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89-583 PS 2004

RESPONSIBLE DOMESTIC RESOURCE DEVELOPMENT AND 

ECONOMIC STABILITY—THE 

ROLE OF THE HARD ROCK 

MINING INDUSTRY

OVERSIGHT FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND 

MINERAL RESOURCES

OF THE

COMMITTEE ON RESOURCES 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

Monday, September 29, 2003, in Reno, Nevada

Serial No. 108-62

Printed for the use of the Committee on Resources

(

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

or 

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

(II)

COMMITTEE ON RESOURCES 

RICHARD W. POMBO, California, Chairman 

NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska 

W.J. ‘‘Billy’’ Tauzin, Louisiana 

Jim Saxton, New Jersey 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Wayne T. Gilchrest, Maryland 

Ken Calvert, California 

Scott McInnis, Colorado 

Barbara Cubin, Wyoming 

George Radanovich, California 

Walter B. Jones, Jr., North Carolina 

Chris Cannon, Utah 

John E. Peterson, Pennsylvania 

Jim Gibbons, Nevada, 

Vice Chairman 

Mark E. Souder, Indiana 

Greg Walden, Oregon 

Thomas G. Tancredo, Colorado 

J.D. Hayworth, Arizona 

Tom Osborne, Nebraska 

Jeff Flake, Arizona 

Dennis R. Rehberg, Montana 

Rick Renzi, Arizona 

Tom Cole, Oklahoma 

Stevan Pearce, New Mexico 

Rob Bishop, Utah 

Devin Nunes, California 

Randy Neugebauer, Texas 

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Neil Abercrombie, Hawaii 

Solomon P. Ortiz, Texas 

Frank Pallone, Jr., New Jersey 

Calvin M. Dooley, California 

Donna M. Christensen, Virgin Islands 

Ron Kind, Wisconsin 

Jay Inslee, Washington 

Grace F. Napolitano, California 

Tom Udall, New Mexico 

Mark Udall, Colorado 

Anı ́bal Acevedo-Vila ́, Puerto Rico 

Brad Carson, Oklahoma 

Rau ́l M. Grijalva, Arizona 

Dennis A. Cardoza, California 

Madeleine Z. Bordallo, Guam 

George Miller, California 

Edward J. Markey, Massachusetts 

Rube ́n Hinojosa, Texas 

Ciro D. Rodriguez, Texas 

Joe Baca, California 

Betty McCollum, Minnesota

Steven J. Ding, Chief of Staff 

Lisa Pittman, Chief Counsel 

James H. Zoia, Democrat Staff Director 

Jeffrey P. Petrich, Democrat Chief Counsel 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES 

BARBARA CUBIN, Wyoming, Chairman 

RON KIND, Wisconsin, Ranking Democrat Member

W.J. ‘‘Billy’’ Tauzin, Louisiana 

Chris Cannon, Utah 

Jim Gibbons, Nevada 

Mark E. Souder, Indiana 

Dennis R. Rehberg, Montana 

Tom Cole, Oklahoma 

Stevan Pearce, New Mexico 

Rob Bishop, Utah 

Devin Nunes, California 

Randy Neugebauer, Texas 

Richard W. Pombo, California, ex officio 

Eni F.H. Faleomavaega, American Samoa 

Solomon P. Ortiz, Texas 

Grace F. Napolitano, California 

Tom Udall, New Mexico 

Brad Carson, Oklahoma 

Edward J. Markey, Massachusetts 

VACANCY 

VACANCY 

Nick J. Rahall II, West Virginia, ex officio 

(III)

C O N T E N T S 

Page

Hearing held on Monday, September 29, 2003 ..................................................... 1

Statement of Members: 

Cannon, Hon. Chris, a Representative in Congress from the State of 

Utah ............................................................................................................... 6

Faleomavaega, Hon. Eni F.H., a Delegate in Congress from American 

Samoa ............................................................................................................ 3

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

Nevada ........................................................................................................... 4

Pombo, Hon. Richard W., a Representative in Congress from the State 

of California ................................................................................................... 1

Prepared statement of ............................................................................... 2

Statement of Witnesses: 

Abbey, Bob, Nevada State Director, Bureau of Land Management, U.S. 

Department of the Interior ........................................................................... 7

Prepared statement of ............................................................................... 10

Chavis, James A., Vice President, U.S. Government Relations, Placer 

Dome America ............................................................................................... 37

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

Coyner, Alan R., Commission on Mineral Resources, State of Nevada ....... 20

Prepared statement of ............................................................................... 21

Dobra, Dr. John, Director, Natural Resources Industry Institute, 

University of Nevada, Reno ......................................................................... 23

Prepared statement of ............................................................................... 24

Fields, Russ, President, Nevada Mining Association .................................... 33

Prepared statement of ............................................................................... 35

Taylor, Dr. Tony P., President and CEO, Millennium Mining Corporation 43

Prepared statement of ............................................................................... 44

(1)

OVERSIGHT HEARING ON ‘‘RESPONSIBLE 

DOMESTIC RESOURCE DEVELOPMENT AND 

ECONOMIC STABILITY—THE ROLE OF THE 

HARD ROCK MINING INDUSTRY’’

Monday, September 29, 2003

U.S. House of Representatives 

Subcommittee on Energy and Mineral Resources 

Committee on Resources 

Reno, Nevada 

The Subcommittee met, pursuant to call, at 11 a.m., Washoe 

County Commission Chambers, 1001 East Ninth Street, Reno, 

Nevada, Hon. Richard Pombo presiding. 

Members Present: Representatives Pombo, Cannon, Gibbons, and 

Faleomavaega. 

Mr. POMBO. The Oversight Hearing by the Subcommittee on 

Energy and Mineral Resources will come to order. This Committee 

is meeting today to hear testimony on Responsible Domestic Resource Development and Economic Stability, the Role of the Hard 

Rock Mining Industry. 

And as we begin, I would like to recognize the Vice Chairman of 

the Full Committee and the host of our field hearing today, Congressman Jim Gibbons. 

Mr. GIBBONS. Thank you very much, Mr. Chairman, and before 

we get to opening remarks, I would like to introduce a Boy Scout 

Troop today, that’s the Boy Scouts of the Nevada Area Council. It’s 

a mixture of several troops, that they’re going to come down here 

and help lead us in the Pledge of Allegiance. 

So, gentlemen, if you will come down. 

BOY SCOUT. Please place your right hands over your heart. 

Bugler sound off. 

[Whereupon a bugler played.] 

BOY SCOUT. Ladies and gentlemen, please join me in the Pledge 

of Allegiance. 

[Whereupon the Pledge of Allegiance was recited.] 

BOY SCOUT. Ladies and gentlemen, you may be seated. 

STATEMENT OF THE HON. RICHARD W. POMBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. POMBO. I want to thank our Boy Scouts for leading us in the 

Pledge this morning. 

2

We are holding this hearing today to discuss the important role 

the domestic mining industry plays in our Nation’s economic and 

national security. It is particularly important to hold this hearing 

in Nevada, the Nation’s leading producer of hard rock minerals. 

Hernando DeSoto, the author of the ‘‘Mystery of Capital: Why 

Capitalism Triumphs in the West and Fails Everywhere Else,’’ attributes the West’s success to the development of property rights 

laws in Western Europe and the United States over the past 200 

years. These laws came from the ground up, a true grassroots effort that brought about significant change in how capital grows, 

creating tremendous prosperity in the vibrant market economies 

the West enjoys. 

One of the two examples he uses from the United States is what 

he describes as this premier mining law of 1872. The law came directly from lode mining regulations from the Grass Valley Mining 

District, in my home State of California, in the gold mining mountain district here in Nevada. 

The mining law, a land tenure law, provides the security of title 

to mining companies so that investors have confidence in providing 

the capital needed to develop the mine projects. 

During the 1990s, Congress passed a moratorium on mineral patents, the process that allows miners to purchase the surface rights 

to claims, and the Department of Interior issued new mining regulations in the Millsite Opinion. The Millsite Opinion reversed 125 

years of practice, instilling uncertainty into the operating plans for 

new projects and mining expansions. 

With the security of tenure in jeopardy, coupled with permitting 

uncertainties and lawsuits brought by environmental groups, the 

U.S. Has lost its market share of the exploration dollars to other 

companies. 

This morning we will examine solutions to these problems facing 

the domestic mining industry. I look forward to hearing from our 

witnesses here today. 

[The prepared statement of Mr. Pombo follows:]

Statement of The Honorable Richard Pombo, Chairman,

Committee on Resources 

We are holding this hearing today to discuss the important role the domestic mining industry plays in our Nation’s economic and national security. It is particularly 

important to hold this hearing in Nevada, the Nation’s leading producer of hardrock 

minerals. 

Hernando de Soto, the author of ‘‘The Mystery of Capital, Why Capitalism Triumphs in the West and Fails Everywhere Else’’ attributes the West’s success to the 

development of property rights laws in Western Europe and the United States over 

the past 200 years. 

These laws came from the ground up, a true grassroots effort that brought about 

significant change in how capital grows creating tremendous prosperity and the vibrant market economies the West enjoys. 

One of two examples he uses from the United States is what he describes as 

‘‘...this premier mining law’’ of 1872. The law came directly from the Grass Valley 

Mining District in my home state of California and the Gold Mountain Mining District here in Nevada. 

The mining law, a land tenure law, provides the security of title to mining companies so that investors have confidence in providing the capital needed to develop the 

mine projects. 

During the 1990’s Congress passed a moratorium on mineral patents, the process 

that allows miners to purchase the surface rights to claims, and the Department of 

Interior issued new mining regulations and the millsite opinion. The millsite opinion 

3

reversed 125 years of practice instilling uncertainty into the operating plans for new 

projects and mine expansions. 

With the security of tenure in jeopardy, coupled with permitting uncertainties and 

lawsuits brought by environmental groups, the U.S. has lost its market share of the 

exploration dollars to other countries. 

This morning we will examine solutions to these problems facing the domestic 

mining industry. I look forward to hearing from our witnesses. 

Mr. POMBO. I would like to now recognize Congressman 

Faleomavaega for his opening statement. 

STATEMENT OF THE HON. ENI F.H. FALEOMAVAEGA, A 

DELEGATE IN CONGRESS FROM AMERICAN SAMOA 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman, and I appreciate 

your calling this hearing this morning. I certainly would like to 

offer my commendation and thanks to the gentleman from Nevada 

who is hosting us in this Committee hearing, Mr. Gibbons, for the 

hospitality and the graciousness of the staff in helping us with logistics and enabling us to be here this morning. 

I think that with all the problems that we’re facing today, sometimes we need to pat ourselves on the back and say what a great 

nation that we live in. And what I mean by this, Mr. Chairman, 

is the fact that our country is one of diversity, so many different 

interests and a tremendous amount of resources. And I think this 

has also attributed to the fact that this is the reason why we’re the 

best and most powerful country in the word economically, as well 

as militarily. 

The sad part of the aspects of our function and working as members of this Committee is the fact that many members don’t know 

some of the specific facts that you have just reiterated, which I 

think is very important. 

My understanding of the geological survey estimates that the 

total domestic mineral production last year was about $38 billion, 

and which would affect some 55,000 people, as far as working in 

this important industry. 

And when you process this amount of minerals that are being 

done domestically, it—the total value comes to some $373 billion. 

And then when you go a little further and combine that with 60 

mineral materials and estimate a value beyond the—when we—the 

major industries in consuming the processing of these minerals, it 

comes to—and I hope I read this correctly—$1 trillion 700 billion, 

as far as our total gross domestic product. 

And I am surprised that I didn’t know that Nevada is the source 

of almost 81 percent of the Nation’s gold, and 31 percent of the silver production domestically. My gosh. Do people know that this is 

the gold state? Maybe Mr. Gibbons will help me find a pan and 

start going out there and looking for gold. 

I suspect a lot of the gold is probably contaminated with all the 

nuclear testing that was conducted years ago. I know something 

about nuclear testing, Mr. Chairman, because we had it in the Pacific, two sides, in the Marshall Islands and also in Tahiti, in 

French Polynesia, where the French government conducted well 

over 220 nuclear detonations. And to this day, we’re still bearing 

some very serious and sad commentaries of what happened in that 

era. 

4

Mr. Chairman, I know probably some of my colleagues will wonder, well, what is a Pacific Islander doing here, other than the fact 

that a couple of our boys do play for the UNLV football team. We 

do export probably more NFL players than any other place that I’m 

aware of here in our country. 

But truly, I think it’s very important, and I commend you and 

the members of this Committee, to find out what the status and 

the health situation is of our domestic mineral industry. And, of 

course, we’re always confronted with the problem of overregulation 

and the problem of no regulation. That always seems to be the 

issue that we go through every year in the Congress. 

And my point, Mr. Chairman, is, why am I interested in minerals? I suspect that many Americans don’t realize that we have 

what is known as seabed minerals in the Pacific. I know for a fact 

in the Cocos Islands, a recent survey was conducted, and they had 

probably well over $200 billion worth of seabed nodules. These nodules contain cobalt, nickel, copper and manganese. The sad part 

about it, Mr. Chairman, is that our country is not in the forefront 

as far as developing the technology to harvest hundreds of billions 

of dollars worth of seabed nodules out there in the Pacific. 

So I’m very happy to be here, Mr. Chairman, to learn something 

about our domestic production and how much I could be of help to 

the gentleman from Nevada to see that when we have issues come 

in front of the Committee, unfortunately, that not very many members of our Committee should have been here to get a real education about the status and the health of our mineral resources. 

And I couldn’t think of a better state than Nevada to conduct these 

hearings. 

Again, Mr. Chairman, thank you, and I look forward to hearing 

from our witnesses. Again, I thank my good friend from Nevada for 

hosting us for this hearing. 

Mr. POMBO. Thank you. 

Mr. POMBO. And I would now like to recognize the gentleman 

from Nevada Mr. Gibbons. 

STATEMENT OF THE HON. JIM GIBBONS, A REPRESENTATIVE 

IN CONGRESS FROM THE STATE OF NEVADA 

Mr. GIBBONS. Thank you very much, Mr. Chairman. It is indeed 

an honor and privilege for me to welcome you, Mr. Pombo, from 

California here. I want to thank you for your leadership and, of 

course, for your willingness to hold this very important hearing for 

Nevada and the industry, which means so much to, not just 

Nevada, but to this country, and it deals with an issue that is so 

significant and so important, that sometimes we take for granted 

a number of these issues that we will be talking about today, and 

it’s important that we allow for the public to hear them as well. 

I am also happy to welcome my friend, Mr. Faleomavaega from 

American Samoa, who has been to Nevada on several occasions, 

one of which was a hearing on wild horses, which we previously 

held, and he’s been a very helpful colleague. He’s also been a great 

friend of Nevada, and including the Yucca Mountain nuclear waste 

issue, which he has a great sensitivity to Nevada on, and I’m always grateful to have him here in Nevada, as well as I am happy 

5

to have our colleague and friend Chris Cannon from the First—or 

is it the Third? 

Mr. CANNON. Third. 

Mr. GIBBONS. —Third District in Utah. And Chris serves with us 

here on this Committee and is a classmate of mine, and someone 

who has a very bright intellect when it comes to the issues with 

regard to the subject matter. 

And last, Mr. Chairman, I want to thank all the witnesses who 

have come here today to spend their morning educating this Subcommittee on the role of hard rock mining and the industry and 

the many challenges that are facing us. 

And before I give my opening remarks here, I want to say that 

many of us read an article this morning in the Business Section of 

the Reno Gazette-Journal on—and some environmental groups 

have complained that they weren’t invited, and one in particular 

was the Great Basin Mine Watch. They were not happy that they 

were not invited, Mr. Chairman. 

I want you to know that, and them to know, that this Committee 

accepts all written testimony. We’re happy to do that. And it will 

remain open for 2 weeks—or 10 days, for them to submit their 

written testimony as well. 

But that being said, let me set the record straight with regard 

to what the article said, because I think it was a little misinformed. 

We’ve heard on numerous occasions from Great Basin Mine 

Watch on these mining hearings. They have testified before. The 

purpose of our invitation to other groups was to get other environmental groups that have not testified before our Committee, invited 

to testify before you, the public, and before this Committee. They 

declined to do so. 

And the reason that Great Basin is upset is because we had 

elected to invite those organizations that have not previously testified. So we would have been hearing from the choir had we heard 

from Great Basin, we would have heard what they’ve already said 

before. 

So I wanted to clear that up for the record, Mr. Chairman, before 

we committed. 

But, Mr. Chairman, as you know, I have a personal background 

and experience in the mining industry as a geologist. I spent many 

years out in Nevada in hard rock mineral exploration and other activities. And over the past 30 years, I’ve witnessed the attack on 

the industry gain momentum as various special-interest groups, 

mostly radical environmental organizations not from Nevada, and 

some government entities, even, create arbitrary obstacles with the 

intention of preventing any mining from occurring in this country. 

And it is a sadly misguided assault against one of our Nation’s oldest, most responsible and important industries. 

Examples of these arbitrary barricades include the 1997 Solicitor 

General’s Opinion on millsites. This opinion, Mr. Chairman, has 

created substantial uncertainty for hard rock miners, deterring the 

development of mines on public lands, and contributing to this 

Nation’s ever increasing reliance on foreign minerals. Another example is the ’94 Mining Patent Moratorium, which prevents the 

BLM from processing any new mining patents, resulting in a forced 

mass exodus of American mining companies to foreign markets. 

6

The EPA has vilified the mining industry with its outrageous requirements to report the transfer of rocks as toxic releases into the 

environment, and yet they do not address the farming industry, 

which tills up probably far more soil and far more overburden and 

moves it—but that’s not why we’re here. Thank you, Mr. Chairman, for reminding me. 

But in any event, every week I receive letters and phone calls 

from individuals conveying the horror stories of trying to get a mining project permitted. In fact, the mining companies have been trying for over a decade and still do not have a drill in the ground, 

in some instances. And for those companies that have been fortunate enough to finally make it through the permitting process, they 

often get slapped with frivolous lawsuits only to delay the process 

for a few more years. 

Mr. Chairman, the fact is that our technologically advanced 

society depends on the mine, on mining, for phones cars, medical 

equipment and, yes, indeed, food substances, such as the filling in 

Oreo cookies. Our national security also depends on a viable domestic mining industry, and that couldn’t be any more important 

than it is today with the history of this country and the fight that 

we’re undertaking now. 

Our military needs minerals for airplanes, computers, weapons. 

The United States would be left, I believe, quite vulnerable if we 

were forced to depend on critical minerals from foreign countries. 

Consequently, mining must continue to occur in our nation so that 

we do not become dependent on foreign countries for our mineral 

development like we have become dependent on our foreign oil supplies. 

And the question here is, Mr. Chairman, will a hostile regulatory 

atmosphere in the U.S. force our domestic industry to move 

entirely offshore, or will this government come to recognize the 

magnificent benefits a flourishing domestic mining industry can 

provide, including jobs, economic growth and stability, industrial 

independence, and a high standard of living? 

This hearing is a step in the right direction. We, as members of 

Congress, can take the information presented here today and use 

it to make sound policy decisions. 

Again, thank you, Mr. Chairman, for holding this hearing in 

Reno today. My constituents and I are very grateful, and appreciate your commitment to this important issue. And I want to once 

again thank everybody for being here today. 

Mr. POMBO. Thank you. 

Mr. POMBO. Mr. Cannon? 

STATEMENT OF THE HON. CHRIS CANNON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH 

Mr. CANNON. Thank you, Mr. Chairman. I would like to associate 

myself with the comments of Mr. Faleomavaega and Mr. Gibbons 

in their thanks to you, and Mr. Faleomavaega’s thanks to Mr. Gibbons for hosting us here today. 

You know, I read the article this morning in the Reno GazetteJournal about the whining by the Great Basin Mine Watch Group. 

I thought that was a pretty good article, good for you, Jim, but 

then I may be a little harsher. It seems to me you referred to them 

7

as a choir, but if they are a choir, there’s a tendency, I think, there 

to focus on dissident music. 

Anyway, we did an interesting thing the other day. I’m the 

Chairman of the Western Caucus, which loves to be supported with 

what this Committee is doing. I’m the chairman of this committee—or the former chairman of the Western Caucus. And we 

have been working with certain lots and groups, including a group 

called Partnership for the West, which held a meeting in Denver 

a couple of days ago. 

And so we had—the Western Caucus is a Republican caucus. It’s 

a white camel, so you have Senators and Congressmen, but it’s 

only Republicans. 

And so I spoke and, unfortunately, I suppose, I was a little bit 

partisan. Fortunately, Mark Udall, who is a Democrat from Colorado, came after I finished speaking, so I was not offensive to him 

personally. But his presence there was, I think, interesting. He 

came knowing what the agenda was, knowing what the mission 

statement of that group was, said, ‘‘We need to work together to 

solve these problems.’’ And by the remark, I count him as a friend. But he is sort of on 

the other side of these issues philosophically from me. But he has 

indicated in the past his interest in working on issues like our public roads and wilderness issues. So his presence there, I take as a 

great sign. In fact, I think if you look at America today and where 

we are politically, now is the time that we need to resolve some of 

these long-standing issues, and we need to do things a little better 

all the way around. 

But we don’t resolve them by taking away the ability of regulation and Federal costs piled on this industry. We do it by doing 

things more efficiently, smarter, more scientifically. And so I look 

forward to the testimony of our witnesses today to help us understand where we are and where we’re going, and perhaps help us 

figure out how we do it more efficiently with—with lower costs and 

more production and more independence and a better economy and 

more jobs. Yield back to you, Mr. Chairman. 

Mr. POMBO. Thank you. 

Mr. POMBO. I would like to call up the first panel to testify today, 

Mr. Bob Abbey, who is the BLM Nevada State Director. And before 

you sit, as is customary, on the Resources Committee, we swear in 

all the witnesses. So if I could have you raise your right hand. 

[witness sworn.] 

Mr. POMBO. Let the record show he answered in the affirmative. 

Thank you very much for being here. 

STATEMENT OF BOB ABBEY, NEVADA STATE DIRECTOR,

BUREAU OF LAND MANAGEMENT 

Mr. ABBEY. It’s kind of a lonely panel up here by myself, but, Mr. 

Chairman, and Members of the Subcommittee, certainly the Department of Interior appreciates the opportunity to participate in 

this hearing and responding to issues regarding the Bureau of 

Land Management’s role in helping provide responsible mineral development and economic stability. 

The Bureau of Land Management is keenly aware of the challenges facing the mining industry today, and we all agree that 

8

there are compelling reasons to encourage investment and support 

for development of our mineral resource. 

I know our time this morning is quite limited, and you have several people that you want to hear from, so what I plan to do is give 

you a very brief overview highlighting some of the actions that the 

Bureau of Land Management is taking to implement our agency’s 

mining law administration program. However, I request that my 

written statement, which has been submitted to the Members of 

this Committee, be included as part of the record. 

Mr. POMBO. Without objection, your entire written testimony will 

be included in the record. 

Mr. ABBEY. Thank you, Mr. Chairman. 

First let me begin with a brief description of the Bureau of Land 

Management’s surface management regulations, also known as the 

3809 Regulations. Under the previous administration, revised 3809 

Regulations were issued on November 21st, 2000, and became effective on January 20, 2001. That rule was subsequently revised in 

October of 2001 to remove several provisions that Secretary Norton 

felt were unnecessarily burdensome. These changes took effect on 

December 31, 2001. 

The overall purpose of the regulations continue to be the protection of our environment while providing for reliable and affordable 

supply of minerals. 

An important change implemented in the January 2001 rule that 

has been retained is the bonding of exploration and mining operations on public land. We believe that a strong financial guaranteed process is necessary to ensure that taxpayers are not left paying for the cost of any necessary clean up. 

All operations, including notice-level operations, those with five 

acres or less, that will cause more than a negligible disturbance are 

now required to have a bond or other form of acceptable financial 

guarantees that cover all anticipated reclamation costs. 

The new regulations disallow the use of new corporate guarantees while honoring those in place prior to January 20, 2001. Increases to existing corporate guarantees and transfer of corporate 

guarantees to another operator are no longer allowed. 

The September 11, 2001, disaster-related losses, as well as the 

recent forfeitures of major corporations have had a significant impact on the surety industry. Because of these losses, companies 

have become more cautious in reducing their exposure to financial 

risk. These actions have had a direct impact on the minerals industries’ ability to secure required bonding. 

This problem is of particular concern to the Department of Interior. A bonding task force was established last year to review the 

availability of surety bonds or other mechanisms to meet Federal 

and tribal financial assurance requirements for mineral extraction 

industries. We anticipate that this task force report will be completed soon and will be forwarded to the Secretary for her consideration. In the interim, BLM is striving to assist the industry where 

possible in meeting requirements to provide financial guarantees 

for outstanding reclamation and other liabilities. 

BLM is working with State agencies to set up mechanisms, such 

as bond pools to assist small miners in obtaining coverage. Nevada 

is one of three states that currently employs State bond pools. 

9

Several BLM state offices, including Nevada, have been working 

with states to simplify the reclamation costs estimating process, 

Colorado, Montana, Utah, as well as Nevada, are all exploring opportunities for the State to take over implementation of certain aspects of the 3809 Regulations. 

You mentioned this morning the congressionally mandated mineral patent program. Well, I’m pleased to report that this process 

is nearing completion. The Bureau began this program in October 

1994 with 405 grandfathered applications. Today we’ve made decisions on 343 of those applications, and have another 67 applications more to complete. 

Of those 67 applications, 25 require remaining field work, that 

is, performing on-the-ground mineral examinations. We expect the 

field work to be completed in October of 2003, and we anticipate 

that all remaining adjudication actions will be completed by 

October of 2004. 

One area of great interest to the industry is the pending review 

of the 1997 Solicitor’s Millsite Opinion, which outlines the number 

and use of millsites. The BLM was aware of the potential for this 

opinion to place constraints on large mining operations and associated support facilities, such as mills, waste rock disposal, tailing 

ponds, and transportation facilities. 

The 1997 Opinion is currently under review by the Office of Solicitor, and we would expect that the Secretary would make a determination of whether or not that 1997 Solicitor’s Opinion should 

be changed. That decision should be coming probably within the 

next month or two. 

As the BLM State Director in Nevada, the remainder of my testimony, which is very short now, will focus on BLM mineral activities on public lands in Nevada. 

As you mentioned, Nevada ranks first in the Nation and third in 

the world in production of gold. We’re also the Nation’s leading producer of barite, lithium carbonate, and a significant contributor to 

other important hard-rock minerals. 

Public lands in Nevada play a significant role in providing minerals to our nation. Mining has enriched our nation by creating 

jobs, stimulating manufacturing, contributing energy, and expanding our economies. It does fall upon our shoulders, working with 

local governments and state governments, to ensure that all mining 

operations conduct themselves in an environmentally friendly 

manner. 

I’m pleased to report, Mr. Chairman, and Members of this Committee, that the Bureau of Land Management in Nevada has a 

great working relationship with the State of Nevada and the agencies that we work with, including Federal agencies like your Environmental Protection Agency, to ensure that our responsibilities 

are met. 

Based upon the number of active notices and plans of operations 

in Nevada, we have 50 percent of the Bureau’s national total in the 

service management programs. Mining activities in Nevada require 

a plan of operation, also require a permit from the State of Nevada, 

Division of Environmental Protection. The Bureau of Land Management in Nevada and the state agencies work together to provide 

the industry with a joint permitting and bonding process. 

10

In the last three years, the State and the BLM have mitigated 

safety hazards on more than 900 abandoned mine sites. We’re 

partnering with the Nevada Mining Association and the Nevada 

Division of Minerals in backfilling mine sites. Sites near urban 

areas, such as Las Vegas, are given our highest priority. 

Good stewardship, if I may, is exemplified by the mining industry and the State of Nevada through their efforts in reclamation. 

There were 13 nominees from Nevada for the 2003 National Reclamation in Sustainable Mineral Development Award, nominees including individual operators, as well as the Nevada Mining Association. The nominations of individual operators focused on their 

successful site reclamation efforts. 

The Nevada Mining Association has routinely been recognized for 

its very active involvement with the Bureau of Land Management 

and the State to reclaim abandoned mine sites that have hazardous 

open shafts and other public safety concerns. 

Mr. Chairman, the Bureau of Land Management is committed to 

Secretary Norton’s Four C’s Guiding Principles of communication, 

consultation and cooperation, all in the service of conservation as 

we pursue our mission to be good stewards of our Nation’s public 

land and work cooperatively with the Nevada mining industry. 

We appreciate the opportunity to testify here today, and I welcome any questions that you might have. 

Mr. POMBO. Thank you. Thank you for your testimony. 

[The prepared statement of Mr. Abbey follows:]

Statement of Robert V. Abbey, State Director, Nevada State Office,

Bureau of Land Management, U.S. Department of the Interior 

Madam Chairman and Members of the Subcommittee, thank you for the opportunity to participate in this hearing and to respond to issues regarding responsible 

domestic resource development, economic stability, and the role of the hard rock 

mining industry. The Bureau of Land Management (BLM) is keenly aware of the 

challenges facing the mining industry today. We all agree that there are compelling 

reasons to encourage investment that supports development of our mineral resources. 

3809 Regulations 

I would first like to discuss the BLM’s surface management regulations, also 

known as the 3809 Regulations. Under the previous administration, revised 

3809 Regulations were issued on November 21, 2000, and became effective 

January 20, 2001. That rule was subsequently revised in October 2001 to remove 

several provisions that were unnecessarily burdensome; these changes took effect on 

December 31, 2001. The overall purpose of the regulations continues to be the protection of our environment while providing for a reliable and affordable supply of 

minerals. One important revision to the January 2001 regulations was the elimination of the ‘‘substantial irreparable harm’’ provision. We determined that BLM 

has other statutory and regulatory means to prevent irreparable harm to significant 

resources and, therefore, this provision was not needed. 

The reference to ‘‘joint and several’’ liability was also removed. We recognized that 

neither the Federal Land Policy and Management Act nor the Mining Law expressly 

provided for joint and several liabilities. Therefore, BLM will rely on surety bonds 

and other financial guarantees to ensure against incomplete reclamation responsibilities. 

A third substantive change to the January 2001 rule was the removal of a provision that established administrative civil penalties. Again, clear authority to impose 

such penalties was uncertain and appeared to require Congressional authorization. 

An important change implemented in the January 2001 rule that has been retained is the bonding of exploration and mining operations on the public land. We 

believe that a strong financial guarantee process is necessary to ensure that taxpayers are not left paying for the costs of cleanup. All operations, including noticelevel (5 acres or less) operations that will cause more than negligible disturbance, 

11

are now required to have a bond or other form of acceptable financial guarantee 

that covers all anticipated reclamation costs. In addition, the new regulation disallows the use of new corporate guarantees, while honoring those in place prior to 

January 20, 2001. Increases to existing corporate guarantees and transfer of corporate guarantees to another operator are no longer allowed. 

Bonding Task Force 

The September 11, 2001, disaster-related losses, as well as the recent forfeitures 

of major corporations, have had a significant impact on the surety industry. Because 

of these losses, companies have become more cautious and are reducing their exposure to financial risks. These actions have had a direct impact on the mineral industry’s ability to secure bonds. This problem is of particular concern to the Department of the Interior. A Bonding Task Force was established last year to review the 

availability of surety bonds or other mechanisms to meet Federal and Tribal financial assurance requirements for mineral extraction industries. The Task Force’s 

charge was: 1) to gather information and statistics; 2) to evaluate the problem; 3) 

to determine its severity and scope; 4) to identify regulatory impediments that may 

make it difficult to obtain surety bonds; and 5) to make recommendations to the 

Secretary, as appropriate. The Task Force is in the process of evaluating all the 

comments received and exploring various administrative options. We anticipate the 

report will be completed soon and will be provided to the Secretary for her consideration. 

In the interim, BLM is striving to assist the industry, where possible, in meeting 

requirements to provide financial guarantees for outstanding reclamation and other 

liabilities. In compliance with the bonding requirements of the January 2001 regulations, BLM adopted the policy that financial guarantees would not be required from 

‘‘grandfathered,’’ small notice-level (less than 5 acres) mining operations until 60 

days after BLM formally notifies the operator of the required bond amount. This allows notice-level operators to continue to operate, pending BLM acceptance of the 

required financial guarantee. BLM is working with states to set up mechanisms, 

such as bond pools, to assist small miners in obtaining coverage. Nevada is one of 

three states that currently employs state bond pools. 

In an effort to deal with many of the uncertainties created by changes in the surety market, combined with the new regulatory requirements, BLM has been actively 

preparing internal guidance. At the local level, BLM has been working with state 

and local agencies to streamline the review and approval process for new operations. 

For example, BLM - Nevada has a cooperative agreement with the Nevada Division 

of Environmental Protection that allows the operator to make a single submission 

for a proposed operation to both agencies. In addition, the agreement provides for 

coordinated review and approval by both the BLM and the state agency of the submission. Several BLM state offices, including Nevada, have been working with 

states to simplify the reclamation cost estimating process. Colorado, Montana, Utah 

and Nevada are all exploring opportunities for the state to take over implementation of certain aspects of the 3809 Regulations. 

In another area, the Congressionally-mandated Mineral Patent Program is nearing completion. The Bureau began this program on October 1, 1994, with 405 grandfathered applications. To date, we have made final decisions on 343 applications and 

have 67 applications more to complete. Of those 67 applications, 25 require 

fieldwork—that is, performing on-site mineral examinations. We expect the 

fieldwork to be completed by October 2003. The remaining applications are in various stages of review by the BLM and the Office of the Solicitor. We anticipate that 

all adjudication actions will be completed by October 2004. 

One area of great interest is the pending review of the 1997 Solicitor’s ‘‘Mill Site’’

opinion, which outlines the number and use of mill sites. The BLM is aware of the 

potential for this opinion to place constraints on large mining operations and associated support facilities, such as mills, waste rock disposal, tailings ponds, and transportation facilities. The 1997 opinion is currently under review by the Office of the 

Solicitor. 

Hard Rock Mineral Resources in Nevada 

As BLM State Director in Nevada, the remainder of my testimony will focus on 

BLM’s mineral activities on public lands in Nevada. Today, Nevada ranks 1st in the 

Nation and 3rd in the world in the production of gold. Nevada is also the Nation’s 

leading producer of barite, lithium carbonate, and mined magnesite, and a significant contributor to other important hard rock minerals. Public lands in Nevada play 

a significant role in providing minerals to our Nation. Mining has enriched our Nation by creating jobs, stimulating manufacturing, delivering energy, and expanding 

our economy. The benefits of hard rock mining accrue on a local as well as National 

12

scale. For example, in February 2002, the Board of County Commissioners of Elko 

County, Nevada, in response to the Department’s pending rulemaking to revise the 

3809 Regulations, stated, ‘‘this activity [hard rock mining] generates substantial economic benefit to our County consisting of direct mining and mineral exploration 

jobs, indirect jobs associated with other businesses in the County, property taxes, 

and other community support from the mining industry.’’

Mining is the second largest industry in Nevada, and BLM employees in the state 

have workloads to prove it. BLM Nevada annually records more than 50 percent of 

the new mining claims in the Nation and maintains nearly half of the Bureau’s active recorded mining claims. There are currently 105,465 active mining claims on 

public lands in Nevada. 

Based on the number of active Notices and Plans of Operations in Nevada, we 

have 50 percent of the Bureau’s National total in the surface management program. 

We have 321 approved Plans of Operations on public lands in Nevada. In addition, 

there are 353 active Notice operations and 1,733 recently expired Notices. In cooperation with the state, BLM manages $465 million in financial guarantees for active Notices and Plans of Operations. $220,000,000 of those financial guarantees are 

in the form of grandfathered corporate guarantees. 

The boom and bust cycle of mining is well-known in Nevada. Through the 1980s 

and 1990s, the state saw a boom in gold and silver mining, although there was a 

slight downturn in the latter part of the 1990s and early 2000. Presently, Nevada 

is experiencing renewed activity in claim staking, exploration and several new 

mines being proposed for development. Claim staking has increased nearly threefold over the previous two years with a corresponding increase in exploration Plans 

and Notices. At the same time, it is evident that the boom cycle of the 1980s has 

matured. Several mines are now in closure and several more are in their final years 

of operation. However, the BLM’s workload has not decreased. We are actively involved with mine closures, bonding (for both Plans and Notices), mine bankruptcies, 

abandoned mine closures, as well as new Plans for exploration and mine development. 

Mining activities in Nevada requiring a plan of operation also require a permit 

from the State of Nevada, Division of Environmental Protection. BLM Nevada and 

the state agencies work together to provide the industry with a joint permitting and 

bonding process. A staff position, funded in part by industry fees paid through the 

State of Nevada, and in part by BLM, serves as a liaison with the state’s Division 

of Environmental Protection. The BLM in Nevada, the state, and EPA are developing new guidelines for mine closures. BLM has also developed guidelines for bonding, re-vegetation, water modeling and risk assessment for new mining plans. This 

guidance is intended to clarify the process for all parties and hopefully expedite the 

review and approval process. 

In the last three years, the state and the BLM have mitigated safety hazards on 

more than 900 abandoned mined sites. For example, BLM is partnering with the 

Nevada Mining Association and the Nevada Division of Minerals in backfilling mining sites. To protect public health and safety, sites near urban areas, such as Las 

Vegas, are given priority. Almost 80 sites have been cleared for closure in Clark 

County. 

Good stewardship is exemplified by the mining industry in Nevada through their 

efforts in reclamation. There were 13 nominees from Nevada for the 2003 National 

Reclamation and Sustainable Mineral Development awards. Nominees included individual operators and the Nevada Mining Association. The nominations of individual operators focused on their successful site reclamation efforts. The Nevada 

Mining Association has routinely been recognized for its very active involvement 

with the BLM and the state to reclaim abandoned mine sites that have hazardous 

open shafts and other public safety concerns. With a rapidly growing population and 

increasing demand for recreation on public land, reclaiming and securing abandoned 

mine land sites around campgrounds, off-highway racecourses, hiking trails and 

popular recreation areas is a priority. 

Conclusion 

Madam Chairman, BLM is committed to Secretary Norton’s 4C’s guiding principles of Communication, Consultation, and Cooperation—all in the service of Conservation, as we pursue our mission to be good stewards of our Nation’s public lands 

and work cooperatively with Nevada’s mining industry. 

Thank you for the opportunity to testify before you today. I welcome any 

questions the Subcommittee may have. 

13

Mr. POMBO. I am going to defer to Mr. Gibbons to ask the first 

round of questions. 

Mr. GIBBONS. Thank you very much, Mr. Chairman. And, Director Abbey, thank you very much for taking time out of your day 

to be here to testify to us. 

I mean, in fact, your testimony today is literally a good-news 

story, as I see it, for the industry. There’s no doubt, and I am sure 

you would agree, that historical mining practices 20, 30, even 50 

to 100 years ago, weren’t as successful in dealing with the environment as mines are today. 

The fact that we have 13 nominees from Nevada for the 2003 National Reclamation and Sustainable Mineral Development Awards, 

I think speaks highly for an industry that is very conscious of the 

fact that the environment is indeed something that they are concerned about. 

My question goes back to your testimony about bonding. You indicated that the—you’re working to improve the availability of 

bonding assurances that are out there. Have you been aware, or 

are you aware, of a reduction in the willingness of entities to provide bonding assurances for mining operations in the last couple of 

quarters? 

Mr. ABBEY. I’m not aware of any lack of willingness to provide 

the bonding that we require. The industry is definitely in trouble, 

the surety industry is definitely in trouble, and it’s becoming more 

and more difficult for mineral extraction industries, as well as 

many other types of industries, to secure those bonds that we require. 

Mr. GIBBONS. So the actual availability depends upon the cost of 

that bond to the individual mining companies, and I’m sure that 

that is rising each and every time they make an application for a 

bonding and permitting process. 

Mr. Abbey, there are some that will ask you about the delay in 

the permitting process, and I think it would—reasonable certainty, 

some companies have had an unusual long delay in getting their 

permitting completed here in Nevada. 

What can you tell us about the BLM’s effort to work toward getting those permitting applications completed and finished up for 

some of these companies? 

Mr. ABBEY. Congressman Gibbons, I believe that there are some 

legitimate concerns that have been voiced by the industry regarding the timeframes that it takes to get to all the necessary permits 

required for mining. We have tried to streamline the process to the 

degree that we can by working with the State of Nevada for a joint 

permitting process so that the industry can apply only one time, 

and then we work together with the State to issue one permit. 

Mr. GIBBONS. Mr. Abbey, could you tell us, just briefly, how 

many permits a mining company has to go through in order to 

get—

Mr. ABBEY. Congressman Gibbons, I certainly do not know. 

Mr. GIBBONS. Is there more than one? 

Mr. ABBEY. I would imagine it is. There’s plenty of permits they 

have to receive in order to pursue their operations. I’m sure the 

industry folks here today will be happy to provide you that 

information. 

14

I will say this, that the timeframe has certainly been extended 

significantly by the amount of litigation that we see. Almost every 

decision that we make regarding an application or proposal for a 

new mine is either protested, appealed or litigated, and in most 

cases, all three. That certainly adds to the timeframe that it takes 

for issuing a permit from the Bureau of Land Management to proceed with the mining operation. 

Mr. GIBBONS. So what you are saying is that after they’ve gone 

through the process that you’ve outlined, or the BLM has outlined, 

that they’re required to go through in order to achieve a permit, 

to explore, to drill, to operate a mine, once you have gone through 

that step-by-step process to make assurances that it meets your 

standards, they then are subject to protest, appeals and litigation? 

And how many years on average does that course of action add 

to the time that a company can finalize its permit? 

Mr. ABBEY. It can add several years to the process. 

Mr. GIBBONS. So if a company is out there with a $400 million 

investment looking to help amortize that by getting their operation 

going, they can expect that their return on their investment could 

be delayed significantly, years and years into the future? 

Mr. ABBEY. Yes, sir, it could. And I believe that the mining industry—and again, I will let them speak for themselves, but I am 

sure that they plan for that timeframe as part of their proposals. 

Unfortunately, you know, it—we will—we can address a protest 

fairly quickly. An appeal to the Interior Board of Land Appeals can 

take up to two or three years before a decision is issued by the Interior Board of Land Appeals. And even when we go through that 

process, that does not preclude anyone from filing a lawsuit. 

Mr. GIBBONS. Thank you, Mr. Chairman. Thank you, Mr. Abbey. 

Mr. POMBO. Mr. Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. And I appreciate 

Mr. Abbey’s testimony this morning. 

Just a couple of questions in refreshing my memory, also. The 

total percentage of the public lands in the State of Nevada is 

owned by the Federal Government. Well, I would like to know, 

what is the percentage of the public land that is owned by Uncle 

Sam? 

Mr. ABBEY. The Bureau of Land Management manages 48 million acres in the State of Nevada. That’s 68 percent of the state. 

The total land base that’s managed by the Federal Government in 

the State of Nevada comes to 87 percent. 

Mr. FALEOMAVAEGA. So you might say there is a tremendous influence as far as Federal involvement with the use of the lands in 

the State of Nevada in that regard? 

Mr. ABBEY. Some might say that. 

Mr. FALEOMAVAEGA. Putting it mildly; right? 

I know that under your administration it—and I don’t know, 

maybe I’m wrong—dividing these public lands some for mining, obviously, permits for agriculture and those for ranching, what percentage of this goes to mining, of the 45 million acres that we have 

here in Nevada? 

Mr. ABBEY. Of the 48 million acres, most are available for mining. We have withdrawn some lands, primarily through legislation, 

15

like wilderness legislation, designations of National Conservation 

Areas that have been withdrawn from—from mineral entry. 

Mr. FALEOMAVAEGA. I indicated earlier in my statement that 

there is always this nagging problem of extreme situations, where 

we find ourselves to be overly regulated, to the point where there’s 

no regulation. I would like to describe myself as a sentry. I would 

like to think that there should be some kind of a balance in—in 

doing both. 

And I wanted to ask you, do you think that the previous administration was a little too hard at being overly—filling up the books 

with regulations as compared to the current administration? 

Mr. ABBEY. I have worked for the administration that’s in office 

at any given time, so I will watch my response to that. 

Mr. FALEOMAVAEGA. Well, you’re a career person. You don’t have 

to worry about that. 

Mr. ABBEY. I sort of believe that the industry itself would suggest that they felt there was an overregulation of the industry during the past administration. I think Secretary Norton has done a 

good job of trying to weigh the pros and cons of what our responsibilities are of managing these public lands in an environmentally 

sensitive manner, at the same time to provide opportunities for 

these much-needed resources to be developed. 

Congressman, as you suggest, there is a—there is a balance, and 

the balance is what we’re pursuing. My experience with today’s 

mining industry has been one that’s most favorable. They understand their responsibilities, they understand that many of us are 

still living with the legacies of yesterday, and we’re going to great 

lengths working together to address those sad legacies that were 

caused by historic mining practices throughout the Western United 

States. 

Today we are making much progress toward the types of balance 

that we both wish. So I would say that Secretary Norton has done 

a good job of addressing the need to balance our protection of the 

environment with the need to provide additional resources for this 

nation. 

Mr. FALEOMAVAEGA. As I said earlier, I was surprised that 81 

percent of the production of gold here in our country comes from 

the State of Nevada, and I know that gold is not found in mother 

lodes, you can’t get out a whole bunch of gold somewhere. And I’m 

curious, because I know that the largest gold mining operation in 

the world is at west Papua New Guinea, as you are probably familiar with that, and is currently operated by a mining company from 

Louisiana and also from Australia. And they’ve literally had to 

move mountains for—tons and tons of dirt to produce one ounce of 

gold. 

And I’m curious, to produce one ounce of gold in the current mining operations in the State of Nevada, how much—how much dirt 

do they have to lift to get that? 

Mr. ABBEY. Significant. It—you know, I certainly would invite 

you to, next time you come to Nevada, to take a tour of some of 

our large mining operations in Northern Nevada. 

Mr. FALEOMAVAEGA. I am going to definitely ask Mr. Gibbons 

permission to do that. And I just want to mention, because my time 

is up and I don’t want to take this further, this operation on west 

16

Papua New Guinea is a disaster, as far as everyone is concerned, 

unfortunately, and I’m glad to hear that there are very sensitive— there’s a tremendous sensitivity toward environmental aspects of 

mining for gold in the State of Nevada. This is not the case in west 

Papua New Guinea. But I will hopefully get a chance to visit your 

mining operations here in the state. 

Mr. Chairman, I know my time is up. Thank you. Thank you, 

Mr. Abbey. 

Mr. POMBO. Mr. Cannon. 

Mr. CANNON. Thank you, Mr. Chairman. 

You know, Utah, if you didn’t have Nevada, Utah would be this 

huge gold producer, maybe 20 percent of the Nation’s gold, which 

represents about a twentieth of what is produced in Nevada. It 

truly boggles the mind what we’re doing. 

Let me just point out that one of the problems that I have with 

some of the environment—extreme environmental controls of mining in America is we tend to export our disasters to areas where 

they don’t have the technical or other capabilities to control what 

happens, which is one of the reasons I would like to have a development here in Utah—you said an interesting thing, Mr. Abbey, 

you said, most of your decisions are protested, appealed or litigated. 

Do you have a sense of what percentage of BLM’s budget overall 

around the country goes toward that, either the litigation or appeal 

or protest process? 

Mr. ABBEY. Congressman Cannon, we’re trying to track those actual costs right now. We’ve done a poor job of being able to account 

for all the dollars that it takes us to deal with the protests, appeals, and litigation. So, sir, I do not have a dollar amount for you. 

Mr. CANNON. I have heard that between the Forest Service appeal and the Fish and Wildlife Service that between 48 and 58 percent of the budgets of those agencies are going toward litigation. 

Would that be ballpark for BLM? 

Mr. ABBEY. I would certainly think that about 20 to 25 percent 

of our total costs are going to address protests, appeals or litigation. What we do not account for is the amount of time that is lost 

while we are going through those processes. 

Mr. CANNON. Right. Which might double that 25 percent? 

Mr. ABBEY. Yes, sir. 

Mr. CANNON. I think that’s probably where that 50 percent more 

or less comes from. 

You’re aware that Senator Daschle asserted in, I guess it was 

last year’s Omnibus Bill a few years ago, a limitation on Federal 

court jurisdiction over appeals of decisions made in the Black Hills 

Forest? Are you familiar with that? 

Mr. ABBEY. Yes, sir. 

Mr. CANNON. Is that something we need to do more broadly in 

America? 

Mr. ABBEY. I would certainly support—and I’m speaking for myself—I could certainly support such an action by Congress. 

Mr. CANNON. Are you familiar with the Forest Hill Initiative? 

Mr. ABBEY. Yes, sir. 

Mr. CANNON. And the limitation on jurisdiction there? 

Mr. ABBEY. Yes, sir. 

17

Mr. CANNON. Do you feel that those are appropriate in that regard? 

Mr. ABBEY. I sure do. 

Mr. CANNON. Let me just offer, Mr. Chairman, my Subcommittee 

on Judiciary oversees the commercial and administrative law aspect of this, and that means what we do administratively with the 

rules and regulations that result in—and this matter of litigation 

seems to be actually working on something to reduce that cost so 

that we can move dollars into oversight and management and away 

from these frivolous lawsuits. 

In addition, let me just point out that this is a—a net benefit 

gain for some of these environmental groups who don’t have to pay 

anything if they lose, and they can lose many, many lawsuits and 

then they get extraordinary attorneys’ fees on the other side if they 

win one, so that it’s a self-funding process, which has done nothing 

but tie up the administration, this administration, the last administration, the administration before that, as far back as I can remember, in costly litigation, costly in terms of dollars and costly in 

terms of time, costly in terms of the resources we’re not developing, 

and costly in terms of what we’re not managing and how we’re not 

managing it. 

So let me just make an offer that we ought to be working together on that issue. And I yield back to you, Mr. Chairman. 

Mr. POMBO. Thank you. Mr. Abbey, how long have you been involved in regulating the mining industry? 

Mr. ABBEY. Mr. Chairman, I have 21 years of experience working 

for the Bureau of Land Management, and the BLM being a multiple-use agency, I’ve been involved in some aspect of regulating 

mining for all 21 years. 

Mr. POMBO. And in—in your testimony and in answering the 

questions from Mr. Gibbons, you talked about the changes in the 

mining industry. One thing I’m interested in pursuing a little bit 

is, how have things really changed over those 21 years in terms of 

what a mining company does when they actually go in and start 

a new mine, and what they leave when they’re done? 

Mr. ABBEY. From my experience, it certainly will start with the 

amount of time that it takes to review proposals that are coming 

from industry and for us to issue a decision. It certainly has, over 

the years, has expanded to include an average of four to five years 

to issue a permit after addressing the protests, appeals and litigation I mentioned earlier. 

What I see primarily is that we have all learned over the years. 

The proposals that we’re receiving from the mining companies are 

certainly much better proposals, there’s more specifics, so we have 

a better idea of what the lasting consequences of these actions are. 

We have a lot more experience under our belts relative to the modeling that we use now to assess and evaluate anticipated impacts 

from these operations and the likely consequences of the—that’s 

going to be left as a result of mine closures, and how those impacts 

can be mitigated. 

So I believe that we’ve all learned over those years, and we all 

benefit from that lesson, or those lessons. So I think for the most 

part, as I suggested to Congressman Gibbons, is that the industry 

18

today does a much better job than what they were doing 10 to 15 

to 20 years ago. 

Mr. POMBO. What—when you talk about how long it takes to get 

a permit, what is the biggest delay? Is it just working their way 

through your bureaucracy or what slows it down? 

Mr. ABBEY. I think to some degree we can accept the legitimate 

criticism that it takes us too long to review proposals. On behalf 

of our employees, I must say that we try to—we fully understand 

that every decision we make is going to be protested, appealed or 

litigated, so sometimes we may go to the extreme to try to address 

any question or every question that we believe might be raised as 

part of those processes. 

As a result, the requirements that we place upon industry, as far 

as helping us to—to come up with the information that we need in 

order to incorporate into the environmental impact statements, 

that we must do to assess potential impacts from these operations, 

that instead of just addressing those known issues, we’re addressing much more than just the known issues, we’re addressing the 

perceptions of what other issues might surface during the protest, 

appeals, litigation. 

Therefore, the amount of time it is taking us to complete an Environmental Impact Statement is much longer today than it was 

three, four or five years ago. 

Mr. POMBO. When you—when the system, you didn’t do it, but 

when the system was set up— Mr. ABBEY. Some people may think I’ve done that. 

Mr. POMBO. Well, Congress bears a big part of the responsibility 

here. But when the system was set up and someone wants to go 

onto public lands and start to mine, and they have to go through 

this process, and you have all the environmental assessments and 

environmental impact statements, all of the different things that 

they have to go through, your agency has to go through consultation with other agencies, all of these steps that we have to go 

through, you’re saying that it could take four or five years to go 

through that process. Isn’t there something wrong with the system 

if, at the end of all of that, it’s still open to lawsuits? 

Mr. ABBEY. Well, again, speaking for myself, it’s very frustrating 

to go through the process and get to the point of issuing a record 

decision, only to see that decision delayed by litigation. And we’re 

on-hold from that point forward until the Federal court will rule on 

the accuracy of our decision. 

So certainly it is very frustrating for us as members of this agency, who are responsible for administrating the law, in carrying out 

the mandates that we have from the Department of Interior and 

from Congress. So I don’t know about whether the system is broken, but I do know it’s very frustrating to work within the system. 

Mr. POMBO. What percentage of the—of the ones that are—of the 

permits that are challenged, what percentage of those do they actually overturn the permit or stop the permit from going forward? 

Mr. ABBEY. Tom Wessendock, who certainly Congressman Gibbons knows, he’s a former Deputy State Director for our mineral 

resources here in the Bureau of Land Management in Nevada, was 

fond of saying that the Bureau of Land Management never lost an 

appeal to the Interior Board of Land Appeals in mining issues. 

19

That’s not to say that it may not change, but we have certainly not 

faired as well in Federal litigation. Even now in Federal litigation, 

though, our success rate is very, very high. I don’t have the percentages that you are asking for, but I do know that our success 

rate in Federal court has been very high. 

Mr. POMBO. Can you provide that for the record for the Committee, because it—I think, as we look at mining law in the future, 

we really do need to look at the way this system works. And if all 

it has become is a way of delay and raise money, then maybe we 

need to look at doing something a little bit differently. 

Mr. ABBEY. Mr. Chairman, I would be happy to provide that information to this Committee. 

Mr. POMBO. I would also like to ask you about the patent moratorium. At what point does BLM come to Congress and ask to lift 

that moratorium? 

Mr. ABBEY. Sir, that—I think that’s the decision Secretary Norton would have to make. I certainly believe that if the current moratorium is a hindrance to this industry, then the industry themselves should be meeting with Secretary Norton to convey to her 

their concerns, and she would be the one that would have to make 

that determination and come back before the Congress. 

Mr. POMBO. And just before I excuse you, I would just say that 

at one point I had dinner with a foreign minister of one of our allies, and he had a theory on what was going on in the United 

States. And it was his theory that the United States had made a— a conscious decision to deplete the natural resources of the rest of 

the world first, and that’s why we were stopping mining and timber and oil extraction, resource extraction, in this country, because 

we wanted to go after all of the resources in the rest of the world 

first, and then we would be the only one with the mining resources 

and timber and oil resources left. And he was serious, he really did 

think that that’s why we were doing this. So his perspective in 

looking at—at laws in this country from the outside was that it 

made so little sense, what we were doing, that we had to be doing 

this and it had to be a conspiracy just to deplete the rest of the 

world’s resources. 

And in listening to the stories that we’ve heard in doing these 

field hearings all over the country, whether we were talking about 

coal or timber or hard-rock mining or oil and gas, I’m beginning to 

wonder if maybe he wasn’t onto something, because it sure doesn’t 

make sense from—from where I’m sitting. 

But I appreciate your testimony. If there are any further questions that members of the Committee have, they will be submitted 

to you in writing. If you could answer those in writing for the Committee so that they can be included in the record? 

Mr. ABBEY. We’ll be happy to. Thank you for this opportunity. 

Mr. POMBO. Thank you very much. 

I would like to call up our second panel of witnesses. We have 

Mr. Alan R. Coyner, State of Nevada Commission on Mineral Resources, Dr. John Dobra, Director of Natural Resources Industry 

Institute, University of Nevada, Reno. 

And before you gentlemen sit down, if I could just have you 

stand and raise your right hand. 

[Witnesses sworn.] 

20

Mr. POMBO. Let the record show they answered in the affirmative. Thank you very much for being here today. If I can begin with 

Mr. Coyner.

STATEMENT OF ALAN R. COYNER, STATE OF NEVADA,

OMMISSION ON MINERAL RESOURCES 

Mr. COYNER. OK. Thank you, Mr. Chairman, and Members of the 

Subcommittee. My name is Alan Coyner, and I am the Administrator of the Nevada Division of Minerals. And on behalf of Governor Guinn, allow me to welcome the Subcommittee to the State 

of Nevada. 

Today I will present information from Nevada that I believe exemplifies responsible mineral development. I will also provide information that demonstrates an ongoing concern whether Nevada 

is competitive in the global competition for exploration dollars. 

These exploration dollars are critical to the new mineral discoveries 

that will provide economic stability in the future for Nevada, and 

especially to our rural communities. 

It’s worth repeating, Nevada is the Nation’s leading producer of 

hard rock minerals. We lead the United States in gold, silver and 

several other mineral commodities. Mining is our State’s second 

largest industry with a total value of mineral production in 2002, 

of approximately $2.8 billion, with precious metal production accounting for 2.5 million of that total. 

The 7.7 million ounces of gold that poured from Nevada’s mines 

in 2002, makes us the third largest producer in the world, behind 

only South Africa and Australia. 

Our major producing region, the Carlin Trend, has surpassed 50 

million ounces of total gold production, a record equaled only by 

four other mining districts on this planet. With Nevada’s vast mineral endowment, clearly the future of hard rock mining in this 

country and the future of Nevada are inextricably entwined. 

Responsible development and modern mining are synonymous. 

Reclaiming the land after mining has ceased is now standard practice, and has been for many years. For the past 13 years, the Governor has presented the Nevada Excellence in Mine Reclamation 

Awards, and during that time, recognized 45 projects and three individuals for outstanding accomplishes in restoring and preserving 

Nevada’s environment. The rewards are given cooperatively by 

state and Federal agencies, making the selection process a true collaboration. 

Many of the projects are unique in the United States, if not the 

world. Each year the regulatory bar that defines above and beyond 

reclamation performance standards has been raised, and each year 

Nevada’s mining industry has responded with ever higher levels to 

commitment to excellence and mining reclamation. 

At this very time, as you’ve heard, several Nevada projects are 

being considered for the first BLM National Hard Rock Mineral 

Environmental Awards, and I am hopeful that a Nevada project 

will be selected. 

Economic stability in hard rock mining would seem to be incompatible. Most maps of Nevada show many places labeled ‘‘sites,’’ which are, in reality, mining ghost towns, places where people lived 

and worked but moved on when the ore ran out. If ore bodies are 

21

finite and mines have lives, how can mining provide economic stability? 

The answer to that question can be approached from many aspects, but I will focus on one. The continuation of economic stability, therefore sustainability, relies heavily on the discovery and 

development of new mines. New mines are found through the investment of exploration dollars in search of new ore bodies. And 

Nevada is in a global completion for exploration dollars. 

The Division of Minerals tracks exploration activity in Nevada 

through filings made by mining companies in the state mine registry. Two of the main indicators of activity are exploration expenditures and the number of active mining claims held by companies 

and individuals. 

In 2002 respondents to the survey reported spending 64.6 million 

in Nevada. While this number is up slightly from 2001, it is significantly less than the 154 million reported in ’94. Over the past 7 

years, Nevada’s largest mining companies have spent, on average, 

less than 20 percent of their exploration dollars in this state, sending nearly all of the remainder overseas. 

Mining claims in Nevada peaked at 425,000 in ’91, and have declined steadily ever since. A one-time loss of approximately 200,000 

claims occurred in ’93 after the enactment of a Federal mining 

claim maintenance fee. The 100-dollar fee per claim paid annually 

by Nevada miners continues to flow to the Federal Treasury. It is 

not shared with the state of origin, like other mineral fees, and 

could be put to a more productive use, such as the reclamation of 

historic Nevada mine lands. 

Active claims in Nevada reached a 25-year low, of 88,124 in 

2002; and nationwide, claims dropped below 200,000 for the first 

time since BLM began publishing claim records in 1978. Simply 

put, fewer claims means less activity, and less activity means fewer 

discoveries. That, Mr. Chairman, directly impacts the economic stability of Nevada. 

Recent increases in the price of gold have led to renewed optimism among exploration companies and individual prospectors. 

Early reports for 2003 claim data indicate the downward trend has 

stabilized or even reversed. Hopefully this will translate into a resurgence of exploration and in mineral development in Nevada. 

However, constant vigilance is required. Burdensome mining fees, 

duplicative regulations and unnecessary permit delays lead to economic instability, not stability. We are in a global competition for 

responsible mineral development, and Nevada cannot afford to fall 

behind. Thank you. 

Mr. POMBO. Thank you. 

[The prepared statement of Mr. Coyner follows:]

Statement of Alan R. Coyner, Administrator,

Nevada Division of Minerals 

Thank you, Mr. Chairman and members of the Subcommittee, I appreciate the opportunity to testify today regarding the role of the hardrock mining industry in the 

responsible development of our domestic mineral resources and the economic stability afforded by mineral development. My name is Alan Coyner and I am the Administrator of the Nevada Division of Minerals, and on behalf of Governor Guinn, 

allow me to welcome the Subcommittee to the State of Nevada. 

The theme for this hearing is very much in keeping with the division’s mission, 

which is to further the responsible development and production of Nevada’s mineral 

22

resources to benefit and promote the welfare of the people of Nevada. Today I will 

present information from Nevada that I believe exemplifies responsible mineral development. I will also provide information that demonstrates an ongoing concern 

whether Nevada is competitive in the global competition for exploration dollars. 

These exploration dollars are critical to the new mineral discoveries that will provide economic stability in the future for Nevada, and especially to our rural communities. It is entirely appropriate that this hearing be held in Nevada, the Nation’s leading producer of hardrock minerals. We lead the United States in gold and silver 

production, as well as barite, lithium and magnesium compounds, and several other 

mineral commodities. Mining is our state’s second largest industry, with a total value of mineral production in 2002 of approximately $2.8 billion. Precious metal 

production accounted for about $2.5 billion or 90% of that total. The 7.7 million 

ounces of gold that poured from Nevada’s mines in 2002 makes us the third largest 

producer in the world, behind only the countries of South Africa and Australia. Our 

major producing region, the Carlin trend, surpassed 50 million ounces of total gold 

production in 2002, a record equaled by only four other mining districts on the planet. With Nevada’s vast mineral endowment, clearly the future of hardrock mining 

in this country and the future of Nevada are inextricably entwined. 

Responsible development and modern mining are synonymous. Reclaiming the 

land after mining has ceased is now standard practice and has been for many years. 

For the past 13 years the Governor has presented the Nevada Excellence In Mine 

Reclamation Awards and during that time recognized 45 projects and three individuals for outstanding accomplishments in restoring and preserving Nevada’s environment. The awards are given cooperatively by the Nevada Division of Minerals, the 

Nevada Division of Environmental Protection, the Nevada Division of Wildlife, the 

Bureau of Land Management, and the United States Forest Service, making the selection process a true collaboration. Many of the projects are unique in the United 

States, if not the world. Each year the regulatory bar that defines ‘‘above and beyond mandated reclamation performance standards’’ has been raised, and each year 

Nevada’s mining industry has responded with ever-higher levels of commitment to 

excellence in mine reclamation. At this very time, several Nevada projects are being 

considered for the first BLM National Hardrock Mineral Environmental Awards, 

and I am hopeful that a Nevada project will be selected. 

If responsibility includes leadership, Nevada’s mining industry again sets the standard. Annually over the past five years, approximately $100 million in taxes of 

various types have been paid by the Nevada mining industry, and a substantial portion remains in counties where the mines are located. Whether it is donations to 

the McCaw School of Mines in Henderson, where schoolchildren can have an underground mine experience, or help for the Elko Little League in the heart of mining 

country, Nevada’s miners strike pay dirt for leadership in civic responsibility. 

Economic stability and hardrock mining would seem to be incompatible. 

Orebodies, which is rock from which a valuable constituent, usually a metal, can 

be profitably extracted, are finite. In fact, most maps of Nevada show many places 

labeled ‘‘sites,’’ which are, in reality, mining ghost towns. Places where people lived 

and worked, but moved on when the ore ran out. If orebodies are ‘‘finite’’ and mines 

have ‘‘lives,’’ how can mining provide economic stability? 

The answer to that question can be approached from many aspects, but I will 

focus on one. The continuation of economic stability, and therefore sustainability, relies heavily on the discovery and development of new mines. New mines are found 

through the investment of exploration dollars in search of new orebodies, and 

Nevada is in a global competition for exploration dollars. For the past 9 years, the 

Division of Minerals has tracked exploration activity in Nevada through filings 

made by mining companies to the state mine registry. Two of the main indicators 

of activity are exploration expenditures and the number of active mining claims held 

by companies and individuals. In 2002, respondents to the survey reported spending 

$64.6 million on Nevada exploration activities. While this number is up slightly 

from 2001, it is significantly less than the $154 million reported in 1994. Over the 

past seven years Nevada’s largest mining companies have spent on average less 

than 20% of their exploration dollars in the state, sending nearly all the remainder 

overseas. 

The other major indicator of activity is the number of active mining claims. Mining claims in Nevada peaked at 425,000 in 1991 and have declined steadily ever 

since. A one-time loss of approximately 200,000 claims occurred in 1993 after the 

enactment of a Federal mining claim maintenance fee. The $100 fee per claim paid 

annually by Nevada’s miners continues to flow to the Federal Freasury. It is not 

shared with the state of origin like other mineral fees, and it is not put to a productive use, such as the reclamation of historic abandoned mine lands. According to 

BLM’s Public Land Statistics, active claims in Nevada reached a 25-year low of 

23

88,124 in 2002, and nationwide claims dropped below 200,000 for the first time 

since BLM began publishing claim records in 1978. Simply put, fewer claims means 

less activity, and less activity means fewer discoveries. That, Mr. Chairman, directly 

impacts the economic stability of Nevada. 

Recent increases in the price of gold have led to renewed optimism among exploration companies and individual prospectors. Early reports for 2003 claim data indicate the downward trend has stabilized or even reversed. Hopefully this will translate into a resurgence of exploration and mineral development in Nevada. However, 

constant vigilance is required. Burdensome mining fees, duplicative regulations, and 

unnecessary permit delays lead to economic instability, not stability. We are in a 

global competition for responsible mineral development, and Nevada cannot afford 

to fall behind. Thank you. 

Mr.POMBO. Dr. Dobra? 

STATEMENT OF JOHN DOBRA, DIRECTOR, NATURAL 

RESOURCES INDUSTRY INSTITUTE, UNIVERSITY OF 

NEVADA, RENO 

Dr. DOBRA. Yes, sir. Thank you for having me here, Mr. Chairman. And some of what I’ve got in my prepared testimony repeats 

some of the things that Alan has said, so I’ll skip around a bit. 

But every year I prepare a presentation for the—an overview of 

the industry, its economics. And the way I began this year was by 

noting that 2002, in the first half of this year, generally being very 

good years for the mining industry if for no other reason than the 

price of gold starts with a three. Because we had gone through four 

years where the price was down for various reasons, and was finally starting to recover in 2002. The price averaged $310 the first 

half of 2003, the price averaged about $350, and it currently sits 

around $380. 

In terms of what that does for the health of the industry, really 

can’t be understated. It’s tremendous. You heard Mr. Coyner talk 

about increases in exploration activity, and he at one point—I 

wanted to reiterate that he made—is that, even though we see exploration activity up, it’s still well, well below the levels that it attained in the early ’90s before regulatory reform and the Millsite 

Opinion and all these other things came about. 

In spite of that generally good trend, we have some concerns. 

First of all, our production costs are rising significantly. Goldfield 

Mineral Services is a worldwide noted expert on mineral economics. 

They pointed out in their 2003 report that in a matter of a few 

short years, Nevada has gone from the cheapest place to produce 

gold in the world to the most expensive, and that refers to production costs averages. 

There are a number of reasons for that. One is the decline in ore 

grades. That’s the result of going through a period of time where, 

in order to survive, the mines had to choose the highest-grade ores 

to drive their costs down. Those have now been depleted and so 

now our ore grades are falling, which raises our costs. 

Another significant issue is energy costs. Goldfield estimates that 

our—well, our costs went from $179 average per ounce in 2001 to 

$206 per ounce in 2002. Excuse me. I said that wrong. 2001 to 

2002. Probably half of that increase in production costs came from 

energy alone, the price of diesel and electricity. So there’s definitely 

an issue that needs to be addressed. 

24

Another significant issue is what you’ve heard about already, so 

I’ll be brief about it, is the rise in insurance and bonding costs. 

That’s been significant. We’ve had surety companies go bankrupt 

and leave, at least in one case, a mine without coverage and in violation of its permit due to no fault of their own. So the insurance 

industry is a significant issue. 

And the third factor we talked about, as well, is that we—we face 

this un-- sort of unending process of appeals and litigation every 

time a permit is issued. Our—those delete the mine’s overhead 

costs. And we saw in 2002, overhead costs of production rise about 

30 percent. So that’s a significant increase in costs, and what attributes our rise in costs to. 

Finally, I guess I should say that the bottom line is that Nevada 

mine managers have to go to their bosses and present claims that 

are being competitive for the use of capital with other places in the 

world. And to keep Nevada competitive, we need to address those 

three main issues. Thank you. 

Mr. POMBO. Thank you. 

[The prepared statement of Dr. Dobra follows:]

Statement of John L. Dobra, Ph.D., Director, Natural Resource Industry 

Institute, Associate Professor of Economics, University of Nevada, Reno 

2002 and the first half of 2003 were generally good for Nevada’s mining industry 

if, for no other reason than for the first time in four years, the annual average price 

of gold started with a ‘‘3.’’ After averaging in the $270 per ounce range for the previous three years, gold averaged $310 per ounce in 2002 and $350 in the first half 

of 2003 and is over $380 per ounce at the time this testimony is being prepared. 

This additional $40 per ounce in 2002 and $80 per ounce in the first half of 2003 

makes an enormous difference in an industry producing around eight million ounces 

of gold per year. The current price in the $380-$390 range is responsible for a significant increase in exploration expenditures as companies seek to expand existing 

reserves and find new deposits. 

Nevada gold mines produced 7.73 million ounces of gold in 2002, down slightly 

from 8.13 million ounces in 2001. Silver production was also down in 2002 at 13.6 

million ounces from 17.5 million ounces in 2001 and over 23 million ounces in 2000. 

The declines in production of both metals were the result of declining ore grades 

and mine closures or temporary closures. 

In spite of declining production, gross proceeds of Nevada mines (including geothermal and oil production) increased to $2.7 billion in 2002 from $2.5 billion in 

2001. Approximately $2.4 billion, or 89 percent, of these 2002 gross proceeds were 

generated by gold and silver production. Net proceeds of mines also increased in 

2002 to $533.7 million from $438 million in 2001. This increase resulted in a corresponding increase in Net Proceeds of Minerals tax revenue from $21.4 million in 

2001 to $25.6 million in 2002, a 20 percent increase. Gold price increases in the first 

half of 2002 offer the prospect that these revenues flowing to the local and state 

coffers as well as revenues from other taxes paid, especially sales and use tax and 

property tax, will reverse their recent course. 

Although mining employment has not yet recovered, if prices remain in their current range, we can expect that mining employment will begin to recover. Employment in mining as in the rest of the economy tends to lag behind investment. 

Other positive developments that are largely attributable to increasing gold prices 

are several expansions of operations that are currently in the permitting phase, that 

is, where operators are currently seeking operating permits from federal and State 

regulatory authorities. Glamis Gold is seeking permits to expand operations at its 

Marigold mine in Humboldt County; Newmont is seeking permits to develop its 

Phoenix deposit in Lander County as well as expanding its operations at Gold Quarry in Eureka County; and Cortez Gold Mines Joint Venture is seeking permits to 

expand its Pipeline operations in Lander County. In addition, Hecla Mining has entered into an agreement with Great Basin Gold Ltd. to develop Great Basin’s 

Ivanhoe prospect at the north end of the Carlin Trend in Elko County; and Placer 

Dome has reopened its Getchell Mine in Humboldt County. 

25

1Philip Klapwijk, et al., Gold Survey 2003, Gold Fields Mineral Services Ltd., London, April 

2003, p. 45. 

In spite of these positive developments, Nevada’s gold industry faces some significant technical and regulatory challenges. One disturbing trend in Nevada’s gold industry in 2002 was the increase in operating costs. The weighted average cash cost 

per ounce for mines in Nevada increased from $179 per ounce in 2001 to $206 per 

ounce in 2002, a $27, or 15 percent, increase. Gold Fields Mineral Services (GFMS) 

estimates that energy cost increases for diesel fuel and electricity alone account for 

between $5 and $10 per ounce of this increase. 1 Other factors raising Nevada producers’ costs have been declining grades in older operations and the shift from openpit surface mining to more costly underground mining. Approximately 27 percent of 

2002 Nevada gold and silver production came from underground mining compared 

to 20 percent in 2001 and that trend will continue for the foreseeable future. 

All of these factors, as noted by GFMS, have resulted in U.S. and Nevada producers going from among the lowest-cost producers to the highest-cost producers in 

the world. 

Nevada’s gold producers face other challenges that have a bearing on production 

costs. One of these challenges is the rising cost of insurance for bonding for reclamation expenses. Recent changes in federal regulations have required cash bonds for 

reclamation for both exploration and operating permits. The problem of rising insurance costs is exacerbated by what some have called a ‘‘crisis’’ in the insurance industry as a result of insurance company stock market losses and the rising costs of lawsuits in various industries. 

However, it should be noted that bonding for exploration is, on the whole, a reasonable requirement and the industry has generally supported it. In the case of 

bonding for exploration, the cash amounts are generally small because of the small 

scale of disturbances. The main problem, particularly for smaller operators, has 

been delays in getting BLM approval of bond amounts. In the mining business, like 

other businesses, time is money and these delays add to project costs. 

Another problem facing the industry is the rising costs of legal action in the permitting process for operators. Environmental groups are routinely challenging applications for virtually all permits in the administrative process and then, if permits 

are granted, they file suits against the State and Federal agencies responsible for 

issuing permits. These actions tie up development plans and, like insurance costs, 

add to operators’ overhead costs. In most cases these appeals are rejected and lawsuits are either lost or dropped. The appeals and suits are simply attempts to slow 

exploration and mine development and, in my opinion, constitute an abuse of the 

NEPA process. 

The increase in Nevada operators’ overhead costs in the past year has been as 

notable as the increase in cash operating costs noted above. In 2001 cash operating 

costs, as noted above, were $179 per ounce, and total costs were $226 per ounce, 

indicating non-cash costs of $47 per ounce. In 2002, cash operating costs were $206 

per ounce and total costs were $266 per ounce, indicating non-cash costs of $60 per 

ounce, a significant 28 percent increase in non-cash costs. 

Nevada producers ended 2002 with approximately 69 million ounces of proven and 

probable gold reserves, which is gold contained in ore that can be mined at a profit. 

This is down slightly from year-end 2001 reserves of 72 million ounces but suggests 

that all but three million of the 7.73 million ounces produced in 2002 were replaced 

by exploration and discovery of new ores. The increase in exploration spending in 

the State reported by the Nevada Division of Minerals from $51.2 million in 2001 

to $64.6 million in 2002 along with higher gold prices make it likely that Nevada’s reserve base will increase in the future. While this trend is favorable, total exploration expenditures still lag far behind expenditure levels in the early 1990’s when 

they were over twice the 2002 level. 

These industry developments clearly show that Nevada’s minerals industry is seeing a reversal of a downward trend over the last five years that has been an economic challenge. In general, the Nevada mining industry is realizing a healthier 

bottom line at many operations, especially for producers of precious metals. The 

North American precious metals industry has worked its way through the difficult 

period of the late 1990’s and is in much healthier financial condition. Nevada remains a major player in the world gold industry. Moreover its large reserve base 

and existing capital investment make it likely that it will remain a major player 

for the foreseeable future. 

Nonetheless, the bottom line is that Nevada’s mineral industry has to compete for 

exploration and development capital with other parts of the world. North American 

mine and exploration managers have to convince their bosses to sink scarce capital 

into Nevada rather than other parts of the world. For this investment to continue, 

26

the industry, with the assistance of public policymakers, need to find solutions to 

problems like high energy costs, access to bonding for reclamation, delays in permitting, and abuse of the NEPA process. 

Mr. POMBO. Mr. Gibbons. 

Mr. GIBBONS. Thank you very much, Mr. Chairman. And to Mr. 

Coyner and Dr. Dobra, again, welcome to the Committee. It’s a 

pleasure to see you. We’ve had many times where we’ve met and 

had conversations on all of these issues in the past, and I appreciate you bringing them forward to this Committee. 

Dr. Dobra, you spoke about production costs, including the decline in ore grade, the energy costs. We’re anticipating an energy 

shortfall in the western part of the United States this fall. Do mining companies actually predict what their costs are going to be? Do 

they buy in advance as they would in futures? How do they adjust 

for that rise? For example, in the natural gas costs which is going 

to spike this winter, which will then have an effect on the electrical 

energy that’s supplied to them in terms of costs which go to their 

milling processes, how do they adjust for that? Because we’re talking about a fixed commodity here in price. I mean, the mining company doesn’t produce an ounce of gold and present it to the market 

and say, ‘‘This is what you will have to pay for it.’’ They’re stuck, 

are they not, with a commodity price, and have to deal within that 

commodity to make a profit? 

Dr. DOBRA. Yes, that’s correct, they have no control over price, 

but there are strategies for controlling costs, and I think most of 

the companies do it, which would be going into the futures market 

and purchasing, you know, options to buy fuel oil, natural gas, in 

advance. 

Unfortunately, there is not a good market for that, like electricity 

itself, but, you know, if you have contracts to acquire fuel, oil, and 

so forth, those generally go up in value when the price of electricity 

goes up. So they—they’re able to offset some of that increase in 

costs through ledgering. 

Mr. GIBBONS. Mr. Coyner, you mentioned the abandoned mines 

program in the State of Nevada. How is that progressing? I know 

there’s a number of abandoned mines which are problematic both 

to the safety and to the environment from historical practices as 

far back as the 1860s in this State. What is the State of Nevada 

doing to address the abandoned mine problem? 

Mr. COYNER. OK. Thank you, Mr. Gibbons. Let me phrase my 

answer in two ways, first with the physical hazards and the second 

with environmental hazards. 

With regard to physical hazards, we still have a very progressive 

program in this state. We are probably the leading state with regards to addressing those, with the help of many partners, including the Nevada Mining Association and the BLM. 

We currently have about 10,000 of those sites identified, and 

about 7,000 of them secured. That is funded through a fee that is 

levied on mining claims. So as you saw in my testimony, it was reflected in there, I have quite a concern over the drop in mining 

claims, because that impacts my ability to get my job done with securing physical hazards in the State. We continue to put every effort and resource we can to that problem. 

27

Let me say next about the environmental hazards, the State of 

Nevada has been quite progressive there, too, in terms of forming 

an environmental task force comprised of 12 State and Federal 

agencies to begin to address this problem in Nevada. Because, as 

you know, we are not a coal mining state, we receive no SMCRA, 

Surface Mining Reclamation Act, dollars to help with that problem. 

We have recently secured some Federal funding with the help of 

Congressman Gibbons through the Army Corp. of Engineers to 

begin our work on environmental cleanup at some of our abandoned mine sites. 

Mr. GIBBONS. Dr. Dobra, you talked about litigation and appeal. 

What—what effect does a delay in the permit process have on a 

mining company’s ability to operate, to recover its investment? 

And finally, in the brief time that you have to answer this, let 

me ask you a question, as a professional. Would you support a 

bonding requirement for those people that appeal if there is damages to, for example, the delay in getting a mine operating? 

Dr. DOBRA. Well, from an economic standpoint, a delay of two to 

three years in getting a permit, basically makes it—makes it very 

expensive to do business here versus other places where you can 

get a mine constructed and started in, say, 18 months. 

About 10 years ago, a mine here in Nevada discovered an ore 

body, got its permits and reported its first foray in 18 months. Now 

it’s taking, you know, a matter of a series of years, as you heard 

from Mr. Abbey. 

Mr. GIBBONS. OK. Thank you, Mr. Chairman. And to our witnesses again, thank you. 

Mr. POMBO. Mr. Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. 

Gentlemen, as I said earlier, the greatness of our nation is based 

on this diversity and so many of its resources and all different aspects of what makes up America as it is, and the reality—and correct me if I’m wrong, Mr. Chairman—I—I represent a constituency 

that is basically surrounded by the Pacific Ocean. And when we 

talk about mining among the 50 members of Congress that make 

up this Committee, it’s almost like talking about fisheries. In the 

same sense of getting the attention of the members in our collective 

will, if you will, among the members of Congress, it’s almost like 

speaking Greek to other members. 

And I know my good friend Mr. Gibbons is constantly faced with 

this problem in educating other members how important this industry is, just as it is that I have to say that I have the largest 

tuna canning facility in the world, where we export about $500 million worth of canned tuna. So I’m a tuna man, as it is to my friend 

Mr. Gibbons, he’s a mining man. Can you see the problem that 

we’re having in the Committee? 

And as you mentioned—you know, I’m very impressed that 

Nevada produces $2.8 billion—and forgive my ignorance. When you 

say ‘‘hard rock,’’ does this mean you have to crack the rock to get 

the minerals, or can it be dug up in dirt? Can you educate me on 

that, Mr. Coyner? When you said, ‘‘hard rock production,’’ anything 

that is mined—that can be mined; is that correct? 

28

Mr. COYNER. I’m happy to, Congressman Faleomavaega. And I’m 

sure that—tuna comes in metal cans, so there is a relationship 

there. 

When we talk about hard rock mining in the United States, we 

are generally referring to those minerals that are processed on 

hard rock mining rather than coal mining. 

Mr. FALEOMAVAEGA. OK. 

Mr. COYNER. That’s sort of the discretionary use of those two 

terms, and mostly, that is found in the western United States. 

Mr. FALEOMAVAEGA. And you mentioned that we’re in a global 

competition, being competitive globally. So when you say that you 

produce $2.8 billion worth of minerals in your production, how 

much is that exported domestically, if I can put it in those terms? 

I mean, does a great percentage of your production go to foreign 

countries or do we absorb the mining operation—I mean, absorb it 

in the sense that we’re selling it domestically. It doesn’t have to go 

to other foreign countries. 

Mr. COYNER. I would say for most of the mineral commodities in 

Nevada, they are for internally, in the United States, with the exception of our largest, which is gold, which is 2.5 billion of that 

total, and by having that amount of gold produced out of Nevada, 

the United States then becomes a net exporter of that value, which 

certainly helps with our trade deficit, so most of that gold is exported. 

Mr. FALEOMAVAEGA. Because I remember in the 1950s, at least 

my readings of it, that we were such a self-sufficient country, we 

didn’t need to—to import so many of the resources or minerals and 

whatever, because we were able to do it domestically. Now we are 

an interdependent country, especially, as always, the issue of fuel, 

where 100 percent I think of our fuel at inception has to be imported from foreign countries. I suppose the same problem deals 

with mining. And so you really don’t have that much that you’re 

exporting to foreign countries, it is for local consumption, so to 

speak? 

Mr. COYNER. Other than gold, I would say that’s true. 

Dr. Dobra, would you care to comment? 

Dr. DOBRA. Well, the last time I checked, the U.S. exported about 

five-and-a-half million ounces of gold per year, so that’s, as Mr. 

Coyner said, that’s a significant amount of gold, and it improves 

our balance of payments. 

Mr. FALEOMAVAEGA. And in the trend that you mentioned last 

year of $2.8 billion, is the trend decreasing in terms of the production or is it increasing from previous years? I—I am a little—

Mr. COYNER. The total is down slightly from previous years. We 

peaked at just over 8 million ounces of gold production about three 

years ago, so we have been declining slightly. Some of that is due 

to the price, some of that is due to the fact that we are seeing more 

underground gold production from our State, which generally produces less volume. 

Mr. FALEOMAVAEGA. And, Dr. Dobra, you mentioned that all the 

increases in costs and just about everything and anything dealing 

with the mining industry, but this is probably true with mostly all 

the agencies as well, increase in insurance costs if you are a doctor, 

increase in costs in just about anything. And I was just curious in 

29

terms of when you said there’s a tremendous—is it to the point 

where now, many companies have to file bankruptcy and they can 

no longer operate, or is it just to say that there are increases, but 

not to the extent where it’s so severe that—that you’re facing a 

very critical situation with the mining industry here in Nevada? 

Dr. DOBRA. Well, over the past several years before the price 

started to rebound, we did see companies go into bankruptcy and 

forced into mergers and some consolidation as a result of low 

prices. 

As I said in my opening statement, I mean, the biggest news in 

the mining industry in Nevada is that the price of gold starts with 

a three, and that—you know, our costs have gone up, yes, but the 

price has gone up more, so... 

Mr. FALEOMAVAEGA. And 60,000 people in the State of Nevada 

depend for employment— Dr. DOBRA. It’s not quite that many, but it’s in the 50 range, 

yeah, either directly employed or employed in businesses that supply goods and services to the industry. 

Mr. FALEOMAVAEGA. Well, I hope we can employ more. Thank 

you very much, sir. 

Dr. DOBRA. Sure. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. 

Mr. POMBO. Mr. Cannon. 

Mr. CANNON. Thank you, Mr. Chairman. 

Mr. Coyner, you mentioned you had about 10,000 abandoned 

mine sites. Can you tell me about your process of prioritization? 

Are you taking the most hazardous sites? Are you taking the closest? And then, also, how many of those sites have you actually 

taken care of? 

Mr. COYNER. Thank you, Congressman Cannon. Yes, the State of 

Nevada Legislature has a prescribed methodology for ranking those 

physical hazards. So our work crews in the field discover the hazards and log them in, inventory them, and take a number of criteria to use to determine how hazardous they are. We then address 

the most hazardous sites first. 

We also keep the County governments informed of the progress 

of our work. So, again, of the 10,000 or so that we’ve logged in, 

we’ve actually physically secured about 7,000 of those, so we have 

about a 3,000-site backlog. 

The universe of sites is something like perhaps 50,000 sites in 

Nevada, of a total number of possible sites of perhaps 200,000. We 

won’t know until we visit them whether they’re part of that group 

that will have to be addressed. 

Mr. CANNON. Do you mitigate those sites? Do you include in your 

process of prioritization the cost of mitigation so that, if it’s not a 

very hazardous site but it’s cheap to mitigate, you go in and clean 

those up? 

Mr. COYNER. Actually, the cost really isn’t too big of a factor unless we choose to backfill the site. Backfilling, they’re actually 

physically filling up the site, which is a fairly permanent solution. 

As you might expect, it is somewhat more costly. But in terms of 

the fencing, which is our normal procedure, most of those sites are 

fenced. The driving force is, how hazardous is it, a vertical shaft 

versus a horizontal shaft, and so forth. 

30

Mr. CANNON. Have you had any AML funds from the coal mining 

abandoned mine lands funds at all for that project? 

Mr. COYNER. No. The State of Nevada receives no Surface Mine 

Reclamation Act dollars. 

Mr. CANNON. You guys don’t have any coal at all? 

Mr. COYNER. Well, we’ve got a little bit of coal down at Coaldale 

Junction, as Congressman Gibbons knows. We’ve discussed the possibility of mining just a little bit of it so that we can qualify for 

those funds. 

Mr. CANNON. It would be sort of nice if you could marry Wyoming, which has huge coal dollars and not many sites that need it. 

Thank you very much. Yield back to you, Mr. Chairman. 

Mr. POMBO. I wanted to, Mr. Coyner, you talked about in your 

testimony, the mining companies that are investing 20 percent of 

their dollars here and the rest overseas. What’s the impact on the 

United States, in general, of more and more of our infrastructure 

being located in other countries? 

Mr. COYNER. Certainly, taking a very parochial view, a State of 

Nevada view, those rural communities—and remember, Mr. Chairman, that Nevada is the most urbanized state in the United States. 

Nearly 2 million residents, nearly 1.4 million of them live in Las 

Vegas, and really don’t know much about mining, maybe .3 or so 

up here and .2 out there in rural Nevada. And they have a very 

strong dependence on mining and agriculture for their economies. 

So that lack of exploration dollars not flowing into Nevada means 

fewer motel stays, fewer drillers working, fewer assay labs, fewer 

bulldozers creating roads to mining claims, it has a very dynamic 

impact on rural Nevada. The magnitude of that, it’s in the hundreds of million of dollars, and it depends on what sort of timeframe you want to look at. But it’s been certainly less in the ’90s 

and the latter part of the ’90s and the beginning of 2000s, than it 

has been in the ’80s, as we indicated. 

Mr. POMBO. Dr. Dobra, I would like to ask you basically the same 

question, because we had a hearing last week in Southern California, the Lake Arrowhead area, talking about the condition of 

San Bernardino National Forest. And one of the things that came 

out in the hearing was that the dead trees that they were taking 

out of San Bernardino National Forest, they were putting in a 

landfill because they no longer had a sawmill anywhere near San 

Bernardino National Forest that was capable of handling the trees 

that were being taken out of there. 

And I—it makes me wonder, when you talk about mining and so 

much of our investments going overseas and so much of the very 

infrastructure that the industry depends on being relocated, what’s 

the long-term economic impact on this country of exporting our 

mining industry? 

Dr. DOBRA. Well, the mining industry is a—you know, provides 

strategic critical materials. Our main output here, gold, is largely 

viewed as a source of jewelry and most of it does go into that, but 

it’s also extremely important in the electronics industry and so 

forth. 

Losing the ability to mine these resources domestically, you 

know, in the case of gold is not really that big of a deal, because 

there’s 8,000-plus tons of it sitting in Fort Knox, and a lot more 

31

than that, you know, in other central banks. So we’re not really losing a strategic material if we drive it offshore. 

But what we are driving offshore are a lot of very high-paying 

jobs that support people. You know, the average, I believe last year 

in—for the metal mining industry in Nevada was over a 62,000-dollar job. And so that’s a significant factor. 

Mr. POMBO. The average was 62,000? 

Dr. DOBRA. Yes. 

Mr. POMBO. In Rural Nevada? 

Dr. DOBRA. Yes. 

Mr. POMBO. Which is a significant income? 

Dr. DOBRA. Yes. And it compares with under—I want to say—I’m 

not sure about the number—but I would say maybe $28,000 on average in this state, in terms of, you know, earnings. So it’s a substantial difference, you know, and that does spur economic activity 

in the rural areas and in the urban areas too, when people come 

to Reno to shop and so forth. 

So it’s a small industry. People like to say it’s the second largest 

industry, but if you want—and that’s in terms of its export, you 

know, how much money it brings into the State. But on the other 

hand, if you look in terms of the number of jobs, it’s one of the 

smallest industries. You have, you know, a very small, highly 

skilled work force generating a lot of value. 

Mr. POMBO. When you talk about the economic factors that are 

forcing companies to make the decision to locate elsewhere, in your 

testimony, you talk about the costs of production here versus other 

states, other countries. Does the permitting process, that bureaucratic process and the delays, is that the number-one factor in driving up costs? 

I mean, if you look at the immense amount of money that’s necessary today to start a new mine and the possibility of being delayed four or five years or more before you can start pulling out, 

then that has to have a major impact on decisions that are made 

by—by companies. 

Dr. DOBRA. Oh, absolutely. You know, you’re looking at two comparable resources, in terms of ore bodies, and one is in Peru and 

one is in Nevada. You’re going to get your money back a lot quicker 

in Peru. And that’s what financial planners demand of their investments. 

So this, you know, these delays, you know, significantly tilt the 

field—the field against us. We’re still seeing development, mine development expansion in Nevada, because we’ve got the capital here 

already. So developing comparable ore bodies in Chile versus 

Nevada, you have to—you know, Nevada still has some advantage. 

But still, if you try to go into a whole new property, you’re looking 

at—you know, the delay seriously discourages investment here. 

Mr. POMBO. But if you have a company or a—yeah, if you have 

a company that looks at Chile and the government of Chile says 

you can be extracting ore in 12 months, and they look at Nevada 

and they say it’s going to be five years if we’re lucky, that is—that 

has to be a deciding factor in terms of moving some of that highly 

skilled labor and that investment out. 

Dr. DOBRA. Oh, absolutely. There’s no question about it. And 

that’s why—you know, Mr. Coyner mentioned that only 20 percent 

32

of exploration dollars are being spent here in the U.S., in Nevada, 

in particular. If you went back 10 years, it would be—that number 

would have been more like 50 percent. I mean, these companies 

want to do business here because, first of all, it’s their home, and 

we’ve got a rule of law and all the advantages, you know, that you 

can think of, that’s here. But, you know, when you are looking at 

12 months versus 5 years, that radically changes the economics for 

an investor. 

Mr. POMBO. Finally, I would just like to—and either one of you 

can answer this if you—if you can. And I don’t know how familiar 

you are with the mining industry in other countries. I have had an 

opportunity to see the mines, some of the mines in, like South Africa and South America. 

What are some of the differences in terms of environmental 

standards and health and safety standards in the mines in other 

countries versus what we have here in this country? 

Mr. COYNER. Mr. Chairman, with all due respect, you’ll be hearing from an international mining company later today, and they 

can certainly answer that question better than I can. 

Mr. POMBO. Well, I’ll save it for them then. 

Dr. DOBRA. I would like to add, though, that, you know, most 

countries around the world require that operators going in will 

meet or exceed U.S. Environmental Standards, and it’s generally a 

condition of the financing. If you go to a bank and ask them for 

$200 million to put a mine someplace, they’re going to say, ‘‘OK, 

fine, but you’ve got to meet or exceed U.S. Environmental Standards because we don’t want to get sued and lose our money.’’. 

So I think there’s significant differences, particularly historically, 

between labor standards and environmental standards, you know. 

But anymore, companies going abroad aren’t really fleeing environmental or human health and safety regulations, they’re the same. 

Mr. POMBO. Well, I won’t debate with you as to whether or not 

they’re the same, but I’ve been through mines in this country and 

I’ve been through mines in other countries and they’re not the 

same. Their standards may be the same, but the level of enforcement may be a little different. 

Dr. DOBRA. That’s very true. 

Mr. POMBO. Thank you very much for your testimony. 

Mr. FALEOMAVAEGA. Mr. Chairman, I just have one quick question. 

Mr. POMBO. Sure. 

Mr. FALEOMAVAEGA. I’m sorry. I know that we’re limited in time. 

I just wanted to ask Mr. Coyner, how many—what’s the total 

number of mining companies that do business here in Nevada? And 

what percentage of that is foreign? And also, I would like to know 

what—are there any mining companies owned by Native American 

companies? 

And if you don’t have the answer, we’ll just let you submit that 

for the record. I would like to—

Mr. COYNER. I can certainly come up with finite answers for all 

of those at a later date, but off my cuff, which I will do as well, 

the number of mining companies actively producing in this state of 

major consequence are somewhere around 20, depending on where 

33

you draw your cutoff, and depending on whether you are talking 

about metal mining or nonmetal mining. 

As to the question of how many are foreign-owned, very few, if 

any. Because, as is commonly known, most of these companies are 

publicly traded. So if you in fact own any large mutual fund, as I 

do, you are a participant in owning part of the gold mining industry in Nevada. 

Mr. FALEOMAVAEGA. When you say very few, two or three; correct? 

Mr. COYNER. Yes, perhaps. And I would say those are more actively involved in exploration activities in this state right now rather than production. 

Mr. FALEOMAVAEGA. Thank you. Thank you, Mr. Chairman. 

Mr. POMBO. Thank you. 

Mr. POMBO. I would like to call up our third panel, Mr. Russ 

Fields, President of the Nevada Mining Association; James A. 

Chavis, Vice President, U.S. Government Relations, Placer Dome 

America; and Dr. Tony P. Taylor, President and CEO of Millennium Mining Company. Would you raise your right hand. 

[Witnesses sworn.] 

Mr. POMBO. Thank you. Let the record show they answered in 

the affirmative. 

Mr. Fields, I’m going to begin with you. 

STATEMENT OF RUSS FIELDS, PRESIDENT,

NEVADA MINING ASSOCIATION 

Mr. FIELDS. OK. Thank you, Mr. Chairman, Members of the Subcommittee. My name is Russ Fields and I’m president of the 

Nevada Mining Association. On behalf of our 300-plus members, I 

appreciate the opportunity to testify here today before you, and 

also thank you very much for coming to our state to hear of these 

issues. 

My focus today will be on my suggestion for land transfers as a 

possible means to address the potential problems that we’ve all 

heard about this morning. Many of these concerns can be addressed by land transfers. 

With close to 90 percent of the land in Nevada being managed 

by the Federal Government, Nevada is at an economic disadvantage compared to the other 49 states. It has a smaller property tax 

base with which to pay for services it provides to its growing population. In fact, it is the fastest-growing population in the United 

States for over the last decade. 

Among the 48 conterminous states it has the smallest percentage 

of private-land base from which to launch any expansion of its 

economy. And due to the large amount of public land, it has an 

ever-growing stream of Federal regulations that limit conditional 

economic development, such as ranching and mining on these 

lands. 

Although regulatory reform would provide some relief, it usually 

is slow and somewhat ineffective. On the other hand, the sale of 

certain Federal lands directly to the private sector through direct 

congressional legislation is neither slow nor ineffectual. For example, the proposed sale of public lands in Northeastern Nevada 

found in H.R. 2869, called the Northern Nevada Rural Economic 

34

Development and Land Consolidation Act of 2003, sponsored by 

Congressman Gibbons, will immediately place much-needed land in 

the property tax base of various Nevada counties. It will also 

streamline a duplicative Federal/State permitting process. 

Mining is important to Nevada, especially to the rural communities that depend on the development of natural resources for 

their livelihoods, a livelihood that, by the way, provides many of 

the raw materials that sustain this country’s overall quality of life. 

You’ve already heard that mining provides these communities 

with very high-paying jobs, nearly twice as high as the State’s average. These jobs in turn, of course, pay for homes, they buy food, 

goods and services, and these all generate tax revenues for both the 

local and State government. 

A key component to the economic stability of rural Nevada is the 

sustainability of the mining industry. In Nevada, nothing is more 

critical to sustainability than access to public lands for exploration 

that will eventually lead to the replacement of mined-out reserves. 

Yet duplicative regulations at the Federal and State level, unsubstantiated delays in the issuance of permits for exploration and development plans and arbitrary limits on access to lands, cumulatively tend to drive exploration out of Nevada and, indeed, out of 

this country. 

We are confident that the transfer of public lands like those in 

H.R. 2869 to private ownership will do much to encourage and facilitate exploration and development. 

You’ve talked about the moratorium and the patenting process. 

As this Committee knows, that has been nearly at a standstill 

since 1994. Although we hope it will be lifted soon, there is no viable mechanism to date in which mine operators can obtain private 

ownership of land, public land. A type of ownership that provides 

operating certainty is a critical issue for any major, long-term capital investment by a mining company. 

Meanwhile, the sustainability of rural communities depends on 

the continuity of economic development that will fill the void once 

the mines play out. Yet mines, by their very nature, are rich in industrial infrastructure, and they can play a vital role in post-mining economic development, as long as this residual infrastructure 

can be utilized by other industries, industrial development that certainly can include, and we think will include in the future, renewable energy projects which hold potential for the State of Nevada. 

Most importantly, the transfer of public lands through a nonFederal ownership will place the decisionmaking down at the level 

with the greatest accountability, which is the elected State officials 

and their agency appointees. It provides, with the elected State legislature, the opportunity to develop laws and regulations that oversee the activity for the prudent use of this land, land that even in 

private ownership remains subject to the Federal acts that are so 

important in the mining industry will always remain subject to, 

that is, the Clean Air Act the Safe-Drinking Water Act, Clean Air 

Act, and others that would remain in effect through any delegated 

State program. 

In addition, as evidenced by State and Federal and private 

awards, mining in Nevada has demonstrated over and over again 

that it can be a good steward of the land and a good steward of 

35

its people. Besides unshackling the economy of Nevada, additional 

benefits of these transfers include a reduction in the number of 

project-by-project NAPO reviews, which lead to many of the delays 

that you’ve been discussing this morning, more efficient facilitation 

of the bonding, unburdening of the regulatory and judicial systems 

from costly environmental appeals and litigation, and finally, saving State and Federal taxpayers’ money. 

Now we certainly understand that not all public lands in Nevada 

would fall subject to consideration for transfer. You notice I said 

‘‘certain public lands.’’ Those that remain under public jurisdiction 

by land managers, such as the Bureau of Land Management— which, by the way, does an outstanding job of working through its 

process. Where it does get hung up is in these appeals that we’ve 

been discussing. 

But one area that, as Director Abbey mentioned, we are working 

on is the transfer of some of the authorities that currently reside 

with the BLM under CFR 43 Section 3809. We’re working with 

both the State and the Federal Government on the delegation of 

bond cost calculations. We think there’s an opportunity to streamline that process. 

By the way, Mr. Chairman, since—the revised Section 3809 does 

provide for such delegation. 

Nevertheless, without progressive legislation and continued 

streamlining of the administrative process that I’ve called for here 

in this testimony, these rural communities here in the State of 

Nevada will find it increasingly more difficult to keep Nevada as 

the world’s largest—third largest producer of gold. 

In closing, I urge this Committee to continue its efforts to free 

up our country’s economic engine in a wise and prudent manner, 

and to support the implementation of current laws like, for example, the Lincoln County Land Act of 2000, and future legislation, 

as I mentioned previously, H.R. 2869. Both of these facilitate the 

transfer of public lands into private ownership. 

In Nevada, for example, we think this legislation would put control of Nevada’s economic future and viability back into the hands 

of Nevadans. Thank you, Mr. Chairman. 

Mr. POMBO. Thank you. 

[The prepared statement of Mr. Fields follows:]

Statement of Russ Fields. President, Nevada Mining Association 

Thank you, Mr. Chairman and members of the Subcommittee. My name is Russ 

Fields and I am the President of the Nevada Mining Association. On behalf of the 

300-plus member companies that make up the Nevada Mining Association I appreciate the opportunity to testify today regarding the role of the hardrock mining industry in the responsible development of our domestic mineral resources and the 

economic benefits afforded on all citizens by mineral development. In spite of the 

existence today of various topics directly affecting hard rock mining in Nevada, my 

focus today will be on the need for land transfers and the benefits to Nevadans. 

With close to ninety percent of the land in Nevada being managed by the federal 

government, Nevada is at an economic disadvantage compared to the other 49 

states. It has a smaller property tax base with which to pay for the services it provides to its growing population; the fastest growing for the past decade. Among the 

48 conterminous states it has the smallest percentage of private land base from 

which to launch any expansion of its economy. And due to the large amount of public lands, it has an ever-growing stream of federal regulations that limit traditional 

economic development, such as ranching and mining on these lands. 

Although regulatory reform would provide some relief, it is usually a slow and 

somewhat ineffective process. On the other hand, the sale of federal lands directly 

36

to the private sector through direct Congressional legislation is not slow or 

ineffectual. For example the proposed sale of public lands in northeastern Nevada 

found in H.R. 2869, ‘‘Northern Nevada Rural Economic Development and Land 

Consolidation Act of 2003,’’ sponsored by Congressman Gibbons, will immediately 

place much needed land into the property tax base of various Nevada counties. It 

will also streamline a duplicative Federal/State permitting process. 

Mining is important to Nevada, especially to the rural communities that depend 

on the development of natural resources for their livelihood. A livelihood that by the 

way provides many of the raw materials that sustains this country’s overall quality 

of life. Mining provides these communities with high-paying jobs. Almost twice as 

high as the state’s average annual wage. These jobs in turn pay for homes, buy food 

and services, all of which generate tax revenues for both local and state government. 

A key component to economic stability is the sustainability of the mining industry. 

In Nevada nothing is more critical to sustainability than access to public lands for 

exploration that will eventually lead to the replacement of mined out reserves. Exploration is the lifeline of mining. Yet, duplicative regulations at the Federal and 

State levels, unsubstantiated delays in the issuance of permits of exploration plans, 

and arbitrary limits on access to lands cumulatively tend to drive exploration out 

of Nevada. We are confident that the transfer of public lands, like those in 

H.R. 2869, to private ownership will do much to encourage and facilitate 

exploration. 

Furthermore, in 1994 the first moratorium against patenting of mining claims 

was put into place. As this Committee knows, patenting activity has been at a 

standstill ever since. Although we are hopeful that this moratorium will be lifted 

soon, there is nevertheless no viable mechanism today for mine operators to transfer 

public lands into private ownership. A type of ownership that provides operating 

certainty, a critical issue for major long-term capital investments by mining 

companies. 

Meanwhile, the sustainability of a rural community depends on the continuity of 

economic development that will fill the void once the mines play out. Yet mines, by 

their very nature, are rich in industrial infrastructure and can play a vital role in 

post-mining economic development as long as this residual infrastructure can be utilized to attract other industries. The transfer of public lands to private ownership 

will facilitate the utilization of this residual infrastructure (i.e., roads, substations, 

power lines, lakes, etc.) for industrial development. Industrial development, that due 

to Nevada’s climate and topography could include renewable energy farms. 

But most importantly, the transfer of public lands into non-federal ownership will 

place the decision-making process on land use squarely where it belongs, at the local 

level. It is here where the greatest accountability resides: with the elected state officials and their agency appointees. It resides with the elected state legislature and 

with the state and local process of constructing regulations and implementing them. 

Finally it resides with those communities whose very existence depends on the wise 

and prudent use of the land. Land that even in private ownership remain subject 

to Federal Acts, such as the Clean Water, Clean Air, Safe Drinking Water, and others that would remain in effect through delegated approved state programs. 

In addition, mining in Nevada has demonstrated over and over again that it can 

be a good steward of the land, and its people. Mining companies in Nevada are recognized annually by both State and Federal regulatory agencies for excellence in 

reclamation, and for the safety and health of its workers. A number of these companies competed this year for BLM’s first national reclamation award. 

Besides unshackling the economy of Nevada, additional benefits of these transfers 

include: 

• A reduction in the number of project-by-project NEPA reviews; 

• Facilitation of bonding and the eventual releases of reclamation bonds; 

• Unburdening of the regulatory and judicial systems from costly environmental 

appeals and litigation; and 

• Saving State and Federal taxpayers’ money. 

Recognizing that not all public lands in Nevada are currently under consideration 

for transfer, a second topic I wish to apprise you of is our ongoing effort in Nevada 

to seek the partial delegation of BLM’s responsibilities under section 3809 of CFR 

43 Hardrock Mining Regulations dealing specifically in the area of reclamation bond 

calculations. Like other Federal agency delegations of program primacy to states, 

this delegation must include the pass through of program funds to the appropriate 

state agencies. 

Efforts to date include the identification of duplicative activities between the State 

agencies and the BLM that unnecessarily prolong the permitting process, such as 

the estimation of reclamation costs. Since the state already does most of this work, 

it would save all parties time and money to have mutually acceptable standard recVerDate 0ct 09 2002 11:56 Mar 04, 2004 Jkt 088533 PO 00000 Frm 00040 Fmt 6633 Sfmt 6621 J:\DOCS\89583.TXT HRESOUR1 PsN: KATHY
37

lamation costs and have only one agency do the calculations. It is anticipated that 

future opportunities for streamlining the permitting process will be identified, along 

with additional program delegation. 

Nevertheless, without the progressive legislation and continuous streamlining of 

the administrative process called for in this testimony, these rural communities will 

find it increasingly difficult to keep Nevada as the world’s third largest producer 

of gold. A strategically important component in the electronics industry, an industry 

that in turn is of strategic importance to the defense of this nation. 

In closing, I urge this Committee to continue its efforts to free up our country’s economic engines in a wise and prudent manner, and to support the implementation 

of current laws like PL 105-263, also known as the ‘‘Lincoln County Land Act of 

2000,’’ and future legislation, like previously mentioned H.R. 2869, that facilitate 

the transfer of public lands into private ownership. In Nevada, for example, such 

legislation would put control of Nevada’s economic viability back in the hands of 

Nevadans. 

Mr. POMBO. Mr. Chavis? 

STATEMENT OF JAMES A. CHAVIS, VICE PRESIDENT,

U.S. GOVERNMENT RELATIONS, PLACER DOME AMERICA 

Mr. CHAVIS. Good afternoon, Chairman Pombo, Members of the 

Committee. My name is James Chavis. I’m Vice President of Government Relations for Placer Dome America. I would like to thank 

you for holding these hearings here in Nevada and giving the citizens that are dependent upon this industry for a living an opportunity to come and address you. 

I moved to Denver—I need to give you a little commercial. I 

moved to Denver just a couple of months ago out of the State of 

Nevada, but I had spent over half of my professional career in 

Elko, Nevada, and I raised three children there, and I educated 

them in this state, two of whom remain in Southern Nevada and 

have families there. So I still have a vested interest in this state. 

I have submitted a longer and more-detailed statement for the 

record as per Chairwoman Cubin’s instructions, and following is a 

brief summary of my comments. 

Placer Dome has been a major employer in Nevada since 1960. 

We have almost 800 employees at our operations and exploration 

offices in Nevada. To offer some indication of the economic impacts 

of these operations, our gross payroll for 2002 was almost $40 million. However, the fact that our existing Nevada mines are flourishing, obscures the reality that we and other companies have been 

operating for the last decade and for a long period of regulatory uncertainty, and we’ve been saddled with the regulatory burdens 

within the United States. 

Today’s hearing is focused on the role of the hard rock mining 

industry and responsible domestic resource development and economic stability. In northeastern Nevada, especially, at least for the 

foreseeable future, the hard rock mining industry is a prime source 

of that economic stability. 

The hard rock mining industry depends on worldwide markets 

and demands for metals. It is also a fact of life in the mining business that the industry and the jobs must go where the resource is, 

not the other way around. Nevada has many old mining camps 

that once flourished and died when the metals prices collapsed or 

when the deposits failed to live up to their promise. 

The realities have not changed, but the mining industry is somewhat better equipped to deal with them than we were in the past. 

38

It’s a different mining industry and a different time in history. In 

1998, Placer was one of the first multinational mining companies 

to adopt a formal policy guiding global activities and sustainability. 

At our operations, we are really committed to the sound environmental practices that leave a chemically, physically and ecologically stable site when the operation is closed. By emphasizing 

a safe and healthy workplace, we involve our employees and other 

stakeholders in major decisions that affect the community, and also 

in providing for investments in education, Public Health and other 

community causes. 

I have included for the record, a copy of Placer’s most recent sustainability update, which includes a copy of the company’s sustainability policies. 

Examples of how the company has worked toward these goals include our 2001 agreement with the Duckwater Shoshone tribe. Our 

Bald Mountain Mine agreed—operation agreed with the tribe to facilitate a business, growing locally hardened and adapted plants 

from local seeds in the tribe’s greenhouse. These plants were used 

in reclamation efforts at Bald Mountain Mine. The reclamation has 

been very successful and has ripened into a larger business whereby our Cortez Mine now buys seedlings from this facility, as do 

other operations in the State. 

We also donated about 32 acres of land, valued in excess of 

$100,000, to the Elko County School District in Carlin. We also 

contributed $100,000 to the Great Basin College that same year. 

These are just examples of the types of activities that the mining 

companies do in rural Nevada and how we help the communities 

where we work. 

Today’s industry is more stable and less characterized by the old 

west boom-and-bust image than ever before. However, every person 

in Northern Nevada knows that in the past five years, things have 

been very challenging for this industry. Hundreds of people were 

laid off, marginal mines have been closed, companies merged or acquired and, in some cases, the companies became insolvent. 

Unless today’s mines are to be replaced by future mineral development, Northern Nevadans face a very difficult future. A decline 

in Nevada’s hard rock mining industry is not inevitable. Everyone 

agrees that Nevada is and will remain one of the most promising 

areas in the world geologically to explore for gold and silver, not 

to mention other valuable minerals. 

However, the total amount expended last year on exploration, 

around $60 million, is about half of what it was in 1996. It’s difficult to quantify all the reasons for this decreased investment, but 

it’s clearly the result of some of the policies of the prior administrations. 

I go into these policies in depth in my written testimony, but I’ll 

quickly list a few of them now for you. The policies include an open 

hostility toward the mining law, the 3809 Regulations, the Millsite 

Opinion, as mentioned previously, a slow-down in the permitting 

process, and a duplication of Federal and state permitting. 

To summarize, if the mining industry is to have a significant future as an employer and economic engine in the State of Nevada 

and the Western United States, these regulatory uncertainties left 

39

over mainly from the prior administration, will have to be addressed and resolved. 

The most important of these issues, of course, to our company is, 

once again, the Millsite Opinion. And if the Millsite Opinion is not 

reversed and the law on this subject remains unclear, major companies, including Placer Dome, will be reluctant to make future investments in new projects in Nevada or elsewhere in the United 

States. 

We look forward to a clearer, more positive and more settled 

legal environment in which to operate in Nevada and elsewhere in 

the U.S. And in the future. I appreciate this opportunity to make 

our views known. Thank you very much. 

Mr. POMBO. Thank you. 

[The prepared statement of Mr. Chavis follows:]

Statement of James Chavis, Vice President of Government Relations,

Placer Dome America, Denver, Colorado 

Good Morning, Chairman Pombo, Congressman Gibbons and other members of 

the Subcommittee. I am Jim Chavis, Vice President of Government Relations for 

Placer Dome America. I thank you for holding these hearings here in Nevada, and 

for allowing the views of the citizens of Nevada to be heard on this important topic. 

I moved to Denver a couple of months ago, but up until then, I had spent most of 

my professional life—over twenty years—as a resident of Nevada and an employee 

of the mining industry. My children were raised and educated in Elko. My two oldest children and their families still reside in the state and as a family, we will always consider Nevada home. 

Elko and all of Northern Nevada would be a very different place if it were not 

for the excellent high-paying and high-tech jobs available here because of the 

hardrock mining industry. Placer has been a major employer in Nevada since the 

1960’s, when the Company acquired an interest in the Cortez Mining District. Since 

then, we have developed the Cortez Mine in 1968, and the Pipeline and South Pipeline deposits. Exploration and development in the Cortez District is being done as 

a joint venture with Kennecott Minerals. Placer is the operating partner in the venture where we currently employ about 415 workers at the operation. In addition to 

the large payroll at Pipeline, we will spend about $7 million this year developing 

the resource and $21 million exploring for additional reserves around the existing 

operations and in grassroots exploration programs. This is one example of the large 

amounts of money—in payroll and capital investment—that others and we invest 

in Nevada. A little later I will explain how we spent over four years and $5.5 million 

getting our most recent expansion of Pipeline permitted. These kinds of costs and 

permitting delays are very much a part of our decision-making process about where 

to invest our money in the future. 

Placer also owns and has operated the Bald Mountain Mine in White Pine 

County, Nevada, since 1983, and currently employs 115 workers at that operation. 

Finally, Placer acquired the long-operating Getchell Mine in Humboldt County in 

1998, but was forced to suspend operations in 2001 because of low gold prices and 

the need to conduct an aggressive exploration program to define reserves. In April 

2003, with significantly improved gold prices, the Company announced plans to restart the Getchell operation and is now doing so. We currently have 250 persons 

employed at Getchell, up from 57 people just over one year ago. To offer some indication of the economic impact of these three operations, our gross payroll in 2002 

for the Nevada operations was almost $40 million. 

Placer also operates the Golden Sunlight Mine in Montana, which just announced 

an extension on mine-life and production of four additional years. The Company is 

advancing the Donlin Creek property in Alaska, evaluating the potential for a mine 

there with a measured and indicated resource of 11.1 million ounces and inferred 

resources of 14.3 million ounces. 

Placer’s recent increase in Nevada employment—we now have almost 800 employees at our operations and exploration offices in Nevada—can be attributed to past 

exploration successes and to the recent increased demand for gold in the world marketplace. However, the employment increase at Placer Dome’s mines is not necessarily an indication of the long-term health of the mining industry in Nevada. The 

fact that our existing Nevada mines are flourishing obscures the reality that we and 

other companies have been operating for the last decade in a prolonged period of 

40

regulatory uncertainty and regulatory burdens in the United States. The failure of 

the United States to provide a stable regulatory environment and straightforward 

permitting process inevitably influences our investment decisions and those of other 

major companies. However, the significant effects of these decisions are not readily 

visible in our current operations or those of other companies, because the major investments in these existing operations were already made. The consequences of recent federal mining policy will only become evident in the future, when the expansions of existing mines and the opening of new mines do not occur because the necessary underlying investments in exploration were not made. 

Responsible Domestic Resource Development 

Today’s hearing is focused on the role of the hardrock mining industry in responsible domestic resource development and economic stability. In Northern Nevada, at 

least for the foreseeable future, the hardrock mining industry is the prime source 

of that economic stability. I am sure Dr. Dobra will provide more information on 

the economics of the industry in Nevada, but for starters, the Nevada Division of 

Minerals estimates that almost 9,000 people were directly employed in the mining 

industry in Nevada in 2002, and 44,000 people were in jobs providing goods and 

services to the mining industry. (Nevada Minerals Industry Fact Sheet—2002.) 

These are high-paying jobs with extensive health, retirement and other benefits. As 

a personal note, I have seen local families grow up in Nevada’s mining industry 

with two, and sometimes three generations working in the mines and making strong 

communities. 

The hardrock mining industry depends on worldwide markets and demands for 

metals. It is also a fact of life in the mining business that the industry and jobs 

must go where the resource is, not the other way around. When a mineral deposit 

plays out and no more minerals are to be found, there is little to do but close down 

the operation and move on. The early map of the western United States is blanketed 

with mining towns that lived with these hard realities. Nevada has many old mining camps that once flourished and then died when metals prices collapsed or when 

deposits failed to live up to their promise. 

These two realities have not changed, but the mining industry is somewhat better-equipped to deal with them than it was in the past. It is a different industry 

operating in a different time in history. 

1. Environmental Protection: In the 19th and early 20th Centuries, little was 

known about the potential effects of mining wastes on the environment and it 

was legal and accepted industry practice to discharge process wastewater and 

tailings untreated onto land and into streams. Modern mining, in contrast, is 

heavily regulated by federal and state governments, and responsible industry 

practice now results in protection of water, air and other environmental media 

throughout the life of the mine, reclamation and closure—including extensive 

treatment and containment of any waste that is generated. Responsible mining 

companies maintain a corporate policy that essentially imposes such standards 

wherever in the world they operate, whether required by law or not. 

2. Sustainable Development: Generally, sustainable development means development that is sensitive to the environment, to local residents and indigenous 

peoples, that share the benefits of the enterprise with these people, and that 

looks beyond the economic life of the project to longer-term economic development that benefits the community. Placer is working to incorporate sustainable 

development practices and principles into all of our operations. At Placer’s operations, we are focusing on the following: 

• Sound environmental practices that leave a chemically, physically and 

ecologically stable site when the operation is closed; 

• Emphasis on a safe and healthy workplace; 

• Involvement of our employees and other stakeholders in all major decisions that affect the community; and 

• Investments in education, public health and other important community 

causes. 

In some respects, the goals of sustainable development are more crucial and the 

needs for them more acute at our operations in developing countries, but we are incorporating these principles into our operations at every one of our facilities, including those in Nevada. Those efforts include: 

1. 2001 Agreement with Duckwater Shoshone Tribe: Our Bald Mountain facility 

agreed with the Tribe to facilitate a business growing locally hardened and 

adapted plants from local seeds in the Tribe’s greenhouse. The plants were to 

be used in reclamation efforts at Bald Mountain. The relationship has been 

successful, and has ripened into a larger business in which the Tribe supplies 

seedlings not only to Bald Mountain but also to Pipeline and to other mining 

41

companies for their operations. In doing business with our neighbors, we aim 

to make a positive impact in the community that extends beyond the direct 

economic impacts of employment and capital investment. We see this as investing in the future of people who were in Nevada long before we started mining, 

and who will remain after our mining operation is successfully closed; 

2. Donation of Land to the Carlin School District: We donated about thirty-two 

acres of land to the School District in 2002 for its various needs. The land is 

valued in excess of $100,000; and 

3. Contribution to Great Basin College: We contributed $100,000 to Great Basin 

College in 2002. 

I am including for the record a copy of Placer’s most recent Sustainability Update, 

which includes a copy of the Company’s Sustainability Policy. 

The economics of the hardrock mining industry over the last several decades has 

resulted in larger, worldwide companies. This trend has not resulted in the elimination of small companies, but does mean that most small companies focus on exploration and leave the riskier, capital-intensive operations to large companies. These 

large companies are able to weather adverse financial conditions and low metals 

prices better than smaller companies could in the past, in part because of their own 

internal resources and in part because of their access to capital markets and risk 

management tools (such as hedging contracts, and other derivatives instruments 

and risk management strategies). Today’s industry is therefore more stable, and less 

characterized by the old West boom-and-bust image, than ever before. 

Every person in Northern Nevada knows that the past five years have been very 

challenging for this industry. Hundreds of people were laid off, marginal mines 

closed, and companies merged, were acquired, or, in some cases, became insolvent. 

Throughout this period our Pipeline Mine, the Bald Mountain Mine and other larger 

projects kept operating, providing much-needed jobs and other benefits to the economy. Imagine a future in Northern Nevada after these and other projects have 

reached the end of their project lives. Unless today’s mines are to be replaced by 

future mineral development, Northern Nevadans face a very different and difficult 

future. Unless the federal government stabilizes its policies regarding hardrock mining on federal lands, this will be Northern Nevada’s future. 

Future Mineral Development In Nevada 

A decline in Nevada’s hard rock mining industry is not inevitable. Everyone 

agrees that Nevada is, and will remain, one of the most promising areas in the 

world geologically to explore for gold and silver, not to mention other valuable minerals. The Nevada Division of Minerals’ Ninth Annual Nevada Exploration Survey 

2002 shows that exploration budgets are up across the board, and there is increased 

optimism in the industry about future exploration prospects. This optimism clearly 

results in part from the improved gold prices of the last 18 months. However, it is 

also the case that the total amount expended last year on exploration—about $60 

million—is half what it was in 1996. Mining companies are spending much less than 

they used to in Nevada to find new resources. 

Nevada’s experience is not unique. In general for public lands in the United 

States, since 1997, both exploration for new minerals and mine development on discovered minerals have all declined substantially: 

1. Notices filed with the BLM for exploration on public lands have declined by 

70%; 

2. Exploration spending in the U.S. has dropped by 66%; 

3. New mining claims have declined by 74%; 

4. Plans of operations for new mines and expansion of existing mines have declined by almost 60%; and 

5. Investment in exploration and mine development has in many cases shifted 

overseas. 

It is difficult to quantify all the reasons for this decreased investment, but some 

of it is clearly the result of the policies of the prior Administration, which was openly hostile to the General Mining Law of 1872, the law that governs mining on public 

lands. These policies included: 

1. Open Hostility to the Mining Law: 

• The Clinton Administration attacked the longstanding General Mining 

Law and lobbied Congress aggressively for its repeal or reform; 

• The Department of Interior refused to carry out its legal duties under 

the law, most dramatically illustrated by its refusal to issue mineral 

patents to a Nevada gold producer that by all accounts had earned the 

patents under federal law. The Department finally had to be ordered by 

a federal court to issue the patents; 

42

• In an attempt to restore stability, the mining industry united behind a 

reasonable reform proposal that included royalties and restrictions on 

privatization of federal land, and which was enacted by Congress. President Clinton vetoed the measure; and 

• The struggle in Congress lasted for years and continues, rendering uncertain the stability of investments in the U.S. under current rules. 

2. 3809 Rules: In 1997, Interior proposed sweeping changes to the rules that govern access to public lands for exploration and mining operations. By Interior’s 

own admission, the rules were intended to accomplish ‘‘administratively’’ what 

Congress refused to do legislatively. Interior’s rules were adopted at the end 

of 2000; fortunately, Secretary Norton made targeted revisions to the rules that 

removed the most onerous and most legally questionable of their provisions, 

notably the so-called ‘‘mine veto.’’

3. Millsite Opinion: 

• In 1997, the Interior Solicitor issued a legal opinion purporting to overturn an important longstanding interpretation of the Mining Law. Simply stated, Interior has long read the Mining Law to permit the location 

on federal lands of ‘‘millsites’’ next to mining claims so that minerals 

can be milled and processed. Traditionally, Interior has allowed the location of as many millsites as necessary to conduct the operation. As ore 

grades have decreased and improved mining techniques have allowed 

greater recovery from lower grades of ore, the amount of material to be 

processed and disposed of in accordance with today’s environmental regulations has increased dramatically, and the number of millsites located 

by companies has increased correspondingly. In the Millsite Opinion, the 

Interior Solicitor claimed this practice was illegal, reading the Mining 

Law to limit the number of millsites to 1 per each valid mining claim; 

• The effect of this ruling on Placer was dramatic because it threw the 

claims required for the Pipeline Project into question and provided 

project opponents one of their main issues for the pending appeal; and 

• More importantly, the opinion endangers the practicability of any future 

project on public lands, because there is no way such a project could be 

situated on the number of millsites that would be allowed if the Leshy 

Millsite Opinion remains in place. This is a very important issue for 

Nevada. 

4. Slowdown in Permitting: The regulatory process during the Clinton Administration drastically slowed down mine and exploration permit approvals, delaying and, in some cases, endangering the viability of new projects. In the case 

of our Pipeline Project, the original federal approvals took four years, even 

though the operation was to be constructed and operated adjacent to a process 

facility that had existed for twenty years and in a district that has been mined 

since the end of the 19th Century. A subsequent expansion proposal, first submitted in 1996, cost over $5 million and again took four years to approve, and 

is still under appeal at the Interior Board of Land Appeals. 

5. Duplication of Federal and State Permitting: Operations on federal lands are 

subject to both federal land management and state laws. In the past, federal 

and state governments have made some effort to work together and reduce duplication and burdens, but this cooperation lagged significantly during the 

Clinton Administration. A hallmark of this failure to work together was the 

proposed 3809 rule I just described. In that rule, Interior proposed to repeal 

the existing regulatory relationship that stressed compliance with existing 

state laws, replacing it with one in which the federal government dominated 

to the exclusion of the views and wishes of state regulators. This aspect of the 

3809 rules was strongly opposed by industry and by state regulators, and, fortunately, was withdrawn by Interior. Still, the dual levels of regulation exist, 

and it remains a challenge for federal and state regulators to work together 

to minimize regulatory burdens. 

To summarize, if the mining industry is to have a significant future as an employer and economic engine in the State of Nevada and the western United States, 

these regulatory uncertainties left over mainly from the prior Administration will 

have to be addressed and resolved. The most important of these issues left to resolve 

is the Millsite Opinion. If the Millsite Opinion is not reversed and the law on this 

subject remains unclear, major companies, including Placer, will be reluctant to 

make future investments in new projects in Nevada or elsewhere in the United 

States. 

43

Placer Dome’s Future in Nevada 

Like every other major mining company in the world, Placer Dome is an international company, with mines and projects in South and Central America, Canada, 

Africa, Asia and Australia, in addition to its mines in the United States. Placer is 

committed to its operations in the United States and to its employees here, and continues to budget significant resources for Nevada exploration. An important part of 

our annual exploration budget is expended on our ‘‘Minex’’ program, in which we 

explore for minerals at or near our existing operations. It is Minex expenditures 

that have expanded the reserves and prolonged the life of the Pipeline Operation, 

and that have enabled us to reopen the Getchell mine. Placer’s worldwide budget 

for exploration in 2003 is $60 million, with $36 million of that going to the Minex 

program. Of our total exploration budget, $21 million will be expended in the United 

States. Over the last 10 years, Placer has spent over $180 million in the U.S. in 

exploration leading to the discovery of Pipeline, plus expansions at Bald Mountain 

Mine and the Golden Sunlight Mine in Montana. 

Like other companies, Placer’s Nevada growth is happening primarily at existing 

properties. As explained above, it makes sense to focus exploration efforts where you 

can use existing processing facilities rather than build new ones, so to us this strategy is just good business. However, it also reflects in part the reality that new 

projects are enormously expensive and difficult to develop and build with uncertain 

permitting. We must choose to direct scarce exploration capital to places where it 

promises to yield the most financial benefit for the Company at the least risk. When 

we decide where to explore, we must reckon with the fact that there is now significantly more political risk in the United States than existed when we made our investments in Bald Mountain, Pipeline and Getchell. Whether we explore and develop new projects in Nevada will depend on a complex calculus of factors that include metals prices, the status of the Mining Law, the Millsite Opinion and related 

legal precedents, and the difficulty and length of federal and state permitting processes. 

We are, above all, committed to being good corporate citizens in Nevada and 

wherever we operate. Placer looks forward to a clearer, more positive and more settled legal environment in which to operate in the United States in the future. I very 

much appreciate this opportunity to make our views known. 

Mr. POMBO. Dr. Taylor? 

STATEMENT OF TONY P. TAYLOR, PRESIDENT AND CEO,

MILLENNIUM MINING CORPORATION 

Mr. TAYLOR. Yes. Thank you, Mr. Chairman, and the Committee 

Members for this opportunity to assist in your deliberations. My 

name is Tony Taylor. I’m president of a home-grown exploration 

company called Millennium Mining, which we’ve developed over 

the last five years here in Reno. 

So we’re an exploration company. We recently completed a reverse takeover of a Canadian public company called Gall Summit 

Mines, and raised $1.6 million for exploration, which at the moment we’re going to choose to spend in Nevada, although I must 

say, having heard some of the—some of the things today, I—I wonder whether that’s a wise decision. 

I am—I’ve been in the exploration business for almost 40 years 

around the world, many commodities in many countries. And so I 

represent what is known as the junior mining sector, and an endangered—an endangered species of the mining industry, which is 

the profession of exploration and geology. 

I make this point in that—that the minds of money and the ability to work in places like Nevada has had a serious impact on our 

profession. There aren’t many of us left in the world. At any rate, 

I wanted to get this opportunity to get that point over. 

Now the junior mining sector raises high-risk money for 

exploration. Now, the majority of that money is raised through 

44

Canadian institutions, and it’s spent worldwide. So to explore in 

Nevada, we have to go and raise money with the help of the Canadians, who understand much more, the business of mining. It’s a 

very important part of their economy. 

So having raised the money, we choose to explore in Nevada because—because of what I believe to be the almost unlimited geological potential, particularly for high-grade underground—for 

high-grade veins, which are going to be mined from underground, 

which is the future of mining in Nevada. We’ve already heard that 

something like 30 percent of the production is coming from underground mines. This percentage is going to increase, and this is 

where the future is in Nevada. 

So we come here because of it’s good geology, an excellent infrastructure, roads, and—and now, a lot of mining infrastructures, 

mills and so on, that you can take your ore to, a productive and 

well-trained work force. The U.S. has a stable political climate in 

contrast, say, to Peru, which is a country we heard about earlier. 

And there’s a long-established mining code and regulations, which 

we’ve heard discussed. 

However, there are some negative aspects. I think I would say— I would determine as a confusing interaction between Federal and 

state agencies, which we’ve heard some examples of. And I have 

given you a brief example in my written testimony to—to make the 

point that, you know, we—we never really know where these interactions will affect us. 

So in summary, miners are responsible people and we are working to provide mankind with essential minerals for living. It’s not 

a matter of choice, these are essentials, and it’s not necessarily 

space-age materials. I like to use the example of sheetrock in your 

house, which is made of gypsum, which comes out of a hole in the 

ground somewhere. 

And we are as much concerned about our environment as anyone. I’ve traveled around many places in the United States. I’ve 

seen a lot more of this country than most people who sit in offices, 

and so on. And I’m—it’s not something I like to see, but we—we 

as a society require these minerals. 

So what we seek are clear rules and regulations, even enforcement. And I’m only reinforcing what others have said, but I think 

the point is that, if that doesn’t appear to be the case, then the 

shareholders are going to say, well—and quite rightly—‘‘You 

should go and spend your exploration dollars elsewhere.’’ But for the moment, I believe that we can—that this is the place 

we’re going to be for—for the next—well, certainly with the money 

that we’ve already raised. Thank you very much. 

Mr. POMBO. Thank you. 

[The prepared statement of Mr. Taylor follows:]

Statement of Anthony P. Taylor, President/CEO, Millennium Mining Corp., 

Reno, Nevada 

I was educated in the United Kingdom with a B.Sc. and Ph.D. degrees from the 

Universities of Durham and Manchester, respectively, and have been a member of 

the Society of Economic Geologists for over 25 years. My professional career as an 

Exploration Geologist, mostly for major international mining companies, encompasses a variety of commodities in many different geological hosts on four continents 

and many countries including lead-zinc in Europe; nickel in Australia; platinum, 

copper and zinc in South Africa; gold-silver-copper-zinc-diamonds in the Americas. 

45

I have lived in Nevada for most of the last 25 years and participated in exploration 

and mining of gold here for much of that time. I currently serve on the board of 

Hecla Mining Company, listed on the New York Stock Exchange. 

I turned to the junior mining sector in 1996 with the demise of exploration within 

the major international corporations with a long-harbored wish to develop my own 

exploration company. After a five-year struggle, in a very tough financial market 

with a few devoted local investors, our private Nevada company, Millennium Mining 

Corporation, succeeded in attracting the attention of the investment community in 

Toronto who engineered a reverse take-over of a public vehicle, Gold Summit Corporation, while raising $C1.6 million. 

We choose to concentrate our efforts to explore for high-grade gold vein systems 

in Nevada because of: 

1) The almost unlimited potential for discovery of a new generation of underground mines; and 

2) The political stability, excellent infrastructure and the efficient, productive 

workforce available in the United States. 

The mines we hope to discover will succeed the large open-pit gold operations that 

are the economic backbone of rural Nevada. With the inexorable decline in production from the world’s largest gold-producing mines in South Africa, Nevada has the 

geological potential to largely supplant this coming shortfall. 

There are, of course, other important gold-producing countries in the world but 

many carry unacceptable political risk and less certainty of mineral tenure. Many 

do, however, have a less-tangled regulatory web and hold out a welcoming hand to 

the mining industry. 

I have long espoused the dictum that, in the mining industry ‘‘the sum of all difficulties is equal.’’ So the balance, for us, goes to Nevada. 

Having raised money in Canada to explore in Nevada with the argument that the 

regulatory labyrinth can be negotiated we applied to the appropriate Federal agency 

for a drilling permit to start our exploratory work. They responded in a responsible, 

helpful and efficient manner. 

But we are delayed by misunderstandings between two federally funded agencies, 

one of which is operated by the State of Nevada together with completion of a survey of any bats that might live in nearby old mine workings. The concern, on one 

hand, is to preserve an old mining artifact, a Stamp Mill (ca 1906); on the other 

hand the possibility that an endangered species chose an adit as home. 

Miners are responsible people who produce materials that are essential to mankind. They are not a luxury, unless we return to live in caves and hunt for food 

on foot with bows and arrows. We seek clear regulatory pathways to produce minerals in an environmentally responsible manner. I trust your Committee will work 

to help untangle the ‘‘Gordian Knot’’ of legislation and rule making that is slowly 

suffocating the mining industry in America. 

Mr. POMBO. Mr. Gibbons? 

Mr. GIBBONS. Thank you very much, Mr. Chairman. 

And, Dr. Taylor, let me say that if the geological exploration industry fails you, you too can become a member of Congress. 

Gentlemen, thank you very much for your time here today and 

the testimony you’ve presented to us. And I would like to begin 

with Mr. Fields, and to a long-standing friend out there who has 

worked hard in this industry, I thank you very much for what 

you’ve done to promote the industry in the State of Nevada. 

Oftentimes we talk about permits as if they’re the kind of permit 

that you go down to your County office to build a house, to improve 

your driveway or to add a room onto your home, and you put your 

money down and show them your plans and get your little permit 

and go home and start working. 

But that’s not the case in mining, is it, Mr. Fields? There is 

much more involved in the permitting process than that. And could 

you help us by understanding—or telling us for our understanding, 

the number, the types of permits that a mine must go through and 

the process that it must go through to get a permit, and how much 

you understand that process costs a mining company to complete? 

46

Mr. FIELDS. Thank you, Congressman. And when I was with the 

State of Nevada, we used to track, as the Division of Minerals now 

tracks, the number of permits that are required in order to conduct 

exploration or mining in Nevada. And if you were working on public lands, I seem to recall that the number is somewhere in the 

high 20s or low 30s, in terms of the numbers of permits. These 

range everywhere from a permit from the fire marshal to—to own 

and store explosives that are used in the mining process, to the 

very substantial permits that you must obtain from the State and 

Federal Government for the opportunity to mine. 

Most mining operations in the State of Nevada, by virtue of the 

fact that 90 percent of the land is somehow owned or managed by 

the Federal Government, require a NEPA process, that’s the National Environmental Policy Act, and that requires scoping. This 

naturally requires public comment along the way. But more importantly, it requires a third-party consultant in most cases to do the 

work, to develop an Environmental Impact Statement, which will 

lead to a plan of operation, that is the permit that’s approved finally by the Bureau of Land Management. This can cost in the millions of dollars, 6 million is not unusual for a major mining operation, it could be much more than that. 

But more importantly is the time that we’ve been discussing, potentially years. A major mining operation taking five years to obtain all of the necessary permits to operate can be a huge disincentive. 

So the quick answer to your question, the numbers are in probably the 30s, and the costs are in the millions of dollars for major 

undertakings. 

Mr. GIBBONS. Mr. Chavis—I guess we lost the mike. 

Mr. Chavis, I’ve had the pleasure to inspect your company’s operations in South America, South Africa and Nevada, and I’ve noticed 

there that the responsibility of your company has been overwhelming to the environmental issues that go on with a mine. In 

fact, in areas that I would have anticipated you to be lax in, you 

were strong in, across the board. You met the IOC 10,004 standards in areas which are an international standard for environmental mines. 

Do you have—does your company have a standard operating policy for every mine, no matter where it’s located, when it comes to 

environmental issues, safety issues, et cetera? 

Mr. CHAVIS. Many years ago, Congressman, we embarked on an 

undertaking to determine just how we were going to apply our 

standards in countries where we operate. In many countries that 

we go into, there are very few regulations, if any, and one of the 

things that we have to do is build environmental regulations as we 

go in. 

What we’ve kind of done is we’ve taken the U.S. standards, the 

U.S. environmental standards—leave NEPA here, we try to leave 

NEPA back here in the United States where it belongs. And we 

take the other rules and regulations, the air quality and the water 

and the other regs that we fall under, and we apply those same 

standards, or as closely as possible, we adhere to those standards. 

Mr. GIBBONS. Mr. Chairman, if you will indulge me one final 

question, because of the value of these witnesses here—and I apoloVerDate 0ct 09 2002 11:56 Mar 04, 2004 Jkt 088533 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 J:\DOCS\89583.TXT HRESOUR1 PsN: KATHY
47

gize to Dr. Taylor, because I wanted to ask a question about the 

Millsite Opinion, but I realize Dr. Taylor is in exploration, but if 

he can answer this, that would be great. But I would sure like, 

also, Mr. Chavis to answer this. 

What effect has the Leshy Millsite Opinion had on both exploration and operation from a company’s standpoint? 

Mr. CHAVIS. Well, quite frankly, Congressman, I—I hesitate to 

get in, too deeply into another company’s, you know, area, but the 

Millsite Opinion has been used to derail operation, an operation in 

another state after they had gone through the extensive permitting 

for the property. 

Now in more particular with our operation, our—we have, of 

course, an appeal that has been filed before the International 

Board of Land—Interior Board of Land Appeals. Part of that appeal is now based on the Leshy Opinion of the millsite ratios that 

are out there. And quite frankly, the Leshy Opinion gives that appeal some feet that it didn’t have before. We feel that the Leshy 

Opinion is adverse to the law. 

We’re sitting on pins and needles right now, to be quite frank 

with you. It’s been a little over two years since the appeal was 

filed. The IBLA has a rule of thumb it takes somewhere between 

two and three years before they hear a case. It’s right there at that 

window right now, so—so we’re a little nervous. This is our biggest 

operation in the world that we are talking about, in our company, 

that—that is under this appeal, so it will have a tremendous effect 

if that appeal comes in—if they give it any weight in the decision, 

which I hope they don’t. 

Mr. GIBBONS. Dr. Taylor, do you have an opinion? 

Mr. TAYLOR. Just a comment that I think any change in what’s 

perceived to be the rules and regulations are adverse when it 

comes to raising money. Investors don’t like to hear about changes 

in rules and regulations. 

Mr. GIBBONS. Thank you, Mr. Chairman. 

Mr. POMBO. Mr. Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman, and I again, 

commend the members of the panel for their testimony. 

I just want to ask Mr. Fields, as the Chairman of the—of the 

Nevada Mining Association, do you sense a consistency among the 

20 major mining companies here in the State of Nevada in terms 

of their good-faith effort in complying with the environmental 

standards, both federally as well as with the State government? 

In other words, you know, they’re all right there and, I mean, I 

don’t want to be pointing fingers to say the worst abusers versus 

the most environmentally conscious company, but I just wanted to 

ask, you might have a better opinion on this, obviously. Among the 

20 major mining companies, do you sense that they’re about an 

even keel in complying or making very sincere efforts in complying 

with environmental standards, et cetera? 

Mr. FIELDS. Thank you, Congressman. I’m not exactly sure. As 

I look around my Board of Directors, I think we’ve got about 15, 

what I would consider, major mining companies. As Allen Coyner 

suggested, it sort of depends on where you draw the line between 

major, middle and small. 

48

One of the functions of the Nevada Mining Association is to provide a venue that leads to the consistency that you’re asking about. 

Through our committee structure, we have a variety of standing 

committees, one of which is the environmental committee, a subsection of environment has been reclamation, water, air. These are 

all part of the environmental committee. 

And what—what that committee does is it meets on a very regular basis, at least monthly, in our offices here in Reno, or in other 

offices out in Elko or Winnemucca, mining communities, and it’s to 

work on issues that are of common interest to all of these companies. And it’s also to exchange ideas on how Company A is dealing 

with a situation that perhaps Company B has not had yet to deal 

with. 

So I think through that process, my answer to your question is, 

yes, they are all striving very well to—to meet not only the letter 

of the law, but to go beyond in some areas and through innovation 

they advance the field, for example, of reclamation. So I think 

we’ve got a very strong situation here in Nevada. 

Mr. FALEOMAVAEGA. We’ve kicked around several major issues 

that seem to affect the operations of a mining issue, not only here 

in Nevada, but nationally. And what I would term respectfully to 

Mr. Chavis and Dr. Taylor, that you’re the farmers out there, this 

is no economic theorist out there, whether it’s going to be a bust 

or a boom for this major industry. 

And I wanted to ask both of you, if you were to list a sense of 

priorities—because you’re right down there in the forefront—what 

major issue or the highest priority that you can serve to accomplish 

and address now and not wait another two or three years—maybe 

my good friend Mr. Gibbons can propose a bill that might be a partial answer. But if you were to really say one, two, three, let—I’ll 

just deal with the highest priority, what would you consider to be 

the major obstacle that Congress should address now if we are 

really serious about saving the mining industry, not only here in 

the State of Nevada, but nationally? What should we address? 

Mr. TAYLOR. That’s a—I’m not probably the best qualified to answer that. 

Mr. FALEOMAVAEGA. As a major explorer. 

Mr. TAYLOR. As a major explorer? 

Mr. FALEOMAVAEGA. Yeah. What do you consider the biggest 

problem that you’ve been faced with on that? 

Mr. TAYLOR. I think in the—I think the—I think the permitting 

processes are—the agencies that oversee them, I see an awful lot 

of overlap. And this little example I gave you in the written testimony is a good example of something that we didn’t anticipate at 

all. We applied for a permit to drill, and out of the woodwork comes 

a requirement that the state—this is—this is Forest Service land, 

regulated, along comes a requirement for, I believe a federally 

funded agency, the State Historic Preservation Society, to make 

sure that we don’t drill into an old staff mill that’s onsite. 

And we then come across the situation where we have to do a 

bat survey and some more workings and added. We don’t even 

know if there are any bats in there. But today we’ve had a bill for 

$6,000 to—to do a bat survey. And we’re—we’re more than happy 

49

to—to do that, and we don’t want to—we don’t want to endanger 

any more bats. 

But the fact that these things have appeared out of the—out of 

the woodwork is—is disturbing, so I—I would say in general terms, 

that—and I get the impression, rightly or wrongly, that the various 

agencies don’t quite know what the other one is doing or is supposed to be doing. 

Mr. FALEOMAVAEGA. Thank you. Mr. Chavis, just real quickly if 

I could ask you. 

Mr. CHAVIS. Well, my company’s biggest issue is the Millsite 

Opinion, but I want to be clear, I don’t believe that that is the Congress’ issue, an issue of the Congress. I believe that that issue was 

created by the Administration and by Interior, and Interior should 

clean it up. OK. 

But now, back to your original question. With that aside, I think 

mining law reform needs to be number one on the agenda, mining 

law reform, whether or not there’s going to be royalties, are you 

going to calculate them, etc. We’re in favor of going forward with 

mining law reform. And I’m sure any of us in the industry would 

be there to support you and help you within that goal. Number two 

would be the removal of the patent moratorium. 

Mr. FALEOMAVAEGA. With my good friend from Nevada being a 

geologist, I am going to depend very much on his opinion and his 

expertise in this area. 

And again, Mr. Chairman, thank you, and I want to thank these 

gentlemen for their testimony. 

Mr. POMBO. Mr. Cannon. 

Mr. CANNON. Thank you, Mr. Chairman. And thank you all for 

being here today, we appreciate that. 

Let me just point out, Mr. Chavis, this is—the Millsite Opinion 

is an Interior problem, I agree with that, but it is my experience 

the head of EPA, the head of Interior, for them a good day is they 

don’t get a headline. And so our job in Congress is to make sure 

they do the right thing. We’ll give them the latitude of choosing the 

day they get the headline. But we see ourselves, I think—maybe 

we see ourselves as being in the position of pushing those decisions 

to see that they actually happen, and they happen in a relatively 

timely fashion. 

Mr. Fields, you—you’re aware, of course, we do a lot of trades or 

consolidations between the Federal Government, the States and occasionally, all too rare, we actually do a sell of Federal lands, although we have accumulated or identified 5 million acres of surplus BLM lands that we would hope could be sold some day. 

But do I understand you as saying in your testimony that you 

would like to see the Federal Government or the Interior Department sell lands to mining companies instead of leasing lands for 

mining? 

Mr. FIELDS. Yes, I—I think that’s exactly the point of my testimony. Not only mining companies, but others that are in a position 

to do something that results in economic development that is of 

benefit to rural Nevada or rural Utah or rural, wherever we’re 

talking about for the purposes of economic development. 

It so happens that in an industry in which I’m very familiar, 

those are mines, and that is a big economic development issue in 

50

Nevada. So, yes, mines could be purchasers, you know, giving fair 

value to the Federal Government, certainly, but... 

Mr. CANNON. But also removing some of the headaches that go 

with it, well preserved in the laws that constrain appropriate use. 

Mr. FIELDS. Exactly, exactly. It will be no less of a regulated industry under the proposal that I make. It’s still subject to State, 

local requirements, as well as your Federal requirements for clean 

air, clean water, but remove a lot of that duplication. 

Mr. CANNON. Well, I personally think that’s a really good idea. 

Are you familiar with the APPLE project started by a Speaker of 

the House in the State of Utah, where he’s looked at the western 

states, the public-land states versus the eastern states that don’t 

have near the source of land, public lands, and evaluated from 

every perspective what percentage we spend on education. The ‘‘E’’ in APPLE stands for education, I don’t know what the rest of it is, 

but I am sure that he spent a lot of time getting the acronym 

APPLE, about education. 

But the amazing thing is that we spend a larger percentage, we 

spend a larger percent of our income, a larger percent of our State 

budgets, and we have overwhelmingly, across the board and across 

every state, which is different, each state is different from the others, but in the west we are generally spending more money per 

capita and less per student than in the east. 

And the reason for that is because we have 90 percent, depending on the state—Utah is about two-thirds, here it’s much higher 

than that—in land that’s held by the Federal Government. In other 

words, most of the public—most of the land is public, and therefore 

not taxed. We’re not even getting a fair shake on our payment in 

lieu of taxes with our counties. 

The result of that is that Westerners—that includes California, 

it includes Alaska, it includes everybody or every state that has 

public lands—is paying a significantly disproportionate share to 

educate our kids whereas eastern states don’t suffer the same problem. 

And it seems to me, the only way you can solve that is by actually selling lands, subjecting them to private ownership and taxation. So I appreciate your testimony in that regard. It was 

thoughtful, well-presented, and made it very clear that we’re not 

trying to take this land and rape it and put it in private hands. 

So I appreciate that testimony. Thank you. Thank you. Yield back 

to you, Mr. Chairman. 

Mr. POMBO. Thank you. I too want to thank this panel for their 

testimony. It was very informative. I would like to start with Mr. 

Chavis, if I may. 

One of the—it appears that one of the real problems that we 

have is the—is the uncertainty in going through the process. And 

what I’m hearing you say and others say is not that we want to 

roll back any of the laws that are in existence, we just want some 

certainty so we know what the rules are. 

Mr. CHAVIS. That’s correct, Mr. Chairman. We don’t expect rules 

to be—laws to be rolled back. That’s not realty, that’s not the way 

it’s going to be. What we would like to see is, we would like to be 

able to start a permitting process and complete that process under 

the same set of rules. Just like a college catalog when you enter 

51

on a college curriculum, we would like to have that same opportunity. 

And I know it’s part of the political system, the political world 

we live in, that when there’s an election if we get a change at the 

top or in the middle, things change. But that is what we would like 

to see addressed, and I don’t know just how to do that. 

Mr. POMBO. Well, the only way that—that I see to do it is to follow-up on your suggestion, in that we have to reform our mining 

laws. And there has to be a set process that’s in place, and if you 

are in a mine here, you are going to have to meet all of those rules 

and regulations. But going into it, you will at least know what you 

have to do in order to get there. 

Mr. CHAVIS. That’s correct. 

Mr. POMBO. When you look at operating in Nevada versus a foreign country—

Mr. GIBBONS. California. 

Mr. POMBO. Yeah, California. We’re not there yet, Jim. We’re 

working on it, though. 

But when you look at operating in Nevada versus a foreign country, when you go into a foreign country, do you—do you basically 

know what the rules are going to be when you go in there, or do 

you have the same kind of process in place that you have those uncertainties, or is that somewhat unique to the United States? 

Mr. CHAVIS. We do what’s called a Country Risk Assessment, 

along with other type—using other analytical tools. But the Country Risk Assessment will generally give us a feel for what environmental regs are or are not present. It also gives us a political assessment, to give us an idea as to whether the individual that’s in 

power or the party that’s in power, what their chances are two 

years down the road when the elections are scheduled and what 

the effect could be on mining. 

We also send our environmental teams and our engineering 

teams and other technical disciplines in early, in the early stages, 

not—not immediately at exploration, but once they’ve got a sniff of 

a mineral being present, to give us an idea of the types of challenges that are involved there. That’s all done, generally, in our 

Feasibility Study, which is done prior to really making the large 

leap, the large investment. And that same thing is actually done 

in the United States. 

Mr. POMBO. Can you give—

Mr. FALEOMAVAEGA. Mr. Chairman? 

Mr. POMBO. Yes. 

Mr. FALEOMAVAEGA. In a foreign country it is called a contribution and donation, but in our country it’s called extortion and bribery. 

Mr. POMBO. That may be the case. 

Mr. Taylor, or Dr. Taylor, when you look at doing exploration, 

and the changes that you have seen in the period of time that 

you’ve been in the business, how much better are you today at 

being able to determine where a mineral is and the extent of that 

find, versus 40 years ago? Has technology changed the business, or 

is it like in the old movies where you go out and smell a rock and 

you know whether it’s there or not? 

52

Mr. TAYLOR. Well, the technology has changed enormously in 40 

years. Advances in geochemistry, geophysics and our understanding of geology have grown enormously. But there’s still—there 

are still mines being found by guys out there with their boots on, 

whacking rocks. And so I—the technology is greatly improved and, 

of course, there are less chances of finding the surface outcropping 

material, the deposits. And so we’re—we’re forever—or we’re—the 

future is the ability to see deeper and deeper down into the earth 

with more—less direct methods, such as—such as geophysics and 

our understanding of the geology. 

Mr. POMBO. If, as you look at—at the future and the ability of 

the mining industry to expand in this State of Nevada using the 

technology that—that’s available today, what is the role that the 

moratorium is playing right now? 

Mr. TAYLOR. I’m sorry, which moratorium? 

Mr. POMBO. The patent moratorium that we’ve been talking 

about. 

Mr. TAYLOR. Oh. Well, as I said before, I think any—anything 

that is perceived to be a blockage in the permitting process of the 

mining end is going to deter people from investing in exploration. 

But I don’t—I think—I think to some extent, some of these difficulties and the changes that—changing of law or the changing interpretation of laws and regulations, some are overweighed by the geological potential that you find in a state like Nevada. There aren’t 

very many places on the planet where we can expect to find, continue to find good high-grade gold deposits. You know, those—those 

places are fixed and limited. So to some extent that, I would say, 

overrides the concerns. But at any rate—I’m not sure that really 

answered your question. 

Mr. POMBO. Well, thank you. I want to thank the panel for their 

testimony. I want to thank Mr. Gibbons for hosting us here today 

and giving us the opportunity to come in. 

One of the efforts that we have made on the Committee this year 

is to get out and do as many field hearings as we possibly can to 

give people the opportunity to testify before Congress, but also to 

give us a chance to hear from people that are actually on the 

ground and doing the work, and those who have to deal with, on 

a firsthand basis, with some of the bureaucracies. So I thank you 

all for being here. 

I want to thank Mr. Faleomavaega for making the effort to come 

out and participate in the hearing, as well as Mr. Cannon. It is always extremely difficult to have members take time away from 

their districts and their other responsibilities to do the field hearings, so I appreciate both of you making the effort to be here. 

If there is no further business before the Committee, I am going 

to adjourn, and again thank the panel for their testimony. 

I just wanted—again, to the members of our audience who may 

wish to offer written testimony to appear in the record, I will hold 

the hearing record open for 10 days to give everybody a chance to 

submit those to the House Resources Committee, and that will be 

included as part of the record. Thank you. 

[Whereupon, the Subcommittee was adjourned.]

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