON KIND, Wisconsin

LLOYD DOGGETT, Texas

LLOYD A. JONES, Chief of Staff

ELIZABETH MEGGINSON, Chief Counsel

CHRISTINE KENNEDY, Chief Clerk/Administrator

JOHN LAWRENCE, Democratic Staff Director

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

BARBARA CUBIN, Wyoming, CHAIRMAN

W.J. (BILLY) TAUZIN, Louisiana

JOHN L. DUNCAN, JR., Tennessee

KEN CALVERT, California

WILLIAM M. (MAC) THORNBERRY, Texas

CHRIS CANNON, Utah

KEVIN BRADY, Texas

JIM GIBBONS, Nevada

CARLOS ROMERO-BARCELO ́ , Puerto Rico

NICK J. RAHALL II, West Virginia

SOLOMON P. ORTIZ, Texas

CALVIN M. DOOLEY, California

CHRIS JOHN, Louisiana

DONNA CHRISTIAN-GREEN, Virgin Islands

——— ———

BILL CONDIT, Professional Staff

SHARLA BICKLEY, Professional Staff

LIZ BIRNBAUM, Democratic Counsel
(III)

C O N T E N T S

Page

Hearing held June 19, 1997 .................................................................................... 1

Statements of Members:

Christian-Green, Hon. Donna M., a Representative in Congress from

the Virgin Islands ......................................................................................... 9

Cubin, Hon. Barbara, a Representative in Congress from the State of

Wyoming ........................................................................................................ 1

Prepared statement ................................................................................... 4

Gibbons, Hon. Jim, a Representative in Congress from the State of Nevada ................................................................................................................ 7

John, Hon. Christopher, a Representative in Congress from the State

of Louisiana ................................................................................................... 8

Romero-Barcelo ́, Hon. Carlos A., a Delegate in Congress from Puerto

Rico ................................................................................................................. 5

Statements of witnesses:

Glover, Jere, Chief Counsel, Office of Advocacy, U.S. Small Business

Administration .............................................................................................. 12

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

Leshy, John, Solicitor, U.S. Department of the Interior ............................... 10

Prepared statement ................................................................................... 39

Additional material supplied:

Letter from the SBA to BLM ........................................................................... 41
(1)

FINAL BONDING RULE FOR HARDROCK MINING OPERATIONS ON BLM-ADMINISTERED

PUBLIC LANDS

THURSDAY, JUNE 19, 1997

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENERGY

AND MINERAL RESOURCES, COMMITTEE ON RESOURCES,

Washington, DC.

The Subcommittee met, pursuant to notice, at 1 p.m. in room

1334, Longworth House Office Building, Hon. Barbara Cubin

(chairman of the subcommittee) presiding.

Mrs. CUBIN. The Subcommittee on Energy and Mineral Resources will please come to order. I would like to welcome our

guests to the hearing today.

STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF WYOMING

Mrs. CUBIN. Today, the Subcommittee continues its oversight of

the Department of Interior’s decision to publish on February 28th

of this year a final rulemaking on bonding of hardrock mining operations on public lands administered by the Bureau of Land Management. We first looked into this matter on March 20th after publication of the rule, but before it became effective on March 31st.

At the initial hearing, the Subcommittee did not have the paper

trail that we have now, albeit I still have document requests that

have not been honored to my satisfaction by the Department. However, from the materials in the Subcommittee’s possession, there

appeared to be sufficient information to conduct further inquiry

into why the Secretary of Interior has allowed this rulemaking to

become final after such a long lapse without any new public input.

Furthermore, information from the Small Business Administration’s Office of Advocacy, the keeper of the faith, so to speak, on

small business and the economic impacts of rules that regulations

make, appears to question the legitimacy of the Department’s compliance in this matter.

Consequently, I have asked the chief counsel for that part of the

SBA to testify before us today as well as the Secretary of Interior’s

designated representative and assistant within the Department,

who has played an important policy-advising role; at least it appears that it has been that way.

Let me say at the outset that I apologize to the other members

here that we had to cancel the hearing last week. All day long

markups and then the next day when we had to vote 23 or 24

times on the floor certainly affected all of our schedules, and, fortu-
2

nately, the witnesses were local people so no one had to make a

trip in from out in the country. So I do apologize for the delay.

However, let me make it clear to everyone that I do not apologize

for conducting this oversight hearing, regardless of the now pending lawsuit brought on behalf of a mining trade association and its

members, many of whom are small miners. At least they are small

miners as described in the definition of the Small Business Administration.

Correspondence from the Secretary of the Interior to Chairman

Young, as well as from Solicitor Leshy to me and to staff counsel

on the Full Committee, echoed by the Ranking Member of the Full

Committee, would have us believe that to conduct a congressional

oversight hearing in matters for which the Secretary is now being

sued somehow imperils the good of the Nation.

I don’t buy that, and neither does the Chairman, which we stated

in our letter of June 11th to Mr. Miller. The filing and prosecution

of the Northwest Mining Association v. Babbitt in U.S. District

Court does not bar our inquiry. If that were so, practically speaking, no congressional oversight could ever occur, for like most agency heads, Secretary Babbitt is routinely named in litigation, probably about every week.

To quote Shakespeare, ‘‘Ah, that is the rub.’’ Why is it that citizens have to bring a Federal court case to be heard on an issue?

Clearly, it is because of an unresponsive bureaucracy that said,

quote, paraphrase, ‘‘no comments are necessary. We know what is

best for you.’’ Thank you very much.

Well, it must come as a shock to the Secretary, but there are

those who disagree with that, and because no comment period was

allowed on the redone rule, what avenue does the disenfranchised

public have left? The Secretary has steadfastly refused to withdraw

the rule and seek public comment. Public comment in any rulemaking, as we all know, is the foundation of the laws that we have

to live by. Public comment is the most important aspect of it, and

I cannot for the life of me understand why we would take a 6-yearold rule, change it, and just try to force it down the throats of our

constituents.

The Secretary has refused to withdraw those rules despite the

fact that at least two Democrat Governors, at least one senator, a

State Attorney General, the Nevada legislature and the county

commissioners representing the biggest mining in that region have

joined me in requesting that the rule be put out for comment. It

seems inane that a constituent has to go to the courts to be able

to have some input on rulemaking.

In apparent contradiction to a statement from the Department

that the Bureau of Land Management has reported no problems in

implementing the rule, Governor Miller of Nevada has had to seek

an amendment to the State law to try to fix the statewide bonding

pool to fit the new regulatory requirements of the BLM in order to

provide relief for small miners in his State.

As our colleague, Jim Gibbons knows, Nevada has a biennial legislature, and unless they act fast, small miners out there could be

left without any access to the pool for another 2 years.

I guess the BLM’s ‘‘no problems’’ remark must mean that the

Feds don’t have any problems; they are doing fine. It is only the
3

State legislators and the folks they represent that are having problems. And the pity is that the Department merely had to ask for

comments to learn this beforehand rather than after the fact.

Likewise, the new requirement for professional engineers to certify the calculation of reclamation costs has brought howls of protest by those who are unable to find engineers who are willing to

do that. Is it a bad idea to require professional engineers certification? I don’t know. That wasn’t the question, but certainly it

wasn’t contemplated back in 1991 when the Bush Administration

published the proposed rule. So why would anyone have anticipated a need to tell the agency about it? No one at the receiving

end of the proposed rule did that I can see, but somewhere along

the line this Administration’s policymakers decided it was necessary to keep the miners honest.

Besides cost recovery concepts mandate mining operators either

pay the BLM’s own engineers to review such data, or they go outside and pay for government contractors, in essence, to do BLM’s

work. Again, let me emphasize that my complaint is with the Secretary’s refusal to take public comment on this idea, not on the certification requirement, per se, although there certainly seems to be

logistical problems worthy of making an analysis. But, I didn’t find

one in the rulemaking materials I have seen, which adress this

issue at all.

Again, a simple comment period might have given the BLM a

heads up on the reluctance of the professional engineers to put

their names and reputations on the line when they don’t seem to

know just what it is that the Feds want them to certify.

Let me finish by noting that just 2 weeks ago the Clinton Administration named as a runner-up small businessman of the year a

gentleman from Idaho, who owns a pumice mining company. My

staff contacted the individual, Mr. J. Marvin Hess, to find out if he

fit BLM’s alleged definition of a small business entity. Mr. Hess

says his 95-employee operation is all on private land with reserves

encompassing 240 leased acres and a mill on additional private

land.

If we were to calculate his operation as if he were on public land,

he would clearly exceed the 10 claims or fewer threshold for the socalled small miner exemption which BLM says they used in their

economic analysis. Yet, the government agency charged with identifying and rewarding such entrepreneurs, the SBA, has decided

that Mr. Hess is the epitome of a small business entity. Go figure.

For my money, I will take the SBA’s assessment of small business over that of the Department of Interior any time, or at least

the Small Business Administration’s view of the adequacy of the

Department of Interior’s economic analyses, which by any standard

falls woefully short. But the bonding rule is only the tip of the

3,809 mining regulations iceberg. Five-sixths of the Secretary’s

hardrock mining strategy lies below view waiting to sink a passing

ship crewed by small miners.

I hereby ask one more time for the Department to swallow its

pride, admit it was wrong to rebuff the public comment, and publish a new rule and set out the time for public comment. Failing

that happening, I pledge to continue our inquiry with an eye toward drafting generic legislation to prevent this type of rulemaking
4

abuse in the future. Passage of the Small Business Regulatory Enforcement and Fairness Act in the last Congress has finally given

citizens the opportunity to sue agencies for noncompliance with the

Regulatory Flexibility Act.

I welcome the lawsuit brought by those affected persons who

were denied a voice in this rulemaking. I just find it a very sad

state of affairs that they had to do it.

[The statement of Mrs. Cubin follows:]

STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF WYOMING

Today the Subcommittee continues its oversight of the Department of the Interior’s decision to publish on February 28th of this year a final rulemaking on bonding of ‘‘hardrock’’ mining operations on the public lands administered by the Bureau

of Land Management. We first looked into this matter on March 20th, after publication of the rule but before it became effective on March 31st. At the initial hearing

the Subcommittee did not have the ‘‘paper trail’’ we do now, albeit I still have document requests at the Department which have not been honored to my satisfaction.

However, from the materials in the Subcommittee’s possession there appeared to be

sufficient information to conduct further inquiry into why the Secretary of the Interior has allowed this rulemaking to become final after such a long lapse without

new public input.

Furthermore, information from the Small Business Administration’s Office of Advocacy, the keeper of the faith, so to speak, for the statutory requirement that agencies fully analyze the economic impacts of rules they make, appears to question the

legitimacy of the Department’s compliance in this matter. Consequently, I have

asked the chief counsel for that part of the SBA to testify before us today, as well

as the Secretary of the Interior’s designated representative and a special assistant

within the Department who has played an important policy-advising role—or so it

appears.

Let me say, at the outset, I apologize to our Members for having to reschedule

last week’s announced hearing on this issue. Day-long mark-ups of reconciliation

legislation, and last Wednesday’s all-afternoon floor voting affected so many schedules, including mine, as to require postponement. Fortunately, our witnesses were

all local.

However, let me make clear to all, I do not apologize for conducting this oversight

itself, regardless of the now-pending lawsuit, brought on behalf of a mining trade

association and its members—many of whom are small miners (at least under the

definition of the term as prescribed by the SBA). Correspondence from the Secretary

of the Interior to Chairman Young, as well as from Solicitor Leshy to me and to

staff counsel on the Full Committee, echoed by the Ranking Member of the Full

Committee, would have us believe that conduct of Congressional oversight in matters for which the Secretary is now being sued somehow imperils the good of the

Nation.

I don’t buy it, and neither does Chairman Young, as per his reply letter of June

11th to Mr. Miller. The filing and prosecution of the Northwest Mining Association

v. Babbitt litigation in U.S. District Court does not bar our inquiry. If it were so,

practically speaking, no Congressional oversight could occur, for like most agency

heads, Secretary Babbitt is routinely named as a defendant in litigation every week.

To quote Shakespeare, ‘‘Ah, there’s the rub.’’ Why is it that ordinary citizens must

bring a Federal court case to be heard on this issue? Clearly, its because an unresponsive bureaucracy said ‘‘No comments are necessary, thank you very much. We

know best who will be impacted and by how much.’’ Well, it must come as a shock

to the Secretary, but there are those who disagree. And, because no comment period

was allowed on the redone rule, what avenue for the disenfranchised public was

left? Why, the other two co-equal branches of government, Congress and the judiciary. The Secretary has steadfastly refused to withdraw the rule and seek public

comment. He has done so despite the fact that at least two Democrat Governors,

at least one Senator, a State attorney general, the Nevada legislature, and the county commissioners representing the biggest gold mining region in the country, joining

me in requesting the rule be proposed for comment.

In apparent contradiction to a statement from the Department that the Bureau

of Land Management has reported no problems in implementing the rule, Governor

Miller of Nevada has had to seek an amendment to State law to try to fix the statewide bonding pool to fit the new regulatory requirements of the BLM in order to
5

provide relief for small miners in his State. As our colleague Jim Gibbons knows,

Nevada has a biennial legislature, and unless they act fast, small miners out there

could be left without access to the pool for another 2 years. I guess the BLM’s ‘‘no

problems’’ remark must mean the feds are doing fine—only the State legislators,

and the folks they represent, are having any problems.

And the pity is that the Department merely had to ask for comments to learn this

beforehand rather than after the fact. Likewise, the new requirement for third party

professional engineers to certify the calculation of reclamation costs has brought

howls of protest by those unable to find engineers willing to do so. Is it a bad idea

to require P.E. certification? I don’t know, but it surely wasn’t contemplated back

in 1991 when the Bush Administration published the proposed rule. So, why would

anyone have anticipated a need to tell the agency about it? No one at the receiving

end of the proposed rule did that I can see, but somewhere along the line this Administration’s policymakers decided it was necessary to keep the miners honest. Besides ‘‘cost recovery’’ concepts mandate mining operators either pay BLM’s own engineers to review such data, or they go outside and pay for government contractors,

in essence, to do BLM’s work. Again, let me emphasize my complaint is with the

Secretary’s refusal to take public comment on this idea, not the certification requirement, per se, although there certainly seems to be logistical problems worthy of an

analysis. But, I didn’t find one in the rulemaking materials I’ve seen which address

this issue at all. Again, a simple comment period might have given the BLM at

heads up on the reluctance of professional engineers to put their names and reputations on the line when they don’t seem to know just what it is the feds want them

to certify.

Let me finish by noting that just 2 weeks ago the Clinton Administration named

as a ‘‘runner-up’’ for ‘‘small businessman of the year’’ a gentleman from Malad,

Idaho, who owns a pumice mining company. My staff contacted this individual, a

Mr. J. Marvin Hess, to find out if he fit BLM’s alleged definition of a ‘‘small business entity.’’ Mr. Hess says his 95-employee operation is all on private land with

reserves encompassing 240 leased acres and a mill on additional private land. If we

were to calculate his operation as if it were on public land he would clearly exceed

the ten claims or fewer threshold for the so-called small miner exemption which

BLM says they used in their economic analysis. Yet, the government agency charged

with identifying and rewarding such entrepreneurs—the SBA—has decided Mr.

Hess is the epitome of a small business entity. Go figure. For my money, I’ll take

the SBA’s assessment of the small business community over that of the Department

of the Interior, or at least the SBA’s view of the adequacy of DoI economic analyses,

which by any reasonable standard falls woefully short.

But the bonding rule is only the tip of the ‘‘3809 surface management regulations’’

iceberg. Five-sixths of the Secretary’s ‘‘hardrock mining strategy’’ lies below view

waiting to sink a passing ship crowed by small miners. I hereby ask one more time

for the Department to swallow its pride, admit it was wrong to rebuff public comment, and publish the rule anew. Failing that happening, I pledge to continue our

inquiry, with an eye toward drafting generic legislation to prevent this type of rulemaking abuse in the future. Passage of the Small Business Regulatory Enforcement

and Fairness Act in the last Congress has finally given citizens the opportunity to

sue agencies for noncompliance with the Regulatory Flexibility Act. I welcome the

lawsuit brought by those affected persons who were denied a voice in this rulemaking. I just find it a very sad state of affairs that it has become necessary.

I now recognize our Ranking Member, Mr. Romero-Barcelo ́, for any opening statement he may wish to give.

Mrs. CUBIN. Now, I welcome the Ranking Member, Carlos Romero-Barcelo ́ and ask for his comments.

STATEMENT OF HON. CARLOS A. ROMERO-BARCELO ́ , A

DELEGATE IN CONGRESS FROM PUERTO RICO

Mr. ROMERO-BARCELO ́. Thank you, Madam Chair. The last time

I had a hearing, I made it clear that I thought everyone should

have been given a chance and should be given a chance, an opportunity. However, on this occasion I think we have a different issue

at hand and we are pleased to welcome Mr. John Leshy, the Solicitor General, the Department of Interior, back to the Resources

Committee.
6

Now, in light of the legislation that is now pending against the

United States on the bonding rule, we have certain misgivings related to the conduct of this hearing and the way that the documents are being requested and will be made—presented to be made

public.

Last week, immediately prior to the postponed hearing on this

matter, the senior Democrat on this Committee, George Miller,

wrote to Chairman Young raising a series of concerns on issues

about whether it is appropriate to release these documents that

have been identified by the Solicitor as privileged.

Unfortunately, the Majority has apparently chosen to disregard

these concerns and is proceeding against the wishes and advice of

the Solicitor and the Democrats on the Committee. I refer to the

Chair’s intention as noted in the Majority staff’s letter of June 9

to the Solicitor, to release or place in the public record a number

of confidential documents related to the bonding rule which were

provided to the Committee by the Department of Interior.

According to Congressman Miller’s letter to the Chairman and

advice from the Solicitor, Mr. Leshy, the release of documents

transmitted to the Committee and related to the bonding rule

which have been identified as privileged may jeopardize the fiscal

and environmental interest of the United States independent litigation. Therefore, it is my duty to object to unanimous consent to use

or include these privileged documents in the public record of this

hearing.

The only way that they should be used is if a vote is taken and

then the Committee votes and the Majority have those documents

to be made public so those proposed documents being made public

could also be put on record that they oppose it, and also give the

authority to the Department of the United States, the Solicitor

General, to say these documents were made public upon, over and

above their opposition, which then would allow them perhaps to

litigate the issue in the court.

Whereas, by not having this document made public without any

objection, without going through a vote on the Committee, may

give the court the opportunity to say that the issues have been

waived and therefore that the documents can be used in the litigation. These documents were provided at the request of the Subcommittee Chair prior to the Northwest Mining Association suing

the Secretary or the BLM’s regulations, and now that the litigation

has been filed, it is clearly inappropriate for the Subcommittee to

release or make public the privileged documents.

As Mr. Miller stated, to do so could create the impression that

the Majority is using the power of Congress to conduct discovery

for the mining industry, obtaining and disclosing materials that

would not otherwise be available through the normal judicial process. To truly represent the interests of the public, we should focus

our interests in this matter on the substance of the rule, not individual questions relating to the release of confidential documents.

We must be mindful of the purpose of the bonding rule, because

even if the Department erred substantively, the intent of the rule

is clearly in the best fiscal and environmental interest of the

United States and its citizens.
7

The rule in question embodies the polluter pays principle. Under

this rule, BLM requires all miners to hold financial bonds or guarantees for a full 100 percent of the cost of restoring public land

that their activities have disturbed. And this is a significant change

from the previous policy that exempted miners disturbing less than

5 acres of public land from providing proof of such protection.

I am sympathetic to the plight of small miners operating on 5 acres or less who find it difficult to find bonds to cover $1,000 per

acre. However, this is the approximate dollar amount the BLM

would need to clean up an area after an irresponsible miner who

leaves an area without reclaiming the land. Therefore, in the interest of both the polluter pays and the cost recovery policies, it is not

unreasonable for the government to require this amount.

Reclamation is required to ensure that environmental damage,

such as acid mine drainage and ground and drinking water contamination does not occur. Reclamation ensures that the land can

be used for other uses like recreation after mining is complete.

American taxpayers have too long borne the cost of cleaning up

after unscrupulous miners and the bonding rule will ensure that

the cost of cleaning up the disturbance caused by mining will be

placed squarely on the mining communities’ shoulders where it belongs.

Mr. Leshy, Mr. Alberswerth, and Mr. Glover, we look forward to

hearing from you. Thank you.

Mrs. CUBIN. Thank you. I do have to take a little Chairman’s

privilege here. I want to make it very clear that my objection to

what is happening here is not the content of the rule. That is beyond my authority. My job is to see that the process is carried out

and that the people of the United States of America have their

right and avenue to have input into what happens to them into

their government. It is strictly the process that I am addressing.

I also have to point out that the lawsuit hadn’t been signed when

we had our first hearing, or the lawsuit hadn’t been filed, and that

is true. But I have to point out that 17 hearings on the Endangered

Species Act have taken place, while there are more than 200 lawsuits pending with documents being freely brought to the congressional committees and to the public. Now, I would like to ask Mr.

Gibbons if he has an opening statement.

STATEMENT OF HON. JIM GIBBONS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEVADA

Mr. GIBBONS. Thank you very much, Madam Chair, and I would

like to thank the gentlelady from Wyoming for her leadership on

this Committee, her willingness to undertake a discussion, I think,

which clearly demonstrates her understanding of the importance of

this issue. These are important times. They are important times for

the people of the United States, and they are important times especially for the people of the district that I represent in Nevada. And

it has come to my attention, and it is my belief that the final rule

on BLM hardrock bonding requirements is detrimental and

unneeded.

I would like to take a moment to dissect the issue before us

today with information provided to me by the Nevada State legislature. The Bureau of Land Management proposed on July 11th,
8

1991, to amend its policies governing bonding requirements for reclamation for mining operations on public land as set forth in the

regulations involving surface management in Subpart 3, 3809,

Supp., Code of Federal Regulations. However, the BLM recently

adopted those proposed regulations with the publication of a final

rule on February 28th, 1997.

Approximately 51⁄2 years later, the newly amended regulation

took effect on March 31st, 1997, and continued new policies that

were not a part of the policies proposed on July 11th, 1991, including requirements for certification of reclamation cost estimates by

a third party professional engineer. It is also my understanding

that the general public was not apprised of the substance of the

final version of the regulation and the significant issues involved,

and therefore had no opportunity to comment on the new policies

included in the final rule, therefore violating the Administrative

Procedures Act.

It becomes very relevant to me and to the people of Nevada that

this final rule has a negative impact on large and small miners,

their suppliers, contractors, as well as the economy. With no opportunity for comment and with no increase in Federal funding, the

final rule is increasing the workload for agencies in the State of

Nevada that administer programs in the areas of environmental

protection and minerals. Even more distressing and just as important is the circumvention of the Tenth Amendment of the United

States Constitution.

The final rule to place the BLM in the place of enforcing criteria

for water quality, a task that rightfully belongs to the State Department of Conservation and Natural Resources, pursuant to the

Nevada revised statutes as well as the Clean Water Act. Further,

the BLM has provided no documentation or evidence of problems

regarding the failure of miners to carry out required reclamation

efforts in the State of Nevada and under existing State bonding requirements, and I believe that the BLM has acknowledged that Nevada is a leader in reclamation.

Likewise, immediately after our last hearing on this issue, I was

informed that all State bonding requirements within the last 2 to

5 years have properly ensured that miners carried out their reclamation requirements. If this is true, then why would we need

this new rule?

I am looking forward to the opportunity of discovering whether

the BLM has successfully met all obligations that are required of

a Federal agency before publishing a final rule. I will begin to ask

the Secretary to withdraw the final rule for bonding requirements

for reclamation of hardrock mining operation on public lands and

open up the process to its established and intended requirements.

And thank you, Madam Chairman.

Mrs. CUBIN. Thank you. Mr. John, do you have an opening statement?

STATEMENT OF HON. CHRISTOPHER JOHN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA

Mr. JOHN. Just a brief opening statement. I, too, with respect to

Mr. Gibbons want to look at this proposed rule and look at the

merits, whether they are good or bad. But I think what we are
9

looking at here is the substance of the proposed rule, whether it

is good or bad, should be voted on on its merits and to, I believe,

compromise some of the situations that we are looking at as far as

some of this privileged information, and giving away our hand, we

need to look very closely at that. And I am looking at this information requested by the Department to stay out of the public, which

could really compromise our situation. So I am looking carefully at

that.

Mrs. CUBIN. Thank you, Mr. John. My reaction to that is the assertion that they are making that somehow their position will be

compromised by releasing the documents to us doesn’t stand up to

me, and that is because when they go to court, the judge will determine what documents will or will not be entered into the case. So

what we have here in the public record or what we use may or may

not be allowed in the court case, depending on how the judge would

like it.

Mr. ROMERO-BARCELO ́. Madam Chair, our concern is that the

judge’s decision can be based on whether the document has been

made public or not, and we don’t know how the judge is going to

base his decision. As an attorney, I know in the case of privileged

documents, in privileged matters, sometimes not having raised an

objection in due time, you are deemed to waive it, and others not.

So we don’t know how the judge is going to rule. The Department

is trying to save its position in terms that they consider these documents privileged, that if they are going to be released, that at least

it would be because the Committee has a right to do it, but it has

a right to do it by a vote.

I don’t think it should be released without bringing it up to a

vote, so that those members of the Committee that want to vote

against it can vote against it, and at least that would allow the Department to defend itself and raise its position in the court with

more substantial documents. I think that is what we are trying to

establish here.

Mrs. CUBIN. I think at this time I will not ask to put the documents in the record, but I reserve the right to do that later on in

the hearing. I am astounded by the fact that the government is

taking the Fifth here. It is just amazing to me that we have a government that cannot share with its people what it has done and

what it is doing.

Mr. Thornberry, do you have an opening statement?

Dr. Green?

STATEMENT OF HON. DONNA M. CHRISTIAN-GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS

Ms. CHRISTIAN-GREEN. Thank you, Madam Chair, for giving me

the opportunity to make a few brief opening remarks. We are here

today to once again discuss the concerns raised by the Bureau of

Land Management’s final rulemaking on hardrock mining on public

lands, and in particular, the requirement that all mining operators

be required to obtain bonds or financial guarantees.

As you know, Madam Chair, the Subcommittee held a hearing on

this issue on March 20th of this year. At that time, the Department

of Interior’s Solicitor, John Leshy, testified that the proposed rule

was necessary for BLM to meet its legal obligation to prevent un-
10

necessary or undue damage to public land. Without the proposed

changes to the rule, BLM would have to use taxpayer dollars to reclaim public lands in cases where mining claims and other operators failed to live up to their legal obligations.

So I thank you, Madam Chair, for yielding me this time and I

look forward to working with you and the Subcommittee. I feel this

rule is unjust and we do appreciate the gentlelady’s decision not to

make public those documents at this time because I agree with my

Democratic colleagues, that they are sensitive documents, they are

privileged, and they are now involved in ongoing litigation.

Mrs. CUBIN. Mr. Brady.

Mr. BRADY. No statement.

Mrs. CUBIN. Mr. Cannon, did you have an opening statement?

Mr. CANNON. No, thank you.

Mrs. CUBIN. Having concluded that portion of the hearing, I now

would like to introduce our witnesses and thank them very much

for being here and again apologize for the fact that we had to cancel that hearing last week.

Mr. John Leshy, the Solicitor of the U.S. Department of Interior

is with us here today; Mr. David Alberswerth, a Special Assistant

to the Assistant Secretary for Land Management, and Mr. Jere

Glover, Chief Counsel, the Office of Advocacy of the Office of Small

Business Administration.

As you three know, I routinely swear in witnesses who testify in

front of this Committee, so before we start, I would like to do that.

If you would stand and raise your right hand.

[Witnesses sworn.]

Mrs. CUBIN. So, I think we will start the testimony with Mr.

Leshy.

STATEMENT OF JOHN LESHY, SOLICITOR, U.S. DEPARTMENT

OF THE INTERIOR ACCOMPANIED BY DAVID ALBERSWERTH,

SPECIAL ASSISTANT TO THE ASSISTANT SECRETARY FOR

LAND AND MINERALS MANAGEMENT, U.S. DEPARTMENT OF

THE INTERIOR

Mr. LESHY. Thank you very much, Madam Chair and members

of the Committee. I am here today once again to discuss the final

rule on bonding for hardrock mining operations. With me is David

Alberswerth, Special Assistant to the Assistant Secretary for Land

and Minerals Management.

I will be very brief and then we can go to questions. I just want

to update the Subcommittee on various matters concerning the

hardrock bonding rule which have occurred since the last hearing

on March 20th. Before I do that, let me say there were several comments made in the opening statement which seemed to indicate

that there had been no public comment or public participation in

the development of this rule, and I just want to make sure that everyone understands that this rule, and as I went in some detail in

my testimony on March 20th, the evolution of this rule goes back

to the Reagan Administration.

There were scoping sessions and a long public comment period

and many comments received on this rule. Those comments, as typical, were analyzed and taken into account in the development of

the final rule, so this was from our standpoint a perfectly normal
11

rulemaking process governed by the Administrative Procedure Act

where there was a substantial period for public comment, that public comment was meaningful and taken into account in the final

rule.

The fact that there was a period of delay between the publication

of the proposed rule and the publication of the final rule, again, in

our view was perfectly normal, explained by the fact that at least

during a part of that time Congress was actively reforming the

mining law of 1872, and we felt it would be confusing to come out

with a final rule in the midst of that debate.

The rule was published in final form on March 30th and went

into effect April 30th, and we have asked the BLM to keep an eye

on the implementation of that rule. It has now been in effect for

nearly 3 months. The BLM is reporting from various field offices

that the rule is going into effect normally without any reports of

major difficulty. Obviously, there is some change involved with the

upgrading of the bonding standards, although I should know in a

number of Western States there is no change at all because the

new final bonding rule is no more stringent than existing State

law, which already governed. So in a number of places, the implementation of this rule simply means no change at all.

In at least one State, a State legislature has amended its State

law to make it consistent with the bonding rule, so again in that

State there is really no difference in between before the rule and

after rule went into effect. That amendment, I think in Idaho, requires full cost bonding for hardrock mining operations just as this

rule does.

BLM is continuing its efforts to advance the mining industry’s

understanding about the rule and what is needed to comply with

it. It is using, among other things, the Internet for this purpose.

In Alaska, which is a State that has an active hardrock mining industry, the BLM has been working closely with the State of Alaska

to develop a Memorandum of Understanding between the State

and Federal Governments.

Hopefully, that is not final yet, but hopefully it will be put in

final and it will allow the miners in that State to use the bond pool

that is available under State law to satisfy the requirements of the

rule. So from our standpoint, as with any new rule, obviously there

is sort of a startup, implementation period.

We are in that period now without major, major difficulty. Some

of the features of the rule, as I explained last time, are actually implemented in a phased manner. They do not all apply to small miners immediately. There is a startup period, and so it is proceeding

basically pretty normally. Nothing unexpected in the implementation of this rule.

The second thing I would mention by way of update is the lawsuit that was filed on May 12th by the Northwest Mining Association represented by the Mountain States Legal Foundation against

the rule alleging that the rule, the Department in promulgating the

rule failed to comply with the Administrative Procedure Act and

the regulatory flexibility ability and that lawsuit is proceeding. We

are defending the lawsuit because we believe we have fully complied with the law, and eventually the court will answer the question of whether we have or have not.
12

The last thing I would say is while there has been concern here

expressed about the process the Department used in adopting the

rule and not the substance of the rule, it is very clear that were

the Department to withdraw this rule as some have requested, the

effect would be that the taxpayer would be at risk of paying, rather

than the miner paying when the miner walks away and leaves a

mess on the public lands.

So it is important, in our view, because we think we have fully

complied with the law and because we think as the Bush and

Reagan Administrations thought that upgrading of the bonding requirements are important in order to protect the taxpayer’s interest

in not being saddled with unnecessary costs and the industry

should bear this cost, that this rule remain in effect. That concludes my prepared testimony. I, of course, will be happy to answer

questions. Thank you.

[The statement of Mr. Leshy can be found at the end of the hearing.]

Mrs. CUBIN. Thank you very much, Mr. Leshy. Mr. Alberswerth.

Mr. ALBERSWERTH. I have no statement, Madam Chair.

Mrs. CUBIN. Oh, Okay. Thank you. Mr. Glover.

STATEMENT OF JERE GLOVER, CHIEF COUNSEL, OFFICE OF

ADVOCACY, U.S. SMALL BUSINESS ADMINISTRATION

Mr. GLOVER. Thank you, Madam Chair. Good afternoon Madam

Chair and members of the Subcommittee. I am Jere Glover, U.S.

Small Business Administration. I appear to you today to discuss

the regulatory flexibility compliance. With me today are Jennifer

Smith and Shawne Carter McGibbon, two of my staff attorneys

who have been advising me on this matter. As always, I would like

to note the views of the Office of Chief Counsel are the views of

the Chief Counsel and may not necessarily represent those of the

Administrator of SBA or the administration.

The Regulatory Flexibility Act establishes that agencies shall endeavor to fit regulatory and informational requirements to the scale

of business organizations in the governmental jurisdiction subject

to their regulation. Under the law, Federal agencies are required

to determine whether the regulation has a significant impact on a

substantial number of small businesses. Agencies also are required

to consider flexible regulatory alternatives for small entities and

ensure that the proposals are given serious consideration.

The Office of Advocacy reviews approximately 2,500 rules and

proposed regulations each year. Of those, we file comments on 97,

which is over a 100 percent increase over the previous historical

average for the office. We are in a period of transition for the Regulatory Flexibility Act.

As the Chairwoman mentioned, when the Act was first enacted

16, 17 years ago, there was no judicial review. As a result, many

agencies did not fully comply with the Regulatory Flexibility Act.

Last year, the Congress did pass remediation providing for judicial review of the Regulatory Flexibility Act. As a general rule,

compliance by the Federal agencies had been spotty. Some agencies

have been very good, some have not been very good, and often

agencies that are very good are very bad on a specific regulation

in a specific situation.
13

We are in a transition period where many regulations had already been proposed and are now being finalized after the judicial

review provisions have been provided. In those situations, I am in

a somewhat embarrassing situation. For example, my office did not

comment when this legislation was originally proposed on the certification in 1991. Quite frankly, many agencies did not—they considered certification an easy way out of compliance with the Regulatory Flexibility Act and agencies did that without depending on

a specific agency. That was a fairly common occurrence.

Since judicial review has come into place, this is obviously much

more important. In terms of transition period, we are seeing things

develop. For example, legislative history does not make it clear

what is a substantial number of small businesses or what is a significant economic impact. Those are things that we are working

with the agencies.

In the case of the Department of Interior, like many other agencies, their compliance with the Regulatory Flexibility Act has been

spotty. We have been working with them very closely. We have had

over 600 government officials attend training seminars put on by

our office trying to educate the government officials on the requirements of the Regulatory Flexibility Act and we are working very

hard.

We have had two such sessions with the Department of Interior

personnel in just the last few months. So I think that the long-term

view is that we will see far better compliance by all agencies of the

Regulatory Flexibility Act, but certainly compliance is spotty from

time to time. I would be happy to answer any questions you might

have.

[The statement of Mr. Glover can be found at the end of the

hearing.]

Mrs. CUBIN. Thank you, Mr. Glover. I think we will go ahead and

start with the questioning and we will limit it to 5 minutes and

then just do further rounds, I think. I do appreciate your coming

to testify today. The Small Business Administration is like a breath

of fresh air to us, and all of the jumps that you have to go through

we so appreciate.

Do I understand it correctly that the Advocacy Office of the SBA

is rather autonomous and your testimony is not subject to editing

by the Office of Management and Budget?

Mr. GLOVER. That is true. It was not submitted to anybody before we submitted it to you.

Mrs. CUBIN. And did you send them the testimony anyway?

Mr. GLOVER. After we sent it to you, we did send it to them. We

routinely do that.

Mrs. CUBIN. And did OMB return any comments to you

about——

Mr. GLOVER. We did not send it to OMB at all. As a courtesy,

we send it to the Federal agency that is going to be testifying with

us and, quite frankly, we asked for their testimony.

Mrs. CUBIN. And you did not receive any comments back.

Mr. GLOVER. We did not discuss the testimony at all.

Mrs. CUBIN. Okay. I will just go ahead. Mr. Cannon, I know, has

an interest in this area and I want him to be able to get his information together, so I will ask a couple more. Do you believe the
14

agency met the requirements in the Regulatory Flexibility Act in

this rulemaking that is in question.

Mr. GLOVER. I am not sure. We would certainly like to have some

clear factual basis for their certifications. Certainly, they did some

things to accommodate the smaller businesses in their regulation,

but the factual basis upon which a certification is made is not clear

in the certification when we look at the information. We would certainly have liked to have had a clear statement as to what the certification was based on. We think that would have been better for

us to make that determination.

Mrs. CUBIN. Thank you. I will yield the balance of my time to

Mr. Cannon—oh, okay. I will go ahead and finish with this. Even

if the Interior had made contact with the SBA prior to proposing

the draft rule in 1991, how could it have made the argument, then,

that this is a, quote, ‘‘Congress has spoken on the definition of

small miners,’’ as Mr. Leshy replied to me in his writing this April,

when the Act he cites didn’t pass until 1993?

Mr. GLOVER. I am not sure on that. One of the interesting questions in this whole definition area is that the Small Business Act

was amended several years ago, and it was provided that agencies

should have a consistent definition of small business. We found

every agency had a different definition that was causing confusion

for the regulators. It was certainly causing confusion for small

businesspeople, and so Congress decided that the Small Business

Administration would be the central definition unless there was an

agreement to change. Prior to the enactment of that legislation,

there was a wide variety of definitions that were out there and it

varied from situation to situation.

Mrs. CUBIN. More importantly, is it not improper for a Federal

agency to attempt to retrofit compliance with Regulatory Flexibility

by begging forgiveness for its inattention to this detail?

Mr. GLOVER. I am not sure of that exact characterization, but

certainly we try to work with agencies whenever we are asked to

try to bring them in. Our job, quite honestly, we have a relatively

small staff and the government to look at; we have to try to encourage compliance by the agencies. So we do an awful lot of work with

the agencies to encourage them to comply.

Mrs. CUBIN. With respect to the economic impact analysis by the

BLM, irrespective of its definition of a small business entity, do you

or your staff have an opinion on the adequacy of that, the analysis?

Mr. GLOVER. The analysis is certainly better than some we have

seen and not as good as others. The Department of Interior hasn’t

done as good a job as perhaps the Environment Protection Agency

has in doing those analysis. For the Department of Interior, this

is one of the better ones. We still didn’t see the kind of industry

analysis we are expecting in the future, and we have advised them

that we would like to see more factual analysis.

We are collecting better information and trying to train the

economists in the various agencies so they can do a better analysis

across the board. We are trying to look at a more factual analysis

of what they are doing, and we are for the first time having good

factual information from the Census Department so we can share

that with agencies. I wish I could tell you we were doing a better
15

job in the past than we have done, but we are doing the best we

can.

Mrs. CUBIN. My time has expired and we do have a vote on the

floor. It is on the Solomon amendment to the rule, so I think we

will recess long enough to go vote and come back. It is on the DOD

bill. So we will be back as quick as we can get here. And thank

you. I hope you don’t mind waiting.

[Recess.]

Mrs. CUBIN. We will call the hearing to order again. Please, I am

sorry it took me so long to get back. Thank you for your patience.

Mr. Glover, isn’t it true BLM failed to comply with the Regulatory

Flexibility Act requirement that it consult with the SBA prior to

finalizing the rule?

Mr. GLOVER. They, in fact, did not consult with us prior to finalizing the rule, that is correct.

Mrs. CUBIN. Does the RFA require such a consultation before the

rule is finalized?

Mr. GLOVER. It does not unless they vary and change some

things. Many agencies don’t contact us at all and finalize their regulation. If they are doing something different, they should consult

with us, and I think here we were looking at other types of small

business, looking at the impact and analyzing the impact on small

business. In those situations, they probably should consult, and

many agencies do consult with us. So in this case, they probably

should and the agency cannot.

Mrs. CUBIN. Okay. I need to back up so I understand your answer. The agency did not consult.

Mr. GLOVER. That is correct.

Mrs. CUBIN. And in your opinion, were their differences that required them to consult?

Mr. GLOVER. I think that if this agency or any other agency is

going to do an analysis that deviates from the form, traditional definition of small business, then they should consult with us about

that.

Mrs. CUBIN. And in this case, the definition of small business is

not the same that the Interior Department established, it is not the

same that the SBA, not the same definition; is that correct?

Mr. GLOVER. This is one of those really unique gray areas of the

law. The law has two different standards. One is in the regulatory

analysis, if they are going to deviate in their analysis from the

small business definition, they consult with us in the analysis.

In the final rule stage, if they are going to change the rule itself

and use a different definition, then they have to consult with the

administrator of SBA. In this case, it is a hybrid in between. They

didn’t change the rule definition of small business, they changed

the way that it was applied. So I can’t tell you with total certitude

they should have come to us. I think it would have certainly been

better policy had they done that and we certainly counseled them

to make sure they do this in the future, but this is a gray area and

I can’t tell you with 100 degree certainty that legally they should

have definitely come to us. I think I would have preferred it and

we would all be—we would have saved ourselves a lot of time had

they done that. We would have been able to point them in a better

direction.
16

Mrs. CUBIN. Maybe we wouldn’t be here. Have you or anybody

at the SBA informed anyone in the Interior Department of their

failure to comply with the RFA?

Mr. GLOVER. Yes, we did. Some of my staff received a phone call

from them asking for some advice on the definitions. We are looking at it in an abstract manner of how small businesses were defined, and on that there were some telephone conversations and

some memos exchanged where we certainly pointed out that if they

were using a different definition of small business, they were missing the point of the law.

Mrs. CUBIN. And there was written communications, I believe.

Mr. GLOVER. Yes, there were telephone calls and written documents.

Mrs. CUBIN. I would like to make as part of the record the communications from the SBA informing the BLM that they had failed

to comply with the consultation requirement. And since the Interior

cannot request privilege, I think that it should be in order. I ask

unanimous consent to put it in the record. Without objection.

[The information referred to can be found at the end of the hearing.]

Mrs. CUBIN. I don’t have any further questions right at this point

in time.

Mr. Romero-Barcelo ́?

Mr. ROMERO-BARCELO ́. Thank you, Madam Chair. I would just

like to ask Mr. Leshy, in his letter to the counsel of the Committee

on Resources of the House, he talks about the documents requested, in part those covered by privilege, the attorney work product or deliberative process.

Can you tell us more about your concerns on the disclosure of

these documents?

Mr. LESHY. Yes, I am happy to. The concern here is not about

interfering in any way with Congress’ oversight responsibility. We

have made available numerous documents upon the request of this

Committee. We have made available other documents for inspection in the Department of the Interior. Everything that we have

that is covered by the request is available to this Committee to look

at.

Our principal concern in this area is the disclosure of some of the

draft documents that are covered by a litigation privilege that we

can assert in Federal court in the litigation that involves this very

rule, and the concern is that if this Committee discloses those documents which are not disclosable to the court under the standard

rules of evidence, the disclosure of those documents by this Committee simply waives our privilege, which means we are deprived

of a defense and a privilege in the judicial proceedings that we

could otherwise assert. And it is of particular concern in this particular context because, you know, we have an inquiry on this rule,

and the inquiry of this Committee is two questions concerning that

rule; that is, did we comply with the Administrative Procedure Act

and did we comply with the Regulatory Flexibility Act. The litigation by one part of the mining industry raises exactly those two

questions. They were filed virtually simultaneously with this Committee’s inquiry.
17

The concern is simply that this Committee’s inquiry, not in terms

of our supplying the documents to this Committee, but in terms of

this Committee’s putting those documents in the public record

would constitute, we fear, a waiver of a privilege we would have

in court. We have encountered—I say we in the general sense of

the executive branch—encountered this situation in all sorts of different contexts over a period of years.

It is an institutional relationship question between the executive

branch and the legislative branch, and in the vast majority of situations we work out a protocol or a way of handling these documents to ensure that the dialog that is taking place between the

legislative and executive branch do not strip the executive branch

of a defense when they go to court.

In this situation, we haven’t worked out that protocol. Our concerns are particularly heightened because in another subcommittee

of this Committee recently we made documents available to the

Committee, noting that the judicial privilege attached to some of

them and requesting the Committee to please talk with us before

they put those documents in the public record so we could make

the subcommittee aware of our concerns, and without any consultation whatsoever those documents were placed in the public record,

in a situation similar to this one in the sense that we had an active

lawsuit challenging the very decision that the Committee was inquiring into.

So this concern is not at all about withholding information from

the Committee. I can’t say that too often. We have made available,

and we will make available any documents within the scope of your

request that we have. Our concern is what you do with those documents after you get them and your handling of them that could

jeopardize a defense that the United States has in the litigation

that is ongoing. So that is our concern.

Mr. ROMERO-BARCELO ́. Thank you. I am running out of time.

Mrs. CUBIN. Mr. Gibbons.

Mr. GIBBONS. Thank you, Madam Chairwoman. I appreciate the

opportunity to participate here today. As I stated earlier, I welcome

the gentlemen to our hearing.

Mr. Leshy, in your testimony that you presented to this Committee, the written testimony, page 1, paragraph 2, specifically,

line 2, you state that the BLM staff has recently informally surveyed implementation efforts in nearly all of the Western States.

In a number of States, you don’t say how many, the new BLM

regulations require no more than existing State law requires.

Hence, there is no difficulty in implementation. The conclusion

here is that there were no reports of difficulty. Is that what you

intended to communicate to this Committee?

Mr. LESHY. I believe my testimony as written says major difficulty, and orally here I said with any rule there are certain transition, startup events that happen. But the informal surveys we

did, we basically just had the BLM call the State director’s offices

in each of these States.

Mr. GIBBONS. What is your definition of a major difficulty?

Mr. LESHY. Some sort of crisis, people thrown out of work, major

parts of the industry shutting down, pickets at the State offices.

Things of that nature.
18

Mr. GIBBONS. Would you include the cost to the State for compliance with this rule?

Mr. LESHY. The cost to the industry you mean?

Mr. GIBBONS. Yes, for the State in complying with your rule

itself.

Mr. LESHY. Well, the rule doesn’t directly require the State to do

anything. All it says is there is a Federal floor below, that if the

State bonding laws do not come up to the Federal floor, then the

Federal bonding rule applies on hardrock mining on Federal land.

If the State bonding requirements that apply to all areas of the

State meet or exceed that Federal rule, then there is no change

that takes place as a result of the Federal rule going into effect.

That is what the testimony means when it says——

Mr. GIBBONS. Mr. Leshy, when I go home to the State of Nevada,

I talk to my constituents and they talk to people employed by your

Department who reflect the attitude they themselves are very distressed, very upset and are opposed to this rule. These are people

who work for the BLM. Have you done an economic impact study

on damages that occur in the State of Nevada, has your agency?

Mr. LESHY. You mean as a result of hardrock mining operations?

Mr. GIBBONS. Of this bonding rule.

Mr. LESHY. We were certainly done, and I am happy to supply

to the Committee the State director’s office has produced a rather

complete survey of mining reclamation problems on public lands

that really show, in our view, the need for this final rule.

Mr. GIBBONS. Well, just give me a dollar amount for Nevada,

what that report states.

Mr. LESHY. It actually is specific to Nevada. The report is, with

a cover letter that I will supply copies to the Committee, May 1st,

1997, from the State Director of BLM in Nevada to Assembly

Woman Marcia de Braga, Nevada State legislature, and it is a

three-page letter which basically——

Mr. GIBBONS. Is there a dollar amount in it, Mr. Leshy?

Mr. LESHY. Well, there is actually, what it does is have an appendix of several pages of, I think, 154 different operations in Nevada where miners have walked away and left the Federal taxpayers with the——

Mr. GIBBONS. Within the last 2 years.

Mr. LESHY. Offhand I can’t tell you over what period of time.

Mr. GIBBONS. You are telling this Committee, then, that there

has been a failure of the bonding requirements within the last 2

years, if that is what you are saying.

Mr. LESHY. Well, let me read the State director’s letter. Since

1981, BLM has processed about 10,000 notices for hardrock mining

operations. Currently, about 2,400 of those are active in Nevada.

There are about 90 mining sites or explorationsites where reclamation bond, had it been required, would have either probably prevented a new modern day problem or would have been used to reclaim an environmental problem. There are an estimated 225,000

to 310,000 abandoned mine sites in Nevada from over the past 125

years where there are cleanup problems.

Mr. GIBBONS. The statement does require a bonding requirement

in this case, doesn’t it?
19

Mr. LESHY. I believe that the State does not. It has the same or

had the same small miner exemption that the Federal rule had,

and there was exactly this problem that we were trying to

upgrade——

Mr. GIBBONS. Well, I understand that completely. I understand

that Nevada does have a bonding requirement and has had one.

Mr. LESHY. And a small miner exemption, I believe.

Mr. GIBBONS. Right. But the law is if there is a failure of bonding requirements under the State statutes, it would have been reported. Some of these issues that you are talking about occurred

either prior to the State bonding requirements, rather than afterwards. Well, let me move on. Obviously, there is a question here,

and Madam Chairman, if you would indulge me one small——

Mrs. CUBIN. Without objection, I will give the gentleman 5 more

minutes.

Mr. LESHY. I am happy to supply you the detail on the bonding

requirement, the Nevada law.

Mr. GIBBONS. And each of the failures that occurred with the

bonding requirement since Nevada’s law has taken place.

Mr. LESHY. So I understand, which Nevada law?

Mr. GIBBONS. Bonding requirements.

Mr. LESHY. Is there a recent one? How far back should I look?

Mr. GIBBONS. Five years.

Mr. Alberswerth, you are awfully quiet.

Mr. ALBERSWERTH. I haven’t been asked a question.

Mr. GIBBONS. What role did you play in it?

Mr. ALBERSWERTH. I reviewed the effects of the rule prior to its

finalization.

Mr. GIBBONS. Did you ever submit memorandum or writings?

Mr. ALBERSWERTH. Yes.

Mr. GIBBONS. Is one of those dated June 19th?

Mr. ALBERSWERTH. I will take your word for it.

Mr. GIBBONS. Well, it may or may not be, but let me just ask you

this question, then. In 1995, there was a document that stated the

estimated economic impact of this rule on Nevada was reduced by

$80 million, and the memorandum states that the 80 million was,

‘‘willed away as an act of management direction.’’ Could you tell us

what that or what action does this statement refer to?

Mr. ALBERSWERTH. Is this an e-mail message from a person in

the BLM to some other people——

Mr. GIBBONS. Well, regardless of what it is, what would that

refer to? Management direction is willed away.

Mr. ALBERSWERTH. I believe what it is referring to is the fact

that under the final rule, an interpretation of the final language

was made that the BLM would recognize the State of Nevada’s

State program.

Mr. GIBBONS. Was this a management attempt to influence the

outcome of the economic analysis in order to avoid the more stringent procedural requirements for rules with an economic impact exceeding $100 million.

Mr. ALBERSWERTH. No, it was an attempt to make a determination of whether or not Nevada’s existing bonding program would

comport with the new regulatory requirements so that we could

recognize Nevada’s program.
20

Mr. GIBBONS. Mr. Leshy, what is your hardrock strategy referred

to, if you could explain to this Committee, that was stated in your

memorandum from Anita Cheek to Monica Burke dated June 7th,

1996.

Mr. LESHY. This is not, I take it, a memo that I wrote.

Mr. GIBBONS. No, it is from Anita Cheek to Monica Burke, dated

June 7th, but it refers to your hardrock mining strategy.

Mr. ROMERO-BARCELO ́. May I make a parliamentary inquiry? Is

this one of the confidential memoranda?

Mrs. CUBIN. It is not on the list. But we will stand at ease for

a second and determine whether or not it is on the list. It is on

the list.

Mr. ROMERO-BARCELO ́. It is on the list. You are referring to the

text of the message.

Mr. GIBBONS. The message just says hardrock strategy of Mr.

Leshy. I am asking—it does not describe that, so I am not disclosing anything other than the fact that it references a strategy

of Mr. Leshy. I want to know what Mr. Leshy’s strategy is.

Mr. LESHY. I have no idea what Anita Cheek was referring to,

if she wrote that memo. I am not sure I have ever seen that memo,

so I am unable to respond.

Mr. GIBBONS. On the last paragraph of page 1 and the first paragraph of page 2, you explain that the Mountain States Legal Foundation on behalf of the Northwest Mining Association filed suit

against the Department because they failed to comply, they, meaning you, comply with the Administrative Procedures Act and the

Regulatory Flexibility Act.

You go on in the next paragraph to refute this claim, but only

state that FLPMA directs the Secretary to prevent unnecessary or

over or undue degradation of the public lands. Reading on, I do not

see where you refute these claims, and I would like you to tell the

Committee if you failed to meet the Administrative Procedure Act

or the Regulatory Flex Act.

Mr. LESHY. I would be happy to. The testimony actually, this describes the suit as alleging that we have failed to comply. It doesn’t

say that we have failed to comply. It simply, the complaint in this

case alleges that we have failed to comply. Taking them one at a

time, under the Administrative Procedure Act, as I understand the

Mining Association’s complaint here, it is that we should have allowed more public comment on the final rule or at least reproposed

the rule as drafted rather than going to the final promulgation of

the rule.

The issue basically is whether or not there was adequate opportunity for public comment on our general proposal to upgrade

hardrock mining operations with the intent to make sure the taxpayers were not saddled with the cost of unreclaimed operations

when members of the industry walked away from mining operations. And the 1991 proposal makes it very clear that that was the

proposal.

As with all rulemaking, the final rule differed somewhat from

the proposed rule and it differed from the proposed rule in substantial part because we responded to public comments we received on

the proposed rule. Now, there are some people who believe that if

you change a comma between a proposed and a final rule then you
21

should repropose the rule and seek comment on changing that

comma. The law is quite clear on this subject and we have looked

very carefully at the law before we promulgate it.

Mrs. CUBIN. The gentleman’s time has expired.

Mr. GIBBONS. Thank you, and I was going to ask whether the

Chairwoman plans to have additional rounds?

Mrs. CUBIN. Yes, and I ask unanimous consent to extend the

questioning period to 10 minutes, instead of 5, to make it a little

easier.

Mrs. CUBIN. Mr. Romero-Barcelo ́, do you have any further questions? It is your turn.

Mr. ROMERO-BARCELO ́. No further questions at this time.

Mrs. CUBIN. Thank you. Then it is my turn.

Mr. Leshy, you just stated that some people think that adding

a comma would be enough to require a new comment period. I

want to follow that line of questioning a little bit. Could you identify for me the portion of the proposed bonding rule 56 Fed. Reg.

31 602 July 11th, 1991, where the BLM provided notice to the public that an operator would have to obtain a third party professional

engineer to certify reclamation cost estimates?

Mr. LESHY. I don’t believe that part of the proposal was in the

draft rule. It was a proposal that was made, as I understand it, by

the BLM professional staff in the development of the final rule in

response to concerns that it would be difficult for both the industry

and the regulatory agency to have a good idea of what the size of

the bond would be without a——

Mrs. CUBIN. Do you consider that to be more than just adding

a comma?

Mr. LESHY. Well, it is certainly within the scope of the rule. The

whole idea of the rule is to upgrade bonding standards and the

whole thrust of the rule is to require bonds in the amount of the

estimated cost of reclamation.

Mrs. CUBIN. Mr. Leshy, I would suggest to you that there are

things about requiring a professional engineer’s opinion about the

cost of reclamation that public comment could have revealed to the

policymakers. Number 1, there are very, very few professional engineers who are willing to put their name on the line as to how much

reclamation will actually cost. So it isn’t possible in many cases to

get what this rule requests.

Also, I am aware that in some States there isn’t a definition, not

a definition, there—professional engineer certificates or the certification is very different. And I think that public comment certainly

would have brought some of the problems to be obvious if it had

been allowed, which it wasn’t.

Could you identify the portion of the proposed bonding rule for

me which provided the public with notice that the financial guarantees for notice level operators would be minimum amounts as opposed to the maximum amounts in the previous rule?

Mr. LESHY. If I could go back to the professional engineer issue

for just a second, the basic purpose of the professional engineer requirement was to get an accurate, the most accurate possible estimates of the cost of reclamation. So you could set the size of the

bond. The basic purpose of the rule was to require the bond be in

an amount sufficient, not in excess——
22

Mrs. CUBIN. Mr. Leshy, you continue to defend what is in the

rule, and I made it very clear at the beginning of the hearing what

is in the rule is not the problem here. The problem here is that the

public has not had the opportunity that it is guaranteed under law

to have to give input into this rule. And if the rule was changed—

the first rule was proposed in 1991 and then it came out in 1997

as a final rule with no public input in between. And there are significant changes between the first rule and this final rule.

So that is the discussion I want to have with you, not the good

points or the bad points of this rule or how you derived at that.

In my opinion, that is not the issue. Could you please identify the

portion of the proposed bonding rule which provided the public

with notice that the financial guarantees for plan level operators

would be a minimum amount as opposed to maximum amounts?

Mr. LESHY. Make sure I understand, you asked me before, I may

be one question behind. The earlier——

Mrs. CUBIN. One was for notice, the other was for plan level.

Mr. LESHY. Right. The proposed rule dealt with bonding requirements for notice level operations. The final rule had a somewhat

different approach to that and the different approach was, frankly,

specifically in response to public comments, including comments of

States. For example, the State of New Mexico wrote a formal comment on the draft rule in which they questioned the approach of

the draft rule on notice level bonding and said it, frankly, ought to

be strengthened, ought to be made more clear. So in part, we were

responding to the comments of the State of New Mexico as well as

a number of other commenters in strengthening and clarifying that

part. That is exactly the way the rulemaking process is supposed

to work. You put out a proposal, you get comments on it, you take

the comments into account——

Mrs. CUBIN. Was one of those, did one of those comments come

from Mr. Alberswerth?

Mr. LESHY. The comment I am thinking of came from a signed

letter from the State of New Mexico. I would be happy to supply

it.

Mrs. CUBIN. Would you say that Mr. Alberswerth was one of

those or was not one of those?

Mr. LESHY. I am not sure. I mean, Mr. Alberswerth may have

signed a letter on behalf of the National Wildlife Foundation. I

don’t recall.

Mrs. CUBIN. I want to go back to the difference between the

original rule and the final rule. Would you please identify the portion of the proposed bonding rule that provided notice to the public

that BLM would require operators to provide a guarantee sufficient

to recover 100 percent of estimated reclamation costs, and please

remember, I think that it is probably a good thing for 100 percent

of the reclamation costs to be bonded. That is not the point. The

point is that I don’t think it was in the original rule and now it

is.

Mr. LESHY. It is interesting to trace the history of this. The law,

of course, that we are acting under says that the BLM and the Secretary are mandated to prevent unnecessary and undue degradation of the public lands——
23

Mrs. CUBIN. What I want you to do is identify the portion of the

original rule.

Mr. LESHY. Well, the original rule that went into effect in 1980

or 1981 said that bond should be set taking into account the cost

of reclamation, which is——

Mrs. CUBIN. I am talking about the 1991 proposed rule.

Mr. LESHY. Right, I think it is important to put this in historical

context. Under the 1980 or 1981 rules, bonds could be set at the

actual amount of reclamation.

Mrs. CUBIN. So I guess what you are saying, you cannot tell me

where that is in the proposed rule because it is not there.

Mr. LESHY. In 1990——

Mrs. CUBIN. That is correct?

Mr. LESHY. The Director of the Bureau of Policy Management

put out a policy memorandum without seeking public comment

which said that bond should be set with a $1,000 to $2,000 maximum under plans of operations. The proposed rule that you have

been mentioning here in 1991 followed the Jamison policy by recommending or proposing a $1,000 to $2,000 maximum, with certain

exceptions, and the final rule simply took the maximums off and

said there should not be maximums because if a miner walks away,

the public shouldn’t have to pick up any of the cost——

Mrs. CUBIN. Actually, what you did was absolutely reverse the

original position. It went from a maximum to a minimum and that

is totally opposite, and to me, Mr. Leshy, that was much more significant than adding a comma, what would require you not to take

further public comment. But when you totally reverse the minimum, or the maximum to minimum, certainly a reversal ought to

warrant more public comment.

Mr. LESHY. I think the minimum idea came about because——

Mrs. CUBIN. I am not interested in that. I am interested in

whether or not changing a maximum to a minimum would warrant

more public comment, and I believe that it would.

Could you please identify the portion of the proposed bonding

rule which provided notice to the public that BLM will impose civil

and criminal penalties for violations of the bonding requirements?

Mr. LESHY. I believe here that the penalty provisions were essentially the same under either the proposed or the final. They were

just made more clear in the final. In other words, and this may

bring to mind the discussions that have taken place about the law

enforcement regulations. There are actually mentality provisions in

the statute and various parts of the regulation, and I believe what

happened in the final regulations was that the penalties were simply made more clear.

Mrs. CUBIN. Mr. Leshy, there are no civil and criminal penalties.

There is no portion of the proposed rulemaking that contain provisions for civil and criminal penalties. So to make nothing more

clear makes no sense to me.

My time has expired. Mr. Gibbons, do you have any further questions.

Mr. GIBBONS. Yes, Madam Chairwoman, I appreciate that. What

I would like to do is to engage Mr. Glover in a brief discussion, if

I could.
24

Mr. Glover, could you define for this Committee the definition of

a small metal mining company under your regulation, under SBA?

Mr. GLOVER. Basically, SBA is under 500 employees, is the SBA’s

definition for a small metal mining company.

Mr. GIBBONS. So it would be an entity employing not more than

or not less than.

Mr. GLOVER. An entity with not more than 500 employees would

be considered small business for purposes of the Small Business

Act.

Mr. GIBBONS. Mr. Leshy, would you tell the Committee what

BLM’s definition of a small entity is that applies to this bonding

rule?

Mr. LESHY. The BLM’s analysis of the economic impact of this

rule did not use a—analyze the impact of the rule on the entire industry. It did not use a specific size standard at all to cutoff definitively between small and large. That is why I believe Mr. Glover

testified that the discussion that has taken place about the size

standard and whether BLM violated the size standard of the SBA

in this rule is sort of beside the point because BLM economic analysis actually looked at the whole industry.

I should also say in BLM’s experience that the 500 employee cutoff as a small miner definition is rather amazing when you look at

the productivity of very large mines that employ, including those

in the State of Nevada, that employ well under 500 employees.

There are few mines in the country——

Mr. GIBBONS. Let me get the answer to this question before you

get off on the sidetrack that you are dragging this discussion into.

What is the BLM’s consideration? What does it consider a small

metal mining company or a small metal mining entity to be, specifically? Is it 50, is it 10, is it 100, or is it 499?

Mr. LESHY. Well, I would note that Congress, in fact, addressed

this question specifically in the Omnibus Reconciliation Act of 1993

and, in fact, defined small business was a miner that held 10

claims or less. So at least for that purpose, BLM would certainly

have, as it is mandated by law to look at that, and 10 claims or

less is a lot different than 500 employees or less.

Mr. GIBBONS. I was just being informed that the mining or the

omnibus laws that you were talking to are for purposes of the holding of a claim, rather than discussions under this Act.

BLM considers a small entity to be an individual or limited partnership?

Mr. LESHY. The determination of effects analysis for purposes of

the final rule here did—let me see, give me a moment. I think I

can produce a copy—actually dealt with the industry structure at

some length on pages 8 and 9 of the determination of effects, pointing out that operators and mining claimants conducting work on

Federal lands generally fall into one of three categories: Major corporations, junior companies, and small proprietorships and independent prospectors.

The major corporations, obviously, are the American Barracks

BHP and RTZ, although I would point out that a number of mines

operated by those companies employ 500 or fewer people. Junior

companies are the larger limited partnerships, venture capital-
25

based mining companies. They tend to be producers of gold, generally in volumes of less than 100,000 ounces per year.

Then, the third class the BLM used in its analysis is sole professorship and individual prospector. Class of operators, mostly notice

level operators, measured cash-flows in small amounts, often a

fashion similar to average middle-class income, et cetera. So there

is about two pages of analysis of the structure of the industry in

the BLM’s determination of effects.

It does not use a specific employee cutoff or any other specific

size standard, which is why, in our view, there was no legal obligation to consult with the Small Business Administration’s Office of

Advocacy because it is only when you change the size standard that

you have to go consult with the SBA, and BLM was not changing

the size standard. It was, in fact, not using any particular size

standard in doing this analysis.

Mr. GIBBONS. We may disagree with your legal opinion on this

and I am sure this is part of the court’s understanding, as well. Mr.

Glover, are you an attorney?

Mr. GLOVER. Yes, sir.

Mr. GIBBONS. Would it be your understanding that if there was

a failure on behalf of an agency to comply with the Regulatory

Flexibility Act, that that would be reason enough to withdraw a

proposed rule or an enacted rule?

Mr. GLOVER. As someone charged with looking after that law, I

would certainly have recommended that to agencies in the past. I

will tell you historically we have not had anybody redo that. So

there at least is a dispute as to whether some people do disagree

with me on that issue. It is always the conservative thing to do,

when you have a serious question, to consider starting over. There

are other reasons people may choose not to do that.

Mr. GIBBONS. Do you have a personal opinion in this regard?

Mr. GLOVER. I think it varies based on the facts of the

situation——

Mr. GIBBONS. But in this specific factual situation, do you have

a personal opinion?

Mr. GLOVER. I really don’t, because that is something that the

agency is charged with, a separate mission. I am charged with the

mission of pointing out if there is a problem with the compliance

or a way to do it better, we do point that out. But the ultimate decision is with the agency itself. We don’t have veto authority, we

can’t stop a rule.

Our authorities are sort of focused. We certainly advise agencies

when they have a problem and we encourage them to come into

compliance. In fact, we have encouraged agencies after the regulation was in place to go back and do the analysis and at least put

it in the record so they can do that. One recent case in the Environmental Protection Agency, we went out and argued that they ought

to come into compliance and they went ahead and did that, after

the fact.

Mr. GIBBONS. With your tenure in your position or any other position, has any other entity sued under similar circumstances to require a regulatory action to be rescinded.

Mr. GLOVER. Yes, sir, there is another matter pending, also involving the Department of Interior as a secondary part, but basi-
26

cally the Transportation Department is the prime one. That is involving flying over the Grand Canyon. We have been looking at

that particular situation. We know there is a lawsuit that has

raised this issue.

Mr. GIBBONS. And that is the only other legal action that has

been brought to rescind a regulatory action?

Mr. GLOVER. There are a couple other pending matters. I think

the methyl chloride rule is there and my staff mentioned the shark

rule, which is NOAA has a rule out on shark fishing, which we

think there has either been or is about to be filed judicial action

on that.

Mr. GIBBONS. Madam Chairwoman, I will reserve the balance of

my time and turn it back to you. Thank you.

Mrs. CUBIN. Thank you. I have to tell you, I don’t get this. The

remedy that the lawsuit asks for is a comment period. What we are

asking for is a comment period. We are spending a lot of money

going through this hearing trying to urge you to do that. The government is spending a lot of money defending the lawsuit. Why?

Why does a 60-day comment period seem to be such an enormous

burden that you can’t grant the American people, and don’t tell me

it is because of degradation that is going to happen in the next 60

days, because I am not buying that.

Mr. LESHY. It is not the degradation, it is the cost to the taxpayer that would result if the new improved bonding rules weren’t

in effect. I mean, I assume by a comment period you mean

suspending——

Mrs. CUBIN. Do you know what that cost is?

Mr. LESHY. Make sure I understand your proposal. Your proposal

is for a comment period during which time the rules would be suspended and not be in effect.

Mrs. CUBIN. That is correct.

Mr. LESHY. And if that is true, obviously there is a risk, we think

a significant risk to the taxpayer that the taxpayer would be saddled with these costs instead of the industry.

Mrs. CUBIN. There is a bonding regulation. It is not as though

there is no protection whatsoever. After all, you sat on it for 6

years.

Mr. LESHY. We agree with the Reagan and Bush

Administrations——

Mrs. CUBIN. You sat on this for 6 years. What would 60 days

matter?

Mr. LESHY. We agree with the Reagan and Bush Administration

that these regulations are inadequate and need to be upgraded

and——

Mrs. CUBIN. I think that you intend to not answer my question,

so let’s just save time. Could you give me, Mr. Leshy, could you

provide the Committee with the name of any Federal case that supports your argument for keeping these documents that we talked

about earlier out of the public record of this Committee?

Mr. LESHY. There are—I assume what you are asking is that if

this Committee were to disclose the documents that we are willing

to provide the Committee and put them in the public record, would

that waive the privilege that we could otherwise assert in litigation?
27

Mrs. CUBIN. No, I am asking you to name any Federal case that

supports your argument. That is what I am asking.

Mr. LESHY. Well, I want to make sure I understand what you

think my argument is. Our concern is that documents——

Mrs. CUBIN. We understand your concern.

Mr. LESHY.[continuing] made available to the Committee, if they

are disclosed by this Committee, would strip us of the defense

against disclosure of those documents in litigation that we would

otherwise have. And there are, there is at least administrative decisions that say that——

Mrs. CUBIN. No, Federal court. I am asking Federal court.

Mr. LESHY. As far as we can tell, we have not done exhaustive

research on this, but when we have inquired of people who I think

should know at the Justice Department and other places, they say

it is quite likely that would be the result, but it couldn’t come

up——

Mrs. CUBIN. Yes or no, so you cannot name a Federal case for

me.

Mr. LESHY. Well, other than what happened a few weeks ago

with a Subcommittee of this Committee where——

Mrs. CUBIN. Please limit.

Mr. LESHY. Have said are of concern——

Mrs. CUBIN. Would you please submit later on an answer to that

so we don’t have to go through all this now? Would you just submit

that to the Committee in writing, any Federal case that supports

your argument for keeping these documents out of the public

record of this Committee?

Mr. LESHY. I am sure I can give you lots of occasions that says

when a document in discovery——

Mrs. CUBIN. Has a Federal judge ever ruled that a privilege that

can be asserted in court can be waived by release of a document

by Congress?

Mr. LESHY. As I said, I can give you lots of cases that say the

disclosure of a document on which a privilege is claimed waives

that privilege. That is black letter, fundamental——

Mrs. CUBIN. I would appreciate that answer in writing, as well.

We will get the question to you. I have one more question of you,

Mr. Leshy. I know you are glad. So am I. It is back to the differences in the original rule and the final rule. Could you identify

the portion of the proposed bonding rule which provided notice that

financial guarantees will not be released until water quality standards have been met?

Mr. LESHY. On the release issue, I am working from a little chart

here that I think we have supplied the Committee. The original

3809 rules adopted in 1981 authorizes complete release of the bond

on reclaimed portions once they were reclaimed, and that remained

true through the proposed bonding rule.

The final bonding rule actually calls, and this is a change that

was made in response to public comment, and industry comment,

would allow phased release of bonds, which is actually of benefit

to the industry. It means they got their bonding money back earlier, so there was a change where the proposed rule has changed

between the proposed and the final in response to industry comments.
28

In terms of water quality standards, that may have been specified more in the final rule than the draft rule. I don’t have that

in front of me, but I am happy to supply a written answer if you

would like.

Mrs. CUBIN. Thank you very much. Mr. Alberswerth, have you

been involved in the decisionmaking process on the BLM’s proposed

bonding regulations for hardrock mining? You have been, isn’t that

correct.

Mr. ALBERSWERTH. Yes.

Mrs. CUBIN. Did you make specific suggestions on how the proposed regulations should be modified to require increased bonding

requirements and broader coverage?

Mr. ALBERSWERTH. Yes.

Mrs. CUBIN. If so, how and when were those recommendations

made?

Mr. ALBERSWERTH. I think the Committee has been supplied

with a couple of memorandums that articulate some recommendations. I don’t have them in front of me at the moment, but yes; that

is correct.

Mrs. CUBIN. Mr. Alberswerth, could you speak a little louder?

Mr. ALBERSWERTH. Sure.

Mrs. CUBIN. When I look at the documents that are marked confidential that were provided to the Committee, you seem to have

developed some fairly strong opinions on these complex issues. I

wonder, how long had you been working at the Department before

making those recommendations?

Mr. ALBERSWERTH. I came to the Department in approximately

late June or July 1993.

Mrs. CUBIN. So by 1994—I am going to quit that line of questioning. You came in 1993, and then you were asked for—I have

trouble here because I am trying to work with you on not having

the things put into the record, but still be able to ask the questions

so that we can know what we need to. When did you first start

working on the bonding regulations at the Interior Department?

Mr. ALBERSWERTH. I am not sure of the precise date. I can tell

you, though, that I was, prior to working on the bonding regulations, I was involved as a staff member at the Interior Department

in developing various proposals on the 1872 mining law reform,

which, of course, you are familiar with, the 103d Congress spent

a lot of time on, and during that period of time, there was really

no work being done on the draft bonding regulations at the Department because our assumption was that Congress would pass mining law reform and we wished not to finalize those regulations and

preempt Congress on those issues.

Mrs. CUBIN. If I—from one of these documents, said that August

1993 you were working on those regulations, would you accept that

as being so?

Mr. ALBERSWERTH. August 1993, I don’t think so.

Mrs. CUBIN. August 6th, 1993.

Mr. ALBERSWERTH. Are you referring to a document’s date there?

Mrs. CUBIN. Pardon me?

Mr. ALBERSWERTH. Let’s see, I simply can’t recall. But if you

have evidence of that, I will accept it.
29

Mrs. CUBIN. What I am wondering is after such a short time on

the job, it appears that you had some very strong feelings about

what should go into this final, into the rule, and I just wondered

if you had been at the Department long enough to know all sides

of the issue and to really understand whether or not enough public

comment had been made to come up with this final rule. Obviously,

you think that you did know enough.

Mr. ALBERSWERTH. Yes.

Mrs. CUBIN. I can see that my time has expired. Do you have

anything, Carlos?

Mr. ROMERO-BARCELO ́. No, Madam Chair, I have nothing.

Mrs. CUBIN. Mr. Gibbons, do you have some more?

Mr. GIBBONS. Yes, Madam Chairwoman, I do, and I want to go

into current operations of the Bureau of Land Management under

what is known in circles in the mining industry as the 3809 Task

Force. Could you describe for this Committee, Mr. Leshy, what this

task force, or who is on this task force, the composition of the task

force?

Mr. LESHY. I am happy to supply a list of members. It is an internal task force composed primarily of BLM field people, career

people in the field who work on hardrock mining regulation dayby-day. The task force came about in——

Mr. GIBBONS. Well, you have answered the question. Do you have

contact with these individuals on this task force, have any conversations with them?

Mr. LESHY. Me personally, no.

Mr. GIBBONS. Anybody in your staff?

Mr. LESHY. There is a lawyer on my staff who provides some

legal advice to the members of the task force as they need it.

Frankly, I don’t know how much they would need it and how much

they have drawn upon him for advice, but it is primarily a BLM

career staff field people task force.

Mr. GIBBONS. Now, what is—is the scope of this 3809 task force

limited in any way?

Mr. LESHY. Well, its basic charge is to address and review and

assess the adequacy of the 2809 regulations, what we call the 3809

regulations.

Mr. GIBBONS. Right. Now, this bonding rule, does it fall within

the 3809 regulation?

Mr. LESHY. Well, the bonding rule and the issue of bonding is an

issue that may be addressed by the task force.

Mr. GIBBONS. Does the bonding rule fall within the specific 3809

regulations?

Mr. LESHY. Well, the bonding rule is part of the 3809 regulations.

Mr. GIBBONS. Thank you.

Mr. LESHY. We took the same position that the Reagan and Bush

Administrations took, which is that bonding is important enough

as a separate matter to be addressed by a separate rulemaking.

That decision was made in 1987, I believe, and continued through

the next 10 years. So the bonding upgrade has always been a separate feature, done separately except at the time of rulemaking.

That decision was made 10 years ago and we reaffirmed it.
30

Mr. GIBBONS. But it is not excluded from the scope of hearings

in this task force, is it, yes or no?

Mr. LESHY. Well, I assume and as I have said, I am not in contact with the task force, but I assume if the task force which has

conducted and will conduct a lot more field hearings, talking to

States, talking to environmental groups in the stakeholder and regulatory process and if they hear a lot of outcry good or bad about

the bonding rule, I am sure——

Mr. GIBBONS. Let me make this question a little more specific,

and I hope I am speaking clearly, and I hope that you understand

what I am asking. Because obviously you get sidetracked on some

of your answers and you don’t go directly to the question. Is there

any restriction on this 3809 task force from considering the bonding regulations as proposed or as enacted by the BLM.

Mr. LESHY. The general charge to the 3809 task force is in

memoranda, I think, we have already supplied to you, but I am

happy to supply further copies of the Secretary’s memorandum of

January 1997 and then there was a BLM Director’s memorandum

of a few weeks later.

Mr. GIBBONS. Have you read that memorandum?

Mr. LESHY. I am sure I have.

Mr. GIBBONS. Then you would know if the bonding requirements

have been eliminated from their consideration or are not eliminated from their consideration; isn’t that true?

Mr. LESHY. Well, I believe my recollection is that bonding is not

eliminated from consideration. As I said, they are holding hearings

on the whole and examining the whole scope of regulation of

hardrock mining, and if they hear during this process, which will

take several months, a couple years probably to complete, that

there is a problem with bonding rules, either that they are too

stringent or not stringent enough, I am sure they will make recommendations to the Secretary about it.

Mr. ALBERSWERTH. Mr. Gibbons, could I help out with that? I

have been in contact with the 3809 task force and meet with them

frequently, and that group has met on a number of occasions with

representatives of the mining industry, State regulators, environmental organization people, and we have told them, the 3809 task

force has informed the mining industry that, in fact, if they would

like to offer suggestions on how to improve the bonding regulation,

we would certainly consider them in the context of the 3809 task

force. So in effect, we have broadened the scope of the charge of the

task force to deal with bonding, and I can’t tell you if we received

any input on that to date or not.

Mr. GIBBONS. Mr. Glover, one final question to you, and we appreciate your patience. I appreciate everyone’s patience with us because this is an educational process to us as well as people who are

interested in this process. Assuming again, and as an attorney you

are well aware of making assumptions in a case and how things

would flow, what would be required if there was a difference in a

definitional phase, for example, small metal mining entity, between

the agency proposing the rule and the SBA or your agency? What

requirements, procedural steps would they have to go through if,

in fact, there was a difference in the definition.
31

Mr. GLOVER. The way it would work is during, in the preproposal

stage they would come to us and say we are thinking about a different definition. We would discuss that, we would bring in the

SBA people who do size determinations and discuss that with the

agency.

Mr. GIBBONS. Now, we can assume that there is a different definition.

Mr. GLOVER. That’s right, assume that the agency wants to have

a different definition. We can say for the purposes of your regulatory flexibility analysis, go ahead and use that definition, but we

would give them some ranges and tell them to look at it in a broader area. They would propose their regulation laying out what they

thought the right definition would be and ask for public comment.

The SBA concurrently would look at that compared to its size determination and the criteria we normally look at for determining

what is the appropriate size. The SBA uses different definitions

from the same industry for different purposes. So we would look at

that and say in case of mining, the argument is well, gee, 500 employees is way too big. Maybe it should be a smaller number. We

would look at that number, propose it to the public, ask for public

comment during this proposed period of time. Then, when the regulation was ready to be finalized, we would look at the public comments, the SBA’s office of size standards would look at the public

comments that addressed the issue of size, and consistent with

what we had probably told them before, unless there was an outcry

that that was a wrong definition, we would probably approve that

and if the final regulation was finalized, that could happen concurrently. So there is a process, if you start this early enough, where

we really don’t hold up the agency in going forward in doing their

analysis.

What we found with most agencies is they don’t think about

small business until it is way down the process and one of the

things I think this Committee has done today, and we all always

look for the good side of things. One of the things you have done

is helped not only educate the Department of Interior, but some

other agencies that someone cares about small business and is

looking at these issues, and it will make not only this agency, but

other agencies in the future be more sensitive to small business

concerns at the earliest stage.

One of the reasons we want and the Regulatory Flexibility Act

provides for early involvement and early concern about small businesses is what we found is the later small business is considered

in the regulatory development process, the less likely the results

are going to be fair to small business. So we want that process to

occur as early as we can, and I want to thank the Committee and

the Chairwoman for having this hearing, because it certainly has

helped focus everybody’s attention on the fact that Congress cares

very much about small business and the Regulatory Flex Act.

Mr. GIBBONS. So let me just summarize what you have said, very

eloquently, I might add, that if there is a difference in the definition, that it requires consultation, that there must be public comment and then it must be published in the Federal Register.

Mr. GLOVER. That’s right.

Mr. GIBBONS. In essence, those three things must be met.
32

Mr. GLOVER. That is right, that is what the law requires.

Mrs. CUBIN. The gentleman’s time has expired. I don’t have

many more questions. Mr. Alberswerth, did you file official comments for the National Wildlife Federation on the proposed bonding

regulations when they were first proposed in 1991?

Mr. ALBERSWERTH. Yes, I signed comments that the Federation

submitted to the BLM on that proposal.

Mrs. CUBIN. As I went over those comments, it looked like just

about everything you asked for ended up in the final rule.

Mr. ALBERSWERTH. I don’t think—unfortunately perhaps, that is

not the case. Some of the comments did, I think, have an impact

on the final rule. There were a number of those comments that

were tracked by other commentators as well. For example, on the

issue that you discussed earlier regarding the bonding amounts,

the State of New Mexico submitted comments criticizing the draft

proposal for being inadequate.

Mrs. CUBIN. Could you speak a little louder? Thank you.

Mr. ALBERSWERTH. Sure. And interestingly enough the State of

Nevada submitted comments as well questioning whether or not

that proposal provided the BLM with sufficient flexibility to impose

bonds that would completely cover the cost of reclamation. So there

were quite a few comments on that subject from commentators on

that rule.

Mrs. CUBIN. I want—I asked you this question about—I didn’t

write the answer down. What date was it when you left your portion at the NWF?

Mr. ALBERSWERTH. I joined the Department, I am not sure of the

exact date, but it was around the end of June, beginning of July

1993.

Mrs. CUBIN. And then that is when you joined the Department.

How long—were you unemployed any time or did you go straight

from the NWF to the Department?

Mr. ALBERSWERTH. Pretty much straight from the NWF to the

Department, yes.

Mrs. CUBIN. So that was June or July you said that you started

working at the Department, and then you started working on these

bonding rules in August, it looks like, from some of this documentation that I have. Did you officially or unofficially notify your

agency ethics officer about a possible conflict on any of the public

lands issues having just been the Executive Director, I believe, of

the NWF?

Mr. ALBERSWERTH. I was not the Executive Director. I was Director of the Public Lands and Energy Program for the Federation.

Mrs. CUBIN. Right.

Mr. ALBERSWERTH. No, I did not.

Mrs. CUBIN. Did you seek or receive prior authorization from

your agency ethics officer to participate in the bonding regulations

that you now had personally lobbied the Interior Department just

months earlier or on any other issues?

Mr. ALBERSWERTH. I did not seek guidance on that from the ethics officer.

Mr. LESHY. Could I interject here, Madam Chair? This issue, we

have looked at this issue in many different contexts in the past. To

the extent that you are raising a possible conflict of interest con-
33

cern about someone coming in from outside into government to

work on a matter, that is the same matter that they had represented or worked outside the government, in the rulemaking context, the rule and the principles are very clear.

A rulemaking such as we are concerned with here with the bonding rule is a legislative matter, not an adjudicatory matter, so it

is quite clear, and I can cite you and am happy to supply court

cases that address the subject, that in a rulemaking kind of process, the fact that Mr. Alberswerth signed comments for an outside

organization on a rule in no way limits his ability to work on the

rule inside the government because it is considered a legislative

type of function.

And frankly, the purpose for that, and the courts talk about this,

is it is important that the government at all levels, including the

executive branch have access to expertise, and it is certainly an advantage to hire employees who know something about the issues

that they are working on. And often the way those employees get

that experience and knowledge is by working for industry associations or other environmental groups, and it would be a severe problem for the government generally, and that, again, goes to the legislative branch as well as the executive branch, if people were disabled from coming in and lending their expertise to rules that they

participated in on the outside.

So that is all assuming, by the way, that someone in Mr.

Alberswerth’s position is a real decisionmaker on the rules. Mr.

Alberswerth obviously played a role here, but the decisionmakers

on the rules, in fact, were the Assistant Secretary for Land and

Minerals, the Director for the BLM. On the legal issues it was my

office and obviously the Secretary ultimately has responsibility as

decisionmaker on these rules.

Mrs. CUBIN. Thank you.

Mr. LESHY. So the decisionmaker can certainly draw upon expert

staff, and if they have had knowledge gained by outside experience,

there is nothing wrong with that, and if you would like I can supply case law.

Mrs. CUBIN. I have two reactions to that. Number 1, I wonder

if you would be as adamant in your response if it were a miner who

got everything they asked for in comments in the next rule; and

number 2, the proper way to cure conflicts of interests problems is

to allow the public to comment on the rule before it goes final. In

this case the public was not allowed to do that after Mr.

Alberswerth became an employee of the Department of Interior.

Mr. ALBERSWERTH. But there is no conflict of interest here at all.

I have no financial interest in this matter. The organization I

worked for had no financial interest.

Mrs. CUBIN. I am not implying that there is a conflict of interest.

I am not implying that at all.

Mr. ALBERSWERTH. Thank you.

Mrs. CUBIN. I merely bring that up because, like I said, the cure

for this problem or perceived problem would be to allow public comment, because the appearance isn’t very pretty. I mean, it really

looks bad, and, it would be so easy to alleviate the whole problem

by allowing other people to have their opinions in, not 6 years old,

dealing with all of the issues I brought up earlier with Mr. Leshy,
34

that are the differences in the original as opposed to the final rule,

it would be so simple to take care of all that and I don’t understand

why you want to do it.

Let’s see, I just want you to respond to that? I think I do. Do

you think that there could be an appearance of impropriety in the

rules as they came out? When I look at—and this, I guess, is not

additional as well, but the items that were in your testimony that

ended up in—excuse me, the comments, I always say testimony—

in your comments that ended up in the final rule that were

changes from the original proposed rule, don’t you think there is

an appearance of impropriety at least?

Mr. ALBERSWERTH. I would say if I were the only commenter who

made those comments, and if the agency had adopted every single

comment that I had signed on to in exactly the way that I had proposed it, yes. But, see, that simply wasn’t the case here. I mean,

some of the comments that I had made as a staff person at the National Wildlife Federation were addressed in a fashion by the final

regulation, and in addition there were a number of other commentators who made similar comments, both private individuals

organizations and even State government agencies in at least one

instance.

If, on the other hand, I had been the only person and everything

was exactly the same as I had suggested, I would say that there

might be an appearance of, you know, something that was improper. But in this case, I really don’t think that is the case, and

what the BLM did is evaluate all of the comments they got in.

They made changes to accommodate some of the mining industry’s

concerns, which we haven’t discussed here at all, which were different from the draft proposal, as well as comments that came in

from State agencies and others.

Mr. LESHY. If I could just interject, I would point out that Mr.

Alberswerth is not a lawyer, and when you talk about possible appearances of conflicts of interest, to the extent that has a legal cast

to it, or a legal definition——

Mrs. CUBIN. I said impropriety, I didn’t say conflict of interest.

I clarified that earlier. I did not imply in any way that there was

a conflict of interest. I do think that when you look at the environmental laws that we have in the Regulatory Flex Act, and when

you put all of that together there, is a flaw here.

Mr. LESHY. I just wanted to point out that in terms of how the

courts look at appearance of impropriety in these situations, in

rulemaking situations the courts don’t consider there is any appearance of impropriety whatsoever. The same way that when a

different party takes over Congress, that party may hire staff members predominantly from a particular industry, or if another party

takes over, they hire my staff members predominantly from a different kind of interest group, and that is kind of the way life is,

and that is no problem with that as long as——

Mrs. CUBIN. As long as your philosophy goes along with the person that is making the decision. I go back to if it were a miner,

and that miner had a totally different philosophy about what

should be in that rule, you might not be so magnanimous about

saying, hey, this is no problem. And I go back to the bottom line

that this is so easily done away with by allowing a 60-day comment
35

period, by withdrawing the rule and allowing a 60-day comment

period.

Mr. LESHY. Again, just to make clear our position on this, I think

what you are requesting is a 60-day comment period, and obviously

to make that meaningful, we would have to look at the comments,

evaluate them, and possibly make changes in the final rule. So it

is not just 60 days; it is really effectively, I don’t know, 9 months

or a year.

Mrs. CUBIN. But it was 6 years from the time the public comment came until the rule was put out; 6 years, so this holds no

water at all.

Mr. LESHY. Well, in that respect we probably should have done

it faster.

Mrs. CUBIN. I think so, and in retrospect when you look back on

this, you are going to think you should have had public comment,

too. You can’t abuse the system sometime and expect it not to come

back and abuse the environment or you or the agency another

time. You have to preserve the system. And you have violated the

system with this 6-year delay, and now a 60-day comment period

is too long for you. I don’t get this. I don’t understand what is going

on here.

Mr. LESHY. Well, we don’t think we have abused the system, and

I guess a Federal court sitting in Washington, DC, actually just

down the street, will tell us sooner or later whether we have complied with the law. We think we have. I guess we agree to disagree

on that.

Mrs. CUBIN. How much do you suppose you will spend on this

lawsuit?

Mr. LESHY. It is actually a pretty simple lawsuit to try. I don’t

think it will take very much. Frankly, I think I can honestly say

it will take less to defend this lawsuit than it would to reopen a

comment period and do a new phase of the rulemaking, and it almost certainly would be far less than it could cost the taxpayer if

we don’t have stronger bonds during this bonding season.

Mrs. CUBIN. Again we have to agree to disagree.

Mr. Cannon, do you have any questions of the witnesses?

Mr. CANNON. Thank you, Madam Chairman, I apologize for my

absence.

Let me ask you directly, Mr. Leshy, are you considering in the

Department at all the possibility of reissuing these rules for comment?

Mr. LESHY. We have—after the last hearing when I told the

Committee I would get back and we would take another look at

this issue and I would talk to the Secretary about it, we have done

so, and we believe that we are on very solid legal ground; that

these rules are good and being implemented without disruption,

and it would be, frankly, more disruptive to suspend the rules and

go through another comment period.

Mr. CANNON. Let me say that I have sensed significant disagreement on both sides of the aisle here on this Committee with that

conclusion. Mr. Romero-Barcelo ́ in the beginning of this hearing

pointed out that—and in the end of the last hearing pointed out

that when you get the participation of people who are governed,
36

there is a tendency to go along better with the rules and regulations.

Personally, I believe that given this time of rather tense relationships between the States and the Federal Government, that it

would be a particularly—that care should be exercised in how you

approach that relationship and what you cram down on the States

and allow people who are interested to express themselves about

it currently, not in the context of 5 years ago.

So I would encourage you to rethink that just because I think it

is a matter of good government. I think that the system works better when you have input from those who have to live under the

regulation. Frankly, I have been a little confused about some of the

testimony because you keep talking about how little—how easy to

the implement this rule, how little the cost is, how most of the

States already have systems, that other States have already

changed their law. I think you mentioned that Alaska had changed

its law, was it?

Mr. LESHY. Idaho.

Mr. CANNON. Idaho.

And then I talked to Jim Gibbons of Nevada, and they changed

their law, and given the fact that you have two of the major hard

rock mining areas of the country with a stricter State law, it might

be advisable to step back. Your suspension of your regulation

would not affect those State laws.

I am a little concerned about the conflict of interest or the appearance of proprietary issue that was talked about. Let me state

what I think the issue is and get a response. I understand Mr.

Alberswerth is not a lawyer, and therefore, the appearance of impropriety that lawyers are under a mandate to avoid is not relevant to him. But, in fact—and, of course, there is a distinction you

made between legislative and adjudicatory, and an important and

powerful distinction. But the Congress, as a legislative body there

are times when there can be a conflict of interest, and certainly

most legislators would try and make it clear by talking to legislative counsel or others about what those conflicts would be in advance so that they are cleared, and, in fact, what happens in that

process is that people who may have a conflict have a public airing

of that process.

Maybe the rulemaking would be a good time to do that, but certainly I think the thrust of the Chairwoman’s question was what

kind of cleansing process have we gone through to evaluate the

prior interests and the effect of those prior interests on the decisionmaking process of someone who is in a decisionmaking mode?

So let me just ask that question: What did—and let me direct

this to you, Mr. Alberswerth: What did you do to make it clear

what your prior interests were and how that would affect your decisionmaking process in whatever capacity you were in in the Interior Department?

Mr. ALBERSWERTH. Well, my boss, Assistant Secretary Armstrong, was well aware of my previous employment and my interest

in the whole issue of mining law reform.

Mr. CANNON. Is he a lawyer?

Mr. ALBERSWERTH. Yes, he is an attorney, but——

Mr. LESHY. He doesn’t practice law.
37

Mr. CANNON. Neither do I, thank heaven.

Mr. ALBERSWERTH. I would say, sir, that I think an analogous

situation in terms of my role in the development of this rule is

analogous to a congressional staff person’s role in the development

of a legislation. That is I make recommendations. My job is to

make some recommendations to various individuals in the Department who had decisionmaking authority with respect to this matter. I was not the decisionmaker, and I made those recommendations, very similar to the congressional staff person making recommendations to a Member of Congress or a committee. And I

think my role is very analogous in that regard, so I think what you

might want to ask yourself is would you apply the same sort of

standards to a congressional staff person as you would to me in

this instance?

Mr. CANNON. Well, I think the relevant regulations require that

absent prior authorization, which requires—that is, someone in authority giving the authority to you to do this, an employee

shouldn’t participate in a particular matter involving the specific

parties which he knows is likely to affect the financial interest of

a member of his household, or if he knows a person with whom he

has a covered relationship or represents a party, if he determines—

it goes on.

Mr. ALBERSWERTH. I am quite confident of that.

Mr. CANNON. Of what?

Mr. ALBERSWERTH. Of the fact that I have no financial interest

in this matter.

Mr. CANNON. The point is if you continue, you have a definition

of covered relationship, including any person for whom the employee has within the last year served as financial or as officer, director, trustee, general partner, et cetera.

It seems to me there are two issues here that I would like to understand. In the first place, you were employed by NWF and received a salary, and therefore had an interest; and in addition, I

understand you were a director. Don’t those with particularity

qualify you as having to be in a position where you need a prior

authorization before you participate in that process?

Mr. ALBERSWERTH. The National Wildlife Federation has no interest, no financial interest whatsoever.

Mr. CANNON. You had a financial interest because they paid you

a salary. You also had a covered relationship because you were a

director. Is that true?

Mr. ALBERSWERTH. No, sir, I was a director of the program. I was

not on the board of directors.

Mr. CANNON. Oh, okay.

Mr. LESHY. I should go back because I think there is a fundamental misunderstanding. First of all, he severed all his ties when

he came to the Department. Second, the regulation you were

quoting talks about a particular matter, and the rules and the case

law in this are quite clear. A legislative rulemaking is not a particular matter. That was the point I was trying to make earlier.

In other words, the principles and the constraints that you apply

when you come into government or go out of government in terms

of working on particular matters that you worked on in one place

or another, a legislative rule is not a matter. It is well understood
38

that that is the case. The courts basically said that. So we really

don’t have that kind of problem in this case.

Everybody in the Department knew where Mr. Alberswerth came

from and knew of his interest, but he has not, in our view, behaved

inappropriately at all by working on this kind of rule, having

worked on it outside, because it is not a particular matter involving

a particular party.

Mr. CANNON. Thank you. I yield back the remainder of my time.

Mrs. CUBIN. I don’t think I have any further questions either. So

I would like to thank the witnesses for being here today. It is a

hard—it is a hard thing to disagree. And I appreciate your appearance and thank you again. I am sure I will see you again. I am

sure we will disagree again.

Mr. LESHY. It is hard for us, too, but thank you very much for

letting us have the opportunity.

[Whereupon, at 3:50 p.m., the Subcommittee was adjourned.]

[Additional material submitted for the record follows.]
39

STATEMENT OF JOHN LESHY, SOLICITOR, DEPARTMENT OF THE INTERIOR

Madam Chair and members of the Subcommittee, I am here today once again to

discuss the final rule on bonding for hardrock mining operations. With me is David

Alberswerth, Special Assistant to the Assistant Secretary for Land and Minerals

Management. I will update the Subcommittee on various matters concerning the

BLM’s hardrock bonding rule which have occurred since your last hearing on this

matter held on March 20, 1997.

First, implementation ofthe rule, which took effect March 30, 1997, is proceeding

without any reports of major difficulty. BLM staff have recently informally surveyed

implementation efforts in nearly all the western States. In a number of States the

new BLM regulation requires no more than existing State law requires; hence, there

is no difficulty in implementation. At least one State has amended its mining reclamation law since the BLM rule became final. That amendment requires full cost

bonding, just as the BLM rule does.

BLM is continuing its efforts to advance the mining industry’s understanding

about the rule and what is required to comply with it. It continues to use, among

other things, an Internet Newsgroup for this purpose. In Alaska, BLM and the State

have been working on a proposed Memorandum of Understanding that would allow

miners to utilize the State bond pool to satisfy the requirements of the new rule.

Second, on May 12, 1997, the Mountain States Legal Foundation, on behalf of the

Northwest Mining Association (NMA), filed suit against the Department seeking a

withdrawal of the rule and an order enjoining the BLM from enforcing the rule

against the members of the IRMA. The suit alleges that the Department failed to

comply with the Administrative Procedure Act and the Regulatory Flexibility Act in

promulgating the final rule.

Section 302(b) of the Federal Land Policy and Management Act of 1976 (FLPMA)

directs the Secretary to prevent unnecessary or undue degradation of the public

lands from, among other things, activities conducted pursuant to the Mining Law

of 1872 (mining of locatable minerals, such as gold, lead, silver, uranium, and bentonite).

We continue to believe that this rule is a most reasonable forward step to carry

out our mandate, given to us by Congress, to prevent unnecessary or undue degradation of the public lands from, among other things, activities conducted pursuant

to the Mining Law of 1872. As I pointed out earlier, the consequences to the health

of the public lands and the implications for the American taxpayer from inadequate

steps to carry out this mandate are potentially very large, even staggering. The Departments of Agriculture and the Interior are currently defendants in several lawsuits seeking to hold the government, as landowner, liable for the cost of cleaning

up toxic wastes from defunct mining operations carried out throughout the west

under the Mining Law of 1872. The irony is that after over a century of making

publicly owned minerals available for next to nothing, the taxpayers may face cleanup costs running into billions of dollars. Most members of the hardrock mining industry are responsible operators. But there is no denying that when protective

measures are not taken, or are inadequate, the consequences can be costly. It is in

the interests of providing a deterrent to such environmental costs, and such fiscal

costs to the Nation’s hardworking taxpayers, that BLM promulgated its final bonding rule.

Some idea of the potential scope of the problem is described in a GAO Report of

April 1988 to the House Subcommittee on Mining and Natural Resources. The GAO

estimated that 424,049 acres of Federal land were then unreclaimed as a result of

hardrock mining operations in the 11 western States. 281,581 of these unreclaimed

acres related to abandoned, suspended or unauthorized mining operations. The estimated cost to reclaim this land was about $284 million. The remaining 142,468

acres of Federal land were being mined at that time and would eventually need reclamation.

The Bureau of Land Management’s (BLM) original regulations implementing section 302(b) of FLPMA became effective on January 1, 1981. That rule, 43 CFR 3809,

required mining claimants to complete reclamation on Federal lands administered

by the BLM during and upon termination of exploration and mining activities under

the mining laws. The rule classified mining-related activities into three categories:

casual use, notice, and plan of operations. Activities are termed ‘‘casual use’’ if they

involve negligible surface disturbance and do not use mechanical excavating equipment. However, if there is surface disturbance involving mechanical excavating

equipment, notice of the operation must be provided to BLM. Plans of operations

were required where surface disturbance of more than 5 acres, or any disturbance

greater than casual use in some special category lands, was involved. At BLM’s dis-
40

cretion, bonding was required on plans of operation. No bonds were required for casual use or notice operations unless there was a pattern of violations.

The preamble to these regulations promised a review of them within 3 years.

Since they took effect, much internal and external (GAO and Congressional committees) attention has been directed at, among other things, the adequacy of BLM’s

bonding policies. In addition, the dramatic rise ofthe gold mining industry in Nevada during the 1980’s increased the public’s awareness of the need for reclamation.

Near the end of the Reagan Administration, the BLM Director established a Mining

Law Administration Program Task Force to address significant issues. The Task

Force’s December 1989 report recommended that BLM’s program ‘‘needs to be

strengthened to meet BLM’s responsibilities,’’ and addressed bonding, among other

things. As a result, a revised bonding policy was issued in August 1990 as a short

term change. In July 1991, a proposed rule on Hardrock Bonding was published in

the Federal Register. The preamble to this proposed rule explained that the Department’s history under the 3809 bonding regulations led BLM ‘‘to conclude that

bonding or other financial or surety arrangements would be useful additions to the

tools available to land managers to protect against unnecessary or undue degradation of the land caused by [notice] operations. . . .’’ (56 FR 31602). The published

summary of the proposed rule explained:

The proposed rule would require submission of financial guarantees for reclamation for all operations greater than casual use, create additional financial

instruments to satisfy the requirement for a financial guarantee, and amend the

noncompliance section of the regulations to require the filing of plans of operations by operators who establish a record of noncompliance. (56 FR 31602).

During the 90-day comment period, which expired on October 9, 1991, the BLM

received over 200 comments on the proposed rule. Some said the policy went too far;

others said it did not go far enough. All of the comments were carefully considered

in developing this final rule.

In August 1992, BLM completed a preliminary draft of the final rule incorporating

changes suggested during the comment period. Internal Departmental review of the

preliminary draft final rule was then begun. In addition to the proposed bonding

rule, on September 11, 1992, BLM published a proposed rule which strengthened

the BLM’s enforcement program against the illegal occupancy of mining claims for

non-mining purposes.

Because it appeared at the beginning of the 103rd Congress that action on comprehensive legislation to reform the 1872 Mining Law was likely, completion of

BLM’s bonding and occupancy regulations was suspended. If enacted, the reforms

being considered would have superseded the rules.

Once the 103rd Congress adjourned without enacting Mining Law reform, the Department resumed work on a number of efforts to address shortcomings in regulation of hardrock mining, including the bonding rule. Among these efforts, BLM also

published an acid rock drainage policy in April 1996. The occupancy rule was completed and published in final form on July 16, 1996. Work then focused on finalizing

the bonding rule.

In response to public comment, and after due consideration, some changes were

made between the draft and final rule. These changes are a logical outgrowth of the

proposed rule. While the proposed rule will enhance environmental protection by ensuring consistent application of bonding requirements, the overall impact of the rule

on the hardrock mining industry is actually relatively limited for several reasons.

First, as was noted earlier, the Department already has the discretionary authority

to impose bonds for up to 100 percent of the costs of reclamation on plan level operators, and some States already require this level of bonding. In other States, which

do not currently require 100 percent reclamation bonds, the BLM will be cooperating with operators and State mining administrators throughout the remainder of

1997 to achieve a smooth transition. Second, the bonding requirement for notice

level operators, which was part of the proposed as well as final BLM rule is not

a new requirement in most States. Moreover, the requirement will be phased in,

which will ameliorate its impact where it is new. Operators with existing notices

on file with BLM which have initiated operations will not be required to provide

100 percent bonding until they file a new notice. With past history as our guide,

we expect that it will take 4 years before all notice level operators are covered.

As I mentioned last time, the BLM has implemented an extensive program to inform interested parties of this final rule. BLM’s homepage on the Internet (http:/

/www.blm.gov) includes the final rule as well as background documents including

a press release, question and answer sheet, and a fact sheet. Other outreach efforts

include BLM staff visits to various mining centers and meetings with miners and

mining industry officials, as well as State regulators.
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We believe this rule is a reasonable forward step to carry out our statutory mandate. We will do all we can in implementing this rule to ensure that the health of

the land is preserved, taxpayers’ interests are protected, and any negative implications for the mining community are minimized.

This concludes my statement. I will be pleased to answer questions.

LETTER FROM THE SBA TO THE BLM

This is in response to the material that you sent by facsimile on April 18, 1997

which refers to a conversation that you had with the Office of Advocacy on April

2, 1997. The Office of Advocacy will review the rule and the Omnibus Reconciliation

Act of 1993 and provide an ‘‘official’’ answer to your inquiry by the close of business

on Wednesday, April 23, 1997. In the meantime, below please find an unofficial response to your request that include the Bureau of Land Management’s April 2nd

consultation with Advocacy in your letter of response to Congresswoman Cubin.

Our recollection of that conversation is that initially Advocacy told you that the

Bureau of Land Management was not in compliance with the Regulatory Flexibility

Act because you did not define a small entity in compliance with SBA’s definition

of a small entity in the mining industry. After giving you our initial opinion, you

stated that the definition of a ‘‘small miner’’ was mandated by statute. We responded that if the definition of small miner was mandated by statute, then the

statutory definition would prevail.

After reviewing the letter from Congresswoman Cubin, it is Advocacy’s opinion

that the Bureau of Land Management did not comply with the Regulatory Flexibility Act (RFA). With regards to the ‘‘statutory mandate’’, Advocacy was under the

impression that the mandated definition was not from the ‘‘Omnibus Reconciliation

Act of 1993’’. Advocacy believed that the mandated definition was specific to the regulation that you were attempting to implement. Furthermore, you requested

Advocacy’s assistance in obtaining a new definition standard after the rule was in

its final stages. The RFA requires consultation with the Office of Advocacy before

determining a size standard definition that deviates from SBA standards. Consulting with Advocacy after the fact does not fulfill the requirements of the RFA.
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