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[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]

 
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

                                 _____

                   U.S. GOVERNMENT PRINTING OFFICE
                          WASHINGTON : 2004
89-583 PS

For Sale by the Superintendent of Documents, U.S. Government Printing Office
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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
W.J. ``Billy'' Tauzin, Louisiana     Eni F.H. Faleomavaega, American 
Jim Saxton, New Jersey                   Samoa
Elton Gallegly, California           Neil Abercrombie, Hawaii
John J. Duncan, Jr., Tennessee       Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland         Frank Pallone, Jr., New Jersey
Ken Calvert, California              Calvin M. Dooley, California
Scott McInnis, Colorado              Donna M. Christensen, Virgin 
Barbara Cubin, Wyoming                   Islands
George Radanovich, California        Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Jay Inslee, Washington
    Carolina                         Grace F. Napolitano, California
Chris Cannon, Utah                   Tom Udall, New Mexico
John E. Peterson, Pennsylvania       Mark Udall, Colorado
Jim Gibbons, Nevada,                 Anibal Acevedo-Vila, Puerto Rico
  Vice Chairman                      Brad Carson, Oklahoma
Mark E. Souder, Indiana              Raul M. Grijalva, Arizona
Greg Walden, Oregon                  Dennis A. Cardoza, California
Thomas G. Tancredo, Colorado         Madeleine Z. Bordallo, Guam
J.D. Hayworth, Arizona               George Miller, California
Tom Osborne, Nebraska                Edward J. Markey, Massachusetts
Jeff Flake, Arizona                  Ruben Hinojosa, Texas
Dennis R. Rehberg, Montana           Ciro D. Rodriguez, Texas
Rick Renzi, Arizona                  Joe Baca, California
Tom Cole, Oklahoma                   Betty McCollum, Minnesota
Stevan Pearce, New Mexico
Rob Bishop, Utah
Devin Nunes, California
Randy Neugebauer, Texas

                     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     Eni F.H. Faleomavaega, American 
Chris Cannon, Utah                       Samoa
Jim Gibbons, Nevada                  Solomon P. Ortiz, Texas
Mark E. Souder, Indiana              Grace F. Napolitano, California
Dennis R. Rehberg, Montana           Tom Udall, New Mexico
Tom Cole, Oklahoma                   Brad Carson, Oklahoma
Stevan Pearce, New Mexico            Edward J. Markey, Massachusetts
Rob Bishop, Utah                     VACANCY
Devin Nunes, California              VACANCY
Randy Neugebauer, Texas              Nick J. Rahall II, West Virginia, 
Richard W. Pombo, California, ex         ex officio
    officio
                                 ------                                

                            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

 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.
    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 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.
    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 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.
    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 
Gazette-Journal 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 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 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.
    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.
    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 notice-level (5 acres or less) 
operations that will cause more than negligible disturbance, 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 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 three-fold 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.
                                 ______
                                 
    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.
    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, 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 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.
    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 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. 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.]
    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 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 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 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.
    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.
    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 open-pit 
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.
---------------------------------------------------------------------------
    \1\ Philip Klapwijk, et al., Gold Survey 2003, Gold Fields Mineral 
Services Ltd., London, April 2003, p. 45.
---------------------------------------------------------------------------
    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, 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.
    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?
    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 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.
    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 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 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 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 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 
non-Federal 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 
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 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:
     LA reduction in the number of project-by-project NEPA 
reviews;
     LFacilitation of bonding and the eventual releases of 
reclamation bonds;
     LUnburdening of the regulatory and judicial systems from 
costly environmental appeals and litigation; and
     LSaving 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 
reclamation 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. 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 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 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. LEnvironmental 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. LSustainable 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:
          LSound environmental practices that leave a 
        chemically, physically and ecologically stable site when the 
        operation is closed;
          LEmphasis on a safe and healthy workplace;
          LInvolvement of our employees and other stakeholders 
        in all major decisions that affect the community; and
          LInvestments 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. L2001 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 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. LDonation 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. LContribution 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:
          LThe Clinton Administration attacked the longstanding 
        General Mining Law and lobbied Congress aggressively for its 
        repeal or reform;
          LThe 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;
          LIn 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
          LThe 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:
          LIn 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;
          LThe 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
          LMore 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.
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 
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. 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) LThe almost unlimited potential for discovery of a new 
generation of underground mines; and
    2) LThe 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?
    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 
apologize 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.
    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 
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 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 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?
    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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