[Senate Hearing 110-272]
[From the U.S. Government Publishing Office]
S. Hrg. 110-272
HARD-ROCK MINING ON FEDERAL LANDS
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HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON HARD-ROCK MINING ON FEDERAL LANDS
__________
SEPTEMBER 27, 2007
Printed for the use of the
Committee on Energy and Natural Resources
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40-573 PDF WASHINGTON DC: 2008
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JIM DeMINT, South Carolina
MARIA CANTWELL, Washington BOB CORKER, Tennessee
KEN SALAZAR, Colorado JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Barrasso, Hon. John, U.S. Senator From Wyoming................... 7
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Butler, Jim, Attorney, Parsons Behle & Larimer, Salt Lake City,
UT............................................................. 8
Craig, Hon. Larry E., U.S. Senator From Idaho.................... 2
Domenici, Hon. Pete V., U.S. Senator From New Mexico............. 4
Horwitt, Dusty, Public Lands Analyst, Environmental Working Group 44
Leshy, John D., Harry D. Sunderland Distinguished Professor of
Law, University of California, Hastings College of the Law, San
Francisco, CA.................................................. 17
Salazar, Hon. Ken, U.S. Senator From Colorado.................... 5
Snider, Tim, President and Chief Operating Officer, Freeport
McMoran Copper & Gold, Representing the National Mining
Association, Phoenix, AZ....................................... 39
APPENDIXES
Appendix I
Responses to additional questions................................ 57
Appendix II
Additional material submitted for the record..................... 69
HARD-ROCK MINING ON FEDERAL LANDS
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THURSDAY, SEPTEMBER 27, 2007
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:35 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman,
chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. Why don't we go ahead and start the hearing.
Thank you all for being here. This hearing is in regards to
mining on Federal lands, a topic of interest to me, of course,
because of the prevalence of mining in New Mexico and
throughout the West.
The mining industry plays an important role in our country.
It provides jobs, it fuels local economies, it produces raw
materials for industry. It also contributes, substantially, to
our national security.
At the same time, the mining industry has been subjected to
criticism, on both fiscal and environmental grounds. From my
perspective at least, some of that problem perhaps is a result
of the Mining Law of 1872 and our failure to do anything to
change that law in the last century and more.
Efforts to comprehensively reform the mining law have been
ongoing, literally, for decades. Results have been elusive.
Congress came close to enacting comprehensive reform in 1994.
Congress has enacted moratoria on patent issuance, and has
imposed claim maintenance fees through the appropriations
process.
However, the problems with the Mining Law and criticism of
its fiscal implications continue. The failure to collect any
payment on hard-rock mineral production from Federal lands is a
source of concern as is the continuation on the books of the
patent system, under which titles to Federal lands can be
conveyed for $2.50 to $5 per acre.
Also, there are those who argue that we must take
additional steps to ensure that mining operations are conducted
in an environmentally sound fashion. I understand that there
may be renewed interest on the part of many, both in the
industry and in the environmental community, in taking a
serious look at reforming the Mining Law. In fact, there are
growing number who say that this Congress is the time to
achieve this long-awaited reform.
This is the first hearing before the committee in this
Congress to address the important topic. We've asked two legal
experts to testify, to help define and focus the legal issues
related to mining law reform, that would need to be addressed
in any reform legislation. We will also hear from a
representative of the mining industry and a representative of
the environmental community. I look forward to hearing from the
witnesses.
I know Senator Domenici was delayed a few minutes and is on
his way, but let me just see if Senator Craig was prepared to
make a short opening statement on his behalf, and then we'll go
to the witnesses.
STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR
FROM IDAHO
Senator Craig. Mr. Chairman, I am prepared to make a
statement. I'll certainly let Senator Domenici speak for
himself, as it relates to this issue.
As you have said, we have attempted to visit reform of the
1872 Mining Law a good number of times over the years. I've
been with you and Pete and a good many others in that effort.
We've not been successful for a variety of reasons.
Clearly, during that time, some significant things have
happened. Issues that nag us, as it relates to mining, are
still out there. But America has also grown increasingly
dependant upon minerals and mineral resources that no longer we
produce. You know, whether it's, of course, the cars we drive
and the catalytic converters or whether it's the
pharmaceuticals that we use, minerals and metals, to our
economy, are as or more important today than they have ever
been.
I once heard the argument, ``Oh, as we move into a high-
tech economy, we certainly don't need to worry about minerals
or metals.'' Quite the opposite is true. In this great time
stretch that we've been involved with the 1872 Mining Law, and
looking at its realities versus its myths--and there are myths
versus realities with it--silver no longer is a numismatic
metal. It's now an industrial metal, used in the high-tech
industry and used in ways that are critical. Now, as the world
economy emerges, in 2006, U.S. metal mines produced $23.5
billion worth of metal ores and generated 170,000 jobs. In
every community, miners are paid more, paid well, have health
benefits, than almost any other class of worker. That has been
historically true.
So those 170,000 jobs remain very, very important jobs to
this economy and to the small rural communities often times
where the metal resource is, that that miner and that company
that he works for are working on. So this--this remains
something that you just don't sweep under the rug and it ought
to remain something that we ought not intentionally handicap.
At the same time, while one, some would argue, ``Gee whiz,
we're operating off of a law that was crafted in 1872 for the
purpose of property and discovery and ownership, that helped
finance mining operations?'' Let's also remember that that
mining operation of today and that mining plan that must be
submitted today, is subject to the Clean Air Act, and NEPA, and
FLIPA, and all of the other environmental laws that are
appropriate, every mining company must apply to today. That's
part of a mining plan. That's part of signing off on a mining
plan to allow that kind of operation.
What we've also found, is that we have made it so
difficult, so complicated to startup a new discovery on public
lands, that unless you are the big boys, the very deep-pocketed
of the industry, you probably will not get that kind of
operation started.
Lastly, let me say, Mr. Chairman, I've changed over time,
the industry has changed, we've all changed. Idaho's no longer
the dominant mining State that it was, but mining remains
important to Idaho. Here's a front page of USAToday. It says,
``Which State has the fastest growing economy?'' It's Idaho,
thriving quietly. The picture is the heart of the old Coeur
d'Alene mining district, which was the lead silver, lead, zinc
operators in the country when I first came to Congress. There
was no operation bigger in the country, other than the copper
of Arizona, and some of the phosphates around the country.
But having said that, when we talk about public lands and
public land resources and the effective management of them, use
of them, conservation of them, and preservation of them--when
you're cutting a log on public lands, you pay a fee. When
you're grazing on public lands, you pay a fee. When you're
drilling on public lands, you pay a fee. I believe the mining
industry ought to be paying a royalty.
But as you know, Mr. Chairman, it was the debate over how
you apply a royalty, at what point. The 8 percent net smelter
return royalty doesn't mean anything if there isn't an industry
to apply it to. It is so easy to move offshore today, because
in more instances the availability at less cost of the resource
is offshore instead of onshore. Because of either limited
access and/or costs that are related.
Secondly, while patenting may be the practice of the past,
the investment longevity is not. In order for the industry to
continue developing its resources and its investments, we have
to have stable, long-lasting environments in which those
investments can come about.
Our world has changed, our environmental concerns are real,
the industry knows it, and over the last two decades, many of
our mining industries are absolutely picture book perfect as
you can be for an industry that disturbs the surface, that
disturbs the undersurface, that processes, that uses chemicals,
and all of those kinds of things to apply.
We know how important mining is to our country today and if
we're going to remain, to some degree, flexible and
independent; if we don't allow ourselves to walk down the road
like we have with our hydrocarbons to a point where now we are
trying to become independent, when we've become 60 percent
dependant upon a very unfriendly world. We are now seeing
petro-nationalism around the world that is restrictive to our
accesses. Do we want to see, you know, mineral-nationalism?
That says, ``No America, you're going to walk the tightrope.
You're the big consumer, you're going to pay the price.''
I hope if we go at reform of the 1872 Mining Law--and I'm
certainly willing to help do that--that we do it in a
responsible and comprehensive way that helps us recognize the
importance of the industry to our economy, and that economy to
the local and small communities that it most oftentimes serves.
Thank you, Mr. Chairman.
The Chairman. Thank you. We have four witnesses. We have
five votes starting at 11 o'clock. So let me just see if other
members want to make short statements here. If they do, I'm
sure that I will certainly do that.
Senator Domenici, did you wish to make a statement before
we hear from witnesses?
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR FROM NEW
MEXICO
Senator Domenici. I want you to put my statement in the
record, first.
Then, I want to say that I am committed now, Mr. Chairman--
having talked with you briefly yesterday and with a number of
members of the committee on both sides--I'm committed to strike
out with you, in an effort to produce a bipartisan reform of
this old Mining Law.
We've done one piece of work that was needed by the
country. It was big and tough and we did it on a bipartisan
basis. There might be some that think I'm kidding, or that we
can't do it. Not at all. I believe we can write a bipartisan
bill, with you and I doing our share, and taking Senators with
us that want to be meaningful participants. I think we can
shake the country and shake the public domain and do something
very positive for the country. I'm willing to try that.
I thank you for your words yesterday afternoon late, when
you welcomed that statement. Therefore, my substantive
statement is not that relevant. The important thing is we're
going to try to do better.
Thank you.
[The prepared statement of Senator Domenici follows:]
Prepared Statement of Hon. Pete V. Domenici, U.S. Senator From
New Mexico
Good morning. Senator Bingaman, thank you for scheduling this
hearing. The Mining Law of 1872 has stood for 135 years without
significant alteration. Efforts to reform this law have a storied and,
at times, contentious history. Throughout this period, however, there
has been one constant: mining has remained of great importance to our
nation and to my own home State of New Mexico.
Today's conversation is a very important one, because I view this
hearing as the first of several steps we need to take toward a
bipartisan reform of the 1872 Mining Law. I have reached out to several
of my colleagues to share my interest in undertaking the work needed to
make reform a reality. This would not be the first time that we've
considered changes to the Mining Law, but this time I would like to
start with a clean slate. To do this, we must re-visit many issues
related to the Mining Law, and I thank the witnesses for shouldering
some of that burden.
Senator Bingaman has laid out the major issues before us today. In
the larger picture, there are some important things to keep in mind as
well, and I would like to discuss them in the context of another issue
that this Committee is certainly familiar with; energy.
Trends in domestic minerals production are nearly identical to what
we have seen of American energy resources in recent times. While our
reliance on foreign sources of energy continues to increase, so too
does our importation of foreign minerals. According to the U.S.
Geologic Survey, in 2006, the U.S. met more than one third of its
demand for 45 minerals through imports, and was 100% reliant upon
imports for 17 of those 45. Americans spent nearly $177 billion on
foreign minerals in 2006, a 28% increase from the previous year.
Unlike energy resources, however, we do not have alternatives to
the individual mineral commodities. For example, while gasoline can be
augmented with domestic biofuels, the periodic table precludes us from
seeking alternatives to aluminum, graphite, steel, or any other mineral
commodity. It is for this reason that reform efforts must maintain, or
increase, the viability of domestic minerals production.
The impact of growth in developing countries on mineral prices is
also comparable to the energy situation in which we find ourselves.
Times are good for the minerals industry. Between 2005 and 2006, the
value of minerals climbed roughly 18 percent, and spending on
exploration worldwide topped $7 billion - a 40% increase over 2005.
However, as I have previously noted, we find that domestic minerals
exploration also mimics domestic energy trends. Had these increases in
exploration occurred in 1993, the United States would have had a 20
percent slice of the $7 billion dollar pie. Our country only managed to
attract 8 percent of worldwide investment in 2006, however, despite
having reserves of more commodity minerals than any other country in
the world.
Of course, there are also many differences between the state of
domestic energy and the state of our mineral production. However, these
differences are not positive developments--instead, they represent
warning signs and the need for balanced reform. While there is a great
deal of support for weaning ourselves off of fossil fuels, for
instance, doing so with minerals is not only impractical, but likely
counterproductive as well.
Consider the fact that a hybrid vehicle on the road now uses twice
as much copper as an S-U-V, or the importance of platinum to the next
generation of clean, hydrogen fuel-cell vehicles. These concerns are
compounded by the very difficult task of finding minerals in the first
place.
According to the National Academies of Science, ``only a very small
portion of Earth's continental crust (less than 0.01%) contains
economically viable mineral deposits.'' Even a brief review of the
complexities related to minerals production makes clear that the task
of reform is a complicated one.
In considering changes to the Mining Law of 1872 we must balance
these complexities with a number of priorities, including: a fair
return to the taxpayer on American resources, providing miners with
stable conditions to attract investment, efficient resource management
to protect the environment, and ensuring the clean-up of abandoned
mines in the U.S.
I hope that we will hear from the witnesses their opinions on
whether these objectives are being met. To the extent that these
objectives are not being met, we welcome constructive recommendations
on how the Committee might address these issues in a meaningful way.
It is worth re-emphasizing that a robust, stable, domestic mining
industry is extremely important to our economic security. By pursuing
balanced reforms to the Mining Law in this Congress-a process which
starts today, in this room-we will help ensure the vitality of this
sector for many more years to come.
The Chairman. Thank you very much. I do welcome the effort
to come together around a joint piece of legislation we can
move ahead with.
Senator Salazar.
STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR
FROM COLORADO
Senator Salazar. Thank you very much, Senator Bingaman.
I'll put my statement in the record as well.
I want to make just two quick comments not in my statement.
The first is that I, too, look forward to working with you as
Chairman and with Senator Domenici and other members of this
committee, to see whether we can move comprehensive reform
forward, with the 1872 Mining Law, that is thoughtful and that
makes sense, both for mining on our public lands, as well as
for protection of the environment.
The second thing I want to say is that as part of this
effort, I do hope we are able to address an age-old problem in
the West. That's the age-old problem of abandoned mines,
whether it's in New Mexico, Arizona, Idaho, or Colorado. It's a
huge issue that's been unaddressed for a very, very long time.
I had legislation last year, which we had hoped to be able
to get through. Unfortunately, we were not able to get it
through, but we've been working with the Western Governor's
Association and others to try to see whether we could get Good
Samaritan legislation through, and I'm hopeful that that is
part of what we consider as we move forward with this.
Thank you very much.
[The prepared statement of Senator Salazar follows:]
Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
Thank you Mr. Chairman and Ranking Member Domenici for holding
today's important hearing on hard-rock mining issues. Hard-rock mining
issues are particularly important in the Western United States. While
much has changed in the West in the past 135 years, the Mining Law of
1872 has remained essentially unchanged since it was passed. I look
forward to hearing from our witnesses today about the issues they
believe Congress should consider when looking at revisions to the 1872
Mining Law.
Today, however, I want to speak about an issue related to mining
law reform that has been a top priority for me since I joined the
Senate, Good Samaritan cleanups of abandoned hard-rock mining sites.
The Western United States is pockmarked with old mines and mining
residues. At these abandoned mines, there are frequently open shafts
and dangerous structures that create real physical hazards to humans
and wildlife. Earlier this month, a thirteen year old girl tragically
died in Arizona when the all-terrain vehicle she was riding in fell
through a brush-covered abandoned mine shaft.
In addition to the hazards posed to humans, many of these sites
continuously pollute the water, the land, and the air. Our rivers and
streams suffer particularly from these old mines. Erosion and
sedimentation, acid rock drainage, heavy metals leaching into streams,
sulfide waste piles, contaminated soils, and improperly disposed mining
processing chemicals are found at abandoned mine sites.
The Environmental Protection Agency (EPA) estimates there are over
half a million abandoned mines nationwide, most of which are former
hard rock mines located in the western States. There is no single
database that tracks these abandoned mines, and no consistent way of
reporting them. Information gleaned from numerous state and federal
databases show these abandoned mines are a problem in many western
states. For example, there are estimated to be 100,000 abandoned mine
sites in Arizona, 50,000 in Nevada, 22,000 in Colorado, and 20,000 in
California, New Mexico and Utah. Clearly this is not a small problem.
In many cases, no one alive is legally responsible for cleaning
these sites. In other cases, those who are legally responsible lack the
money or other resources necessary to clean them up, and the pollution
continues.
Fortunately, some people and some companies are willing to clean up
mine sites in whole or in part, even though they are not legally
responsible. These are Good Samaritans.
They act for many reasons. Some are people who live nearby and
suffer directly from the pollution. Others are companies that want to
perform a service to the community and to address less fortunate
aspects of the history of the mining industry.
Unfortunately, though, our environmental laws create great risks of
broad, long term, and very expensive liabilities for anyone who acts at
a mine site, even if they act only as Good Samaritans. This problem
understandably dissuades Good Samaritans from cleaning mine sites.
In the 109th Congress, I introduced S. 1848, the Cleanup of
Abandoned and Inactive Mines Act. My bill enjoyed strong bipartisan
support and was reported favorably out of the Environment and Public
Works Committee, but we were unable to overcome objections to the bill
on the Senate floor. Since my bill was introduced, I am pleased to note
that the Western Governors' Association has convened several
stakeholder meetings to find common ground on important issues dealing
with Good Samaritan cleanups including the scope of liability
protection, cleanup standards, state program requirements, and
financial assurances that would be required. I also am pleased to note
that on June 6, 2007, the Environmental Protection Agency issued
Interim Guiding Principles for Good Samaritan Projects at Orphan Mine
Sites, and a model Good Samaritan Comfort/Status Letter and a model
Good Samaritan Settlement Agreement and Order for Removal Actions at
Orphan Mine Sites.
I believe we are closer than we have ever been in the past to
moving forward with Congressional action that will allow Good Samaritan
cleanups to take place. I plan to reintroduce a bill in this session of
Congress that builds upon the work of the Western Governors'
Association, the EPA, and the progress we made on S. 1848 in the last
Congress. Good Samaritan cleanups are the right thing to do, and I look
forward to working with my colleagues to ensure we move forward in this
Congress on encouraging the clean up of abandoned mine sites.
The Chairman. Thank you very much.
Senator Barrasso.
STATEMENT OF HON. JOHN BARRASSO, U.S. SENATOR
FROM WYOMING
Senator Barrasso. Thank you very much, Mr. Chairman. If
it's alright with you, I'll include my comments as part of the
records. I'm looking forward to this panel today.
Being from Wyoming, an energy State and a State where
mining is very important, I look very carefully upon this.
Reforms to me, Mr. Chairman, that are overly burdensome can
result the loss of good-paying jobs, increased reliance of
foreign countries, many of whom operate with much less care for
the environment than we do here. So, I'm looking forward to
working with you and other members of the committee in finding
the right balance on these difficult issues. Because I think,
philosophically, we have many agreements, but when it gets to
the practical issues, we need to make sure that things are done
right for our States.
Thank you, Mr. Chairman.
[The prepared statement of Senator Barrasso follows:]
Prepared Statement of Hon. John Barrasso, U.S. Senator From Wyoming
Thank you, Mr. Chairman. And, I thank the informed panelists
assembled before us today for their participation and instruction.
Reading through the prepared materials submitted by the panelists,
I am struck by the agreement I found at the most philosophical level.
Examples of such agreement include the recognition that:
Mining provides materials essential to our economy.
Some provisions in the hardrock mining law deserve a careful
look, and potentially reformat the question of royalties, for
example.
There should be a framework and funding to insure
responsible reclamation.
Mining activities should respect and protect the
environment.
And, the notion that privatization, or patenting, could
continue to serve a role in certain circumstances.
It would be my hope that another area for agreement would be that
the legal and regulatory framework would be efficient, well-understood,
and predictable.
Nonetheless, below this high level of philosophical agreement,
there are profound differences as to the best course of action.
Therefore, let me offer a few of my own observations. Domestic
mineral production offers benefits to labor, consumers, industry, and
even national security.
As an orthopedic surgeon, I am cognizant that the medical
instruments I used everyday in my practice are derived from both common
and rare minerals. The advances in medical technology would not have
been possible but for the minerals extracted from the earth.
Some benefits from the mining industry are intangible:
They are intangible for my patients and
They are intangible for my medical colleagues.
Not everything we will be hearing today can be melted down into a
gold bar and fully described by a spot market price.
With respect to the environment, I am fortunate to come from
Wyoming where responsible mining operations have been the norm, not the
exception.
Our State's Department of Environmental Quality is working
diligently to resolve any outstanding environmental concerns and
appropriately addressing abandoned mines.
And, I'm no stranger to protecting very special environments. As I
have previously announced, I am just finishing up work on a draft that
will remove significant portions of the Wyoming Range in the Bridger
Teton National Forest from future mineral leasing.
That said, I believe this Committee should proceed cautiously with
proposed changes that:
would discourage new mines from being economically viable,
close existing operations, or
discourage investment in technologies or full mineral
recoveries.
Reforms that are overly burdensome can result in:
the loss of good paying jobs,
increased reliance on foreign countries-many of which
operate with much less care for the environment, and,
in the case of uranium, opportunities to produce carbon-free
energy.
Mr. Chairman, I look forward to today's hearings, and I look
forward to finding balance on these difficult issues just below the
philosophical statements of agreement.
The Chairman. Thank you very much.
Why don't we call the first panel forward? The first panel
consists of two witnesses: Jim Butler, who is with Parsons
Behle & Latimer in Salt Lake City, who has concentrated his
legal practice on mining law issues for many years and John
Leshy, who is now with Harvard Law School and was our dislister
in our Department of Interior in the previous Administration,
in the Clinton Administration.
Thank you both for being here. Why don't you go ahead, Mr.
Butler, with your statement? Then we'll call on Mr. Leshy.
STATEMENT OF JIM BUTLER, ATTORNEY, PARSONS BEHLE & LARIMER,
SALT LAKE CITY, UT
Mr. Butler. Thank you very much, Mr. Chairman, for inviting
me here. It's an honor to appear.
Senator Domenici, in an earlier life, I worked for Utah
Governor Scott Matheson, and I know he spent a lot of time with
you in the 1980s and thought very highly of you. So it's nice
to see you again.
Senator Craig, I know how hard you've worked on these
issues and it's a personal pleasure to see you here this
morning.
Because the time is very limited, I have prepared a written
statement. I going to skip just to a few of the substantive
issues in that statement and try and talk some about royalties
and environmental regulations. If there's time, I'll talk about
some of the other issues.
There's little disagreement that the Federal Government
should receive some payment from the production of minerals on
Federal lands. The issues, as Senator Craig said today, are how
this royalty should be structured and how it should be applied.
He talked about a gross versus a net royalty. I want to talk
briefly and try and demonstrate how the gross royalty affects
investment decisions.
What I have in this chart*--this is from the 1977 National
Academy of Sciences report, which I've doctored up a little
bit--and it describes a model, a very simplified model, for how
investments are made in new mining projects. The costs that are
incurred by the mining company are the blue, they're below the
line. The cash that's realized by the mining company, is the
green above the line. There are a couple of things here that I
think this model, very simplified, illustrates.
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* Chart has been retained in committee files.
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One is, a lot of the costs precede the cash-flow. This is a
unique thing about the mining industry. There is exploratory
drilling, development drilling, baseline studies, environmental
permitting, environmental documents, geotechnical drilling,
acquisition of land and water rights--all of those come before,
in these early stages, and there's no cash-flow, again, in a
new property.
Then you have the mine design. After you have the
permitting decision, you have the mine construction. Again,
there's usually, typically a large capital investment there.
In the case of a gross royalty, the way mining companies
make this decision, obviously, is they say, ``This it, these
are the costs that we will sink into this property, these are
the revenues we expect to receive.'' There are a lot of
complicated assumptions that go into each element of the costs
and to the revenues. We could spend a long time talking about
that, but I'm going to gloss over it.
Then the question is, in today, ``Do we get a sufficient
rate of return to justify that investment?'' The rate of return
has to account for the alternatives, where else you might put
that money and the level of risk that is associated with that
investment.
If you apply a gross royalty, let's say that at the 8
percent gross royalty in the House, what you do to the
investment decision, is you take 8 percent from this line and
you move it down here. You're sitting here today, or in these
early stages, trying to make an investment decision and trying
to calculate a potential rate of return on a mining project.
Moving those dollars from cash-flow to cost has a major impact
on the projected rate of return. That is why the gross royalty
has a dampening affect on mineral investments.
The Chairman. Let me just ask a question on that. I can
understand why you would take it off of the top, off the
revenue, if you had a gross royalty. Why would you add it to
the costs?
Mr. Butler. Because it's a cash-flow you have to pay out,
like a fuel expense or a labor expense. It moves, you have an
offsetting----
The Chairman. But you're not off----
Mr. Butler. I don't want to double count, so let me----
The Chairman. Yes, but that's what I think you're doing.
Mr. Butler. I don't mean to double count, but it is what
you would--you would take dollars from here. Maybe the cash-
flow, this square would be the same size, but these dollars
would be moved to a cost item down here. You're right, I don't,
and I didn't intend to double count.
The Chairman. Either you take it off the top and don't add
it to the bottom or you leave it in the top and do add it to
the bottom. Right?
Mr. Butler. You're correct. In--the way this shading is in
the model, what you would do is you would add it to the bottom.
The Chairman. Right.
Mr. Butler. Yes. I didn't mean to double count. But it
would affect the cash-flow decision, the rate of return that
you make right here. I thank you for clarifying that. You're
right.
The net royalty, because it's tied to profitability, one of
the reasons that people invest in mines, is because there's
upside. You can strike it rich. Prices may exceed your
expectations. The ore that you have in the ground may exceed
what you projected at this point. You may make a profit. So in
the net royalty sense, you know, there is some money and I--
there is the prospect of additional cash-flow out here, that
you can't count on at the investment stage, but that you hope
to get.
The net royalty comes more from that, more from the
expectation, because it's tied to profitability and it's not
moved below to a cost line.
There are different impacts on existing operations, but
I'll talk about those separately.
I also want to talk briefly about environmental
regulations. That's basically my bread and butter legal work.
Last year I worked with the State of Nevada, BLM Office. We had
a task force to try and help their field offices coordinate the
permitting process between the BLM Federal permitting and the
Nevada State permitting. One of the products, one of our work
products was a chart. I apologize at the, that that is not
legible, but you should all have a blown-up copy in front of
you that is at least legible.
All I'm trying to illustrate with this is, that it is, to
give you some hands-on illustration of the level of detail and
complexity that goes into this process. Every plan of
operations is supported by a bunch of backup data and
additional plans, reclamation plans, waste rock plans, water
management plans, quality assurance plans, and must be part of
an environmental impact statement for a major project.
On the State side you have water quality permits, you have
air quality permits, you have reclamation permits. What I do
when the mining industry is good, is I help clients find their
way through this process. Because what they want to know, is
from this point here where I submit a plan of operations to the
BLM, to this point here when I get a permit decision, what do I
have to do, what are the hoops that I have to jump through, and
what substantive standards does my operation have to meet?
I want to talk briefly about those regulations. In 1998,
Congress asked the National Academy of Science to study this
system, this coordinated system of Federal and State
regulations, to determine if it was effective in protecting the
environment from hard-rock mining on Federal lands. That report
came back in September 1999 and answered ``Yes''. It said even
though this system is complicated, the report found that it was
generally effective.
Congress also asked the National Academy of Sciences to
identify regulatory gaps in the current program. The report
identified nine gaps. Seven of those gaps have been filled by
changes to BLM's 3809 regulations. One of those is an expanded
bonding requirement. Everybody, regardless of the size of the
operation, is required to post a bond before surface
disturbance activities begin.
Two gaps were left and those have to be filled by Congress.
One of those is the Good Samaritan legislation that Senator
Salazar mentioned. NAS recommended that the law be changed so
that mining companies could perform cleanups without assuming
extra liability. The second is, the report recommended that BLM
be given authority to impose civil penalties in administrative
enforcement actions. I think that requires Congressional
action, as well.
There were some additional regulations in 2000. The
regulations went beyond the recommendations of the National
Academy of Sciences report and I expect Mr. Leshy will talk
about those and then we can answer some questions.
The last thing I want to do in my remaining minute, is talk
just briefly about context. Senator Craig and others have noted
that demand and prices are driven now primarily by China.
That's true. Everything that's happened in the mining industry
in the past 5 years can be traced to the modernization of
China.
But I want to focus on just one related aspect of that. The
mining industry in the U.S., if we are not receptive to
investment, if we're not going to meet the needs, the
increasing global demand, not only are we not competitive in
terms of being a consumer, but we're not competitive in terms
of being a producer. We face the potential of falling behind in
technologies like metallurgy and mining technology, mine
engineering and design, because those investments, those people
are being trained in other places. I know that the Congress has
had hearings about these shortages. There's a generation in the
mining industry of technically trained people that's missing. I
think that's a follow-up issue to the question of Chinese
demand and the changing global market.
Thank you very much and I look forward to your questions.
[The prepared statement of Mr. Butler follows:]
Prepared Statement of Jim Butler, Attorney, Parsons Behle & Latimer,
Salt Lake City, UT
introduction
Chairman Bingaman, members of the Committee, thank you very much
for the opportunity to appear before you to discuss implementation of
the U.S. mining laws. By way of introduction, I am an attorney with
Parsons Behle & Latimer. My firm has offices in Salt Lake City and
Reno. We have been working with the mining industry since 1882, when
the two original partners--mining lawyers from Carson City--formed the
firm in Salt Lake City.
My own legal career includes almost twenty years working for dozens
of mining companies with interests on federal lands. My clients have
included some of the world's largest companies as well as medium and
small mining companies, and individuals and prospecting ventures who
are engaged in mineral exploration on public lands. I have served two
years as Chair of the American Bar Association's Mining Committee and
four years as a vice-chair of the Public Lands Committee. In 2005, I
was the Program Chair for the Rocky Mountain Mineral Law Foundation's
Annual Institute.
My particular specialization is environmental permitting and
compliance for mining operations. I have helped clients with more than
30 plans of operations with the Bureau of Land Management and U.S.
Forest Service and the related environmental and reclamation permits
from state regulatory authorities. I have also represented mining
companies in administrative and judicial appeals relating to their
operating permits--before the Interior Board of Land Appeals, state
administrative appeal boards, and federal courts in Arizona, Nevada,
Montana and Washington.
Before joining Parsons Behle & Latimer, I worked in the office of
Utah Governor Scott M. Matheson, where I was his staff assistant on
natural resources issues. In that position, I was the primary contact
with federal land management agencies, including the BLM, Forest
Service and National Parks Service, under cooperative agreements
between the State of Utah and those agencies.
For your information, I am registered with the Senate as a lobbyist
for Barrick Goldstrike Mines, Inc., which is a subsidiary of Barrick
Gold Corporation. However, I am not appearing today on behalf of
Barrick Goldstrike or any other mining company. Obviously, my views are
influenced by all of my experiences, including my work for the mining
industry, but the views I express here today are my own, and may or may
not be the views of my clients.
the major issues
Discussions with Committee staff and your invitation letter to
appear at this hearing identified five broad categories of issues
related to the mining laws:
Royalty
Should the law impose a royalty on the production of hard
rock minerals from federal lands and, if so, what form should
that royalty take?
Patenting
Should the opportunity to patent mining claims be revived,
or, if not, whatalternatives can provide security of land
tenure for mining investments?
Mining Law Administration
Are there ways to improve the efficiency and administration
of the current law?
Environmental Regulation
Should the law be amended to include additional
environmental standards or regulations?
Should a federal land manager be able to deny approval of a
mining plan of operations which meets environmental standards
to favor other land or resource uses?
Abandoned Mines
What is the extent of environmental problems associated with
abandoned mining operations on federal lands, and what are the
alternatives to address that problem?
royalty
The question of whether a royalty should be imposed on the
production of hard rock minerals from federal lands has been settled
since at least 1995, when the mining industry supported legislation
contained in the Budget Reconciliation Act which would have imposed a
5% net proceeds royalty on new claims. The debate now focuses almost
entirely on the structure and level of the royalty.
With regard to structure, the choices are between a gross royalty,
which is based upon the total revenue from the sale of minerals, and a
net royalty, which allows the operator to deduct specified costs of
production from the value of the minerals before the royalty is
calculated. The advantage of the net royalty in the mining context is
that it is tied to profitability and does not exaggerate the inevitable
price swings in the minerals markets. Royalty payments increase when
prices and profits are high, but fall when prices are low and times are
hard, allowing operations to cut costs and maintain production and
employment.
A profit-based royalty also has a less dampening effect on mining
investment. Mining investments typically seek a long-term rate of
return based on alternative investments and comparative risks. A
royalty payment based on a percentage of the total proceeds from
mineral sales directly reduces the potential rate of return--making all
mining investments less attractive. Because revenue projections (and
rates of return) are typically based on conservative price assumptions,
the possibility that prices may exceed expectations--along with profits
and royalty payments--does not reduce the initial projected rate of
return. A recent study prepared for the World Bank discusses the
various royalty options and describes how they might affect investment
decisions and the availability of reserves.
With regard to rate, there are two considerations. The first is how
the royalty payments fits with the overall economic contribution from
mining activities. Mining produces substantial government revenue, even
without a federal royalty. Mining operations pay property taxes, sales
and use taxes, and business fees and taxes. In Nevada, for example,
where mine operators pay a 5% net proceeds tax that is shared between
state and county governments, the industry paid more than $192 million
in direct tax payments in 2006, including almost $62 million in net
proceeds tax. That calculation includes only direct taxes and does not
account for the income taxes paid by mine owners or shareholders or the
taxes paid by mine employees and businesses that sell products and
services to the mining industry. The second consideration is how that
rate will affect mine investment. It is axiomatic that if the
government takes too much of the potential profit, investors will put
their dollars elsewhere.
environmental regulations
Mining operations on federal lands are subject to the full range of
federal and state environmental laws as well as federal regulations and
state laws and regulations relating specifically to mining operations,
reclamation and closure. When mines are expanding or new mines are
being built, mining clients come to me to help them navigate through
the procedural rules of these various laws and regulations. Before
construction, the typical mining operation on federal lands will be
required to obtain:
Approval of a plan of operations from the BLM or Forest
Service, including a reclamation plan, closure plan, and
cultural resources plan.
--Applications for plans of operations are supported by
environmental baseline studies for air, water, and
wildlife, geochemical testing of ore, tailings and waste
rock material, geochemical and hydrological modeling,
cultural resources studies and reclamation studies.
Air quality permits from EPA or state agencies with
delegated programs under the Clean Air Act. The complexity of
the air quality permits increases if there are substantial
onsite processing facilities. All sites must have an approved
fugitive dust control program.
Water quality permits from EPA or state agencies with
delegated programs under theClean Water Act. Water quality
permits can include discharge permits, stormwater management
permits and section 404 permits. States also require permits to
address potential impacts to ground water.
Rights to use or consume water from appropriate state
authorities.
Hazardous waste permits that govern storage, transportation
and disposal of laboratory or processing wastes.
Authorization under the National Historic Preservation Act
if cultural or historic resources are present.
Permits to construct tailings ponds or other impoundments.
Financial assurance equal to the cost that would be borne by
the government if it had to contract with a third party to
complete reclamation of the site.
Each of these permits is typically accompanied by an agency and
public review process. Every operation that requires a federal decision
to authorize mining activities is subject to the National Environmental
Policy Act (``NEPA''). For any large project, this requires preparation
of an environmental impact statement, which evaluates potential
environmental impacts of the mining operation, assesses alternatives
and requires the identification of mitigation measures to reduce
potentially significant environmental impacts. Public review and
comment is invited at the beginning of the process, to determine the
scope of the environmental evaluation, and when a draft environmental
impact statement is completed. The federal agency preparing the EIS is
obligated to consider and respond to all substantive comments on the
draft document.
All of the permits including monitoring and reporting requirements.
Monitoring may be constant, as in the case of some air and water
quality permits, or season, as in the case of some water use
authorizations, which require season monitoring of stream flow, seep or
springs.
These different pieces of the regulatory process work together--in
a way that the National Academy of Sciences report called ``generally
well coordinated''--to provide a comprehensive regulatory framework for
hardrock mining on federal lands.
The regulatory process for mining is constantly evolving. Changes
in federal water and air laws, regulations and policies translate
directly into on-the-ground requirements for mining operations. States
are constantly updating and revising their reclamation and
environmental programs. At the federal level, substantial changes were
made to BLM's 3809 regulations in 2000 and 2001. The complicated
history of the changes in the 3809 regulations--and contemporaneous
changes in the administration of the mining law--are spelled out in a
chronology that is attached to this statement as Table 1.
The most important changes are included in the revised 3809
regulations which were adopted during Secretary Babbitt's tenure and
ratified by the Bush Administration. Those regulations implement
changes which were supported by the National Academy of Sciences report
on hardrock mining on federal lands, including:
Expanded bonding requirements.--Regulations now require that
all mining and exploration disturbance, no matter how small, be
fully bonded before activities can proceed. Regulations, and
subsequent BLM guidance, also revise how bonds will be
calculated, maintained and released.
Full NEPA review for small operations.--Earlier regulations
included an exception from NEPA for small operations that
disturbed less than 5 acres. As the National Academy of
Sciences report recommended, that exception has been dropped
for all mining activities, but retained for exploration
activities. Even exploration activities disturbing less than 5
acres, however, must be bonded.
Strengthened water quality measures.--Regulations
incorporated key aspects of two prior BLM policy documents
regarding management of cyanide in mining operations and acid
rock drainage. Those same provisions required increased
frequency of inspections of mining operations that use cyanide
or may result in acid rock drainage. BLM has adopted additional
guidance documents to implement specific water quality
objectives in the regulations.
The National Academy of Sciences Committee identified seven
``regulatory gaps'' in the laws and regulations that were reviewed by
the 1999 report. Five of those seven gaps were filled by changes to the
3809 regulations and BLM guidance and policies. Two of those ``gaps''
require legislative action and include 1) a recommendation that
``existing environmental laws should be modified to allow and promote
the cleanup of abandoned mine sites in or adjacent to new mine areas
without causing mine operators to incur additional environmental
liabilities,'' and 2) a recommendation that ``BLM and the Forest
Service should have both (1) regulatory authority to issue
administrative penalties for violations of their regulatory
requirements, subject to appropriate due process, and (2) clear
procedures for referring activities to other federal and state agencies
for enforcement.''\1\
---------------------------------------------------------------------------
\1\ Hardrock Mining on Federal Lands, National Research Council, 9
(1999).
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patenting and mining law administration
The mining law has a long and colorful legal history. Some of the
complexities in the law and the details of mining claim location and
maintenance that were drafted in the 19th century seem unnecessary
today. At the same time, the mining law has unquestionably succeeded in
its primary purpose to encourage mineral exploration and development.
Though some disputes still arise, the mining has generally learned to
live with thee complexities.
The primary legal issue associated with what we traditionally
consider to be the ``mining law'' in the early 21st century is whether
unpatented mining claims offer sufficient security in the land to
support investments which may be measured in the billions of dollars.
The patenting provisions of the mining law allowed claimants to acquire
full title to the land and mineral deposits that were claimed, but
those provisions have been the lightning rod for substantial criticism
of the law and Congress has allowed no new patent applications since
1994. The security issue can be solved in a number of ways. The most
straightforward method is to allow claimants to secure title to
unpatented mining claims through the payment of annual claim
maintenance fees.
abandoned mines
There is a broad range of estimates of the number of abandoned
mines and physical hazards on the federal lands. There is little
disagreement that eliminating these sites deserves more attention. In
the context of mining law legislation, an abandoned mines reclamation
program should include two components. First, Congress should adopt the
recommendation from the National Academy of Sciences and enact
legislation that would allow mining companies--and other parties--to
reclaim abandoned sites without incurring additional liability under
environmental laws.
Second, Congress should support and expand existing programs that
work, not create a new program. Again, Nevada provides a model for
designing a program that works.\2\ The Nevada program is funded by a
modest fee ($1.50) on county mining claim filing fees and a onetime fee
of $20 per acre of new permitted mining disturbance. The Nevada program
also applies for grants from BLM's abandoned mines program. The Nevada
program secured 540 hazards in 2006 with total revenue of nearly
$350,000. The Nevada program encourages cooperation from mining
claimants, private property owners, volunteers (including mining
companies) and other agencies. The bulk of the work includes fencing or
backfilling mine openings on public land. The Nevada Division of
Minerals, which administers the Nevada program, is also working with
the Nevada Department of Wildlife, Nevada Natural Heritage Program, BLM
and Forest Service to secure mine openings in Clark County, but
preserve those that may be suitable for bat habitat by constructing
bat-compatible enclosures, i.e., enclosures that restrict public access
but allow continued use of the mine opening by bats.
---------------------------------------------------------------------------
\2\ This information is drawn from the Nevada Abandoned Mine Lands
Report, 2006, prepared by the Nevada Division of Minerals.
---------------------------------------------------------------------------
BLM's abandoned mine land program has also evolved. The most recent
information available on that program states that nearly 500 physical
hazards were eliminated and more than 1000 acres of water quality in
riparian areas improved during fiscal years 2004 and 2005.
Those are my initial comments on the issues raised by the
Committee. I expect these issues will be addressed in more detail in
questions to Mr. Leshy and myself, or to members of the second panel.
With the brief time that remains, I would like to set the context for
your consideration of these specific issues that relate to mining on
federal lands in the U.S. These are narrow issues, but occur in a world
that is much different from the last Congressional consideration of
these issues in 1995. Specific legislative decisions on these
particular issues should be informed by a broader world view.
the context for mining law discussion in 2007: china dominates the
world market for minerals
The last half of the early 1990s and early years of this century
were difficult economic times for the mining industry. Copper prices
hovered at less than $1 per lb. and gold prices were typically below
$300 per ounce. Depressed prices lead to predictable results--incomes
dropped, mines closed, a handful of mining companies went bankrupt, and
there was a significant consolidation in the industry. For example, I
looked back at the record of hearings held by this Committee in 1993.
The supplementary material in the record included information on the
top nine North American gold producers. Seven of the companies--Placer
Dome, Homestake Mining, Lac Minerals, Echo Bay Mines, Battle Mountain
Gold, Pegasus Gold and Amax Gold--no longer exist. Only two of the top
producers, Barrick and Newmont, remain in business. There has been a
similar trend in the copper industry.
The market for metals began to rebound in 2002 and 2003, based
almost exclusively on demand associated with the modernization of China
and the growing Chinese economy. Chinese demand is today, and is
expected to continue to be, the biggest single influence on the global
minerals market. Copper consumption in China has more than tripled
since 1998 and it is now the biggest consumer of copper in the world.
The story is the same for most other minerals. China is also the
world's largest consumer of aluminum, nickel, tin, lead, zinc and iron
ore. Since 1999, China has consumed two-thirds of the world's growth in
base-metals output. Since 2002, China has accounted for half the
world's growth in consumption of steel, copper and aluminum, almost all
the world's growth of nickel and tin, and much of the growth in lead
and zinc.\3\ The new demand has driven commodity prices up. Market
prices for copper, zinc, lead and iron ore have all more than tripled
since 2002.
---------------------------------------------------------------------------
\3\ China Business, Sept. 1, 2007.
---------------------------------------------------------------------------
In the past few years, the Chinese, concerned about future reserves
and prices for the minerals necessary to continue economic expansion,
have invested heavily in global mining companies and reserves. In 2005,
the Chinese mining company entered into an agreement with Chilean
copper producer Codelco, guaranteeing delivery of refined copper for 15
years and giving the Chinese an opportunity to invest directly in one
of the Codelco mines. Chinese companies have sought to diversify their
supplies with investments in South America, Australia, Africa and even
the United States. Within the past few weeks, it has been reported that
China is seeking to invest more than $5 billion in the Democratic
Republic of the Congo, which could lead to Chinese ownership of
important reserves of copper, cobalt, iron ore, gold and uranium.
To date, the growing global demand has not translated into
increased production in the U.S. According to U.S.G.S. data, mine
production of copper in the U.S. is essentially flat. Copper production
from U.S. mines in 2006 was actually lower than production between 1991
and 2001. Imports of copper have increased. Again, based on U.S.G.S.
data, about half of the refined copper consumed in the U.S. was
imported. Through 2006, production of other major metals in the U.S.,
including gold, which is a major export commodity, also remained flat.
Experts disagree as to what these developments for the global
mining industry and potential U.S. production. Some predict that prices
will moderate as global production--especially from Australia and South
America and within China--increases. That may mean little long-term
change in U.S. mining. Others see that any lagging demand from China
will be offset by new demands from India. If prices remain at current
levels, domestic exploration will continue and eventually some new
mines will make it to production. Most agree that any prolonged
downturn in the Chinese economy would dramatically impact metal prices
and halt growth in the industry.
Under either view, it is important that decisionmakers in Congress
understand how much the world has changed in the past fifteen years.
Decisions about the mining law and the mining industry should not be
made based on a view of the world that is 15 to 20 years out of date.
If a healthy domestic mining industry is important and I believe that
it is then we need to look closely at policy decisions which affect the
long-term cost and availability of minerals. Gross royalties that
shrink reserves and prematurely close mines, additional hurdles in the
permitting process that increase investment risk and delay permit
decisions, and decisions that further restrict the availability of
lands for exploration and development will inevitably reduce the
production of minerals from federal lands. In the future, if we look
abroad for those resources, they may not be available, at least at
prices that American consumers are willing to pay.
conclusion
I appreciate the opportunity to make this opening statement and
look forward to your questions.
Attachment.--Table 1
Chronology of Administrative Changes to the Mining Law, 1994 to 2007
Sept. 1994 Congress imposes moratorium on
processing of patent
applications (renewed
annually since 1994).
April, 1996 BLM adopts new acid rock
drainage policy as agency
guidance.
July, 1996 BLM adopts regulations
addressing use and occupancy
on mining claims.
Feb. 1997 BLM promulgates new bonding
regulations subsequently
struck down in 1998 in
Northwest Mining Ass'n v.
Babbitt because BLM failed to
comply with Regulatory
Flexibility Act).
Nov. 7, 1997 Solicitor Leshy issues
``Millsite Opinion,'' which
limits the availability of
millsite claims for mining
support facilities.
Nov. 14, 1997 Department of Interior
Appropriations Act for 1998
requires that BLM consult
with Western Governors before
proposing any changes to the
BLM's 3809 regulations.
Nov. 17, 1997 BLM Director Pat Shea sends
letter to Chairmen of
Congressional Energy and
Appropriations Committee
certifying that consultation
required by Interior
Appropriations Act has been
completed.
Oct. 1998 Department of Interior
Appropriations Act for 1999
requires National Academy of
Sciences to study and report
on adequacy of federal and
state environmental,
reclamation and permitting
laws regarding hardrock
mining on federal lands.
Feb. 1999 BLM publishes proposed
revisions to the 3809
regulations.
May, 1999 Congress limited application
of the Millsite Opinion in
1999 Supplemental
Appropriations Act.
June, 1999 Supplemental Appropriations
Act of 1999 requires that BLM
reopen the public comment
period on the proposed 3809
regulations after the
publication of the National
Academy of Sciences report.
Sept. 1999 National Academy of Sciences
Report, Hardrock Mining on
Federal Lands is released.
Nov. 1999 Appropriations Act for FY 2000
requires Secretary of
Interior to promulgate 3809
regulations that are ``not
inconsistent'' with the
recommendations of the
National Academy of Sciences
report.
Sept. 2000 Requirement of Appropriations
Act for FY2000 is extended in
FY 2001.
Oct. 2000 BLM publishes final 3809
regulations.
Dec. 2000 State of Nevada and others
file suit challenging certain
provisions of the final 3809
regulations.
Jan. 2001 Solicitor Leshy issues
``Ancillary Use Opinion,''
which restricts the use of
mining claims for mining
support facilities.
Jan. 2001 Final 3809 regulations go into
effect.
March, 2001 BLM suspends certain
provisions of the 3809
regulations and reopens
public comment period on
other provisions.
June, 2001 BLM retains bonding provisions
of the 3809 regulations.
Oct. 2001 BLM issues final rule revising
3809 regulations. Final rule
includes four substantive
changes:
Nov. 2001 Mineral Policy Center and
others file suit challenging
the revised 3809 regulations.
Oct. 2003 Department of Interior
rescinds the Millsite
Opinion.
Nov. 2003 District Court's decision in
Mineral Policy Center v.
Norton, upholds the revised
3809 regulations with the
exception of the application
of FLPMA's ``fair market
value'' requirement for
certain lands, which is
remanded to BLM for further
consideration.
Oct. 2005 BLM adopts new rules requiring
cost recovery for processing
of mining plans of
operations.
Dec. 2005 Department of Interior
rescinds the Ancillary Use
Opinion and clarifies process
for review of plans of
operations.
The Chairman. Thank you very much.
Mr. Leshy, thank you for being here.
STATEMENT OF JOHN D. LESHY, HARRY D. SUNDERLAND DISTINGUISHED
PROFESSOR OF LAW, UNIVERSITY OF CALIFORNIA, HASTINGS COLLEGE OF
THE LAW, SAN FRANCISCO, CA
Mr. Leshy. Thank you very much, Mr. Chairman. I'm delighted
to be here and delighted that the committee is interested in
looking again at this issue. It is, as many of you have noted,
a longstanding, sort of, controversy on the public lands and
there have been many attempts by this committee and this body
to, in this Congress to reform the law. All have--some have
made nicks in it and many have failed and I'm really heartened
by the interest of the committee, particularly by Senator
Domenici's remarks.
I'm delighted to appear here with Jim Butler. Jim and I
have discussed these issues in a friendly and adversarial way
over many years. I've always enjoyed debating them with him.
I emphasize I appear today as a private citizen. I'm not
representing anybody. I've made it, the Mining Law and it's
reform, kind of a hobby over the last 35 years, for better or
worse, mostly worse, I suppose. But I've written about it and
I've worked on it in government in the non-profit sector and
academia.
The shortcomings of the law, I think, have really been
identified by the remarks that many of you have made so far.
There are really three--three basic ones as I see it.
One is the patenting feature, the fact that the law allows
privatization of very valuable public resources at bargain
basement rates without any kind of consideration of a larger,
broader public interest. This patenting feature is really the
last vestige of the, sort of, 19th century westward movement
constellation of laws. Congress has interrupted it, in a sense,
by these annual moratoria on patent applications. But
obviously, Congress must act each year to continue those
moratoria or patenting resumes, and we did have an attempt a
couple of years ago to actually, not only lift the moratoria,
which passed the House, but to expand the whole patenting idea.
So, I think there is, frankly, general consensus that the time
has come to really end that feature of the Mining Law.
The second shortcoming is the one that Jim addressed in
some detail and others have mentioned. That is the fact that
there is no payment, no royalty, no rental, no kind of direct
financial return to the Treasury from the hard-rock mining on
the public lands. It really is the glaring exception, as you
all know. We now generally charge people to camp on the public
lands and recreate in various ways and timber harvesters and
energy companies and utility companies and just about, cattle
ranchers, just everybody else pays something to use and exploit
the resources of the public lands. Usually something like fair
market value. The hard-rock mining industry doesn't pay
anything. It's the big, very large exception. So that's one
unique thing about it.
Frankly, if you look to other lands, State private lands
and lands abroad, the mining industry pays something. I mean,
the Federal lands of the United States are practically the only
place on this earth, that this industry operates without making
a direct payment to the owners of the minerals. So, if they
operate on private land, they pay a royalty, if they operate on
State land they pay a royalty, Federal lands they do not. It is
time to close this, what I think is really a big loophole.
Let me say a couple of words about Jim's comments, because
there are various ways to do this. My own view is, the devil is
very much in the details, in terms of how you design a royalty,
net versus gross, those are sort of labels, whether it's 10
percent or 2 percent or some other percentage. It's much more
important exactly how you craft the royalty.
For the model here, I would look, frankly, as this
committee knows, the United States charges a royalty for coal
extraction, oil and gas extraction, geothermal extraction,
fossil fuels generally. Those systems aren't perfect, as we all
know. I saw an Inspector General report the other day that
talked about some difficulties the Interior Department is
having, but they do produce genuine, important revenues for the
taxpayers, a return on their ownership of these minerals.
They're systems that the industry and the government are quite
comfortable with, I think overall. They haven't crippled the
industries.
So, I think my message here, is that there are ways,
sensible ways to craft a royalty or other form of payment that
can produce genuine revenue for things like cleaning up the
abandoned mines, as well as deficit reduction and the like,
that can be carried out in an efficient way without crippling
the industry.
The third point I want to talk about, and the third, I
think, general area of--recognized as a shortcoming of the
Mining Law, though not by everybody, is that there are some
environmental gaps and loopholes in terms of regulation. It is
true, I will agree with Senator Craig that the mining industry
is now subject to a lot of environmental law that it did not
used to be. The Clean Air Act, generally the Clean Water Act,
et cetera, do apply to hard-rock mining operations. But, but
there are differences. There are loopholes, gaps here,
regulatory gaps that, that result in real problems.
A couple are in the water area. The Clean Water Act, for
example, does not generally protect ground water. It's not
designed to protect ground water. The Clean Water Act is
generally designed to protect, sort of, industrial waste coming
out of pipes. Mines don't pose those kind of problems. They
need, in some respects, some Clean Water Act permits, but the
sort of overall, general water quality and, to some extent,
quantity impacts of hard-rock mining are not addressed under
existing environmental laws.
Also, the hard-rock industry operating on Federal land,
again, does not get the same kind of regulatory treatment that
virtually all other users of the Federal land get. Because no
other user of the Federal land can claim a right to mine,
regardless of the level and quantity of environmental impact.
Some of you know, or I've addressed this in more detail in
my written statement, but the current Administration takes the
view--this is their legal position--that the government does
not have a right to say ``no'' to a proposed hard-rock mining
operation, no matter how devastating its impacts on the
environment or on other natural cultural resources. It simply
can not stop a mining operation, no matter how bad it is, if
the impacts of that mining operation are considered necessary
to mining, if they're sort of a necessary byproduct.
That is a very large loophole. Again, no other industry
operating on the public lands, faces that kind--has that kind
of opportunity. In other words, if you're an oil and gas lessee
or a timber operator or an energy company building a pipeline
or a transmission line or power plant or whatever, the
government always has the right to say, ``You know, we sort of
would like to be able to help you, but your particular
operation in this place, is so devastating, we can't allow
it.'' The government can not say that to the hard-rock mining
companies, under the current legal view.
Second, and also important, under the current legal view of
this Administration, the government can not deny hard-rock
mining companies the right to use as much public land as they
want and they think they need for waste dumps, tailings piles,
et cetera, an unlimited right to an unlimited amount of
acreage. That is, again, the current legal position of the
Government. These, again, are things that no other industry
operating on the public lands has, that is this kind of
``right.''
Now, I readily admit that there are some, many excellent
mining operations out there that do a very good job of
protecting the environment. Many companies behave very
responsibly. There's just no question about that. The industry
has come a long way in that respect. But, this is a pretty,
very big business, in terms of the huge amounts of acreage, of
tons of material that are moved. That is a huge change in the
industry from 30 years ago. We now move 100 tons of rock and
ore to get one ounce of gold. You've seen, I'm sure, the
committee has seen, the scale of these operations is vast. It's
a technological engineering marvel, really.
But it also can pose some very serious environmental
problems. When mistakes happen or mines are put in the wrong
place or bad mines are approved, the consequences can be really
expensive, devastating, long-term, et cetera.
As has been noted, the abandoned mine problem on Federal
lands from days, particularly when there was no environmental
regulation, is a very large one, estimated, I mean, depending
on who you ask, between $10 and $50 billion ultimately would be
required to clean these abandoned mines up. They also pose
safety problems. I was in Arizona a week ago and there was, a
kid fell into an abandoned shaft and died. That happens from
time to time. Those things need to be fixed and there needs to
be a source of money to do that.
So, I see my time is coming to a close. I'm sure the
committee has questions. I do, let me just close by saying I
think the industry needs to live up to, essentially, be brought
up to the same standards--and it's not that far to bring them--
but to the same standards and the same decisionmaking
authorities that apply to all other users of the Federal land.
I think we as a nation are there. I really applaud this
committee's interest in taking up this issue again, and I stand
ready to help any way I can.
Thank you.
[The prepared statement of Mr. Leshy follows:]
Prepared Statement of John D. Leshy, Harry D. Sunderland Distinguished
Professor of Law, University of California, Hastings College of the
Law, San Francisco, CA
I appreciate your invitation to testify today, and the engagement
of this Committee on reform of the Mining Law of 1872. There is no more
important task among the constellation of issues involving our public
lands, lands which encompass nearly one-third of the Nation's real
estate and a large portion of its valuable natural resources like
minerals.
I appear here today as a private citizen, expressing my own
personal views, and not representing any group or institution. I have
worked on Mining Law issues for thirty-five years, in academia, in
government and in the nonprofit sector. Before I address the specific
questions in your letter of invitation, I would like to provide some
larger perspective on the recently rekindled effort to reform the
Mining Law.
Calls to reform the Mining Law date back to a few years from its
passage, and have been made by many U.S. Presidents, from Republicans
like Theodore Roosevelt and Richard Nixon to Democrats like Jimmy
Carter and Bill Clinton. Almost forty years ago, as Stewart Udall was
stepping down after eight years as Secretary of the Interior, he called
its repeal the biggest unfinished business on the Nation's natural
resources agenda.
Signed into law by President Ulysses S. Grant four years before the
telephone was invented, this antiquated relic is the last statutory
survivor of a colorful period in the Nation's history that began with
discovery of gold in the foothills of the Sierra Nevada in 1848. The
mining ``rushes'' that ensued accelerated the great westward expansion
of settlement. And they swept many of the Western states to statehood--
California (the golden state), Nevada (the silver state), Montana (the
treasure state), Idaho (the gem state) and eventually Arizona (the
copper state). The same era witnessed the enactment of numerous other
laws filling out the framework for that great movement--laws like the
railroad land grant acts and the Homestead Act of 1862. A generation
later, Congress enacted landmark laws like the National Forest Organic
Act in 1897 and the Reclamation Act of 1902, and a generation after
that, the National Park Organic Act of 1916 and, in 1920, the Mineral
Leasing Act and the Federal Power Act.
All these other laws have long since been repealed, replaced, or
fundamentally reformed, often more than once. But the Mining Law of
1872 remains. Today the public lands and resources are managed under
modern laws like the Federal Land Policy & Management Act of 1976
(FLPMA), the National Forest Management Act of 1976, the Federal Coal
Leasing Amendments of 1976, the Surface Management Control and
Reclamation Act of 1977, the Reclamation Reform Act of 1982, and the
Federal Oil and Gas Leasing Reform Act of 1987.
The Mining Law has escaped this tide of reform despite the fact
that, since 1872, the population of the U.S. has grown more than seven-
fold (from less than forty million to more than 300 million), the
population of the eleven western states plus Alaska (where the Mining
Law principally applies) has grown from about one million to nearly 70
million, and the mining industry, our society and our economy have all
changed in ways beyond comprehension.
It is not for lack of trying. It has long been recognized that the
Mining Law is thoroughly out of step with evolving public resource
management principles. Indeed, the first Public Land Commission created
by Congress to assess public land policies recommended in 1880 that it
be thoroughly rewritten. Many blue-ribbon commissions since have
likewise called for reform.
The Law's three most important shortcomings are as follows:
First, the Mining Law allows valuable public resources to be
privatized at bargain-basement rates, without consideration of
the broader public interess. Its so-called patenting feature is
the last vestige in federal law of nineteenth century public
land disposal policy. Much abused for purposes that have
nothing to do with mining, the Mining Law has privatized an
area of federal land larger than the state of Connecticut, much
of it in scattershot inholdings that complicate rational land
management throughout the West to this day. Patenting is not
necessary to mine; indeed, the Supreme Court recognized as far
back as 1884 that the ``patent adds little to the security of
the party in continuous possession of a mine he has discovered
or bought.'' Many large mines are found at least partly on un-
patented federal lands.
Congress has since 1994 enacted appropriation riders to
forestall new applications for Mining Law patents. This
practice has had no demonstrable negative effects on the
hardrock minerals industry. But Congress must act each year, or
patenting resumes. The fragility of these annual riders was
driven home in the fall of 2005 by the now-infamous Pombo-
Gibbons legislative proposal that would have not only lifted
the moratorium on new patents, but also greatly liberalized the
terms of patenting. That ill-conceived proposal--which passed
the House but then died under a storm of protest--could have
resulted in the scattershot privatization of more millions of
acres of federal lands.
As long as privatization remains a core feature of the Mining
Law, the temptation remains for future mischief-makers to try
similar stunts. It is time for Congress to repeal, once and for
all, the Mining Law policy allowing willy-nilly privatizing of
the federal lands.
Second, the Mining Law fails to produce any direct financial
return to the public for the exploitation of publicly owned
resources. Mining companies are charged no rental, pay no
royalty, and make no other payment that recognizes that the
people of the U.S. own the minerals being mined. Their position
is unique in two distinct ways. First, practically all other
users of the public lands--oil and gas and coal developers,
timber harvesters, energy companies that run transmission lines
across the federal lands, cattle graziers, and even, these
days, hunters, anglers and other recreationists--pay the
government something (in most cases, something like market
value) for the publicly-owned resources being used or removed.
Second, practically everywhere else on this earth that hardrock
mining companies operate--on state or private lands in the
U.S., and just about everywhere abroad--they pay something to
the governments and others who own the minerals.
It is time for Congress to close this glaring loophole.
Whatever justifications might once have been offered for such a
giveaway of public property--such as when gold had strategic
value and the West was sparsely settled--have long since
disappeared. Today 85% of the gold mined is used to make
jewelry, and the West has long been the fastest-growing region
of the country.
Third, the Mining Law results in inadequate protection of the
environment and other uses of the public lands. All other users
of the public lands who can cause significant environmental
disruption are subject to a straightforward system of
regulation which requires them to minimize the environmental
effects of their activities and clean up any mess they create.
And all other users are subject to the fail-safe authority of
the government to prevent proposed activities that threaten
major environmental harm which cannot be prevented or mitigated
appropriately.
The Mining Law itself is utterly silent on environmental
regulation. Operations carried out under it no longer entirely
escape regulation, thanks to laws like the Clean Water Act. But
these other laws do not comprehensively address the myriad of
environmental threats posed by hardrock mining, such as
groundwater depletion and pollution and disruption of wildlife
habitat. Nor do these other laws require the government, in
making decisions about whether to approve proposed mines, to
weigh the value of mining against other values and uses of the
public lands.
The hardrock mining industry has long used the silence of the
Mining Law on such issues to stoutly contest the reach of the
government's authority over its activities. And it has long had
powerful allies in the government on these matters. Just within
the last few years my two immediate successors as Solicitor of
the Interior Department issued legal opinions supporting the
industry's view that the Mining Law hamstrings government
authority. In one, the Solicitor concluded that the government
lacks authority to prevent proposed hardrock mineral operations
on public lands no matter how huge a threat they might pose to
the environment and other resource uses. In another, the
Solicitor concluded that the Mining Law gives the mining
industry the right to use as much public land as it thinks it
needs as a dumping ground for the residue of its vast hardrock
operations. This is no small matter, because hardrock mining
operations these days can involve hundreds of millions of tons
of waste from gigantic open pits several miles across and a
mile or more deep. This legal position holds, in other words,
that the government is powerless to reject a proposed hardrock
mine on federal land that would permanently contaminate
aquifers containing immensely valuable future drinking water
supplies, and/or obliterate immensely valuable cultural sites,
and/or permanently appropriate many thousands of acres of land
immensely valuable for other uses. It is no wonder that the
federal land management agencies continue to feel cowed when
they contemplate exercising regulatory controls over this
industry.
Mining is a dirty business, and must be carefully controlled
to prevent environmental disasters. History teaches not only
that things can go bad with hardrock mining operations, but
when they do, the costs to repair the damage can be enormous.
Well over a century of mining under the Mining Law of 1872 has
saddled the Nation's taxpayers with a cleanup cost for
thousands of abandoned mines that, according to some estimates,
approaches fifty billion dollars. It bears emphasizing that,
despite the limited controls modern laws like the Clean Water
Act bring to bear on hardrock mining, bad mines still fall
through the regulatory gaps. To take just one example, Montana
and U.S. taxpayers are today paying millions of dollars to
clean up the Zortman-Landusky mine in Montana--a mine which was
approved with all the modern laws in place that the industry
argues are adequate.
It is long past time to close these regulatory loopholes and
eliminate these ambiguities so as to make clear to all in the
industry--as well as to federal land managers--that the
hardrock mining industry will be held to the same standards,
and be subject to the same kinds of regulatory authority, that
apply to all other users of the public lands.
Since the last time Congress seriously considered comprehensive
Mining Law reform, more than a dozen years ago, much has changed.
Today, Mining Law reform is both more imperative and, in my judgment,
more achievable. Here's why.
First, the industry structure, operations and economic impact have
evolved considerably. Thanks to new techniques for processing gold and
other hardrock minerals from more and more widely disseminated, fine-
particle deposits, the hardrock industry produces more and more
minerals by moving vastly greater amounts of earth and rock than ever
before. The United States now produces much more gold than it ever did
before, and is the third leading producer in the world.
The industry is also much more heavily concentrated, with many
fewer companies and many fewer mines than ever before. More than four-
fifths of U.S. gold production now comes from a single state-Nevada.
The four largest mines, all in Nevada, account for well over half the
total domestic production. The thirty biggest mines (more than half in
Nevada, including twelve of the fifteen largest) yield 99% of total
production. Barrick Gold, a Canadian company, is the biggest,
accounting for about 40% of domestic U.S. (and 8% of world) gold
production. Production of copper and other precious metals are
similarly concentrated.
Moreover, the hardrock industry now operates with such ruthless
efficiency that it employs far fewer people than it used to. Its
workers may be relatively well-paid, but they are far fewer in number
and much more geographically concentrated than they ever were.
In the meantime, the economies of the western states have evolved
rapidly away from their historic roots dependent on resource
extraction. Today the regional economy where the Mining Law applies--
the western states in the lower 48 plus Alaska--has changed
dramatically. While mining used to be a dominant industry in many
western locales (as state nicknames remind us), today its overall
economic impact is small, even minuscule. The west is now the most
urban and fastest growing region in the country. Its dynamic growth and
economic health are fundamentally linked to the quality of life
provided by the open spaces and recreational amenities of the public
lands.
Demographic and economic change has changed public sentiment at the
ground level. Westerners are increasingly unsympathetic to the idea
that the hardrock mining industry deserves these special exemptions
from the laws and policies that apply to everyone else. It is not
surprising, then, that when the mining industry seeks to exploit its
favored position under the Mining Law, more and more local people-
ranchers, hunters, anglers, retirees, land developers, tourist industry
officials, municipal water providers and other local government
officials-are asking why this nineteenth century policy still exists.
Their concerns are growing because soaring mineral prices,
particularly for gold, copper and uranium, have led to a new rush of
claim-staking under the Mining Law in areas with high values for other
uses. Mining claims on federal lands recorded with the BLM have nearly
doubled in just the last four years; there are now close to 400,000
individual mining claims scattered across federal lands.
People in the west are also more familiar than most with the
consequences of failing to control the industry. They live with the
thousands of abandoned mines scattered throughout the region, and are
familiar with the sorry legacy of safety hazards, polluted streams and
disrupted landscapes that will require billions of dollars to repair.
And they don't appreciate the fact that, under the current regime, the
dollars to pay for this cleanup will come more from taxpayers than from
the industry that created the mess.
Another noteworthy change in recent years is that, for the first
time, the hardrock mining industry is facing some pressure to reform
from the demand side-the jewelry industry that consumes much of its
product. With leadership from Tiffany and other major jewelers, this
movement has helped persuade some major mining companies, concerned
about their reputations as well as their impacts, to work to improve
their practices and make other accommodations to modern social and
environmental values. In short, the industry is no longer so monolithic
and so reflexively hostile to change.
Reforming the archaic Mining Law will not--as some industry
representatives ritually maintain--put an end to the domestic hardrock
mining industry. Every year Canada's Fraser Institute surveys mining
industry executives and uses the results to rank the most favorable
jurisdictions in the world for hardrock mining, considering a variety
of factors, including political stability. The American West is always
at or near the top of the rankings. Furthermore, skyrocketing mineral
prices means the industry is thriving as never before, and any increase
in production cost that might result from reform will be modest and can
readily be absorbed. The basic objective of reform is to put in place
practices and policies that oil and gas operators, coal miners,
electrical utilities, ski areas, and other intensive users of the
federal lands have operated under quite successfully for decades. I
have no doubt that the innovative, progressive companies in this
industry-those who have flourished around the world by being so-will
adapt readily to such reforms, just like other public land users have
successfully adapted to similar requirements imposed on them over the
last many decades.
Now let me address in some detail the questions you posed in your
September 12 letter of invitation.
Question: Whether there should be a royalty or alternatives to it,
including how to structure it:
I would underscore two goals in designing a system by which the
hardrock mining industry pays something to the public for the use of
the public's lands and minerals: First, that it produce real revenue
for the Treasury, to reduce the deficit and/or to repair some of the
costs and damage left by past hardrock mining activities. Second, that
it be efficient to administer, to minimize opportunities for clever
accountants and lawyers to ``game'' the system. Generally speaking, the
rule of thumb for a royalty is that the more exemptions, deductions and
offsets allowed, the more the system can be ``gamed,'' and the less
likelihood significant revenue will be raised. As an extreme example, I
would direct your attention to the ``sham'' royalty included in what
came to be known as the ``sham reform'' proposal that was included in
the gigantic budget econciliation bill vetoed by then-President Clinton
in early 1996. My recollection is that the Congressional Research
Service estimated that it was so riddled with deductions and loopholes
that it would have raised a paltry $1 million per year from the entire
multi-billion dollar industry.
For guidance on both royalty levels and structure, the Committee
would be well-served to look at the oil and gas and coal provision of
the Mineral Leasing Act. The context is closely analogous to hardrock
mining-in each case the objective is to secure a fair share of revenue
from highly capitalized investments to produce minerals from publicly-
owned lands, that are not without risk and are globally competitive.
While the Leasing Act royalty systems are not free from opportunities
for mischief, there is no doubt they raise significant revenue for the
Treasury in a relatively efficient manner.
Any royalty or similar payment the Congress might embrace--whether
8% as in H.R. 2262, the reform bill introduced into the House, or a
higher percentage comparable to what the oil and gas industry pays-will
be small compared to risk factors the industry has long faced, like
fluctuations in commodity prices, and in exchange and interest rates.
Sizeable return to the government from fossil fuel extraction from
federal lands has not hurt the competitiveness of that industry.
Question: Are there alternatives to a royalty?
A conventional royalty would presumably apply only to mineral ore
extracted from federal lands. It would not, in other words, include any
kind of charge for the use of federal lands to support the extraction
of minerals from formerly federal lands. Many, perhaps even most, of
the very large hardrock mining operations in the West (which, as I
noted earlier, are responsible for the vast majority of the total
domestic production) are on lands in a mixture of ownerships-private,
state and federal. Often the federal lands, particularly those where
the ore body is found, may be mere slivers or odd-shaped parcels
intermixed with others. Sometimes all or most of the actual ore body is
on non-federal land (often, because it has already been patented under
the generous terms of the Mining Law). See, e.g., Mineral Resources:
Value of Hardrock Minerals Extracted From and Remaining on Federal
Lands (GAO/RCED-92-192, August 1992).
Even where the U.S. no longer owns any part of the ore body, the
federal lands usually play a key role in bringing the ore body into
production-by providing lands for mineral processing, for dumping waste
rock and mine tailings, and so forth. The United States should, in my
judgment, receive a financial return for the use of its land in these
circumstances that reflects its contribution, both past and present, to
the overall operation.
Suppose, for example, that the ore body of a large mine is 75% in
private ownership, having been previously patented under the Mining
Law, and 25% federal land. That mining operation may permanently use
thousands of acres of federal land as waste rock dumps and tailings
piles for the mining operation. It seems to me that a royalty or
payment to the Treasury which is limited to the 25% of the ore body
still in federal ownership is inadequate return to the public for this
use of the public's resources. If access to this federal land were
granted under Title V of FLPMA-which would be the case if this were a
power plant, a factory, the user would pay fair market value for the
land. Mine operators who use thousands of acres of federal land as a
dumping ground ought to pay something more than a nominal fee to hold
claims; indeed, their payment ought to reflect some measure of the
value these federal lands contribute to the entire mining operation.
This might be done through a much more substantial rental, holding fee
or other payment, or a severance tax. I appreciate there may be
jurisdictional complications should this Committee try to craft
something along those lines, but it seems to me well worth thinking
about.
Question: How should revenues from a royalty or other levy be
distributed?
I will discuss this below, in connection with abandoned mines.
Question: What kind of transition rules should there be for
royalties or other levies?
As a matter of law, there are in fact very few limits on Congress's
ability to apply reforms, including a royalty or other fees, or tougher
environmental regulations, to existing mining claims.
This is a much misunderstood area. Many believe, mistakenly, that
all mining claims located on federal lands are constitutionally-
protected ``private property interests'' which limit the ability of
Congress to reach them. That is not the case. It has long been clear-
reaffirmed in many decisions of the U.S. Supreme Court--that a mining
claim located on the federal lands carries with it a constitutionally
protected property right only if it contains a ``discovery'' of a
``valuable mineral deposit.'' Mining claims which lack such a
``discovery'' are mere licenses to occupy the federal lands. The legal
status of locators of such claims is no different from that of a hunter
or angler or other recreational user of federal lands. ``[I]t is clear
that in order to create valid rights . . . against the United States
[under the Mining Law] a discovery of mineral is essential.'' Union Oil
v. Smith, 249 U.S. 337, 346 (1919); see also Cole v. Ralph, 252 U.S.
286, 296 (1920).
The locator of a claim without a discovery does have the right to
exclude other miners from the claim, so long as the original locator is
actively exploring for a mineral. This is the ``pedis possessio''
(foothold) doctrine recognized by the Supreme Court almost ninety years
ago. Union Oil v. Smith, supra. But the locator has no rights against
the United States until a discovery is made. This means the United
States can change its policy or rules, and even effectively extinguish
such claims, at any time before a discovery is made, without any
obligation to pay compensation.
In practice, almost all mining claims are located in advance of
discovery. They are located to provide a foothold on public lands in
order to explore for valuable mineral deposits. Mining claims are
typically located, in other words, in speculation that a mineral might
possibly exist and be profitably mined from the claimed land. But hopes
and speculations, the Supreme Court has long made clear, are not
tantamount to a ``discovery.'' See, e.g., United States v. Coleman, 390
U.S. 599 (1968); Sullivan v. Iron Silver Mining Co., 143 U.S. 431
(1892). Thus most mining claims do not carry with them constitutionally
protected property rights, and Congress retains practically unfettered
authority to change the rules regarding them.
With regard to mining claims that do include a ``discovery,'' the
analysis is a little different. These contain property rights which can
give the claimant some argument for compensation in some circumstances
if the government acts to ``take'' these rights. Whether the argument
will succeed usually depends on a case-by-case, fact-intensive
analysis. See, e.g., Tahoe-Sierra Preservation Council, Inc. v. Tahoe
Regional Planning Agency, 535 U.S. 302 (2002); Penn Central
Transportation Co. v. New York City, 438 U.S. 104, 123-28 (1978).
But certain things are clear from Supreme Court decisions in this
area. For example, the government retains broad authority to impose new
regulations over mining claims that contain a discovery and a property
right. The U.S. Supreme Court addressed this exact question in 1985,
and its guidance is worth quoting at some length:
Even with respect to vested property rights, a legislature
generally has the power to impose new regulatory constraints on
the way in which those rights are used, or to condition their
continued retention on performance of certain affirmative
duties. As long as the constraint or duty imposed is a
reasonable restriction designed to further legitimate
legislative objectives, the legislature acts within its powers
in imposing such new constraints or duties. * * *
This power to qualify existing property rights is
particularly broad with respect to the ``character'' of the
property rights at issue here. Although owners of unpatented
mining claims hold fully recognized possessory interests in
their claims, we have recognized that these interests are a
``unique form of property.'' * * * The United States, as owner
of the underlying fee title to the public domain, maintains
broad powers over the terms and conditions upon which the
public lands can be used, leased, and acquired. See, e.g.,
Kleppe v. New Mexico, 426 U.S. 529, 539 (1976). * * *
Claimants thus take their mineral interests with the
knowledge that the Government retains substantial regulatory
power over those interests. * * * In addition, the property
right here is the right to a flow of income from production of
the claim. Similar vested economic rights are held subject to
the Government's substantial power to regulate for the public
good the conditions under which business is carried out and to
redistribute the benefits and burdens of economic life.
United States v. Locke, 471 U.S. 84, 104-05 (1985) (emphasis
added). As this last-quoted sentence from Court's opinion makes clear,
the government retains the right to require a payment (whether labeled
a tax, royalty, fee, or something else) from a holder of a mining claim
on federal lands, even one with a discovery and a property right, as
part of its continuing redistribution of the benefits and burdens of
economic life. In general, the Supreme Court has never given credence
to arguments that federal taxes and fees constitute takings of private
property. See, e.g., Cole v. LaGrange, 113 U.S. 1, 8 (1885) (``the
taking of property by taxation requires no other compensation than the
taxpayer receives in being protected by the government to the support
of which he contributes''); County of Mobile v. Kimball, 102 U.S. 691,
703 (1880) (``neither is taxation for a public purpose, however great,
the taking of private property for public use, in the sense of the
Constitution'').
It is well-established that the ``discovery'' creating a property
right against the government is dependent upon the marketability of the
mineral. This means the right may vanish-and with it the property right
against the government-as a result of changed conditions. As the
Supreme Court has held, a ``locator who does not carry his claim to
patent . . . does take the risk that his claim will no longer support
issuance of a patent.'' Best v. Humboldt Placer Mining Co., 371 U.S.
334, 336 (1963).
In this connection, the Interior Department and the federal courts
have long held that, in determining whether a discovery exists, the
cost of complying with environmental laws and regulations must be taken
into account. The courts have recognized that new environmental
restrictions may affect claim validity, and reduce or eliminate the
government's obligation to compensate claimants. See, e.g., Clouser v.
Espy, 42 F.3d 1522 (9th Cir. 1994) (``virtually all forms of
[government] regulation of mining claims-for instance, limiting the
permissible methods of mining and prospecting in order to reduce
incidental environmental damage-will result in increased operating
costs, and thereby will affect claim validity. However, the . . . case
law makes clear that such matters may be regulated by the
government''); Reeves v.United States, 54 Fed. Cl. 652 (2002)
(compensation denied to a claim locator who was prevented from
developing claims he located in a wilderness study area on federal
land).
For all these reasons, I believe it is well settled that the
government has nearly unfettered authority to apply newly enacted laws
and regulations, including a royalty, to mining claims that are not
accompanied by a discovery; that is to say, most of the several hundred
thousand claims currently of record. It also has very considerable
power to apply to new laws and regulations to mining claims that
include a discovery, without creating any obligation to compensate the
claimants.
Because of the strength of the case for congressional authority, I
was dismayed by the rather casual assertion of the Administration's
witness, at the House hearing on Mining Law reform on July 25, that a
royalty on existing claims would raise constitutional ``takings''
questions. Given the analysis I set out here, I recommend the Committee
give no weight to such assertions unless the person making it supplies
the Committee with a legal memorandum backing up its assertion by
refuting the analysis offered here.
While there is very little legal limit on the ability of Congress
to impose a royalty or other levy or to tighten environmental
regulation of existing claims, obviously Congress can take equitable
considerations into account, such as capital investments that have
already been made in existing mines. But I would strongly discourage
applying royalties or other levies or new environmental regulations
only to claims located after enactment of reform legislation. Most
areas of federal land that have significant likely mineral potential
are already blanketed with claims. Most of these claims lack a
discovery and a concomitant property right. Most have seen little
investment and are being held speculatively. Most mines likely to open
in the next few decades will probably be on already located claims.
Thus exempting existing claims from new requirements (permanently, or
for a period of years) would be a huge loophole and not provide genuine
reform.
As I indicated earlier, any levy that emerges from Congress will be
a small factor in the overall profit and risk picture for these
enterprises. Furthermore, there are various ways to craft a royalty or
other levy that adjusts its impact to overall profitability. Payments
to the government might be on a sliding scale depending upon overall
commodity prices; e.g., if the price of gold doubles or is halved, the
royalty or other payment is adjusted accordingly.
Question: Whether to eliminate patenting entirely or only partially
and whether to provide some other mechanism for security of tenure.
At one time, I thought that further patenting under the Mining Law
was never justified. But after further reflection I believe that
privatization of the federal lands involved in large hardrock mining
operations can be justified under certain carefully defined conditions.
As I have already noted, many, perhaps most, major hardrock mining
operations in the West are on lands in a mixture of ownerships--
private, state and federal, with the federal parcels often mere slivers
or odd-shaped parcels intermixed with others.
Giving mining companies title to federal lands involved in these
operations would consolidate and simplify ownership and reduce
regulatory and other complexities. After operations cease, the lands
involved often serve very little public value for other uses. Moreover,
continuing federal ownership can cloud the responsibility for
protecting public health, safety, and the environment from pollution
endemic to these sites.
On the other hand, I can think of at least two federal interests
that are implicated in any proposal to privatize these federal lands.
First, taxpayers deserve a fair return on valuable publicly-owned
resources. There is no reason why the U.S. could not protect this
fiscal interest while still privatizing these lands; e.g., Congress
could make privatization contingent upon the mining operation making a
payment (lump sum or periodic) to the Treasury to capture an
appropriate share of future income streams made possible by the use of
these federal lands in these mining operations.
Mining companies have sometimes showed a willingness to entertain
such arrangements and pay real money to simplify and secure their land
positions. In the last Congress and again in this one, for example,
legislation has been introduced to approve a complex series of land
exchanges in Arizona between the United States and the Resolution
Copper Company (a joint venture between BHP Billiton and Rio Tinto).
According to news reports, Resolution is seeking to tap a large deep
underground copper deposit. While it already owns or controls
considerable land in the area, it wants title to some federal land
(which may or may not include part of the ore body) to facilitate the
operation. To gain title (through a proposed congressionally-approved
exchange), Resolution is apparently willing to pay the United States
substantially more than it would be required to pay to gain title under
the Mining Law (assuming Congress failed to renew the annual moratorium
on patenting, and assuming Resolution qualified for patents). That is,
Resolution has acquired title to and is offering to trade to the United
States considerable land of high conservation and recreational value.
Not having examined the details of this proposal, I am not prepared to
comment on whether the arrangement represents a fair return to the
federal taxpayer. But it is an example of a major mining entity being
willing to pay genuine value for privatizing federal land in order to
facilitate a major mining operation.
Second, the U.S. should ensure that privatization does not unduly
threaten the environment in general, and nearby federal lands in
particular. So long as the U.S, retains title to some of the lands
affected, some environmental regulations and procedures that attach
only to federal decisions (such as are made with respect to federal
lands) would continue to apply--such as NEPA, Endangered Species Act
7, National Historic Preservation Act, Native American consultation
and protection laws, and parts of the Clean Water Act. Here too,
however, I believe it should be possible to fashion ways to protect the
federal interest protected by these federal laws. For example,
privatization might be conditioned on working out an agreement or
compact between state and federal regulators that establishes a
regulatory framework to do this.
For these reasons, I think privatizing federal lands involved in
major hardrock mining operations need not be ruled out. I hasten to
point out, however, that patenting has a long and sorry history of
abuse. Most of the 3.2 million acres patented under the Mining Law
since 1872 have in fact never been used, or used very little, for
mining. Instead, they have been used for residential or other kinds of
development, as private recreational retreats, spas, golf courses, and
many other things. Given that record, any legislation that retains some
opportunity to privatize lands in connection with hardrock mining must
be very carefully drawn.
In short, I think privatization is an option worth considering, so
long as it (a) is narrowly tailored to apply only to active or approved
bona fide major mining operations; (b) retains for the U.S. the
discretion to decide whether, under all the circumstances, the public
interest is better served by deeding the land to the mining company
rather retaining it in public ownership; (c) provides appropriate
compensation to the United States for the fair value of the federal
lands and minerals involved in the land being privatized; and (d)
accommodates federal interests in protecting federal lands and
resources not being privatized through some arrangement worked out in
advance with state regulators.
While the hardrock mining industry is naturally concerned about
security of tenure, no other industry operating on federal lands has a
guarantee of perpetual tenure. All are subject to periodic
reexamination and reevaluation, and environmental and other operating
standards are readjusted from time to time. This is, indeed, a fact of
life in all natural resource enterprises operating around the globe.
Market and other forces are usually far more important to the tenure of
these enterprises than the decisions of government land managers.
Question: How can the administration and efficiency of the Law be
improved?
The Mining Law contains many provisions which plague the industry.
This is not surprising, considering that the Law was mostly designed
for ``pick-and-shovel'' mineral activities common in the mid-nineteenth
century. Today's vastly changed industry bears no resemblance to the
kinds of activities for which the Law was designed. As a result, the
Mining Law contains inadequate protection for legitimate explorers
against claim-jumping by rival miners, and has some limits on claim
size that seem arbitrary and anachronistic. I devoted considerable
attention in my 1987 book on the Mining Law to many of these features.
I believe reform legislation could well address these matters. The
most important reasons to reform the Mining Law remain, however, to end
the opportunity for wholesale patenting, to capture some revenue for
the public owners of the minerals and land involved, and to hold the
hardrock mining industry to the same kinds of environmental standards
and regard for other uses of the federal lands that are routinely
applied to all other users of the federal lands.
If reform legislation contains adequate measures on these three
points, I believe Congress should, at the same time, consider and
incorporate any reasonable suggestions the hardrock mining industry has
to make the Law more simple and efficient from its perspective. The
Congress should, however, take care to ensure such improvements do not
undermine or defeat the thrust of the legislation on the three most
important points.
Question: Whether environmental standards, regulations, monitoring
and enforcement need modifying, such as whether a federal land
management agency can deny approval of a permit to a mining operation
which meets environmental standards because of other land resource
values and uses (environmental and other).
As I indicated earlier, I believe that clarifying and upgrading
environmental standards is a principal reason to reform the Mining Law.
I do not believe existing standards and practices are adequate to
protect multiple uses of the public lands and a healthy environment.
Looking first at the Bureau of Land Management's current ``Part
3809'' regulations governing surface management of hard rock mining on
BLM-managed lands, early on the George W. Bush Administration weakened
these regulations significantly, removing a number of key provisions
that had been added by the Clinton Administration. Compare 65 Fed. Reg.
69,998 (2000) with 66 Fed. Reg. 54,837 (2001). One of the most
important was to eliminate the federal government's authority to
disapprove proposed hardrock mines on federal lands that threatened
devastating, uncontrollable harm on other important natural and
cultural resources.
The Bush Administration acted on the basis of a Solicitor's Opinion
issued by my successor, which overruled an opinion I had issued in
1999. These legal opinions differed on how to interpret a key phrase in
the Federal Land Policy and Management Act of 1976 (FLPMA), where
Congress expressly amended the Mining Law to require the Interior
Secretary to protect the public lands from ``unnecessary or undue
degradation'' (emphasis added). 43 U.S.C. 1732(b).
My legal opinion was that ``or'' means ``or,'' so that BLM has a
responsibility to regulate hardrock mining on the public lands to
protect against ``undue'' degradation, even if that degradation is
regarded as ``necessary'' to mining. My successor's legal opinion was
that ``or'' really ought to be construed as meaning ``and.'' Thus, in
his view, BLM has no authority to prevent hardrock mining that causes
``undue'' degradation if such degradation is ``necessary'' to mining.
Environmental groups asked a federal court to settle this dispute.
After full briefing, the court ruled that my reading of FLPMA was
correct, and the Department has the responsibility to say no to
proposed hardrock mines that cause ``undue'' degradation even if it is
``necessary'' to mining. Somewhat bizarrely, however, the court decided
not to set aside the Bush Administration's removal of the right to
prohibit devastatingly bad mines from the Part 3809 regulations.
Conceding the question was ``indeed extremely close,'' the court was
persuaded by the Department of Justice's argument that--even conceding
that the Bush Administration's Solicitor was wrong on the law--those
regulations need not articulate that authority in so many words,
because they could be interpreted as allowing the Department to
prohibit such mines, and environmental groups could challenge
Interior's decisions in particular cases in the future. Mineral Policy
Center v. Norton, 292 F. Supp. 2d 30, 46 n. 18 (D.D.C. 2003). Neither
side appealed this ruling.
Turning to national forest land, the counterpart U.S. Forest
Service regulations (36 C.F.R. Part 228) are even weaker. This is not
surprising, for the Forest Service was long reluctant to do any
regulation of hardrock mining on national forests. Congress gave it
express authority to regulate mining to prevent destruction of the
national forests way back in 1897 (see 16 U.S.C. Sec. Sec. 478, 551),
but it did not exercise this authority for more than three-quarters of
a century. The regulations it finally adopted in 1974 were relatively
tepid and have changed little since, despite vast ensuing changes in
hardrock mining technology and practices.
Among other things, they require mining operations only to be
``conducted so as, where feasible, to minimize environmental impacts on
National Forest resources,'' 36 C.F.R. 228.8 (emphasis added), and
they require operators to take only those measures to ``maintain and
protect fisheries and wildlife habitat which may be affected by the
operations'' that are ``practicable''; id., at 228.8(e) (emphasis
added). In other words, the Forest Service, like the Interior
Department, currently takes the position that the government cannot
prevent a proposed hardrock mine on lands it manages even if it
threatens dire environmental harm. The courts have refused to overturn
this position. Okanogan Highlands Alliance v. Williams, 236 F.3d 468
(9th Cir. 2000).
In my judgment, this is too important a matter to be left in this
current state. I believe the law should clearly state that the
government has the responsibility to prevent proposed hardrock mining
operations if it finds severe, un-mitigatable adverse impacts would be
visited on other important public resources and values. The public
interest requires no less. Every other user of the public lands--oil or
coal company, forest products company, electric utility, rancher,
hunter, angler, or hiker--is held to that common-sense standard.
Hardrock mining, which has the potential to cause more serious
disruption than any of these others, deserves no special exemption.
Finally, the question posed suggests that a distinction may be
drawn between ``environmental standards'' and standards to protect
``other land resource values.'' I do not believe this distinction is
easy to draw, nor do I think it is useful to draw in this context.
Environmental standards are imposed for the purpose of, among other
things, protecting other resource values; e.g., an important reason the
government controls air and water pollution is to protect wildlife
habitat. Moreover, the ``other . . . resource values'' that the
government is responsible for protecting in this context are on public
lands. Every decision made to allow a particular use of public lands
ought to consider the impact of that use on other uses and values. The
government routinely does that when it decides whether to issue coal or
oil and gas leases, sell timber, issue permits for livestock grazing,
site power plants or other energy generating facilities, or allow
hunting or off-road vehicle use or even hiking. I do not believe there
is any persuasive reason to give proposals to open hardrock mines an
exemption.
Question: Whether additional categories of public land should be
withdrawn from hardrock mining.
I know that the industry has expressed particular concern about the
idea of withdrawing national forest lands subject to the roadless rule
from new mining claim location. Many do not realize that under the
Clinton Administration's so-called ``roadless rule'' (whose future is
still in doubt, being mired in litigation) national forest roadless
areas remain open to new mining claim location and to the possibility
of hardrock mineral development. Even new roads might be built in such
areas to serve proposed hardrock mines. The extent to which the Forest
Service can and would limit or control such road-building is left murky
in the rule and in its preamble.
I would argue that this matter should not be left uncertain. I
understand that substantial numbers of new claims have recently been
filed in such roadless areas, suggesting the very real possibility of
future conflict. Yet there is much room to doubt whether, in reality,
any proposed new mines will ever be opened in these areas. They are by
definition remote, with difficult access and, wholly apart from legal
restrictions, have high development costs. Also, nearly all of these
lands have been open to mineral development for well over a century,
yet no significant development has taken place (else they would no
longer be roadless). My recommendation would be to close them to new
claim location, subject to whatever valid existing rights exist.
I also recommend that uranium be withdrawn from the Mining Law. The
other energy resources--coal, oil and gas, tar sands, oil shale, and
geothermal resources--are all governed by leasing systems, most of them
dating back to 1920. These industries have not been hampered, and the
public's fiscal and environmental interests are better protected.
Uranium is the only energy mineral treated differently, and it only to
some extent. Some federal uranium is already subject to leasing rather
than to the Mining Law-a result of some post-World War II withdrawals
of some federal land on the Colorado Plateau (which vested the Atomic
Energy Commission with jurisdiction over this leasing, now exercised by
the Department of Energy).
There is no justification for continuing to subsidize the domestic
uranium industry (and with it the civilian nuclear power industry) by
allowing publicly-owned uranium to be mined without a royalty or other
payment to the Treasury. As with hardrock mining, past uranium mining
and milling has left a big cleanup bill for the taxpayer. The
government is currently spending many millions of dollars, for example,
to move a large mill tailings pile away from the banks of the Colorado
River adjacent to Moab, Utah, and has spent much public money in
cleaning up uranium mines and mills in the past. And there is more to
do. Consumers of uranium should pay these bills, not taxpayers.
Finally, there is no strategic argument for subsidizing domestic
uranium production when friendly countries like Canada and Australia
have abundant uranium resources. For all these reasons, I believe the
idea of simply putting uranium under the Mineral Leasing Act ought to
be given very serious consideration. It would be a welcome part (but
only a part) of Mining Law reform.
I also urge the committee to consider crafting a special process
for state and local governments to petition the federal government to
withdraw tracts of federal land from the Mining Law where they can show
special reasons for local concern. Many communities in the West derive
water supplies from watersheds that could be severely impacted by
hardrock mines. Many derive important economic and other benefits from
federal lands nearby that could be threatened by hardrock mines; e.g.,
gateway communities to federal land areas with high recreational use,
big game habitat and the like. While some of these lands may already be
withdrawn, some may not. It seems to me appropriate to give state and
local governments a special process to petition the government to
withdraw lands from new mining claims, to give such petitions
presumptive validity, and to require the federal government to act on
them promptly.
Question: Whether coverage of existing environmental laws is
sufficient and if not what gaps must be addressed.
In my judgment, existing BLM and Forest Service regulations do not
adequately address hardrock mining's potential for adverse impacts on
surface and groundwater supplies, which can be considerable. The Ninth
Circuit recently ruled, for example, that existing federal law did not
require BLM to protect water supplies in approving hardrock mining
plans. Great Basin Mine Watch v. Hankins, 456 F.3d 955 (9th Cir. 2006).
Neither the BLM nor the Forest Service do a very good job
regulating small-scale mining operations--so-called ``notice only''
mines and wildcat explorations. Compliance with laws like NEPA, the
Clean Water Act or the Endangered Species Act is often wanting, and
these operations sometimes mishandle toxic chemicals and use
earthmoving equipment carelessly, devastating fish and wildlife
habitat. Yet many times other users of federal lands and the public do
not even get notice in advance of these operations.
Finally, there is the matter of ``bonding,'' where the government
requires operators to provide financial assurance for cleanup so that
the taxpayer does not foot the bill if the operator defaults or goes
bankrupt. To its credit, the George W. Bush Administration did not
relax the Clinton Administration's tightening of bonding standards in
the Part 3809 regulations. The Forest Service regulations are not as
good, leaving it with much more discretion on bonding.
Several governmental reports have documented that bonds are still
sometimes set at inadequate levels, putting the taxpayers at risk. See,
e.g., Hardrock Mining: BLM Needs to Better Manage Financial Assurances
to Guarantee Coverage of Reclamation Costs (GAO # 05-377, June 2005)
(reporting on a 2004 survey showing 48 mining operations on public
lands had closed without cleanup since BLM began requiring financial
assurances; in more than half the cases, the financial assurance was
inadequate, to the tune of at least $56 million, to cover the cleanup
costs); see also Environmental Liabilities: Hardrock Mining Cleanup
Obligations (GAO #06-884T, June 14, 2006) (recommending hardrock mining
be given a high priority in developing financial assurance
requirements, because of the serious risk to taxpayers; some mine
owners have defaulted on multiple occasions, leaving taxpayers to bear
cleanup costs); Environmental Liabilities: EPA Should Do More to Ensure
that Liable Parties Meet Their Cleanup Obligations (GAO #05-658, August
17, 2005); US EPA, Office of Inspector General, Nationwide
Identification of Hardrock Mining Sites (Report No. 2004-P-00005, March
31, 2004).
While federal officials generally try to require financial
assurances in the amount sufficient to repair and reclaim what they
forecast will be the adverse effects of the proposed mine, their
forecasts often prove to be unduly optimistic. Recent studies show they
often underestimate the amount of environmental degradation from
proposed hardrock mines, particularly from disruption and pollution of
water supplies. See Ann Maest and Jim Kuipers, Comparison of Predicted
and Actual Water Quality at Hardrock Mines: The Reliability of
Predictions in Environmental Impact Statements (2006); and Predicting
Water Quality at Hardrock Mines: Methods and Models, Uncertainties, and
State-of-the-Art (2006). The cost to repair or control that kind of
damage can be high, and the bond amount-which is often calculated
simply on the basis of moving dirt, replacing soil and reestablishing a
vegetative cover--can be woefully insufficient to cover it.
Question: What is the extent of the problem of abandoned mines, and
what funding mechanisms and priorities should be put in place to deal
with it.
I have already noted that the problem is huge; while exact
estimates vary, there is no doubt that there are many thousands of
abandoned mines on the federal lands which pose continuing safety and
pollution problems, and that the cost of cleaning up these problems
runs into the tens of billions of dollars. An informative report on
this subject is Patricia Nelson Limerick, et al., Cleaning Up Abandoned
Hardrock Mines in the West: Prospecting for a Better Future (U. of
Colo. Center of the American West, 2005), available at http://
www.centerwest.org/publications/pdf/mines.pdf.
In considering this problem in the overall context of Mining Law
reform, I would urge that the first principle be one borrowed from the
Hippocratic Oath--do no harm. Reforming the Mining Law should cement in
place environmental standards and controls sufficient to prevent the
already huge problem of abandoned mines from getting worse.
Second, in my judgment, it is entirely appropriate that a
significant part of the revenues raised by any royalty or other levy be
set aside for helping repair the vast legacy of past hardrock mining
operations on federal land in the west. Often the owners and operators
can no longer be found to bear the costs.
Third, in terms of standards for cleanup, it seems obvious that
serious safety problems need to be put at top priority, with serious
pollution and other environmental problems second. But I would caution
against mandating any comprehensive inventory of the scope of the
problem before on-the-ground work can begin. Many states and some
federal agencies have been evaluating the particulars of this problem
for many years. Fourth, federal money should be limited to cleaning up
federal lands, or sites that are in mixed federal and state/private
ownerships. There is plenty to do for the foreseeable future on federal
lands. Other laws, federal, state and local, may provide remedies to
clean up abandoned sites on non-federal lands. In generally, I think
the approach to this problem contained in the reform bill introduced in
the House, H.R. 2262, is a sound one.
conclusion
I commend your leadership for taking up this important issue. You
have the best opportunity in a generation to achieve a landmark legacy
in public land policymaking. I stand ready to help any way I can to
move this forward, and I would be happy to answer any questions you may
have.
The Chairman. Thank you very much.
Thank you both. Let me just start with a couple of
questions. Mr. Butler, let me ask on this issue of patenting. I
think Mr. Leshy's testimony was that he thinks there's a
consensus that patenting no longer makes sense, that we ought
to have some other system for making public land available,
rather than just giving fee simple to those who stake claims to
mine. What's your view on that? Do you think that a reform of
the Mining Law should include the elimination of a patenting
process?
Mr. Butler. I'm not sure I'd agree that patenting no longer
makes sense, but I think the judgment has been that it's not
longer politically viable. That transferring those lands into
private hands is at odds with the general public policy of
holding on to public lands. So that other means need to be
found to give operators a security in the piece of land where
they put their property--apart from a patent--but something
that--unpatented mining claims, because of the vagaries of the
law, can sort of come and go in terms of their property rights.
So you need some certainty of the title before you make that
investment.
I've got a picture* of the Gold Strike mine, that I was
going to use, and I'll be very quick so as not to take your
time. These are processing facilities at the Gold Strike
property. This is the roaster, this is the autoclave, those
were two properties built by Barrack, because the particular
kind of ore at this property requires a different kind of
processing. They were developed and patented in the sense of
intellectual property and then built at a cost of, between the
two of them, about $1 billion. People don't make those kinds of
investments if they don't have some belief that the land that
they're sitting on is going to remain under their control.
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* Photo has been retained in committee files.
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The Chairman.What's the right way to accomplish that?
Through a leasing arrangement, like we do with oil and gas, or
what?
Mr. Butler. I think, actually I think there are some
simpler ways to do it, if you're not going to patent it. You
can simply make the title to those lands that are included
within a plan of operations, secured by the payment of claim
location fees. It's not a complicated problem, but I, and I
think you can get around it. Again, there may be some details
where you want to deal with closure issues and post-mining land
uses, but I think you can secure the title in those through the
existing claims system.
The Chairman. Let me ask also about this suggestion or
point that Mr. Leshy made about current law that allows
unlimited right to use an unlimited amount of public land for
the various attendant activities that go with mining. Once you
establish a mining operation, as I understand it, if you want
to have a tailings site, if you need other processing sites
that might----
Mr. Butler. You can that this is the table, this is the,
these are, this is the tailings, that in background, that's one
of the waste rock dumps.
The Chairman. Right. So, should a reform of the Mining Law
contain some types of limitations on the extent of the mining
companies' ability to use public land for these purposes?
Mr. Butler. There is a limitation in existing law that says
you can only use those lands that are necessary for ancillary
facilities. While John, I think, disagrees with that, I don't
think there are circumstances where people have spread out
waste rock dumps over, you know, thousands of extra acres that
they didn't need. You know, there are design factors and I
think the regulations can impose, you know, sort of reasonable
design requirements. I think the limitation is in the law and
should remain, that you can use what is necessary to support
the mining operation.
The Chairman. All right.
Mr. Leshy, I think in your testimony, you suggest that
uranium should be withdrawn from the Mining Law and made
subject to leasing. Could you elaborate on that suggestion a
little bit?
Mr. Leshy. Yes. You know, if you look at all the other
energy minerals--fossil fuels, coal, geothermal, et cetera,
they're all leasable. Uranium is the only energy mineral that's
not leasable. It also a kind of embedded, like, geologically
similar to other, the fossil fuels in many respects. So,
there's frankly no real good reason why the one mineral that
has, you know, strategic significance for energy, et cetera,
should be subject to the Mining Law. It sort of stands out
there as an exception, nobody was thinking about it, obviously,
when the Mining Law was adopted.
It is also, because it is under the Mining Law, there's no
royalty, there's no rental, et cetera, it produces no return to
the Treasury. It seems to me, for all those reasons, that it
ought to be treated more like coal and oil and gas than like
gold and silver and zinc and copper.
The Chairman. Senator Domenici.
Senator Domenici. Mr. Leshy, if your country is short on
mineral development and that's a matter of fact and
established--I'm not saying that is the case, but if it is and
if it was--why would it be so important that we have a
remuneration to the Federal Government, rather than a set of
laws that would get the minerals developed and the properties
maintained? When the minerals are no longer there, that the
property would be returned. What's wrong with that as a model?
Mr. Leshy. In terms of general policy toward public lands,
the Congress and the Government as a whole, for a very long
time, has basically adopted the view that these are public
resources and if they're exploited, the public owners of these
resources ought to get some sort of remuneration.
Senator Domenici. Sure.
Mr. Leshy. That is, you know, of course, in a way that goes
back to, I suppose, the monarchies and the idea that the, the
whole idea of the royalty is that the king reserves, you know,
a portion of the mineral wealth of the country.
So--but we apply that general principle way beyond
minerals. So like I said, almost everything else, timber,
forage, camping opportunities, et cetera. So, the idea that if
you exploit the public's resources, you should pay the public
Treasury something for that is a long-standing idea that's
firmly embedded in policy and the----
Senator Domenici. The word exploit is an interesting word
because that's what you keep using. You know, I don't want to
spend much time on this because we'll all be, obviously, dead-
set moving toward royalties of some type. So long as we don't
kill the cook, you know, we ought to have royalties.
The most important thing is that something good occur for
the United States of America and that if, in fact, we're going
to develop minerals that we really need, and if you put too
much of a royalty on, you're not going to develop them, then it
doesn't do any good to talk about the fact that everybody else
does it. It doesn't do any good to say that it's exploitation
when, who knows if it's exploitation. You put it down on paper
and add up pluses and minuses, it might not be. It might be the
cheaper the royalty, the more America gets. That's a
possibility, right?
Mr. Leshy. Yes. I did not mean, by using the word exploit,
any negative connotation. Extract, substitute extract for
exploit. What I meant was when you use the public's resources.
Senator Domenici. OK. That's fine.
Mr. Butler, I'm interested in your interpretation of
unnecessary or undue degradation, a standard contained in the
Interior Department's regulations.
Mr. Butler. I think that goes to the issue that John raised
in his testimony about BLM's right to say no to what he called
a bad mine. I think he's wrong on that because--and it's partly
a question of timing and partly a question of characterization.
The, under the Federal Land Policy and Management Act, the
Secretary has authority, the Interior Department has authority
to say no to mining anytime, anywhere, any location. They can
withdraw those lands from the operation, the mineral laws and
claims can not be staked there. That's an authority that is
frequently used. In the BLM land use planning process, that--
the agencies are supposed to look at lands that should be
withdrawn, and they frequently do.
I did a quick scan of land use plans that are pending in
Utah, there's one in Moab. They proposed to withdraw another
80,000 acres. One in Vernal, they proposed to withdraw another
40,000 acres. They can place restrictions on particular areas
by designating them as areas of critical environmental concern.
So I think that the Government has adequate authority to
say no to mining, but they have to say it at the land use
planning stage. They can't say no to a mine that otherwise
meets all applicable environmental standards. That is, you get
your water quality permit, your reclamation, your air permit,
you post your bond, you comply with the Endangered Species Act,
you comply with the National Historic Preservation Act. You
can't go down, you can't go through that whole process, which
was described on that flow chart, and the BLM land use manager
say, ``Well, now I've decided, even though you've spent 5 years
in the permitting process, you've invested $50 million in
developing this, and we've completed an EIS, and you meet every
applicable standard. I've decided you're a bad mine and I don't
want to permit you,'' or, ``I've decided that the land that
you're on is more valuable for recreation or some other use.''
That, I agree, is a correct interpretation of the law. The
Government can say no, but they can't say no at the end, if you
meet all the applicable standards.
Senator Domenici. Something goes around in my brain, that
last time we took a crack at this, it was because some kind of
a scandal was allegedly brewing, and that had to do with how
the mining company ends up getting to use the property at some
point in time for things that have nothing to do with mining.
Is that still a problem or did we solve that issue?
Senator Craig. Patent----
Mr. Leshy. I think it's, that particular issue is largely
solved, because the--well, it's solved in the sense that
there's no more patent applications. So if you want to use the
land for hotels or whatever, you can't get a patent. If
patenting resumed, it could be a problem again because, the
fact is, about 3.2 million acres have been patented under this
law since 1872 and GAO has looked at this from time to time and
determined that the vast, vast majority of that acreage has
never been mined. I mean, there is a very long history of
Mining Law being used for patenting for purposes that have
nothing to do with mining.
That problem has generally reduced over the years with a
little more Government oversight scrutiny and all of that. But
it is--it is still a potential problem because in order to get
a patent, you don't have to be mining. That's--that's a clear
principle of the law and so that opens the door to this kind of
event.
Senator Domenici. If we're reforming the Mining Law, we can
look at that issue, though, right? Come out with a Mining Law
that doesn't permit that, right? We could do that.
Mr. Leshy. Yes, you can address that issue. Yes. You could
end that problem.
Senator Domenici. It seems to me, rather than leave it as
one of these sores out there that gives everybody an
opportunity to take a whack at it, you know, you probably don't
need it.
People used to try to talk me into the fact that they
needed hotel property. I never did believe it. I don't remember
who I sat by that tried to convince me, but I think he might be
present here, but I'm not sure. Would one of the Senators ever
do that?
Senator Craig. Never.
Senator Domenici. Never. OK.
Mr. Butler, in his written testimony, Mr. Leshy is rather
dismissive of the takings issues associated with applying
royalties to mining operations retroactively. As a matter of
legal merit--but also in terms of a policy decision before this
committee--can you state your thoughts on this matter?
Mr. Butler. Sure, that goes to the question of when the
royalty will apply, the transition rules or the grandfather
rules. Mr. Leshy's testimony discusses some of the legal issues
and concludes that it's Constitutionally permissible to apply a
royalty to existing claims, particularly those that don't have
a discovery. I don't disagree with that. I think you have that
authority. Whether or not it's a good thing to exercise that
authority, I think that's the question.
I also think that there will be a narrower range of cases,
those operations that do have discovery and are affected
directly by the royalty, where there may be some takings issues
raised. I think those are more case by case, rather than a
restriction on Congressional authority.
But on the policy side, I think, Senator, it goes back to
the remarks that you made a few minutes ago about how the
royalty will affect decisionmaking and affect operations of
existing mines. I--if you consider, apart from the model I
talked about the investment decision--if you've got an
operating mine, you're trying to keep, you know, enough cash
coming in to pay your costs. So you may, in the rough times
when prices are low, you may keep that mine open even if you're
not achieving that rate of return, because you hope that you
can cover your costs and prices will go up. If you impose a
royalty on those operations, there does come a time--you know,
that is an additional cost, again if it's not based on
profitability--an additional cost that you have to bear. That
could force some mines, again in those hard times, and in
those, when the operations are close to the margins, that could
force additional mines to close.
So I think you have to be very careful about where you
apply the royalty. I think the best policy is to not apply it
to those companies that have made investment decisions based on
the current structure.
Senator Domenici. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Senator Craig.
Senator Craig. Mr. Chairman, thank you very much.
All that is being discussed this morning, I find
refurbishing memories. I'm flipping through my mental Rolodex
at this moment, Mr. Chairman, thinking about some of these
things. Let me highlight a couple of them that I think are
tremendously valuable.
Patenting gave certainty. If we're not going to use
patenting any more--and I don't disagree with Mr. Leshy, times
have changed--then we must provide certainty. How do you do it?
You might do it with a lease. Do we want to allow public land
to become private land? It appears we don't want as much of
that anymore. But we have to provide certainty, stability for
these kinds of very huge investments to be made.
If we don't do that, and if at the end of the day, 832 days
later, that BLM land manager out there says, ``Nope.'' Then
$60, $80, $100 million and 837 days in the State of Nevada--
investors will not come. They can not make that kind of
investment without certainty.
I understand what Mr. Leshy is saying. There is one of our
biggest problems. That's where the frustration hits the road.
Yes, it takes land, surface land. We all think of getting down
in the ground or digging a pit. It also takes surface to
operate these large new mines of significant value. That
surface is impacted. I don't dispute that.
I've passed the day when I think you ought to get private
property, reversion. We're going to let them use the land under
certain restrictions for the purpose of bringing out the
resource, and when the resource is depleted, we can revert. But
in that time we must provide certainty. I'm not sure yet how to
do it.
Now, devil's in the detail. What is the debate we've just
finished on oil leasing? Somebody's decided that when we
designed oil leasing to push out into the deep waters of the
Gulf, we would reserve the right, but we would grant the right
of certain royalty relief. Why? To challenge the producer to
get out there in that deep water. We did, and it worked.
But now we're trying to backtrack, saying, ``Oh, gee whiz.
There's a lot of money being made here. That was not our
intent.'' Devil's in the detail, and that's what you just said,
John. Whatever we do with any of this, we had better be very,
very clear. We ought to put it in a business model that works,
that the industry says, ``Yes, we can do those things.''
Now, I will tell you, and I've lived the history of silver
for a couple of decades. If we had a gross royalty applied and
not a net, my guess is, that when silver was two and a half and
three dollars a few years ago, the mining operations that were
struggling would not be here today.
But they are here today and they're very profitable today
at a $10 and $11 silver. I don't know where it is at the
moment. I haven't checked to see what the price of silver is.
But the point is also survivability. If you're going to get a
group of investors, Mr. Chairman, that are going to make this
huge up front investment, then they know that there will be
good times and bad times, based on international mineral
markets. The good times never stay in this industry. Only the
wise investor, who can plan for the future, can and does stay.
That is the history of mining. I don't see it being any
different when you subject yourself to a commodities market in
a world environment. Survivability, stability, certainty, all
of those are key factors. There's absolutely no reason to plug
any environmental loophole that's out there. I'm glad that Mr.
Leshy recognizes that we've come a long way, and we are. If
there are differences, we ought to try to get to them.
I know the mining industry well. The mining industry of
today are a group of men and women that are environmentally
very sensitive. They want to do the right things, but they also
see the opportunity.
So, I've listened closely to all of you and I thank you
very much for your testimony. I don't see the task as
impossible, but I do see it as, if we don't do it right, then
we will chill investment. It will go away and the industry will
begin to shrivel. That is something that we should not do.
Senator Domenici knows, as you know, Mr. Chairman, uranium, the
ability to produce energy. In the decades ahead, may be
extremely valuable for this country. We ought not shove it
offshore.
Thank you.
Silver's at $13 today. Thank you. That's profitable, that
is very profitable.
The Chairman. I should have bought some of that.
Senator Craig. Yes, you should have. But when it was $3,
you would not have.
The Chairman. Yes.
Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
Mr. Butler, in your testimony you eloquently noted that if
government takes too much of the potential profit, investors
are going to put their dollars elsewhere. Looking at this, I
also look to see when does someone decide to withdraw or close
something, as well. So this is just in a new investment.
Mr. Butler. That's a new investment.
Senator Barrasso. But for additionally, if you move enough
of this down here, at some point you may find that it's not
worthwhile continuing.
Mr. Butler. That's right. It's a different----
Senator Barrasso. Certainly in Wyoming where we have a
situation where, if something were, that were operating were to
close because of a change, you know, we would lose severance
taxes, State and local property taxes, all of the other
benefits that come to the State, as well as to the employees
who are working there. You know, so if something is imposed,
what are your recommendations of how you would construct one
that results in the least chance of any kind of serious
disruption?
Mr. Butler. I think that the royalty based on
profitability, and that is one that allows deduction of some of
the costs, primarily solves that problem. Because a decision to
maintain an operating mine is a different calculus. You're
primarily concerned about covering day to day costs. In fact,
some mines will operate for a year or two or more at net
losses, if they think that there's, you know, light at the end
of the tunnel.
What happens with the gross royalty, is it just pushes that
down. Because as long as you're producing, you have to keep
paying that royalty. It's like any other cost. So that
encourages, in the bad times, it encourages mines to close. If
that's based on profitability, in those times when you're not
making very much money, you're not paying very much royalty. If
you're actually not making any money, you're not making, you're
not paying any royalty. That is, I mean, that's an issue in
terms of the revenue stream. But in terms of maintaining those
operating mines, that's the way to do it.
Senator Barrasso. Then, Mr. Leshy, along the same line. I
think I heard you say something along the lines that a royalty
should be developed without crippling the industry. You know,
I'm not convinced that that should be the standard that we use
in crafting a royalty. I mean, it's almost, I read your
testimony, it almost sounds like you're saying, ``Well, we
should because we can,'' as opposed to really making the
overall decision. You mentioned this as a hobby, but in Wyoming
this is lifeblood. So I'd be interested in your comments on
that, please?
Mr. Leshy. You know I don't disagree with a lot of things
that Jim said, in terms of the industry's investment, sort of,
psychology here. The idea of a royalty is only one of the
various ways to get, what I think, is a fair return to the
taxpayer for the extraction of the public's minerals.
For example, the very large tailings and waste dump acreage
that is involved in these modern operations--the industry is
basically paying nothing for those, other than a small holding
fee on the claims. I mean, there's no rental value. There is no
value captured to the public for the, really the permanent use
of those lands. Because those tailings piles aren't going to go
away when the mine ceases. They're going to be there forever.
So, that is another way to, I think, capture a fair return
to the Treasury that--I just keep coming back to this, but I
think it's an important point--that that kind of fair return to
the taxpayer is captured in virtually every other use of the
Federal lands. I can not think of a reason why hard-rock mines
should be treated differently under that principle.
So I think the overall objective here is just parity. It is
to say this industry operating on Federal lands should be
treated the same way as all the other industries and users of
the Federal lands.
Senator Barrasso. You believe you can do that without--I
think your words--without crippling the industry?
Mr. Leshy. I think there are ways to do that, yes. You
know, the coal industry, the oil and gas industry pay
substantial royalties, far higher in percentage than we've ever
talked about in Mining Law reform, and they're an extremely
prosperous industries.
Senator Barrasso. Thank you, Mr. Chairman.
The Chairman. Thank you very much.
We have another panel and so, unless any Senator has a
burning question, I'll thank this panel very much for your
testimony. We appreciate it and we will continue to call on you
for ideas as we move ahead in this process and ask the second
panel to come forward.
The second panel is made up of Dusty Horwitt, who is with
the Environmental Working Group here in Washington, D.C., and
Timothy Snider, who's with Freeport McMoRan Copper & Gold,
representing the National Mining Association.
All right. Why don't you start, Mr. Horwitt, and then Mr.
Butler.
Mr. Horwitt. Senator, thank you. I think we're having a
small technical problem.
The Chairman. OK. Should we go with Mr. Snider first while
you're resolving the technical problem there?
Mr. Horwitt. That would be fine with me.
The Chairman. OK. Why don't you go ahead, Mr. Snider?
STATEMENT OF TIM SNIDER, PRESIDENT AND CHIEF OPERATING OFFICER,
FREEPORT MCMORAN COPPER & GOLD, REPRESENTING THE NATIONAL
MINING ASSOCIATION, PHOENIX, AZ
Mr. Snider. Great. Thank you, Mr. Chairman. Thank you
members of the committee.
My name is Tim Snider, I'm the President and Chief
Operating Officer of Freeport McMoRan Copper & Gold. I held a
similar position with Phelps Dodge Corporation before Freeport
acquired us in March of this year.
We, our company, has operated in New Mexico and Arizona
since the 1880s. Personally I'm a third generation copper
miner. I started my career in 1970 and in fact, I worked about
a third of my career in New Mexico for our operations. I'm
testifying today on behalf of the National Mining Association
and we appreciate the opportunity to testify before the
committee.
The National Mining Association, of course, is an
association of producers and supporting businesses of the
mining industry. They produce the majority of the coal, metals,
industrial and agricultural minerals in the United States. Our
association and its members employ about 170,000 high-wage
jobs.
Of course, it shouldn't come to any surprise that from
somebody like me, that we believe mining is very important to
this country. Public lands in the west are a vital source of
minerals and metals that are, it's a key element to driving our
economy and our national security, by the way.
What may not be as widely known, is that the National
Mining Association and its member companies support reform of
the Mining Law. We are committed to the development of a fair,
predictable, and efficient National Minerals Policy through
amendments to the Mining Law of 1872. A lot of my comments have
already been covered, so I won't take you, I won't plow, replow
the same ground. But I do want to make a few points.
The Mining Association supports--what we seek is a Mining
Law that includes, really five specific aspects. First, we
agree that it should secure a fair return to the Government
through a royalty on production of metals and minerals from new
mining claims on Federal lands. Of course, there's been a lot
of discussion around the form of that royalty, but--and a
discussion around whether this is a gross royalty or a net
profits royalty. But I just want to kind of put that in human
terms a little bit.
This industry is realizing very high metal prices at the
moment and all of our companies are making good profit. Just 5
years ago the, exactly the opposite was true. We were
struggling for our very existence. My company and various
others in our Association were working very hard to maintain
the integrity of our operations from an environmental
standpoint and other standpoints, and we did a very good job of
it. But most importantly, we maintained employment during that
period. Because we knew that better times were coming.
If we are to apply a gross royalty, I would argue that we
would be adding fixed costs to all of those operations, that
make them less viable during those down times, and we would be
less able to maintain that employment and the other benefits to
communities that we generated during that time. That's why we
support a net profits royalty, one in which everybody gains in
the up times and we're able to remain viable in the downtimes.
Second, we think that the law should establish an abandoned
mine lands cleanup fund, financed through this, with the
revenues from this royalty. This was mentioned a little bit
earlier. Such a fund would allow for reclamation and closure of
historic mines, which were left during a time, before the
advent of modern environmental practices. We believe this is
something that can and should be done. This provision should
seek to coordinate with other existing programs and should
include a Good Samaritan liability protection provision that
could promote voluntary cleanups.
The third aspect, the law should provide for certainty of
title and tenure to support confident investment in mining
ventures. Of course, this has been discussed by the other
witnesses pretty thoroughly, the patenting issue and so forth.
But it's very critical when we, in the industry, seek to make
investments for something that could be a 30-year investment,
in which we start investing and 10 years later we might start
getting cash-flows. It's very important for us to have that
security of title in one fashion or another.
Patenting has worked and it worked during its time. It may
be time for something else, but we have to make sure that
investors feel certain about the investments that they're
making, to the extent possible.
The uncertainty that we have today, I think is reflected in
the fact that only about 8 percent of the worldwide mineral
exploration budgets are targeted for the United States. I think
it's a clear indication of the uncertainty that the industry
feels about investing in the United States.
The fourth aspect of the law that we believe that is
important, is that we recognize and not duplicate or supplant
existing Federal and State environmental laws, which regulate
all aspects of the mining, of the industry, from exploration
through mine reclamation, and ultimately to closure. There's a
comprehensive framework of regulations that we deal with,
including the Clean Water Act, Safe Drinking Water Act, the
Clean Air Act, NEPA, Toxic Substances Control Act, RECRA,
Endangered Species Act, and I could go on.
We believe this suite of laws and regulations is sufficient
and appropriate to protect the environment. In fact, in 1999, a
report issued by the National Academy of Sciences on hard-rock
mining, agrees with that assessment. They conclude that the
best way to improve environmental protection in our industry is
to effectively implement those existing regulations.
The fifth and final aspect that we believe is important for
the Mining Law involves access to public lands. We, of course
this has also been talked about and I won't replow that ground
too much, but we believe that there are adequate methods of
removing lands from mining use today. We don't believe that the
Mining Law needs to provide more.
Currently about half of public lands are not available for
mining. Some of the mechanisms in which lands can be removed
are wilderness designation, national parks, wildlife refuges,
recreation areas, wild and scenic rivers, and other means. We
do agree that there are places where mining just shouldn't be
done, but we think that the existing mechanisms provide that.
In conclusion, the United States needs a robust mining
industry to help meet the needs of American consumers.
Unfortunately, we believe that America is allowing our mineral
industries to diminish as other countries' industries are
flourishing. Increased dependency on imports of vital metals
and minerals is not in our national interest and causes many
negative consequences, not the least of which is vulnerability
to supply disruptions due to political or military instability.
The U.S. mining industry has fully embraced the
responsibility to conduct its operations in an environmentally
and fiscally sound manner. We hope and expect that the Mining
Law legislation will recognize and honor this commitment and
the industry's contribution to our national well being. We look
forward to working with the committee to bring this to
conclusion.
Thank you and we appreciate the opportunity to provide
testimony.
[The prepared statement of Mr. Snider follows:]
Prepared Statement of Tim Snider, President and Chief Operating
Officer, Freeport McMoran Copper & Gold, Representing the National
Mining Association, Phoenix, AZ
Good morning, Mr. Chairman and members of the Committee. My name is
Tim Snider, and I am President and Chief Operating Officer of Freeport
McMoran Copper & Gold. In March, Freeport acquired Phelps Dodge
Corporation, which has operated copper mines in New Mexico and Arizona
since the 1880s. I am a third generation copper miner and started my
career at Phelps Dodge in 1970. I am testifying today on behalf of the
National Mining Association (NMA). NMA appreciates the opportunity to
testify before the Committee on this issue of great importance to the
domestic mining industry. NMA members support reform of the Mining Law
and look forward to working with the Committee to try to resolve this
issue during this Congress.
NMA is the principal representative of the producers of most of
America's coal, metals, industrial and agricultural minerals; the
manufacturers of mining and mineral processing machinery, equipment and
supplies; and the engineering and consulting firms, financial
institutions and other firms that serve our nation's mining industry.
Our association and our members, which employ or support 170,000 high-
wage jobs, have a significant interest in the exploration for, and
development of, minerals on federal lands. The public lands in the
Western states are an important source of minerals, metal production
and reserves for the nation's security and well-being. Mining on
federal lands provides for high-wage employment, vitality of
communities, and for the future of this critical industry.
NMA is committed to the development of a fair, predictable and
efficient national minerals policy through amendments to the Mining Law
of 1872. Because the vitality of the modern American economy is firmly
rooted in the ready availability of metals and minerals that are
essential to our way of life and our national security, our efforts in
the end should result in a mining law that:
Secures a fair return to the government in the form of a net
income royalty for minerals produced from new mining claims on
federal lands;
Establishes an abandoned mine lands clean-up fund financed
with revenue generated from a net income royalty;
Provides the certainty needed for private investment in
mining activities on federal lands by ensuring security of
title and tenure from the time of claim location through mine
reclamation and closure;
Recognizes the existing comprehensive framework of federal
and state environmental laws regulating all aspects of mining
from exploration through mine reclamation and closure; and
Recognizes existing authorities for closing or declaring
unsuitable for mining those federal lands with unique
characteristics or of special interest.
The cornerstone of NMA's policy objectives is a predictable legal
and regulatory framework to provide the long-term certainty and
stability needed to protect existing investments and to attract new
capital necessary to maintain a healthy and sustainable domestic mining
industry. The importance of the domestic mining industry to our
economy, our way of life and our national security cannot be ignored.
Indeed, it is irresponsible for us to ignore the vast mineral resources
we have within our nation's boundaries when our domestic needs are so
great.
The United States has an abundance of natural resources including
78 metals and minerals that are the foundation of our modern industrial
economy. Only the combined countries of the former Soviet Union and
Australia rank higher than the United States in the global distribution
of 15 metals with critical uses.
fair return
A progressive and responsible approach to modernizing the Mining
Law can achieve a fair return to the public and fund the restoration of
abandoned mine lands, while encouraging the private investment required
to develop and carry out environmentally and socially responsible
mining operations.
The imposition of a royalty has the potential to have significant
economic consequences on existing and future mining operations, but the
impact will vary depending upon the type of royalty imposed.
Determining the type of royalty, the rate and its application to
existing claims are critical. As noted in the World Bank royalty study,
mining is ``particularly sensitive to [royalty] effects because of its
cost structure and vulnerability to substantial market-driven demand
and price swings.'' Otto, James. Mining Royalties: A Global Study of
Their Impact on Investors, Government, and Civil Society. Washington,
DC: World Bank, 2006, p. xiv.
A net income royalty produced from new mining claims on federal
lands would provide the public with a fair return and with funds for
restoring abandoned mine lands. This type of royalty most appropriately
balances the need to both provide a fair return to the public and to
foster a strong domestic minerals industry. Gross royalties, or certain
royalties based on a net smelter return, on the other hand, may result
in significant losses to state and federal treasuries, mine closures,
job losses and discouragement of new mines. The World Bank study
appropriately cautions against gross royalty approaches as compared to
approaches based on ability-to-pay or profit-based approaches:
``Nations should carefully weigh the immediate fiscal rewards to be
gained from . . . high levels of royalty, against the longterm
benefits to be gained from a sustainable mining industry that will
contribute to long-term development, infrastructure, and economic
diversification.'' Id. at 3. This type of royalty also encourages
operators to leave lower grade (less profitable) ore in the ground,
resulting in wasted public resources.
abandoned mine lands
Using revenue generated from a net royalty on new claims to fund
the cleanup or rehabilitation of abandoned mine lands (AML) is an
essential aspect of amending the Mining Law. AML sites, which were
mined and left in an unreclaimed state before the advent of modern
environmental laws and reclamations practices should be addressed by:
using funds generated through a royalty to assist in clean-ups;
coordinating existing federal and state AML funds and programs; and
Good Samaritan liability protection to promote voluntary clean-ups. The
funds should be used for the actual cleanup and rehabilitation of
abandoned mines and not to cover administrative overhead costs.
certainty/security of tenure
Ensuring long-term security of tenure (or title) is an essential
component of a modern mining law necessary to encourage the private
sector to invest in mineral activity on federal lands. In the past,
such security was provided by the patenting process, which allowed mine
claimants to obtain ownership of the lands being mined or used for
mining purposes. While the current congressional moratorium on
patenting has not brought mining on public lands to a halt, it
highlights the need for additional security of tenure in the mineral
and the surface while claims are being held in advance of, as well as
during, development and operations. Inclusion of language in the Mining
Law is needed to clarify the rights to use and occupy federal lands for
mineral prospecting, exploration, development, mining, milling, and
processing of minerals, reclamation of the claimed lands, and uses
reasonably incident thereto.
Furthermore, security of tenure is critical in obtaining the
financing necessary for mining projects. Investors need to know that a
mining project in the United States can obtain approval and proceed
unimpeded as long as the operator complies with all relevant laws and
regulations. Mining projects--from exploration to extraction to
reclamation and closure--are time- and capital-intensive undertakings,
requiring years of development before investors realize positive cash
flows. Uncertainty in the legal regime applicable to mining projects
can chill the climate for capital investments in domestic mining
projects. Potential investors must know their expectations will not be
turned upside down by fundamental alteration of laws, regulations or
policies. As the World Bank recently found, to attract such
investments, governments need to adopt the fundamental principle of
``no surprises,'' such as changes in laws, regulations or policies. Id.
at 73.
Because mining operations by their very nature require long-term
and substantial commitments of capital, the stability of the statutory
and regulatory framework plays a crucial role in decisions to invest in
a mining project. As a result, the investments critical for bringing a
mine to fruition tend to migrate toward projects planned in countries
that offer predictable regulatory climates that correspond to the long-
term nature of mining operations.
Despite reserves of 78 important mined minerals, however, the
United States currently attracts only eight percent of worldwide
exploration dollars. As a result, our nation is becoming more dependent
upon foreign sources to meet our metal and minerals requirements, even
for minerals with adequate domestic resources. The 2007 U.S. Geological
Survey Minerals Commodity Summaries reported that America now depends
on imports from other countries for 100 percent of 17 mineral
commodities and for more than 50 percent of 45 mineral commodities.
2007, U, 2007, p. 7. This increased import dependency is not in our
national interest. Increased import dependency causes a multitude of
negative consequences, including aggravation of the U.S. balance of
payments, unpredictable price fluctuations, and vulnerability to
possible supply disruptions due to political or military instability.
Our over-reliance on foreign supplies is exacerbated by competition
from the surging economies of countries such as China and India. As
these countries continue to evolve and emerge into the global economy,
their consumption rates for mineral resources are ever-increasing; they
are growing their economies by employing the same mineral resources
that we used to build and maintain our economy. As a result, there
exists a much more competitive market for global mineral resources.
Even now, some mineral resources that we need in our daily lives are no
longer as readily available to the United States.
environmental standards
Under current law, a mineral exploration or mining operation on
federal lands is subject to a comprehensive framework of federal and
state environmental laws and regulations including: the Clean Water
Act; the Safe Drinking Water Act; the Clean Air Act; the National
Environmental Policy Act; Toxic Substances Control Act; the Resource
Conservation and Recovery Act; the Endangered Species Act; and the
Bureau of Land Management (BLM) and Forest Service surface management
regulations for mining. These laws and regulations are ``cradle to
grave,'' covering virtually every aspect of mining from exploration
through mine reclamation and closure. According to the 1999 report on
issued by the National Academy of Sciences (NAS) panel of experts
convened by Congress, this existing framework for mining is ``generally
effective'' in protecting the environment. Hardrock Mining on Federal
Lands, National Academy of Sciences, National Academy Press, 1999, p.
89.
That 1999 NAS report also found that ``improvements in the
implementation of existing regulations present the greatest opportunity
for improving environmental protection . . . '' Id. at 90. Notably, the
Department of the Interior's 2000 and 2001 regulations governing mining
and reclamation on BLM lands (``the 3809 regulations'') significantly
strengthened the standards for mining on federal lands, including new
provisions on guaranteeing reclamation through financial assurances.
Importantly, the NAS panel of experts cautioned against applying
inflexible, technically prescriptive environmental standards stating
that ``simple `onesize-fits-all' solutions are impractical because
mining confronts too great an assortment of site-specific technical,
environmental, and social conditions.'' Id. Furthermore, recognition of
the existing comprehensive framework of federal and state environmental
and cultural laws that already regulate all aspects of mining from
exploration through mine reclamation and closure avoids unnecessary and
expensive duplication. Additional standards or enforcement mechanisms
are not needed to protect the environment.
importance of access
Access to federal lands for mineral exploration and development is
critical to maintain a strong domestic mining industry. As stated in
the 2006 BLM Minerals Policy Statement: (1) except for Congressional
withdrawals, public lands shall remain open and available for mineral
exploration and development unless withdrawal or other administrative
actions are clearly justified in the national interest and (2) with few
exceptions, mineral exploration and development can occur concurrently
or sequentially with other resource uses.
Federal lands account for as much as 86 percent of the land area in
certain Western states. These same states, rich in minerals, account
for 75 percent of our nation's metals production. As the 1999 NAS
report to Congress noted, the ``remaining federal lands in the western
states, including Alaska, continue to provide a large share of the
metals and hardrock minerals produced in this country.'' Id. at 17.
Efforts to amend the Mining Law must recognize existing authorities
to close certain ``special places'' to mining activity. Congress has
closed lands to mining for wilderness, national parks, wildlife
refuges, recreation areas, and wild and scenic rivers. Congress also
has granted additional authority to the Executive Branch to close
federal lands to mining. The Antiquities Act authorizes the president
to create national monuments to protect landmarks and objects of
historic and scientific interest. Finally, Congress authorized the
Secretary of the Interior to close federal lands to mining pursuant to
the land withdrawal authority of the Federal Land Policy and Management
Act. As a result of these laws and practices, new mining operations are
either restricted or banned on more than half of all federally owned
public lands. These existing laws and authorities are adequate to
protect special areas. New closures of public land, based on vague and
subjective criteria without congressional oversight, would arbitrarily
impair mineral and economic development.
conclusion
The United States needs a robust minerals production industry to
help meet the needs of American consumers. Unfortunately, America is
ceding to others the responsibility for meeting our minerals needs.
Increased import dependency created by lack of U.S. mineral development
is not in our national interest and causes a multitude of negative
consequences, including aggravation of the U.S. balance of payments,
unpredictable price fluctuations and vulnerability to possible supply
disruptions due to political or military instability. The U.S. mining
industry has fully embraced the responsibility to conduct its
operations in an environmentally and fiscally sound manner. It hopes
and expects that Mining Law legislation will recognize and honor both
this commitment and the industry's contribution to our national well-
being.
NMA appreciates the opportunity to provide this testimony.
The Chairman. Thank you very much.
Mr. Horwitt, why don't you go right ahead?
STATEMENT OF DUSTY HORWITT, PUBLIC LANDS ANALYST, ENVIRONMENTAL
WORKING GROUP
Mr. Horwitt. Thank you, Mr. Chairman, distinguished members
of the committee. My name is Dusty Horwitt and I'm a Public
Lands Analyst in Environmental Working Group. We're a non-
profit and advocacy organization based here in Washington and
in Oakland, California. Thank you for this opportunity and I
thank Mr. Snider for agreeing to go first.
For the last several years, Environmental Working Group has
analyzed mining claims on Federal land using a computerized
data base from the Bureau of Land Management.
Mr. Chairman, what we have found is a frenzy of claims
staking that is increasing every day and threatens a crisis for
many of America's most treasured national parks, including the
Grand Canyon, where there has been an explosion of uranium
mining claims.
This modern day land rush is driven by the sky-high price
of uranium, gold, and other metals, which is caused by demand
from China, the United States, and other players around the
globe. It's facilitated by a law, as we know, written in 1872
when Ulysses S. Grant was President.
More than 4 years of analysis has led us to one inescapable
conclusion. Under the current wide-open Mining Law, where
mining interests, unlike oil and gas companies, can stake
claims with no government oversight or approval, vast portions
of the American West are at the mercy of global demand for
minerals.
This is simply unacceptable. Without changes to the law,
the global demand for minerals could easily result in
situations where companies begin prospecting and developing
mining claims right next to incomparable wonders like the Grand
Canyon, other national parks, or even local water supplies.
Since 2003, mining claims on public land, in 12 Western
States, have increased by more than 80 percent. You can see it
on the chart displayed here. Active claims are now at their
highest level since an annual claim maintenance fee took effect
in the mid-1990s. Claims have increased in each Western State.
Here's an image of New Mexico, where active claims as of
July 2007, marked in blue, have increased 50 percent in the
last three and a half years. Each claim on the map represents
dozens or even hundreds of claims on the ground.
Here's an image of Colorado, where claims have increased by
239 percent since 2003. That's the largest increase of any
State. Again, these claims on the map represent thousands of
claims on the ground, as we'll see in just a moment.
This dramatic surge in claims could be extremely
problematic, because once a claim is staked, the Federal
Government interprets Mining Law as providing virtually no way
to stop hard-rock mining, short of buying out mining claims or
other extraordinary measures, even when mining is right next
treasured national parks, such as the Grand Canyon.
Here's a satellite image of the Grand Canyon. You can see
the claims in blue clustered on both the north and south rims.
We found that as of July, mining companies hold 815 claims
within 5 miles of Grand Canyon National Park, 805 of those were
staked since January 2003. Most of these claims are for
uranium. Those identified as uranium claims have the yellow and
black symbol. A Canadian company, Catera Resources, has already
proposed to drill exploratory holes for uranium just north of
the Canyon. The operation would include a helicopter pad to
carry supplies in and out.
Next, let's look at a map of the Canyon Country in Southern
Colorado and Utah. Many of these claims are also for uranium.
Arches National Park in Utah has 869 mining claims within 5
miles of its boundary, 864 of those staked since 2003. Canyon
Lands National Park has 233 claims within 5 miles, all of them
staked since January 2003. Some of the claims on the Colorado
side are, are the lands that are treasured for their scenic and
recreational value.
Without proper protections for our public lands, these
claims can be very costly. In 1996, the Government paid $65
million to buy out patented mining claims just 3 miles from
Yellowstone National Park, that would have been the site of a
major gold mine. The mine would have been located at the
headwaters of three streams that flow into the park.
You'll note the town of Moab, Utah on the map here. The
Department of Energy has begun a project to clean up 16 million
tons of radioactive uranium mine waste near the Colorado River.
The waste is a threat to drinking water for millions
downstream. Cleanup estimates range from $412 million to $697
million and the project may not be complete until 2028.
Mining pollution--our leading source of toxic pollution--is
often not contained at the site of the mine. In Summitville,
Colorado, in 1992, a spill of cyanide and heavy metal-laden
water killed some 20 miles of the Alamosa River. The area is
now a Superfund Site. A similar disaster occurred in the 1990s
at Oregon's Formosa mine. Just this month, that site was also
made a Superfund Site.
Mining provides important raw materials for our economy,
but we also need a Mining Law, that in the face of global
demand for minerals, protects our most important places and
allows land managers to balance mining with other interests,
such as drinking water, just as they can with oil and gas
development. With our most treasured places at risk, the time
for reform is now.
I thank the committee for this opportunity and look forward
to your questions.
[The prepared statement of Mr. Horwitt follows:]
Prepared Statement of Dusty Horwitt, Public Lands Analyst,
Environmental Working Group
summary
Mr. Chairman, distinguished Members of the Committee: My name is
Dusty Horwitt, and I am a Public Lands Analyst at Environmental Working
Group (EWG), a nonprofit research and advocacy organization based in
Washington, DC, and Oakland, California. I thank the members of the
Committee for this opportunity to testify.
For the last several years, the Environmental Working Group has
analyzed mining claims on federal land, using computerized data
provided by the Bureau of Land Management.
Mr. Chairman, what we have found is a frenzy of claim staking that
is escalating each day and threatens a crisis for many of America's
most treasured wild places and national parks, including the Grand
Canyon, where there has been an explosion of uranium mining claims.
This modern-day land rush is driven by the sky-high price of uranium,
gold and other metals caused by demand from China, the United States
and players around the globe.
Since 2003, claims on all public land in 12 Western states have
increased by 80 percent. This dramatic surge in claims could be
extremely problematic because once a claim is staked, the federal
government interprets mining law as providing virtually no way to stop
hard rock mining at that site, short of buying out mining claims or
other congressional intervention, even when mining is in plain view of
national parks such as the Grand Canyon.
As you well know, a valid mining claim gives the claim holder the
opportunity to mine on federal land and can be staked without
government approval or oversight wherever land is open to mining. This
Wild West approach stands in stark contrast to the approval required
through the oil and gas leasing program where the public has an
opportunity to participate in decisions that affect public lands. As
anyone knows who has been in the West in the past five years, this
approval process has not in any way stymied oil and gas exploration.
More than four years of analysis of mining claims has led us to one
inescapable conclusion: Under the current, wide open mining law, vast
portions of the American West are at the mercy of global demand for
minerals. This is simply unacceptable. Without changes to the law,
global demand for minerals could easily result in situations where
companies begin prospecting and developing mining claims right next to
incomparable wonders like the Grand Canyon, other national parks and
wilderness areas, or even local water supplies.
Globalization has finally caught up with the 1872 Mining Act and
rendered it totally and definitively obsolete. The West is not as big
as it used to be. With growing demand for metals we do not need a
Mining Law designed to encourage mining; we need a mining law that both
permits mining, but also protects, without wavering, our most important
natural places and resources.
active mining claims increased more than 80% since january 2003
Our research shows that in 12 Western states, the number of active
mining claims has increased from 207,540 in January 2003 to 376,493 in
July 2007, a rise of more than 80 percent. Over an eight-month period,
from last September to this May, the BLM recorded more than 50,000 new
mining claims. Claims as of July 2007 covered an estimated 9.3 million
acres.
We have seen this increase in every Western state, with claims for
all metals increasing by 50 percent or more in Arizona, Colorado, New
Mexico, Nevada, South Dakota, Utah and Wyoming.
Mining claims have increased in every one of twelve Western states.
----------------------------------------------------------------------------------------------------------------
Claims active as Claims active as
State of January 2003 of July 2007 Percent Increase
----------------------------------------------------------------------------------------------------------------
Arizona 22,711 40,670 79%
California 18,981 22,494 19%
Colorado 5,430 18,391 239%
Idaho 10,598 13,013 23%
Montana 10,554 12,779 21%
New Mexico 7,550 11,348 50%
Nevada 100,972 179,773 78%
Oregon 5,088 6,087 20%
South Dakota 1,030 2,340 127%
Utah 8,723 28,968 232%
Washington 2,193 2,492 14%
Wyoming 13,710 38,138 178%
12 state total 207,540 376,493 81%
----------------------------------------------------------------------------------------------------------------
* Source: Environmental Working Group analysis of Bureau of Land Management's LR2000 Database, July 2007
download.
Attached to the end of this statement are maps of several Western
states that show the locations of active claims.*
---------------------------------------------------------------------------
* All maps and photos have been retained in committee files.
---------------------------------------------------------------------------
Many of the new claims are for uranium. The BLM reports that the
estimated number of uranium claims staked in Colorado, New Mexico, Utah
and Wyoming combined increased approximately 750 percent from less than
4,300 in fiscal year 2004 to more than 32,000 in fiscal year 2006.
http://resourcescommittee.house.gov/images/Documents/20070726/
testimony_horwitt.pdf. Information source and contact: House
Subcommittee on Energy and Mineral Resources, Legislative Hearing on
H.R.2262, Thursday, July 26, 2007, at 10:00 am, Testimony of Mr. Dusty
Horwitt, Public Lands Program Analyst, Environmental Working Group,
1436 U St. N.W., Suite 100, Washington, DC 20009, (202) 667-6982.
Many of the claims for all metals are being staked by foreign
mining companies and speculators who could mine the land or sell to
multinational corporations. Mining companies often extract minerals
using techniques involving toxic chemicals, giant earthmoving
equipment, sprawling road networks and vast quantities of water where
water is a precious, scarce resource.
This land rush is sweeping the West despite the remnants of an
earlier generation of uranium mines that have left a legacy of death
and disease, despite the fact that mining as a whole is our leading
source of toxic pollution and despite the fact that mining claims give
companies a right to mine that effectively supercedes efforts to
protect the environment and preserve our American heritage.
In the face of a landslide of global economic forces that threaten
many of our most valued natural places and the health of people all
across the American West, the 1872 Mining Law offers the legal
equivalent of a pick and a shovel.
The following photo images* were produced by EWG by linking federal
data on mining claims with Google Earth satellite photos of national
parks. They show the clear threats to some of our most treasured
national parks and depict areas that bear the legacy of past uranium
mining pollution.
This satellite image of Grand Canyon National Park shows mining
claims featured in blue and uranium claims identified with the yellow
and black radiation symbol, clustered on both the north and south rims.
We found that as of July, mining interests held 815 claims within five
miles of the Park, 805 of them staked since January 2003. Many of these
claims are for uranium.
A Canadian company, Quaterra Resources, has already proposed to
drill exploratory holes for uranium on claims just north of the Canyon.
The operation would include a helicopter pad to carry supplies in and
out. The idea of uranium mining near America's greatest national
treasure is troubling and the thought of helicopter flights of
radioactive material in an area already crisscrossed by dozens of
tourist flyovers a day is even more disconcerting.
Many of these claims are also for uranium. Arches National Park in
Utah has 869 claims within five miles of its boundary, 864 of them
staked since January 2003. Nearby, Canyonlands National Park has 233
claims within five miles, all staked since January 2003. Many of the
claims on the Colorado side are near lands treasured for their scenic
and recreational values.
A third national park threatened by mining claims is California's
Death Valley. Here, mining interests have staked 1,693 claims within
five miles, 503 since January 2003.
Without proper safeguards for our public lands, protecting national
parks from these claims can be very costly. In 1996, the federal
government paid $65 million to buy out patented claims just three miles
from Yellowstone National Park that would have been the site of a major
gold mine. The mine would have been located at the headwaters of three
streams that flow into the park.
National Parks and Monuments with mining claims within five miles
include:
------------------------------------------------------------------------
Active Claims Staked
Park or Monument Claims Since Jan. 2003
------------------------------------------------------------------------
Death Valley National Park, CA and NV 1,693 503
Arches National Park, UT 869 864
Grand Canyon National Park, AZ 815 805
Joshua Tree National Park, CA 409 117
Canyonlands National Park, UT 233 233
Mt. Saint Helens National Volcanic 204 105
Monument, WA
Capitol Reef National Park, UT 161 151
Great Basin National Park, NV 154 18
Yosemite National Park, CA 83 50
Zion National Park, UT 66 54
Yellowstone National Park, ID, MT, WY 21 1
------------------------------------------------------------------------
the legacy of uranium mining
Near the top left of the Utah/Colorado map on page six is the town
of Moab, Utah. The Department of Energy has begun a project to clean up
16 million tons of radioactive uranium mine waste near Moab that have
contaminated land near the Colorado River. The waste is a threat that
could pollute drinking water for millions. Cleanup estimates range
between $412 million and $697 million and, according to the Department
of Energy, the project could last until 2028.
You'll also note the town of Monticello, Utah at the far south of
the map. Colorado's Grand Junction Daily Sentinel recently reported
that residents of Monticello claim unusually high rates of cancer they
believe were caused by a now-closed uranium mill.
The Los Angeles Times reported in a landmark series last year how
uranium mining has left a legacy of cancer and a degenerative disease
known as Navajo Neuropathy on the Navajo reservation that includes
Arizona, Colorado, Utah and New Mexico.
Uranium mining companies have said that a process called ``in situ
leaching'' will reduce environmental harm, but the practice raises
significant concerns about contamination of groundwater according to
the U.S. Geological Survey (USGS) and Nuclear Regulatory Commission
(NRC). In this type of mining, chemicals are injected underground to
leach uranium out of subterranean deposits. While the USGS and NRC
state that in situ leaching ``in general'' is less harmful than
traditional uranium mining and milling, ``the use of leaching fluids to
mine uranium contaminates the groundwater aquifer in and around the
region from which the uranium is extracted.'' The agencies add that
``groundwater restoration represents a substantial portion of the cost
of decommissioning at a uranium leach mining facility.''
mining is the nation's leading source of toxic pollution
But uranium mining is hardly the only cause for concern. According
to the U.S. Environmental Protection Agency's Toxics Release Inventory
(TRI), metal mining as a whole is the leading source of toxic pollution
in the United States-a distinction the industry has held for eight
consecutive years (1998-2005), ever since mining was added to the TRI
list.
The EPA has also reported that more than 40 percent of Western
watersheds have mining contamination in their headwaters. The total
cost of cleaning up metal mining sites throughout the West is an
estimated $32 billion or more.
unearthing pollution
The extraordinary pollution generated by metal mining is caused
largely by digging and the sheer size of contemporary mining
operations. Modern mining practices are a far cry from the use of mules
and pick axes that were common during the late 1800s when the Mining
Law was written. In part, the techniques have changed because
concentrated deposits of gold and other metals are largely gone. Mining
companies now excavate ``mineralized deposits,'' or ore that contains
microscopic amounts of precious metal.
To extract the amount of ore they desire, modern mining operations
typically have to remove enormous quantities of rock and dirt with
heavy, earthmoving equipment. The holes they dig can exceed one mile in
diameter and 1,000 feet in depth.
Mining companies commonly use cyanide or other chemicals to extract
the metal. In this process, companies place the huge quantities of rock
and earth on a plastic-lined heap leach pad and then spray or drip
cyanide over the pile. As the cyanide trickles through the heap, it
binds to the precious metal. The mining company then collects the metal
from the cyanide solution in liquid-filled pits at the base of the rock
pile.
Cyanide and other chemicals can poison water, land and wildlife
near mines, but most mining pollution results from digging. When mining
companies dig for metals, they expose sulfur-laden rock to air and
water, resulting in the formation of sulfuric acid. The acid often
drains away from the mine site into ground or surface water where it
makes the water so acidic that fish and other organisms cannot survive.
This phenomenon is known as acid mine drainage. At California's
abandoned Iron Mountain mine, for instance, scientists discovered the
world's most acidic water with a pH of -3.6, 10,000 times more acidic
than battery acid.
The acid itself is not the only problem. When the acid comes in
contact with rock, it dissolves toxic metals including arsenic,
cadmium, lead and mercury, and carries those metals into water sources.
Acid mine drainage from the Iron Mountain Mine, for example, has
periodically released harmful levels of heavy metals into the
Sacramento River and has virtually eliminated aquatic life in several
nearby creeks. Roughly 70,000 people use surface water within three
miles of Iron Mountain Mine as their source of drinking water. Acid
mine drainage laden with heavy metals is a problem throughout the West
from past and present mines.
Once it begins, such pollution is very difficult to stop. Roman
metal mines are still draining acid in Europe. Closer to home, the EPA
wrote that Newmont's Phoenix proposal in Nevada ``will likely create a
perpetual and significant acid mine drainage problem requiring
mitigation for hundreds of years.'' Furthermore, reclaiming acid
draining mines after mining ceases is a huge financial liability. The
state of New Mexico estimates that one copper mine, the Chino Mine,
will cost more than a quarter billion dollars to clean up.
long-distance pollution
Mining pollution often spreads far beyond the site of the mine. For
example, in Summitville, Colorado in 1992 a spill of cyanide and heavy
metal-laden water killed some 20 miles of the Alamosa River. The area
is now a Superfund Site. Taxpayers have already spent $190 million to
clean up the area and will likely be tapped for millions more in the
future.
Earlier this month, the EPA added Oregon's Formosa mine to the
Superfund list. The historic mine was reopened in the 1990s, mined for
two years by a Canadian company and then abandoned with catastrophic
results. The mine's acid drainage has killed 18 miles of a creek where
salmon once spawned and cleanup is expected to exceed $10 million, the
Associated Press reported.
Another example of extended mining impacts is the plume of
contaminated groundwater beneath the Bingham Canyon mine. The EPA
reports that the plume extends for 72 square miles. The mine is part of
the Kennecott South site about 25 miles southwest of Salt Lake City
that has been proposed for Superfund status. The mining watchdog group,
Earthworks, estimated that the Bingham Canyon mine will leave taxpayers
with the largest liability of any mine in the United States: more than
$1.3 billion.
A fourth example comes from Arizona in 2006, where dust from a 400-
foot-high tailings pile at Phelps Dodge's Sierrita Mine spread over a
two- to four-and-a-half-mile radius, coating homes and lawns in nearby
Green Valley with white powder. The company said it sampled the
tailings several years earlier and found no cause for concern but the
state cited the company for failing to prevent the dust from blowing
onto homes.
Residents of Crested Butte, Colorado, Boise, Idaho and other towns,
are currently facing significant mine proposals that could threaten
local water supplies and other resources.
antiquated law
The threat we face today, however, is more serious than in years
past. The specter of mining operations is looming over the Grand Canyon
and many other treasured national parks, and the 1872 Mining Law
provides inadequate tools to control it. Indeed, the 1872 Mining Law
does the opposite: it directly facilitates the problem by granting
mining rights with no government approval, providing weak standards for
protecting water, and creating a potential bonanza with no royalty
payments if the claim pans out. Under current law, demand for raw
materials around the globe can place our public lands at risk and leave
Westerners and federal land managers at the mercy of multinational
mining companies.
Mining companies have argued against changing the law because
mining is so important to our national security. Yet the oil and gas
industry is also vital to our national security and has operated on
federal land under a significantly different set of rules. Oil and gas
operators must win government approval before gaining control of
federal land, pay royalties on the energy they extract and are subject
to rules that allow energy development to be balanced with other
interests. Under this system, oil and gas companies have enjoyed record
profits and record numbers of approvals for drilling permits in the
past several years. Indeed, government oversight has often been far too
lax. But the main point is that the oil and gas industry has thrived
under a much more progressive legal framework.
Mining has operated under an antiquated law for long enough. When
mining threatens to scar if not destroy places like the Grand Canyon,
it is time to draw the line. We no longer need to give special
treatment to the mining industry, particularly when other extractive
industries operate profitably on our public lands without such favored
treatment and particularly when our national parks and monuments are at
risk.
recommendations to improve the mining law
We recommend several changes to the mining law:
Protect Western lands.--Mining companies should be allowed
to operate on federal lands, but some places should be off-
limits. These places include lands bordering National Parks,
Forest Service Roadless Areas, and sacred sites.
Tougher standards for mine permits and cleanup.--Mining
companies should be required to prevent perpetual water
contamination and put up enough money before operations begin
to cover the full costs of cleanup should the company go
bankrupt or abandon the site.
Treat Mining Like Oil and Gas.--Land managers should have
the ability to balance mining with other interests such as
water quality, the same ability they have with oil and gas and
other extractive industries.
Royalty payments.--Currently, mining companies pay no
royalty unlike every other extractive industry operating on
federal land. A fair return to taxpayers is essential for
cleaning up abandoned mines and providing assistance for
communities affected by the boom and bust mining economy.
Abandoned mine cleanup fund.--Cleaning up abandoned mines is
estimated to cost $32 billion or more. Congress should create a
fund to accomplish this important task.
An end to mining's tax break.--In addition to being able to
mine royalty-free, mining companies can claim a tax break on up
to 22 percent of the income that they make off hardrock
minerals mined on federal public lands. Congress should close
this loophole.
No more land giveaways.--For years, mining interests have
been able to buy claimed land from the federal government for
$2.50 or $5.00 an acre. Since 1994, Congress has placed a
moratorium on these giveaways that must be renewed annually.
Congress should enact a permanent ban.
Mining provides materials essential to our economy, but it must be
conducted in a way that strikes a balance with other values. We look
forward to working with the Committee to ensure that mining on our
public lands is conducted in a responsible manner.
Thank you for this opportunity to testify.
The Chairman. Thank you very much.
Let me start and just ask Mr. Snider, I think I heard you
say that about half of the public land is currently not
available for mining.
Mr. Snider. Yes, that's what I said.
The Chairman. We have a staff background memo here that
says, according to the 1999 NRC--that's the National Research
Council--report, ``The BLM is responsible for 260 million acres
of land in the Western States, including Alaska, of which
roughly 90 percent are open to hard-rock mining. The Forest
Service manages 163 million acres in the Western States, of
which roughly 80 percent are open to hard-rock mining.'' Do you
disagree with those?
Mr. Snider. I haven't looked at those specific reports.
What I would ask you, if I could research that and get back to
you on that.
The Chairman. Yes, I wish you would because obviously
there's a big difference. If the Government has already chosen
to put half of the public land off limits to mining, that's
very different than this information.
Senator Craig. Mr. Chairman.
The Chairman. Yes.
Senator Craig. Does that include all National Parks? Very
possibly that reference is a factor of all public lands. You've
spoken only to Forest Service and BLM and not all of the other
domain out there. Those are the dominant ones.
The Chairman. Yes, well maybe----
Senator Craig. No, I would--I would like to see that figure
confirmed also, but my guess is you've not mentioned parks, and
parks is not in there.
The Chairman. Yes. No, that's a good point.
Mr. Snider. OK.
The Chairman. If you could clarify that----
Mr. Snider. We'll certainly do that.
The Chairman. That would be useful.
Let me ask Mr. Horwitt, it seems to me, based on our
previous panel's discussion, Mr. Butler's points, the
Government is free to take action to put areas off-limits to
mining claims under current law, as I understand it. Do you
know if there's any effort by environmental groups or others,
to urge the Government to put some of these areas off-limits,
to deal with the proliferation of mining claims that you've
described?
Mr. Horwitt. Yes, there is. In fact, in the bill on the
House side, that bill would include several areas off-limits,
including Forest Service roadless areas and sacred sites. We
look forward to working further to identify areas, such as land
just outside the Grand Canyon, that ought to be put off-limits
to mining.
The Chairman. But you're referring there to areas that are
suggested Congress put off-limits. I'm asking administratively,
is it your understanding that the various land management
agencies have--I took it from Mr. Butler's testimony--ample
authority in the law today for the land management agencies to
put areas off limits to mining? Do you know if there's a big
push to cause them to exercise that authority?
Mr. Horwitt. We, my understanding is that they can do that,
also. You know, our push in recent weeks and months has been to
include areas off-limits in Congressional legislation.
The Chairman. OK.
Let me stop. I know we're going to run into a vote problem
here soon.
Senator Domenici, go right ahead.
Senator Domenici. Thank you very much.
Mr. Horwitt, I'm not certain that the number of claims
staked is the most accurate measure of on-the-ground mining
activities. You know what history has revealed in that regard--
lots of stakes, but not so much mining. Can you tell us how
many plans of operation have been submitted for the claims that
are displayed on the maps that you showed us, in my State and
other States? I don't know of any claims, any plans for
operation.
Mr. Horwitt. I'd be happy to get that number for you. I
agree generally that there are many claims that are staked that
are not developed. I think the risk is that you have a
situation like we had outside Yellowstone National Park where a
claim could be developed.
Senator Domenici. I'm not disagreeing, I'm merely saying
that it's good for us, for those of us who are contemplating
fixing the law to understand that claims don't end up as being
property transferred, nor does it end up being operational
headquarters for mines. What about from an historic
perspective? How often do mining claims become full-scale
operations? That's what I was trying to get to. You don't have
the answer, but you can dig it up.
Mr. Horwitt. Yes, we can get you some data on that.
Senator Domenici. I think that would be interesting for us
to know. We also do know, without any further research, that
the interest in uranium activity is directly related to the
price. This is because the price of uranium has gone up
dramatically and that has pricked the investment interest of
thousands of people. I know because they're writing letters to
my office from all over, talking about how do you do this, how
do you make claims? Because remember some people did get rich--
a lot didn't--in the first drive through New Mexico.
Let's see. I want to move to two more quick ones. Thank you
for letting me have a moment, Mr. Chairman.
Mr. Snider, I've discussed, in some detail, the
similarities between domestic energy security and trends in the
mineral industry. I worry that the concerns we have had about
foreign ownership of and investment in domestic energy
resources mirrors the American mining industry. Can you
quantify any foreign participation in domestic mining for us
and provide some insight as to what the implications of that
might be, if any?
Mr. Snider. I can't--I can't quantify that. I can tell you
that there is--there is some foreign investment in the U.S.
mining industry, but I do not believe it's----
Senator Domenici. Big.
Mr. Snider [continuing]. It's substantial.
Senator Domenici. All right.
Mr. Snider. But I can quantify that for you.
The Chairman. Will you do that?
Mr. Snider. Yes, I will.
Senator Domenici. Thank you. That's for the committee, not
just for me.
Mr. Snider. Yes, of course.
Senator Domenici. In considering changes in mining law,
cleanup and abandoned mines must be a top priority. That's
already been stated. An obvious approach to this situation
would involve spending royalties and other revenues on cleanup
efforts. What else can the industry do to expedite abandoned
mine cleanup? Either of you? Both?
Mr. Snider. Of course, the Good Samaritan provision that I
spoke of earlier.
Senator Domenici. Yes.
Mr. Snider. Today, if my company--or any company--was to go
to some abandoned mine that we had nothing to do with
originally and try to clean it up, we're immediately tagged
with all of the liabilities and the chain of title that goes
along with it. That's what keeps us from going out and doing a
lot of that stuff.
Senator Domenici. Right.
Mr. Snider. A Good Samaritan provision would release us
from that type of liability and make it much more attractive
for companies to go out and do some of that voluntary,
additional reclamation.
Senator Domenici. I'm as interested in the fact that it
wouldn't necessarily be voluntary. They'd get stuck with the
Good Samaritan rule if they happen to go on and do a cleanup
that's not for free. They get stuck with the fellow servant and
go on and have to pay for everything. So we've got to look at
that.
Mr. Snider. Yes.
Senator Domenici. Unless we want to leave these mines
sitting out there and wait until it gets so profitable that
maybe somebody will pick a couple of them and clean them up.
I yield and thank the Chairman for giving me so much time.
The Chairman. Senator Craig.
Senator Craig. Mr. Chairman, thank you very much. I'll be
brief.
Let me focus on what Mr. Horwitt has brought us because it
is really very fascinating and it is prelude to a reality that
we are moving toward. It is very, very important. Now, the
primary source of our fuel for these new reactors, that Pete
received a license application for the other day, is in part
coming out of the down-blends from highly enriched weapons from
Russia, that we're now taking in and redoing. That will last
through 2013.
When that's over with, if you think uranium prices are high
today, and we've not yet effectively facilitated sources and
we've got new reactors coming online, then we have a very real
problem, a very pricey problem, and one of being, again,
dependent upon, Mr. Chairman, places like Kazakhstan and other
places that are much less stable than might Moab, Utah be.
Now, having said that and that's not a criticism of your
observations. Not only do we need to be concerned about those
properties and how they get developed, if they can be
developed, for a 2013 and beyond resource, or once again, we'll
be 60 or 70 or 80 percent dependent upon foreign nations for a
critical energy source. Because we want to bring online a lot
of new clean nuclear reactors.
But a Good Samaritan Law property crafted, under the new
technologies of today, what Mr. Snider has talked about is not
just going in and being a Good Samaritan, but maybe doing so in
a way that is profitable, because of new technologies today. I
don't know and I doubt that you would know, Mr. Horwitt, so I
won't ask, unless you can add that those large tailings piles
in Moab that are going to cost $413 million to clean up. Under
today's technologies, might be reprocessable, to pull out
uranium that would be needed beyond 2013, if the Good Samaritan
Law would allow it.
You know, the Government does things sometimes pretty well,
but there are a lot of things they don't do well and they ought
to let the private sector do it and they ought to incentivize
the private sector to do it. Because they will do it for less
money, because they want to make it profitable, but they will
do it within the limits.
I see a tremendous opportunity. Old tailings, old
techniques, new techniques, new technology, that we can take
that Good Samaritan Law and do cleanup that is ``profitable'',
not a negative impact on the general fund. It might, under a
new royalty system, actually bring money into the general fund.
To me, that is a phenomenal environmental win-win concept.
If all interests come to the table to understand that if we
approach it from that manner, we have great opportunity.
That's my general reaction to the observation, but there's
some real factors moving in the market out there, and the one I
just gave about 2013 and beyond is a very real one and a very
important one for a future nuclear electrical generation
industry in this country.
Thank you all very much.
The Chairman. Senator Barrasso.
Senator Barrasso. Thank you, Mr. Chairman. I know the time
is short.
Mr. Horwitt, I agree with Senator Domenici that, with that
question about how many claims and how many things actually
develop into economically feasible mines. I think it would be
less than 1 percent, so I'd be interested in that response as
well, that if you can get that back to the other members of the
committee.
You talked about the large global demands. I'm wondering if
there are things that we do better in the United States
environmentally than are happening other places. Are there
things that we should try to do here because the global demand
is going to continue to be there and I think the use of so many
of these resources are going to be important and go forward.
I'm an orthopedic surgeon. Some of the different things
that we use--chromium, cobalt, molybdenum, in the implants--
they're going to be continued to be needed in a greater and
greater number. So I'd be interested in that.
Then, finally, we talked a little bit about the AML money,
the abandoned mine lands. You know, I look at that and do we
really believe that Federal royalties are going to be used for
cleanup. You know, in Wyoming I know that money's been
collected by 30 years, for the last 30 years, but the money
hasn't come back yet to the State. So, you may want to both
comment on that.
Thank you, Mr. Chairman. That's the--that will be my last
question.
Mr. Horwitt. I would comment on, you know, as far as a
small number of mines, or of claims turning into mines. That's
likely true. It's also true and a recent study by a mining
engineer and a geochemist, that a large percentage of mines
that do get developed, end up exceeding water quality. So we do
need to make sure that if a mine is developed that it's
developed properly.
I would also say one thing that we could do better and that
would help with abandoned mine cleanup, is on the front end,
making sure that our bonding requirements for mining operations
are adequate. Because we've seen, even in recent years, in the
1990s, again and again that the Bromine in South Dakota,
Zortman-Landusky Mine in Montana, the Summitville in Colorado,
that operators have created significant cleanup disasters, and
there's very little money that the companies have put up to
cover those costs. Taxpayers end up paying tens or even
hundreds of millions of dollars.
Mr. Snider. Just a quick comment on the abandoned mine land
fund. I think you're right about the coal situation. We need to
craft the fund so that, make sure that the funds go back to the
States and therefore, is used for abandoned mine cleanup.
Senator Domenici. That was his question. Excuse me, Mr.
Chairman. Didn't you want to raise, weren't you raising the
question, what's happened to that fund? Why isn't it used? I
don't know. Maybe I didn't hear you.
Senator Barrasso. You're correct, Senator Domenici. We're
continuing in a struggle to make sure that the money goes back
to the States that should go back with the Abandoned Mine Land
Fund. When people talk about Federal royalties and then some of
that being used for cleanup--if we look at the AML money, I
don't think that it's turned out the way that I think it was
initially designed, and would hope that if we are talking about
royalties, that those lines be made more clear.
Mr. Snider. Absolutely.
Senator Barrasso. Thank you.
The Chairman. All right. Thank you very much.
Thank both witnesses. I think it's been a useful hearing.
It's not the last hearing we're likely to have on this subject.
So, we will be in touch with you and thank you again for your
testimony.
[Whereupon, at 11:08 a.m., the hearing was adjourned.]
APPENDIXES
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Appendix I
Responses to Additional Questions
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Responses of John Leshy to Questions From Senator Bingaman
Question 1. In your view, can legislation legally impose new
environmental requirements on existing claims that are not yet being
mined?
Question 2. Can legislation legally impose new environmental
requirements on existing claims that are being mined on the date of
enactment?
Question 3. What transition rules should apply to any new
environmental requirements?
Question 4. In your view, can legislation legally impose a royalty
on existing claims that are not yet being mined?
Question 5. Can legislation legally impose a royalty on existing
claims that are being mined on the date of enactment?
Question 6. What transition rules should apply to any new royalty?
Answer. Questions 1-2 and 4-5 raise legal questions about the power
of the government to impose new environmental and financial
requirements on existing mining claims and existing mining operations.
Questions 3 and 6 raise more general questions of policy.
I will begin by setting out the general analytical and legal
framework for analyzing these questions.
First, the Supreme Court has many times held that the power of
Congress over public property like federal land and minerals is
extremely broad. See, e.g., Kleppe v. New Mexico, 426 U.S. 529 (1976).
``Without limitations'' and ``entrusted primarily to the judgment of
Congress'' are phrases the Court has frequently used in this context.
See, e.g., United States v. Gratiot, 14 Pet. 526, 537-38 (1840); Light
v. United States, 220 U.S. 523, 527 (1911).
Second, Congress's broad power may be somewhat constrained to the
extent property rights have vested in federal lands or minerals. It has
long been clear, however, as reaffirmed several times by the U.S.
Supreme Court, that a mining claim located on the federal lands carries
with it a constitutionally protected property right only where the
claimant can show a ``discovery'' of a ``valuable mineral deposit.''
``[I]t is clear that in order to create valid rights . . . against the
United States [under the Mining Law] a discovery of mineral is
essential.'' Union Oil v. Smith, 249 U.S. 337, 346 (1919); see also
Cole v. Ralph, 252 U.S. 286, 296 (1920). Mining claims without a
discovery are mere licenses to occupy the federal lands. Their legal
status is no different from that of a hunter or angler or other casual
user of federal lands. The locator of a claim on which a discovery is
lacking has the right to exclude other miners from the claim, so long
as the original locator is actively exploring for a mineral, Union Oil
v. Smith, supra, but until a discovery is made the locator has no
rights against the United States.
This means the United States is not constrained by law from
changing its policy or rules, from levying a royalty or other financial
charge against any minerals produced from such claims, nor even from
effectively extinguishing such claims altogether, at any time before a
discovery is made.
In practice, almost all mining claims are located in advance of
discovery, to provide a foothold on public lands in order to explore
for valuable mineral deposits. Such mining claims are located in the
hope and speculation that a mineral might possibly exist and be
profitably mined from the claimed land, but the courts have long made
clear that such hopes and speculations do not satisfy the ``discovery''
requirement. See, e.g., United States v. Coleman, 390 U.S. 599 (1968);
Sullivan v. Iron Silver Mining Co., 143 U.S. 431 (1892).
The vast majority of the several hundred thousand mining claims
currently located and maintained on federal lands are not currently
producing minerals. Many have not even been significantly explored. One
can safely assume that very few if any claims not now in production
could presently show a discovery within the applicable legal
requirements.
This means that Congress retains practically unfettered authority
to change the rules regarding them--both the environmental rules (see
question 1, above) and the financial terms or royalty under which
mineral production might take place in the future (e.g., the royalty
asked about in question 4, above).
Existing claims that are currently being mined-the subject of
questions 2 and 5 above-require a little different analysis. Such
claims presumably have a ``discovery'' of a ``valuable mineral
deposit,'' and thus have a property right. If the government imposes
new regulation that effectively shuts down such operations, the
claimant may-and I emphasize may - have a legal argument for
compensation. Whether the argument succeeds depends on a case-by-case,
fact-intensive analysis. See, e.g., Tahoe-Sierra Preservation Council,
Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002).
Regarding question 2, it is very clear that the government retains
substantial ongoing regulatory authority over such claims. In 1985, the
U.S. Supreme Court said this about the power of Congress to legislate
new requirements for existing mining claims from which minerals were
currently being produced, and its guidance is worth quoting at some
length:
Even with respect to vested property rights, a legislature
generally has the power to impose new regulatory constraints on
the way in which those rights are used, or to condition their
continued retention on performance of certain affirmative
duties. As long as the constraint or duty imposed is a
reasonable restriction designed to further legitimate
legislative objectives, the legislature acts within its powers
in imposing such new constraints or duties. * * *
This power to qualify existing property rights is
particularly broad with respect to the ``character'' of the
property rights at issue here. Although owners of unpatented
mining claims hold fully recognized possessory interests in
their claims, we have recognized that these interests are a
``unique form of property.'' * * * The United States, as owner
of the underlying fee title to the public domain, maintains
broad powers over the terms and conditions upon which the
public lands can be used, leased, and acquired. See, e.g.,
Kleppe v. New Mexico, 426 U.S. 529, 539 (1976). * * *
Claimants thus take their mineral interests with the
knowledge that the Government retains substantial regulatory
power over those interests. * * * In addition, the property
right here is the right to a flow of income from production of
the claim. Similar vested economic rights are held subject to
the Government's substantial power to regulate for the public
good the conditions under which business is carried out and to
redistribute the benefits and burdens of economic life.
United States v. Locke, 471 U.S. 84, 104-05 (1985).
The last-quoted sentence also answers question 5, above, which asks
whether the United States has the authority to impose new financial
requirements on existing claims that are producing minerals. The
government retains the right to require a payment (whether labeled a
tax, royalty, fee, or something else) from a holder of an actively
mined claim on federal lands, as part of its power to act in the
general welfare to ``redistribute the benefits and burdens of economic
life.'' In general, the Supreme Court has never given credence to
arguments that federal taxes and fees constitute takings of private
property. See, e.g., Cole v. LaGrange, 113 U.S. 1, 8 (1885) (``the
taking of property by taxation requires no other compensation than the
taxpayer receives in being protected by the government to the support
of which he contributes''); County of Mobile v. Kimball, 102 U.S. 691,
703 (1880) (``neither is taxation for a public purpose, however great,
the taking of private property for public use, in the sense of the
Constitution'').
Claims that are producing minerals today are not guaranteed a
future income stream. The minerals must remain marketable, considering
the myriad of factors affecting commodity prices, the cost of
production, and so forth. Because ``marketability'' is a standard test
for discovery, see United States v. Coleman, supra, the mining claimant
has only a somewhat fragile property right, one which may disappear
because of circumstances beyond the miner's control. As the Supreme
Court has held, a ``locator who does not carry his claim to patent . .
. does take the risk that his claim will no longer [have a discovery
good against the government].'' Best v. Humboldt Placer Mining Co., 371
U.S. 334, 336 (1963).
In this connection, the Interior Department and the federal courts
have long held that, in determining whether a discovery exists, the
cost of complying with environmental laws and regulations must be taken
into account. The courts have recognized that adding environmental
restrictions may in fact affect claim validity. See, e.g., Clouser v.
Espy, 42 F.3d 1522 (9th Cir. 1994) (``virtually all forms of
[government] regulation of mining claims-for instance, limiting the
permissible methods of mining and prospecting in order to reduce
incidental environmental damage-will result in increased operating
costs, and thereby will affect claim validity. However, the . . .
case law makes clear that such matters may be regulated by the
government''); Reeves v.United States, 54 Fed. Cl. 652 (2002) (person
who located mining claims in a wilderness study area had no compensable
property right to have a mining plan approved).
To summarize my answer to questions 1-2 and 4-5, then, there are
very few limits on Congress's power to apply reforms to existing mining
claims. It is well settled that the government has nearly unfettered
authority to apply newly enacted laws to mining claims that are not
accompanied by a discovery; that is to say, most of the several hundred
thousand claims currently of record. It also has very considerable
power to apply new regulations to mining claims that have a discovery
without creating any obligation to compensate the claimants.
The Statement of [George W. Bush] Administration Policy issued on
the House-passed reform bill on November 1, 2007, expresses ``serious
concerns'' about its royalty provision ``because it fails to take into
consideration property rights relating to properly maintained mining
claims established prior to enactment of the bill.'' The quoted
statement is ambiguous. If the Administration is suggesting that
``properly maintained mining claims'' without a discovery have property
rights, it is flat wrong for reasons set out above.
Perhaps it is referring only to existing ``properly maintained''
claims that have a discovery. But even if it is, it seems to be saying
that it opposes applying a royalty to this much smaller category of
claims because doing so could result in a ``claim for a compensable
taking under the Constitution.'' Of course, virtually any government
action can result in a ``claim'' of a compensable taking. That is not
the same thing as saying that the ``claim'' would be honored by the
courts. Indeed, Congress would have very little to do if it acted only
in ways that did not give anyone some sort of ``claim'' for
compensation.
For these reasons, I believe the Committee should give no weight to
the Administration's assertion unless it-and I would include here the
Department of Justice as well as the Solicitor's Office of the Interior
Department-supplies the Committee with a legal memorandum explaining in
detail exactly what its position is on this matter, and responding to
the analysis I have offered here.
Now let me turn to questions 3 and 6, which raise issues not about
Congress's power, but about matters of equitable policy in reforming
the Mining Law. This is mainly a matter of balancing the interest to be
protected by the new law (primarily the public's interest in a healthy
environment and the interests of the public owners of these minerals in
receiving a fair return for their ownership interest) with the interest
of the mining industry (primarily in protecting sunk investments).
I would strongly discourage exempting all existing claims from the
application of royalties or other levies or from new environmental
regulations. Many areas of federal land with mineral potential are
already blanketed with claims but, as I indicated earlier, most of
these claims lack a discovery and a concomitant property right. Equally
important, most have seen little investment and are being held
speculatively. Most mines likely to open in the next few decades will
probably be on already-located claims. Thus exempting existing claims
from new requirements (permanently, or for a period of years) is not
legally required, would open a huge loophole, and thwart genuine
reform.
Regarding environmental requirements (question 3), I suggest that
existing exploration operations need be given only a minimal time-
perhaps a year or two-to bring themselves into compliance with new
rules. At the exploration stage the amount of investment is relatively
small compared to the actual mining enterprise. While more time should
be provided to existing producing mines, generally a few years should
be sufficient.
It is worth keeping in mind that, while large mines can involve
very substantial investments, the costs of environmental compliance are
only a small part of the industry's overall profitability picture, and
tend to fade into insignificance compared to factors like retail
commodity prices, foreign exchange rates, the cost of energy and
equipment, and so forth.
Regarding a royalty or other financial payment to the government
(question 6), the investment interest in existing mines could be taken
into account in at least two different ones. One is to impose a lower
payment on existing mines than new ones (as HR 2262 does). The other is
to transition into a royalty payment gradually or after a period of
years. There are various other ways to craft a royalty or other levy
that adjusts its impact on overall profitability. Payments to the
government might be on a sliding scale depending upon overall commodity
prices; e.g., if the price of gold doubles or is halved, the royalty or
other payment could be adjusted accordingly.
Any royalty or similar payment the Congress might embrace-such as
8% for new mines, and 4% for existing mines, as provided in the House-
passed reform bill, H.R. 2262, or a higher percentage comparable to
what the coal or oil and gas industry pay on federal leases-will be
small compared to risk factors the industry has long faced every day,
like fluctuations in commodity prices, and in exchange and interest
rates. Sizeable return to the government from fossil fuel extraction
from federal lands has not hurt the competitiveness of that industry.
This is not to trivialize the investments or the equitable concerns of
existing miners, but to suggest how easy it is to overstate the
significance of the costs of reform on the overall profitability of the
industry.
Practically all the major mineral producing countries of the world
have increased royalties or other financial payments and tightened
environmental requirements on mines in the last couple of decades, and
yet overall the industry has never been in better financial health.
Responses of John Leshy to Questions From Senator Cantwell
Mr. Leshy, I am very concerned about the environmental impacts of
hardrock mineral mining on our nation's public lands. Hardrock mining,
the extraction of metals such as gold, silver and copper, can cause
significant impacts on the environment, potentially affecting ground
and surface waters, aquatic life, vegetation, soils, air, wildlife, and
human health. Metals contamination resulting from hardrock mining can
continue for hundreds or thousands of years following the cessation of
mining operations. In the United States, more than 500,000 inactive and
abandoned mines are estimated to exist in 32 states. Thousands of
abandoned mines in Washington are located in sensitive mountain
watersheds.
Recently in my state, the Bureau of Land Management (BLM) released
a draft Environmental Assessment for issuing a hardrock minerals lease
near Mount St. Helens. I am concerned that the BLM's draft
Environmental Assessment did not adequately address potential
environmental impacts. Although the Environmental Assessment identifies
unstable soils in the potential lease area and notes concerns about
sediments washing into the streams that feed into the Green River, the
BLM nonetheless issued a finding of no significant impact. The Green
River is home to listed species of salmon and steelhead, and mine
development activity could significantly harm and potentially eliminate
these fish populations. Also, acid rock drainage from the mine's
leaching process could contaminate the municipal water supply for
nearby communities including Kelso, Castle Rock, and Longview.
Question 1. On April 18, I sent a letter to Acting Bureau of Land
Management (BLM) Director Jim Hughes regarding the BLM's recent
announcement of a hardrock minerals lease near Mount St. Helens. Mr.
Hughes stated in his response to my letter that ``implementation of the
preferred alternative would not result in authorization of on-the-
ground activities or disturbances, thus, at this point in time, there
are no impacts to analyze for this action.'' I understand that the BLM
has a statutory responsibility under National Environmental Policy Act
to analyze and document the direct, indirect and cumulative impacts of
past, present and reasonably foreseeable future actions resulting from
federally authorized fluid minerals activities. The issuance of a
hardrock minerals lease is a necessary precursor to authorizing mining
activity that pose serious environmental consequences.
a. In the fluid federal minerals mining program, federal
commitments to mining companies seem concrete, in practice
at least, at the point of lease issuance. What is your
understanding of the point in the leasing application
process that it is appropriate for the BLM to consider the
environmental impacts of a proposed mining operation on
federal public lands?
b. Do you agree with the position that ``there are no impacts to
analyze'' when undertaking an Environmental Assessment
considering the issuance of a hardrock minerals lease?
c. Do you believe an Environmental Assessment that considers the
issuance of a hardrock minerals lease should accurately
evaluate all potential environmental impacts that could
result from a mining lease?
Question 2. In response to my April 18 letter, Mr. Hughes stated
that ``The U.S. Forest Service consent letter indicated that issuance
of a lease is compatible with both the purposes of the acquisition, and
the Forest Plan.'' It is my understanding that the BLM can only issue a
lease for acquired land if it is compatible with the purposes for which
the government obtained the land. The land in question was purchased by
the government from the Trust for Public Land under the authority of
the Weeks Act using Land and Water Conservation Funds, which are
appropriated by Congress for conservation and recreation purposes. Land
acquisition under the Weeks Act is for limited purposes. Specifically,
only lands ``necessary to the regulation of the flow of navigable
streams or for the production of timber'' are to be recommended for
purchase. Such acquisition is authorized only if it ``will promote or
protect the navigation of streams on whose watersheds they lie.''
Furthermore, the Gifford Pinchot National Forest Supervisor sent a
letter to the Congressional Delegation in February 1986 stating that
the federal government's acquisition of this property ``will aid in the
preservation of the integrity of the Green River prior to its entering
the National Volcanic Monument, and will also aid in the preservation
of the scenic beauty of this area which is to become an important
Monument portal.''
Question 3. Mr. Leshy, can you imagine a scenario where leasing
this land acquired through the Weeks Act to a mining company is
compatible with ``promoting or protecting the navigation of streams on
whose watersheds they lie,'' the ``preservation of the integrity of the
Green River,'' or ``aid[s] in the preservation of the scenic beauty
of'' such an area?
Answers. Because this proposal involves acquired land, the Mining
Law of 1872 is not involved. Although I am not familiar with the
details of this situation, NEPA generally requires BLM to assess the
environmental impacts of proposed mining operations made possible by a
decision to lease at the time that decision is made. The Act requires
federal agencies to take a ``hard look'' at the environmental
consequences of their actions before they occur, thereby ensuring
``that the agency, in reaching its decision, will have available, and
will carefully consider, detailed information concerning significant
environmental impact.'' Robertson v. Methow Valley Citizens Council,
490 U.S. 332, 349 (1989) As a statute intended to affect federal agency
decisionmaking, the courts have held that the ``appropriate time for
preparing an EIS is prior to a decision, when the decision maker
retains a maximum range of options,'' which is before ``irreversible
and irretrievable commitments of resources'' are made. Sierra Club v.
Peterson, 717 F.2d 1409, 1414 (D.C. Cir. 1983).
Regarding the question of whether there are impacts to analyze at
the lease issuance stage, and what the BLM should consider at that
stage, NEPA requires consideration of all reasonably foreseeable
impacts that may develop as a result of lease issuance. The government
might credibly argue that there are no impacts to analyze at the lease
issuance stage only if the lease itself contained a stipulation that
the lessee had no right to occupy the leased land surface without
further approval from the government-sometimes called a ``no-surface-
occupancy'' or NSO stipulation. Courts have held that the government
may postpone NEPA compliance past the lease issuance stage on leases
with an NSO stipulation. If the lease does not contain an NSO
stipulation, the possibility of full-scale mining needs to be
considered at the lease issuance stage, because it is a reasonably
foreseeable consequence of issuing a mineral lease without reserving
the authority to deny surface occupancy of the leased premises. See
Conner v. Burford, 848 F.2d 1441, 1448-51 (9th Cir. 1988); Peterson,
717 F.2d at 1414. The fact that there is some uncertainty about the
future, and thus te NEPA analysis requires some speculation, is not a
sufficient excuse for not doing it: ``Reasonable forecasting and
speculation is thus implicit in NEPA, and we must reject any attempt by
agencies to shirk their responsibilities under NEPA by labeling any and
all discussion of future environmental effects as ``crystal ball
inquiry.'' City of Davis v. Coleman, 521 F.2d 661, 676 (9th Cir. 1975).
Regarding your question in Paragraph 3, because the land here was
acquired under the authority of the Weeks Act for limited purposes
relating to watershed protection and streamflow, any mineral
development on such lands (though not prohibited entirely, see 16
U.S.C. 520) is allowable by the Interior Secretary only if the
Secretary of Agriculture advises that it will not interfere with the
primary purposes for which the land was acquired. Also, the fact that
this land was, as you point out, acquired with Land and Water
Conservation Fund (``LWCF'') moneys brings into play the specific
requirement of the Land and Water Conservation Fund Act of 1965 that
lands purchased by the Forest Service with LWCF funds shall be
``primarily of value for outdoor recreation purposes.'' 16 U.S.C.
460l-9(a)(1).
Leasing these lands for mining purposes could well be inconsistent
with the terms under which these lands were acquired. Cf. Kerr-McGee
Corp. v. Hodel, 630 F.Supp. 621 (D.D.C. 1986) vacated as moot, 840 F.2d
68 (D.C.Cir. 1988) (``it appears that mineral development is
incompatible with the primary purposes'' for which the forest lands
were acquired under the Weeks Act).
Responses of John Leshy to Questions From Senator Salazar
Question 1. The issue of payment for the right to mine minerals
from federal lands seems to be one of the areas where there are
differences of opinion when mining law reform is discussed. Some
advocate a royalty-based approach that would collect a fee based on the
production of minerals from federal lands. Others have suggested a
profit-based approach where payments would be tied to the income a
company makes. It seems to me that one of the goals of collecting a
payment is to fund the cleanup of abandoned mine sites. Can you share
your views on how a payment for the right to mine might be structured
that would guarantee adequate funding, while also ensuring a
sustainable mining industry?
Question 2. It seems that our country must address the past legacy
of abandoned mines that continue to pollute the lands in the West. We
know today that there are companies that are willing to step forward as
``Good Samaritans'' to help address the problems from past mining, but
they may be hesitant to step forward because of concerns about the
possibility of becoming fully responsible for cleaning up a problem
they did not cause. Can you describe what changes you believe are
necessary to make to existing laws to encourage Good Samaritans to help
in addressing abandoned mine sites?
Answer 1. I agree completely that a very important goal of
collecting a payment for hardrock mineral extraction on federal land is
to fund the cleanup of abandoned mines. As many have noted, the problem
is huge; while estimates vary, there is no doubt many thousands of
abandoned mines on the federal lands pose continuing safety and
pollution problems, and the cost of cleaning them up runs into the tens
of billions of dollars. An informative report on this subject is by
Prof. Patricia Nelson Limerick, et al., Cleaning Up Abandoned Hardrock
Mines in the West: Prospecting for a Better Future (U. of Colo. Center
of the American West, 2005), available at http://www.centerwest.org/
publications/pdf/mines.pdf.
In considering this problem in the overall context of Mining Law
reform, I would urge that the first principle be one borrowed from the
Hippocratic Oath-do no harm. Reforming the Mining Law should cement in
place environmental standards and controls sufficient to prevent the
already huge problem of abandoned mines from getting worse. A key part
of this is to make it difficult for companies to walk away and leave
polluting messes with the cleanup bill going to the Nation's taxpayers.
Second, in my judgment, it is entirely appropriate to set aside a
significant part of the revenues raised by any royalty or other levy to
address this sad legacy, for often the owners and operators can no
longer be found to bear the costs. It is appropriate for the industry
responsible for creating the problem (and its consumers) bear
considerable responsibility for cleaning it up.
Third, in terms of standards for cleanup, it seems obvious that
serious safety problems need to be put at top priority, with serious
pollution and other environmental problems second. But I would caution
against mandating any comprehensive inventory of the scope of the
problem before on-the-ground work can begin. Many states and some
federal agencies have been evaluating the particulars of this problem
for many years. Fourth, federal money should be limited to cleaning up
federal lands, or sites that are in mixed federal and state/private
ownerships. There is plenty to do for the foreseeable future on federal
lands. Other laws, federal, state and local, may provide remedies to
clean up abandoned sites on non-federal lands. In generally, I think
the approach to this problem contained in the reform bill introduced in
the House, H.R. 2262, is a sound one.
It seems to me there are two basic goals in designing a system by
which the hardrock mining industry pays something to the public for the
use of the public's lands and minerals: First, that it produce real
revenue for the Treasury, to reduce the deficit and/or to repair some
of the costs and damage left by past hardrock mining activities.
Second, that it be efficient to administer, to minimize opportunities
for clever accountants and lawyers to ``game'' the system. Generally
speaking, the rule of thumb for a royalty is that the more exemptions,
deductions and offsets allowed, the more the system can be ``gamed,''
and the less likelihood significant revenue will be raised. As an
extreme example, I would direct your attention to the ``sham'' royalty
included in what came to be known as the ``sham reform'' proposal that
was included in the gigantic budget reconciliation bill vetoed by then-
President Clinton in early 1996. My recollection is that the
Congressional Research Service estimated that it was so riddled with
deductions and loopholes that it would have raised a paltry $1 million
per year from the entire multi-billion dollar industry.
For guidance on both royalty levels and structure, the Committee
would be well-served to look at the oil and gas and coal provision of
the Mineral Leasing Act. The context is closely analogous to hardrock
mining-in each case the objective is to secure a fair share of revenue
from highly capitalized, risky, globally competitive production of
minerals from publicly-owned lands. While the Leasing Act royalty
systems are not free from opportunities for mischief, there is no doubt
they raise significant revenue for the Treasury in a relatively
efficient manner.
Regarding how such a payment might be structured, I would point out
that most proposals for reforming the Mining Law in this area levy a
royalty on mineral production, but apply it only to mineral ore
extracted from federal lands. It does not apply any kind of rental
(other than the claim holding fee already in law) or royalty to the use
of federal lands to support minerals that have already been patented.
Yet it is very common for there to be a jumbled mixture of private,
state and federal ownership of large hardrock mines. Sometimes all or
most of the actual ore body is on non-federal land (often, because it
has already been patented under the generous terms of the Mining Law).
Even where the U.S. no longer owns any part of the ore body, the
federal lands play a key role in bringing the ore body into production-
by providing lands for mineral processing, for dumping waste rock and
mine tailings, and so forth. The United States should, in my judgment,
receive a return for the use of its land in these circumstances that
reflects its contribution, both past and present, to the overall
operation.
Suppose, for example, that the ore body of a large producing mine
was 75% in private ownership, having been previously patented under the
Mining Law, and 25% federal land. And suppose that thousands of acres
of federal land are being used as waste rock dumps and tailings piles
for the mining operation. It seems to me that a royalty or payment to
the Treasury which is limited to the 25% of the ore body still in
federal ownership is inadequate return to the public for this use of
the public's resources. Mine operators who use thousands of acres of
federal land as a dumping ground ought to pay something more than a
nominal fee. Their payment ought to reflect some measure of the value
these federal lands contribute to the entire mining operation. I would
be happy to work with the committee to try fashion something that would
do that.
Answer 2. I agree Congress ought to consider legislation that
clarifies the responsibilities and liability exposure of those who
propose do restoration and environmental remediation work on abandoned
mines. The general idea is simply stated: Laws and regulations ought to
encourage such cleanup activity without the participants facing
potential liability or responsibility for cleaning up problems they did
not create, so long as the participants make things measurably better
on the ground. But of course the devil is in the details. Such
provisions need to be carefully designed to avoid creating legal
loopholes in the existing fabric of environmental laws or other
opportunities for mischief- particularly when new mining (or
``remining'') is proposed--because the end result could be to weaken
necessary protections in existing law, and ultimately do more harm than
good. I have not followed this topic closely and so I have no specific
suggestions to make as to how to do this.
This general subject is related to reform of the Mining Law of 1872
because that Law's historic inadequacies and silence on environmental
protection led directly to the large abandoned mined land problem. But
it is fundamentally different in the sense that Good Samaritan
proposals involve tinkering with the coverage and standards of modern
environmental laws like the Clean Water Act. In short, while it is a
problem well worth addressing by the Congress, I do not believe it has
to be addressed as part of Mining Law reform. The Mining Law reform
proposal that just passed the House (HR 2262) would deal with the
problem of abandoned mines more directly and comprehensively, by
levying a royalty on hardrock mineral production and dedicating a
substantial portion of the resulting revenues to cleaning up abandoned
mine sites on federal land.
______
Responses of Dusty Horwitt to Questions From Senator Domenici
Question 1. Can you tell us how many plans of operation have been
submitted for the claims that are displayed on the maps that you showed
us? (The maps included a state map of New Mexico, a state map of
Colorado, a map of mining claims near Grand Canyon National Park and a
map of claims in southern Utah and Colorado including claims near
Arches National Park and Canyonlands National Park. The claims and
mines on the maps were taken from the Bureau of Land Management's
LR2000 Database, July 2007 download.)
Answer. There are 14 plans of operation within the state of New
Mexico and 31 plans of operation within the State of Colorado. There
are 23 plans of operation on the map showing Grand Canyon National Park
and 22 on the map showing southern Utah and Colorado that includes
Arches National Park and Canyonlands National Park. Some of these plans
may be difficult to see without zooming in because they are
intermingled with claims or other features.
(Please not that BLM's LR2000 database contains records of all
claims on federal land but includes only those plans located on BLM
land. Plans on Forest Service land are not included in the database and
are not shown on the maps. Therefore, the maps likely under represent
the total number of plans in the areas shown. The Forest Service keeps
records of plans in locan ranger district offices. Because these
records are not in a central database, records for plans on Forest
Service land are more difficult to access.)
It takes mining on only a small percentage of claims to create
pollution impacts that can last a lifetime . . . or longer. Some of
today's contamination from California's Iron Mountain Mine-a federal
Superfund Site-dates to mining activity in the 1800s. Pollution from
Montana's Zortman-Landusky mine that dates to the 1990s may require
perpetual water treatment.
Because of the catastrophic impacts that mining can have-it is our
leading source of toxic pollution-land managers must have the ability
to balance mining with other resources such as water quality just as
they can for other extractive industries including oil and natural gas.
Under current law, once a valid claim is staked, the federal government
interprets mining law as providing virtually no way to stop hard rock
mining at that site, short of buying out valid claims or other
extraordinary intervention, even when mining is in plain view of
national parks such as Grand Canyon or Death Valley.
``We are very concerned,'' Death Valley National Park Supt. James
T. Reynolds told the Los Angeles Times on October 16 about the surge in
claims near the Park. ``I hope the public understands the destruction
that will occur. Development will have far-reaching impacts that our
grandchildren will have to address.''
``Unfortunately, we don't have the authority to stop'' any of the
claims, Reynolds said.
He added that the biggest threat to the Park is the depletion of
groundwater, which is affected by mining, farming and nearby
residential development. ``If too much water is pumped from the
aquifer, then the seeps in the springs in Death Valley will no longer
flow,'' he said. ``Plants will die, animals will die and they would
even have to truck in water to the valley's private resort.''
Reynolds told the Times that he is in negotiations with two borite
mining companies to convince them to donate their land to the park.
Reynolds has strongly opposed the reopening of the Briggs mine, an
open-pit cyanide operation in the Panamint Range on the park's western
border.
Canyon Resources, the company that owns the Briggs Mine, says on
its website that ``re-starting the Briggs Mine in light of today's gold
market is Canyon's top priority.'' Canyon Resources has a history of
pollution in Montana. Its Kendall Mine was permitted in 1989 and has
exceeded water quality standards according to the EPA. Canyon Resources
led an unsuccessful attempt in 2004 to overturn a Montana state law,
passed by voters in 1998, that bans open-pit cyanide heap leach gold
mining. Previously, the company sued the state of Montana for
``taking'' its potential profits due to passage of the law.
Without changes to the mining law, land managers may face the same
situation they did in 1996 when the federal government paid $65 million
to buy out patented claims just three miles from Yellowstone National
Park that would have been the site of a major gold mine. The mine would
have been located at the headwaters of three streams that flow into the
park.
Question 2. How often do mining claims become full-scale
operations? We cannot calculate the number of claims that are included
in each plan of operation or mine, but the percentage of total claims
that become full-scale operations is likely small. Yet it takes mining
activity on only a small percentage of claims to create devastating
pollution problems.
Answer. Please refer to my response to Question #1.
Responses of Dusty Horwitt to Questions From Senator Salazar
Question 3. The issue of payment for the right to mine minerals
from federal lands seems to be one of the areas where there are
differences of opinion when mining law reform is discussed. Some
advocate a royalty-based approach that would collect a fee based on the
production of minerals from federal lands. Others have suggested a
profit-based approach where payments would be tied to the income a
company makes. It seems to me that one of the goals of collecting a
payment is to fund the cleanup of abandoned mine sites. Can you share
your views on how a payment for the right to mine might be structured
that would guarantee adequate funding, while also ensuring a
sustainable mining industry?
Answer. Because hardrock mining interests pay no royalty on the
minerals they extract from federal land-in contrast to every other
extractive industry-taxpayers have been deprived of a fair return on
our resources and an important source of funds to help clean up
abandoned mines. Mines have contaminated more than 40 percent of
Western watersheds' headwaters according to the EPA and cleanup costs
for all abandoned mines are estimated at $32 billion or more. Abandoned
mines can also be an immediate hazard. In September, a 13-year-old girl
died and her 10-year-old sister was seriously injured when they were
riding an ATV and fell into an abandoned, unmarked mineshaft in
Arizona-the type of accident that is all too common throughout the
West. A fair royalty is critical to addressing these significant
problems.
We believe that a royalty should be based on the gross proceeds
that mining interests receive from selling their products. A variation
on this type of royalty is known as ``net smelter return'' in which a
royalty is paid on the amount of money a refinery or smelter pays the
mine operator for the mine operator's product. The money paid to the
mine operator is typically based on the current price of the mineral
with deductions for costs associated with additional processing. The
net smelter return, like the gross proceeds royalty, does not include
deductions for operating costs.
We do not support the other type of royalty often discussed: a net
profits or net proceeds royalty. In this model, the royalty is a
percentage of the mine's gross income minus the expenses required to
generate the income. The problem with this model is that companies can
make the profits disappear simply through innovative accounting
mechanisms, such as increasing expenses, leaving taxpayers with little
money for abandoned mine cleanup. The Las Vegas Sun reported recently
on a study by the mining watchdog group, Earthworks, which found that
multinational mining companies had thus erased their royalties under
Nevada's net proceeds model.
``The state's largest gold mines, operated by global giants Barrick
and Newmont,'' the Sun reported, ``have deducted about $500 million
three times--at Barrick's Goldstrike in 2001 and 2002, and at Newmont's
Carlin mines in 2005--wiping out their tax bill.''
Between 2000 and 2005, Nevada's mining industry paid royalties to
the state that amounted to just one percent of sales: $158 million on
sales of $16.4 billion. Gold is the major metal mined in Nevada and,
during this time period, its price rose 160 percent.
A fair royalty for hardrock mines would be eight percent or greater
based on what coal mining companies pay to extract federal coal and
based on the fact that the hardrock mining industry has negotiated
similar rates in its private agreements. Underground coal operators on
federal land pay an eight percent royalty on the gross value of the
coal. Surface coal operators pay a 12.5 percent royalty on gross value.
LKA International, a Washington State-based natural resources company,
leases its Golden Wonder Mine in Colorado to Au Mining, Inc. in
exchange for a 10 percent net smelter royalty. Canadian mining company,
High River Gold, will pay a 15 percent gross royalty at its Taparko-
Boroum mine in Burkina-Faso. And Newmont, the world's second-largest
gold producer, pays what amounts to an 18 percent gross royalty on its
Gold Quarry property in Nevada.
In addition, as Earthworks has noted, existing mines can afford an
eight percent royalty or greater because metals prices have risen so
much. Gold prices were roughly $270 per ounce in 2001 when most
existing U.S. mines were either operating or in the planning process.
Gold is currently worth almost $790 an ounce. The prices of other
metals have also skyrocketed; uranium rose from less than $15 a pound
in 2003 to more than $125 a pound earlier this year. With all other
extractive industries paying a royalty, billions of dollars of cleanup
needs and surging metals prices, there is no reason why the industry
cannot pay at least an eight percent royalty on both existing and new
mines.
Question 4. It seems that our country must address the past legacy
of abandoned mines that continue to pollute the lands in the West. We
know today that there are companies that are willing to step forward as
``Good Samaritans'' to help address the problems from past mining, but
they may be hesitant to step forward because of concerns about the
possibility of becoming fully responsible for cleaning up a problem
they did not cause. Can you describe what changes you believe are
necessary to make to existing laws to encourage Good Samaritans to help
in addressing abandoned mine sites?
The general principle of our pollution laws-a principle that we
endorse-is that the polluter pays for cleanup. Governments should
enforce this principle. When others step in to attempt to clean up
abandoned mines, including companies and state and local governments,
they should be required to meet all applicable federal, state and local
cleanup standards.
Although some view legal liability as an impediment to Good
Samaritans who might otherwise undertake mine cleanups, legal liability
drives cleanups more effectively than any Good Samaritan legislation
could. As Velma Smith of National Environmental Trust told the House
Committee on Resources last year, the Yerington mine in Nevada is being
cleaned up-though serious problems remain-because the potential for
Superfund liability provides significant motivation for potentially
responsible parties.
There are other examples of mines being cleaned up within our
current legal framework. In Alaska, the federal and state government
have collaborated to restore an area near the Birch Creek National Wild
River Corridor that had been used for placer gold mining from 1984 to
1990. In Idaho, the federal government, with help from a local Boy
Scout troop, completed a cleanup at the Martin Mine that helped to stop
a threat to water quality in Little Cottonwood Creek.
We must bear in mind that mining cleanups can be complex and
unpredictable, as Smith noted; some attempts to mitigate mine pollution
have met with mixed results. In 1997, for example, a mining company in
Arizona attempted to cover a tailings impoundment with waste rock but
the impoundment failed, sending debris into nearby Pinto Creek. Such
cleanup activities ought to be conducted with full environmental
standards.
The real issue is money: governments lack the funds needed to clean
up abandoned mines that will cost $32 billion or more to remediate. We
support a royalty and other funding mechanisms to pay for this
important cleanup.
______
Responses of Tim Snider to Questions From Senator Salazar
Question 1. The issue of payment for the right to mine minerals
from federal lands seems to be one of the areas where there are
differences of opinion when mining law reform is discussed. Some
advocate a royalty-based approach that would collect a fee based on the
production of minerals from federal lands. Others have suggested a
profit-based approach where payments would be tied to the income a
company makes. It seems to me that one of the goals of collecting a
payment is to fund the cleanup of abandoned mine sites. Can you share
your views on how a payment for the right to mine might be structured
that would guarantee adequate funding, while also ensuring a
sustainable mining industry?
Answer. The National Mining Association shares your dual objective
of fashioning a royalty that raises funds for much-needed cleanup of
abandoned mined lands, while at the same time making sure it is
structured in a way that ensures a sustainable mining industry in this
country. The industry has long supported a ``net proceeds'' royalty or
production payment patterned on the Nevada net proceeds of mines tax
which allows for deduction of the enormous ore beneficiation and
processing costs and provides a fair return to the government in good
times and bad times. When profit margins are higher due to volatile
high prices, the royalty revenues would increase.
The industry opposes a gross royalty, such as the one contained in
H.R.2262 because it would eliminate the vast majority of the industry's
profit from longterm mining investments, detrimentally impact
investments in new mines and would cause significant job losses,
substantial revenue losses to state and federal treasuries, and mine
closures. We attach testimony given by James F. Cress,* a mining lawyer
with the firm Holme Roberts & Owen before the House Natural Resources
Committee, which does an excellent job of presenting the problems with
gross royalties.
---------------------------------------------------------------------------
* See Appendix II.
---------------------------------------------------------------------------
Question 2. It seems that our country must address the past legacy
of abandoned mines that continue to pollute the lands in the West. We
know today that there are companies that are willing to step forward as
``Good Samaritans'' to help address the problems from past mining, but
they may be hesitant to step forward because of concerns about the
possibility of becoming fully responsible for cleaning up a problem
they did not cause. Can you describe what changes you believe are
necessary to make to existing laws to encourage Good Samaritans to help
in addressing abandoned mine sites?
Answer. You are correct that the mining industry has long been
interested in promoting thevoluntary cleanup of abandoned mines.
Although it may seem counterintuitive, existing federal and state
environmental laws are the major obstacles that stand in the way of
voluntary cleanups. A ``Good Samaritan'' that begins to remediate or
even investigate a site could be potentially liable under the
Comprehensive Environmental, Response, Compensation and Liability Act
(CERCLA) and the Resource Conservation and Recovery Act (RCRA) for
cleanup of the entire site to strict remediation standards, even though
it did not create the contamination at issue. In addition, a Good
Samaritan could be liable under the Clean Water Act (CWA) to prevent
future discharges from an abandoned site to surface waters. These are
liabilities and regulatory responsibilities that Good Samaritans are
unlikely to voluntarily accept, particularly with respect to abandoned
sites with significant environmental problems.
Legislation should ensure that mining companies that did not create
the environmental problems associated with a particular abandoned mine
qualify as ``Good Samaritans''. Companies have the resources,
expertise, experience and technology to efficiently and appropriately
assess problem sites. We are prepared to help.
Therefore, legislation should provide EPA with the discretion, on a
case-by-case basis, to revise the regulatory and/or liability
provisions of federal and state environmental law that might otherwise
apply to the Good Samaritan. In order for the mining industry to
participate in Good Samaritan efforts, there needs to be assurance that
the mining company will not be subject to suits after the fact for
having done exactly what was permitted by the EPA.
The industry also supports the opportunity to ``remine'' while
performing a Good Samaritan cleanup. Abandoned mining sites are located
in highly mineralized areas. Processing and reuse of historic mining
material may often be the most efficient and least costly means of
cleaning up a site. Allowing a company, particularly a company with
operations near the abandoned site, to process such materials and
wastes with adequate liability protection would provide a financial
incentive for mining companies to remediate such sites. In addition,
part of the net profits from the remining could be split with EPA to
fund remediation at other abandoned sites.
Response of Tim Snider to Question From Senator Bingaman
Question 3. In your testimony you state ``As a result of these laws
and practices, new mining operations are either restricted or banned on
more than half of all federally owned public lands.'' What is the basis
for this statement?
Answer. Bureau of Land Management 2000 Study, ``Public Lands, On-
Shore Federal and Indian Minerals in Lands of the U.S.:
Responsibilities of the Bureau of Land Management.'' p 12.*
---------------------------------------------------------------------------
* Documents referred to in Mr. Snider's responses have been
retained in committee files.
---------------------------------------------------------------------------
Responses of Tim Snider to Questions From Senator Domenici
Question 4. How much mining activity on public lands is undertaken
by foreign basedcompanies?
Answer. According to the environmental organization, Environmental
Working Group (EWG), only 20 percent of the claims on federal lands in
the U.S. are under control of foreign controlled corporations. See EWG
Report, ``Who Owns the West'' at http://www.ewg.org/mining/report/
index.php?stab=US&chapter=3.
______
[Responses to the following questions were not received at
the time the hearing went to press:]
Questions for Jim Butler From Senator Bingaman
Question 1. In your view, can legislation legally impose new
environmental requirements on existing claims that are not yet being
mined?
Question 2. Can legislation legally impose new environmental
requirements on existing claims that are being mined on the date of
enactment?
Question 3. What transition rules should apply to any new
environmental requirements?
Question 4. In your view, can legislation legally impose a royalty
on existing claims that are not yet being mined?
Question 5. Can legislation legally impose a royalty on existing
claims that are being mined on the date of enactment?
Question 6. What transition rules should apply to any new royalty?
Questions for Jim Butler From Senator Salazar
Question 1. The issue of payment for the right to mine minerals
from federal lands seems to be one of the areas where there are
differences of opinion when mining law reform is discussed. Some
advocate a royalty-based approach that would collect a fee based on the
production of minerals from federal lands. Others have suggested a
profit-based approach where payments would be tied to the income a
company makes. It seems to me that one of the goals of collecting a
payment is to fund the cleanup of abandoned mine sites. Can you share
your views on how a payment for the right to mine might be structured
that would guarantee adequate funding, while also ensuring a
sustainable mining industry?
Question 2. It seems that our country must address the past legacy
of abandoned mines that continue to pollute the lands in the West. We
know today that there are companies that are willing to step forward as
``Good Samaritans'' to help address the problems from past mining, but
they may be hesitant to step forward because of concerns about the
possibility of becoming fully responsible for cleaning up a problem
they did not cause. Can you describe what changes you believe are
necessary to make to existing laws to encourage Good Samaritans to help
in addressing abandoned mine sites?
Appendix II
Additional Material Submitted for the Record
----------
Statement of James F. Cress, Attorney, Holme Roberts & Owen, on H.R.
2262
Mr. Chairman and members of the Subcommittee, my name is Jim Cress,
and I am testifying today as a mining lawyer in private practice on the
subject of mining royalties. I am a partner at Holme Roberts & Owen, a
109-year old law firm that represented miners in Colorado in the late
1800s and today represents mining companies around the globe. I have
specialized for nearly 20 years in U.S. and international mining law,
as well as oil and gas and coal law. I have represented mining
companies and landowners in negotiating royalties for gold, silver,
copper, coal, uranium, oil and gas and other minerals, and have advised
clients on royalty compliance for private, federal and state royalties
and severance taxes. In my international practice, I have negotiated
royalty and tax sharing agreements with governments from Asia to the
Americas. I have taught in the Graduate Studies program in Natural
Resources and Environmental law at the University of Denver Sturm
College of Law, am a contributing author to the Rocky Mountain Mineral
Law Foundation's American Law of Mining treatise, and am the former
Chair of the Mineral Law Section of the Colorado Bar Association. Thank
you for the opportunity to appear and speak on the important issue of
hardrock mining royalties.
the h.r. 2262 royalty is a gross royalty, not a ``net smelter return,''
and is not an appropriate measure of fair value for mining on federal
lands
This hearing focuses on the royalty provisions of H.R. 2262.
Section 102(a)(1) of H.R. 2262 provides for a royalty of 8 percent of
the ``net smelter return'' from production from federal mining claims.
The term ``net smelter return'' is defined in Section 102(i) as ``gross
income'' as defined in Section 613(c)(1) of the Internal Revenue Code
of 1986. This provision is used to define the depletion allowance under
the tax code, and was not intended to capture a fair return for
minerals mined from federal lands.
Let's call a spade a spade: the H.R 2262 royalty is a gross
royalty, not a net royalty. The use of the term ``net smelter return''
in the bill is actually misleading, because this royalty is not a ``net
smelter return'' royalty as customarily used in the mining industry.
A customary ``net smelter return'' royalty in the mining industry
permits the deduction of the costs of smelting (and sometimes costs of
leaching and other non-smelting processing methods), refining,
transportation from the mine to smelter, transportation from refinery
to market, as well as deduction of taxes paid to the government and
royalties paid to landowners. The deduction of post-mining costs such
as smelting and refining is, in fact, the hallmark of this type of
royalty (thus the name ``net smelter return'').
The term ``gross income from mining'' under Section 613(c)(1) of
the Internal Revenue Code is designed to capture the gross value of the
mineral after the mining processes end and non-mining processing begin,
contrary to the industry definition of ``net smelter return.'' The
intent of this provision of the tax code is to prevent mining companies
from claiming a depletion allowance on the value added by the non-
mining operations such as smelting and refining operations. Thus, the
customary deductions for smelting, refining and other costs under an
industry ``net smelter return'' royalty are actually prohibited under
Section 613(c)(1). The result is essentially a gross royalty. A gross
royalty is a blunt axe approach to royalty valuation that ignores the
comparative value of the federal land base and the value added by
subsequent beneficiation and processing of mineral products, and makes
little sense in the context of hardrock mineral economics.
a gross royalty is not a fair measure of the value of hardrock minerals
in federal lands
Any royalty payment to the United States for hardrock minerals
should be based on the value of the United States' ownership interest
in the land. That interest is limited to the minerals in the ground,
and it cannot justifiably be extended to require a royalty to be paid
on values added to the minerals after mining, by the mining company
processing, refining and selling the mineral products. The United
States makes available land, and any minerals in the land for
development, but the United States contributes nothing to the costs and
effort of producing and processing the minerals.
Gross royalties are inconsistent with the principle of sustainable
development. A gross royalty reduces the volume of an ore deposit that
can be recovered. Each deposit of metallic minerals will have varying
grades of mineral, generally requiring extensive concentration and
refining to be marketable. The portion of the deposit with grades too
low to be recovered economically is either removed as waste or left
undisturbed in the ground. Adding costs such as royalties raises the
``cutoff point'' between recoverable ore and waste, shortening the life
of a mine by causing what otherwise would be valuable minerals below
the cutoff point to be lost. These lost reserves generally can never be
recovered, because once the mine is reclaimed, it is uneconomic to
recover them.
If mining costs can't be deducted, a mining company would have to
pay the royalty regardless of how high those costs may be for difficult
mining situations or for low grade ores. This would require a mining
company to continue paying a royalty even when it is operating at a
loss, and that royalty could even cause the loss. No mine can be
operated long at a loss. The result would be that some mines would shut
down prematurely, creating loss of jobs, federal state and local taxes
not paid, and suppliers of goods and services suffer. The result is
lost economic vitality affecting both those directly involved in the
mining activity and the governmental entities, including the United
States, that are sustained by those activities.
hardrock minerals are different, and should be treated differently than
coal and oil and gas
Why should hardrock minerals not be subject to the 8 percent or
greater royalty imposed on oil & gas and coal? The dramatically
different characteristics of the minerals themselves and the ways in
which they are explored for and developed justifies different
treatment.
Oil and gas are fluid and usually collect in sedimentary basins.
Exploration for oil and gas usually consists of seismic studies to
detect the type of structures where oil and gas are found. These
studies are conducted at relatively low cost and usually without the
need to acquire more than an easement over the property to be explored.
When a promising prospect is identified leases are acquired, a well is
drilled and core samples, drill stem tests and logs are taken to
determine whether the well is successful. The costs of drilling can
sometimes be quite high, but a single well can also drain a large area
because of the fluid characteristics of oil and gas. Development of a
field is usually accomplished through the initial exploratory well and
one or more development wells that are drilled in locations reasonably
expected, as a result of the information gathered from seismic studies
and the initial wells, to draw from the same reservoir. Once a prospect
has proved successful, identification of the size and shape of the
reservoir can be conducted with relatively low risk and expense.
After extraction, oil must be processed and refined before it is
ultimately consumed as vehicle fuel or other product. The royalty on
oil produced under federal leases is not based upon the value of these
refined products, however; it is measured by the value of the crude oil
at the lease or wellhead, prior to such processing and refining. Unlike
many other minerals, there is a market for oil in its crude, unrefined
state and therefore a ready value for royalty purposes before the value
added by refining and processing. Most oil is sold at the wellhead into
this crude oil market and that wellhead sales price establishes the
value of the oil for federal royalty purposes. Thus, it is somewhat
misleading to call the federal royalty on oil a ``gross'' royalty.
Because the royalty is typically based on the value of the crude oil
prior to processing and refining, the royalty is, in essence, ``net''
of those costs.
Similarly, federal royalty on gas is also based upon the value of
the gas at the lease. After gas is extracted, often the only thing
required for consumption by the ultimate end-user is transportation
(the cost of which, if paid by the producer, is deducted before
royalties are calculated). Sometimes further processing is required to
remove sulfur and separate gasoline, butane and other constituents from
the gas. The royalty, however, remains payable on the value of the gas
at the lease or wellhead and the processing costs incurred by the
producer downstream of the lease are deducted under the federal rules
before calculating royalty, to arrive at essentially a ``net'' value at
the lease.
Coal is a solid mineral of generally uniform quality and
composition. In the West, where most federal deposits exist, coal beds
often consist of vast deposits of great thickness, in Wyoming averaging
80 feet and up to 200 feet. Little exploration for coal is required,
and it is relatively easy to determine the quality of the coal and the
thickness of a seam prior to mining. The western coal miner thus knows
much about the characteristics of the mineral he has to sell prior to
actual mining. At the same time, coal mining is an extremely labor and
capital-intensive enterprise. Because of the need to construct
facilities, obtain equipment, employ workers, and comply with
substantial permitting requirements, it can take years to design,
permit and construct a mine. For these reasons, coal from federal lands
in the West has often been sold under fixed, longterm contracts entered
into prior to construction of a mine. Based on the certainty of a
market provided by these contracts, the coal miner can lease sufficient
reserves to mine over the life of these long-term contracts and make
the considerable capital investments required to construct the mine.
Additionally, many long term coal contracts and state utility laws
allow for the pass through of the royalty burden to the consumer, while
no such pass-through is available for many hardrock minerals, which are
sold and priced in global markets.
While the 12.5% royalty imposed on coal in 1976 was a considerable
increase over the coal royalties typical at the time, the royalty did
not take effect for many federal coal leases until they were
readjusted, which occurred over a period of 20 years. In the meantime,
the demand for low-sulfur western coal boomed due to the increasingly
stringent requirements of the Clean Air Act, and transportation costs
out of the Powder River Basin decreased, which permitted the large
surface coal mines developed in Wyoming during this period to bear the
increased royalty burden, which in any event was generally passed on to
utilities (and consumers) under long term coal contracts. The higher-
cost coal production in Colorado and North Dakota did not fare as well
as Wyoming. Colorado's production initially plummeted, and North
Dakota's fared little better, and only because North Dakota mines are
associated with mine mouth power plants and because the state made
efforts to prop up the industry by lowering taxes and discouraging
import of coal from Wyoming. The higher BTU or heating value and low
sulfur content of Colorado coal has allowed the market to rebound since
that time, and to bear the 8% royalty applicable to Colorado's
underground coal deposits (although some Colorado mines have operated
under royalty reductions during economic downturns).
In addition, the federal coal royalty regulations permit the
deduction of the most material costs, including coal washing where
required, and transportation. Thus, the federal coal royalty is not a
gross royalty in the strictest sense.
Oil and gas and coal are not the only leasable minerals on federal
lands. Sodium, potash, and phosphate are also leasable minerals. These
minerals are commonly occurring, low margin industrial and fertilizer
minerals the economics of which cannot support a 12.5% or even an 8%
royalty. The statutorily established base rate for phosphate is 5% and
for sodium and potassium is 2%. That is because the nature of these
commodities and the economics around their extracting and marketing
differ from oil and gas and coal. In practice, these mines have
operated under government-sanctioned reduced royalties during periods
when economic conditions and foreign competition threatened to close
the mines.
These examples demonstrate clearly why prevailing royalties differ
from mineral to mineral. Specific analyses can be made for many other
types of minerals. It is clear, however, that application of a gross
royalty at a rate of 8% to hardrock minerals simply because that is
what is done with coal and oil and gas would be dangerously naive.
Hardrock minerals are, by comparison, scarce and hard to find.
Unlike oil and gas and coal, the size and geometry of a hard rock ore
deposit, the quality of the ore, the mineral composition, the value of
the mineral products, the metallurgical processes required, the mining
methods, the commodity prices and the capital costs all vary for each
operation. Commercial ore bodies may be found under as little as a few
acres of land. Exploration is conducted through exploratory drilling
which gives initial clues regarding the deposit, followed by many
expensive development drill holes to define a deposit for development.
Once a prospect is identified, development commences at considerable
cost, with the capital and labor intensiveness of large coal mines, but
without the geologic or metallurgical certainty of coal mines nor the
economic certainty and incentive of long-term coal sales contracts,
which are not customary for most hard rock minerals. The prices of hard
rock minerals have historically been subject to great fluctuation.
Because hardrock deposits were often concentrated by ancient subsurface
magma flows which have been altered by subsequent faulting, the
concentration of metals varies considerably over relatively small
distances, unlike the relatively constant quality of western coal
deposits. As a result, portions of a hardrock deposit may be economic
while other portions may contain near- or sub-economic ore that is
extremely sensitive to the addition of royalty and other burdens. The
combination of price volatility and the variations in the concentration
and the chemical and geological characteristics of the minerals within
an ore body can turn a profitable mine into valueless rock with a
sudden downturn in the market.
Hard rock minerals, therefore, require considerably different
approaches to exploration and extraction than do oil and gas and coal.
Oil and gas and coal are relatively plentiful, and occur over
relatively large areas where found. Hardrock minerals are scarce and
occur in small concentrations, and must be discovered by expending
considerable money pursuing elusive prospecting clues. The period
between exploration and extraction for hard minerals is much more
lengthy than with oil and gas or coal, and since hard minerals prices
are not stable, the risk of the project becoming uneconomic before
production begins is substantial. These factors are some of the reasons
that hard rock mining transactions and agreements are considerably
different from each other and from those dealing with oil and gas and
coal. These factors also weigh in favor of a royalty reduction
provision in the bill, so that site-specific determinations can be made
to reduce costs and achieve the maximum economic recovery from federal
mineral deposits.
While individual royalties for specific commodities would
theoretically be the best approach, such a system might be too
difficult to administer. The most reasonable approach given the large
number of commodities to be covered would be a uniform net royalty that
permits deduction of mining and processing costs. The Nevada net
proceeds tax provides a model that has been tested in practice, and you
should consider a similar approach for federal lands.
if mining companies use net smelter returns in private negotiations,
why shouldn't the government follow that approach if it imposes a
royalty?
A negotiated royalty between private parties is not analogous to
the federal government's imposition of a royalty on millions of acres
of unexplored federal lands. Private royalties are negotiated on a case
by case basis for each property. Usually, the royalty negotiated
depends on what information is known about the property at the time of
the negotiation. The less that is known, the lower the royalty.
An 8% gross royalty for lands not proven to contain a mineral
deposit is virtually unheard of. I am aware of only one royalty of this
magnitude in 20 years of practice. In that case, there was a known ore
body containing millions of ounces of gold on the property when the
royalty was negotiated and the owner conveyed the mineral rights to the
surrounding area (measuring roughly 25 miles by 15 miles), free from
any royalty. Clearly, this is not the typical case on unexplored
federal land.
Any particular private royalty is not the proper benchmark for
setting the federal royalty for tens of millions of acres of federal
lands. The purpose of the federal royalty is to encourage exploration
and discovery on lands which are not yet proven to contain mineral
deposits.
In privately-negotiated royalties, there are almost as many royalty
rates and calculations as there are minerals. Each is dependent upon
the nature of the product that is produced and sold, customs and
practices in the industry, the strength of the market for the
particular mineral, the mining cost/processing cost ratio, and many
other factors. Use of a net royalty for the federal royalty avoids the
need for extensive, mineral-specific legislation. All mines measure net
revenues, or profits, and bear determinable operating costs. Therefore,
a reasonable percentage net proceeds royalty can be applied and achieve
a reasonable return for the use of federal lands, without
disproportionate impacts on any particular mineral industry.
In my experience, other countries are paying considerable attention
to the appropriate royalty and tax burden to encourage mineral
exploration and development. The United States has relatively low grade
deposits of many hardrock minerals, relatively high labor costs, and
stringent environmental and operating requirements. These must also be
balanced in determining whether a royalty is necessary on federal
lands. The United States should not impose a royalty without careful
consideration of the economic and competitive impacts.
british columbia's failed experiment with a ``net smelter returns''
royalty
is instructive
In 1974, British Columbia enacted the Mineral Royalties Act, which
imposed royalties on mines located on Crown Lands and the Mineral Land
Tax Act and subjected owners of private mineral rights to royalties
equivalent to those applied to Crown Lands. The government imposed a
net smelter royalty of at 2.5% in 1974, and 5% thereafter.
The results were devastating for British Columbia mineral
development. During the period the royalty was in effect, no new mines
were developed, several marginal mines ceased operations, and non-fuel
mineral output fell, despite increased prices. As a result, revenue
collected from royalties on metal mines declined from $28.4 million in
1974 to $15 million in 1975. During the two year period the royalties
were in effect, nearly 6,000 mining-related jobs were lost. In 1972,
$38 million Canadian was spent on exploration expenditures. In 1975,
exploration expenditures fell to $15.3 million Canadian (a 60% decline)
while exploration expenditures in the Pacific Northwest--outside
British Columbia --increased. New mine exploration and development
spending (excluding coal) decreased from an annual average of $131
million in the years 1970-1973 to an estimated $20 million in 1975 (an
85% decline). In 1972, 78,901 new claims were staked. In 1975 the
number of new claims staked fell to 11,791 (an 85% decline).
The royalty was repealed in 1976. After the royalty was repealed,
BC Mine Minister Tom Waterland said that ``[t]he Government's decision
to introduce royalties in 1974 was the result of inadequate
understanding of the realities of mineral resource development and the
economic characteristic of that development..''
I thank the Subcommittee for the opportunity to address this
important public lands issue, and I am happy to answer any questions
you may have.
______
Statement of Nancy Freeman, Executive Director, Groundwater Awareness
League, Inc., Green Valley, AZ
Urgency of mining law reform
legacy of uranium mining impacts on native american lands compels the
immediate need for reform
introduction
One of the most compelling reasons to enact significant mining law
reform NOW is the rush to mine uranium on public land, including Native
American land and their historical sacred sites. Nuclear power is now
being touted as a relatively cheap, reliable and emissions-free
solution to the world's insatiable demand for energy. Even some leading
environmentalists have endorsed nuclear power as an antidote to global
warming. More than 50 nuclear plants are planned or under construction
in a dozen countries, according to the experts. The truth is nuclear
power uses fossil fuel energy at every step: mining, milling,
enriching, and conversion to solid--then carting the waste to a
disposal facility. Further the problems with the radioactive waste
still have not been solved.
The price of uranium is going up so the speculators who hope to
make a quick fortune on its rise are coming out of the millworks-
especially those from across our northern border. Our Canadian
neighbors are in a frenzy to stake claims on free public land,
accompanied by its free water, offered by their unsuspecting and
uninformed taxpayers south of their border. The situation is so blatant
on Native American lands in U. S. that on April 10, 2007, the United
Nations Committee on the Elimination of Racial Discrimination (CERD)
told Canada that it must rein in Canadian corporations operating on
Native American land in the United States. [See Attachment One: UN Body
Holds Canada Responsible for Corporations' Actions Abroad]
According to the meticulous records of the Environmental Working
Group, Our research shows that in 12 Western states, the total number
of active mining claims has increased from 207,540 in January 2003 to
376,493 in July 2007, a rise of more than 80 percent. Over an eight-
month period, from last September to this May, the BLM recorded more
than 50,000 new mining claims. Current claims cover an estimated 9.3
million acres. Many of the new claims are for uranium. The BLM reports
that the estimated number of uranium claims staked in Colorado, New
Mexico, Utah and Wyoming combined increased from less than 4,300 in
fiscal year 2004 to more than 32,000 in fiscal year 2006.
i. what are the problems?
I-1. Unreclaimed mine sites.--Currently, there are uranium mining
sites on Native American lands that have not been properly cleaned up
and reclaimed from the uranium boom of the 1950's to 1985.
I-2. Health concerns.--Environmental Protection Agency has released
extensive testing on the carcinogenic nature of radioactive materials.
I-3. Technologically enhanced radioactive material.--The pervasive
nature of uranium mining entering the air, water and soil of the
environment as ``technologically enhanced'' radioactive material must
be taken into consideration, particularly for health concerns.
I-4. Disposal of Toxic Waste.--Disposal regulations did not prevent
the radioactive contamination of water and soil in Concord, MA or in
Paducah, KY. Can we expect the people of Nevada and Utah to continue to
storing the chemical and radioactive waste of the rest of the states?
I-5. Cultural impacts.--There are irreversible cultural impacts
from living in a toxic zone. First, the relationship to the land and
the wild food source are destroyed. Further, the reservation lands are
flooded with hundreds of people with no knowledge of or respect for
Native American culture.
I-6. Taxpayer burden.--The Environmental Protection Agency
estimates that billions of dollars are needed to protect Western
drinking water supplies from mine waste. They estimate that cleaning up
the half a million abandoned mines across the country may cost $35
billion or more (EPA 2000) Under the Superfund Amendments and
Reauthorization Act of 1986 (SARA), USEPA is required to select
remedial actions involving treatment that ``permanently and
significantly reduces the volume, toxicity, or mobility of the
hazardous substances, pollutants, and contaminants'' [Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA),
Section 121(b)].
ii. what are some solutions?
II-1. Permitting limitations.--Corporations and their subsidiaries
that have not completed clean-up and reclamation mandated by
Environmental Protection Agency (EPA) or Department of Environmental
Quality (DEQ) of any State should not be allowed to file for mining
claims and/or mining permits or permitted for new operations. A
thorough list should be compiled by EPA and State DEQ's.
II-2. Health assessments.--Priority should be given to health
concerns of communities who live in areas with uranium.
II-3. Waste disposal assessments.--Overall consideration of the
ramifications of radioactive waste disposal on human and animal
survival, including the necessities of clean water to drink, pure air
to breath and uncontaminated soil to grow food crops, should be given
priority consideration.
II-4. Sovereign Authority.--Native Americans should be given total
rights and authority over minerals in their lands.
II-5. Create funds and bonds.--To insure proper reclamation of all
mining sites.
iii. conclusions
Uranium is extremely toxic. The fact is that land, water and people
are still suffering the effects of mining of uranium from the boom of
the 1950's through the 1980's. When it comes to uranium mining, public
land has a unique connotation: Most of the uranium is on wasteland, and
those wastelands were the land forced on Native Americans, which are
managed by the Department of Interior. This unique situation must be
given special consideration in mining law reform to guard against a
repeat of the past devastation on Native American lands.
Further, companies who have not complied with reclamation mandates
on public and Native American lands should not be allowed to file
permits for new operations on public or Native American lands.
A common misconception is the view that electricity generation is
the whole energy supply. Electricity comprised about 16% of the total
world energy consumption in 2005. Less than 16% of the world
electricity is generated by nuclear power stations, so the total share
of nuclear power is about 2.5% of the world energy generation, slightly
less than that of hydropower. Even if the world electricity generation
would be all nuclear, it would provide only 16% of the world energy
demand. Report on the misconceptions of nuclear power. Nuclear
Information and Resource Service: ``Confronting a False Myth of Nuclear
Power: Nuclear Power Expansion is Not a Remedy for Climate Change.''
ten reasons why we don't need to build more nuclear power plants
1. Nuclear reactors are pre-deployed weapons of mass destruction
and pose an unacceptable risk. We need to eliminate, not proliferate
them. An attack could render a city like Manhattan a sacrifice zone and
kill hundreds of thousands within weeks.
2. There is a misconception that nuclear power produces no carbon
dioxide (CO2), when in reality the twenty steps of the fuel
and plant cycle require immense amounts of fossil fuel support.
However, the misconception is that we would need 300 in the U.S. and
1,500 worldwide just to make a dent in greenhouse gas (ghg) emissions.
One reactor takes about ten years to build. So, even if nukes were a
good global warming solution, the time to construct a significant
number of reactors would put off the solution for many years.
3. Devoting scarce resources to shore up nuclear takes away from
the real climate change solutions-conservation, energy efficiency and
renewables like wind and solar.
4. Building enough reactors to offset climate change is cost
prohibitive. Reactors cost $4 billion or more each a decade ago and the
price hasn't gone down.
5. Nuclear reactor proliferation means more waste with no place to
put it. A new Yucca Mountain-style dump every four years would be
needed if 1,500 new reactors were built.
6. Nuclear power is not emissions-free. From uranium mining,
milling and enrichment to construction and waste storage, nuclear uses
fossil fuels. Studies show that there will be a net energy loss-that is
more fossil fuel support than electrical output, once our limited
amount of high grade ore is depleted. Just like oil, uranium supplies
are dwindling.
7. Even nuclear industry executives aren't convinced. One described
nuclear expansion as ``comatose'' and an option that would give his
chief financial officer and Standard and Poors ``a heart attack.''
8. More reactors send the wrong message abroad. The peaceful atom
is a myth already exposed by the weapons programs of Indian, Pakistan,
Israel, North Korea and Iran.
9. Reactors at the beginning and the end of their lifespan are at
their most dangerous, prone to breakdown and accident. Most of the 103
operating now are nearing the end of their cycles. Adding new ones
doubles the risk of accident.
10. Electricity is not the biggest problem. It's fossil fuel-
powered vehicles. Adding nuclear won't address this or reduce these
major ghg emitters. Electricity consists of only 1/6 of our total
energy consumption. 83% of our energy consumption is in other areas
like auto use, industrial manufacturing, mining, etc.
Information Source: Arizona Nuclear Energy Watch (ANEW), Steve
Brittle, 6205 South 12th Street, Phoenix, AZ 85042, 602-268-6110.
The Nuclear Information and Resource Service has created a report:
``Confronting a False Myth of Nuclear Power: Nuclear Power Expansion is
Not a Remedy for Climate Change.'' [See Attachment Two: Confronting a
false myth of nuclear power]
i. what are the problems?
On September 9-11, 2003 Environmental Protection Agency sponsored a
two-day workshop on Mining Impacted Native American Lands in Reno,
Nevada. The workshop goals were to educate individuals involved with
mining issues affecting reservation and other Native American lands in
the U.S., to identify current approaches to these issues, and to
provide a comprehensive annotation of those issues, which include
mining and mine waste impacts, support mechanisms, cleanup processes,
and other key areas of mining and reclamation.
The Workshop Committee members were U.S. Environmental Protection
Agency; Office of Research and Development, National Risk Management
Research Laboratory, Office of Solid Waste and Emergency Response and
Regional Offices; Montana Tech & MSE-Technology Applications, Inc.;
University of Nevada, Reno; Great Basin Mine Watch; Laguna Acoma
Coalition for a Safe Environment (LACSE); Pyramid Lake Paiute Tribe;
Gros Ventre and Assiniboine Tribes, Fort Belknap Indian Community;
Cheyenne River Sioux Tribe; National Tribal Environmental Council;
Mineral Policy Center; Natives Impacted by Mining (NIBM).
http://www.epa.gov/ttbnrmrl/miningimpact.htm. Information source and
contact: Norma Lewis, U.S. EPA, NRMRL, 26 West Martin L. King Dr.,
Cincinnati, OH 45268, (513) 569-7665, [email protected].
Following is an except from the presentation of Manuel Pino,
Chairman for The Laguna Acoma Coalition for a Safe Environment at The
Sixth Session Of The United Nations Permanent Forum on Indigenous
Issues, May 2007 under Agenda Item 3, Under the Special Theme: Lands,
Resources and Territories, under the mandated issue of Environment,
with the following signatories: The Seventh Generation Fund for Indian
Development, Eastern Navajo Dine Against Uranium Mining (ENDAUM) Dineh
Bidziil Coalition, Haaku Water Office of Acoma Pueblo, Black Mesa Water
Coalition, Indigenous Environmental Network (IEN), International Indian
Treaty Council (IITC), Western Shoshone Defense Project, Nuclear Free
Future Award, Sierra Club's Environmental Justice Office in Flagstaff,
and Southwest Research and Information Center.
declaration of the indigenous world uranium summit (excerpt)
We, the Peoples gathered at the Indigenous World Uranium
Summit, at this critical time of intensifying nuclear threats
to Mother Earth and all life, demand a worldwide ban on uranium
mining, processing, enrichment, fuel use and weapons testing
and deployment, and nuclear waste dumping on Indigenous lands.
Past, present and future generations of Indigenous Peoples have
been disproportionately affected by the international nuclear
weapons and power industry. The nuclear fuel chain poisons our
people, land, air, and waters and threatens our very existence
and our future generations. Nuclear power is not a solution to
global warming. Uranium mining, nuclear energy development and
international agreements (e.g., the recent U.S.-India nuclear
cooperation treaty) that foster the nuclear fuel chain violate
our basic human rights and fundamental natural laws of Mother
Earth, endangering our traditional cultures and spiritual well
being. We reaffirm the Declaration of the World Uranium Hearing
in Salzburg, Austria in 1992, that ``uranium and other
radioactive materials must remain in their natural location.''
Further, we stand in solidarity with the Navajo Nation for
enacting the Dine Resources Protection Act of 2005, which bans
uranium mining and processing and is based on the fundamental
laws of the Dine [Navajo]. And we dedicate ourselves to a
nuclear free future. Indigenous Peoples are connected
spiritually and culturally to our Mother the Earth . . .
For entire presentation, see http://docip.org/Permanent%20Forum/pf07/
PF07manuel080.pdf. Information source and contact: Manuel Pino, 9000 E.
Chaparral Rd., Scottsdale, Arizona 85256-2626, United States, Phone:
480-423-6221.
i-1. lack of clean-up and reclamation of uranium sites from the 1950s
through 1980s uranium boom
I.1.1) Navajo Nation Lands
The largest single source of uranium ore in the United States was/
is the Colorado Plateau located in the ``Four Corners'' area: Colorado,
Utah, New Mexico and Arizona. The U.S. Federal Government, the sole
legal purchaser of uranium ore, paid discovery bonuses and guaranteed
purchase prices to anyone who found and delivered uranium ore. The Feds
twisted the arms of the tribes, principally Dino, with the promise of
good jobs and even royalties (the Dino are still waiting for those
checks) and by assuring them that it was the ``patriotic'' thing to do.
The economic incentives resulted in a frenzy of exploration and mining
activity throughout the Colorado Plateau from 1947 through 1959.
More than 1,000 old uranium mines and four abandoned processing
mills are scattered across the Navajo Nation, which spans parts of
Arizona, New Mexico and Utah. From 1944 to 1986, 3.9 million tons of
uranium ore were extracted by private companies from the region. The
tribe retained a former federal prosecutor Thursday to coordinate an
effort to finish the cleanup and eventually to help Navajos made ill by
exposure.
The biggest expulsion of radioactive material in the United States
occurred July 16, 1979, at 5 a.m. on the Navajo lands. Moore than 1,100
tons of uranium mining tailings gushed through a packed-mud dam near
Church Rock, N.M. With the tailings, 100 million gallons of radioactive
water gushed through the dam before the crack was repaired. By 8 a.m.,
radioactivity was monitored in Gallup, N.M., nearly 50 miles away. The
contaminated river, the Rio Puerco, showed 7,000 times the allowable
standard of radioactivity for drinking water below the broken dam
shortly after the breach was repaired, according to the Nuclear
Regulatory Commission.
In April, 2005, Navajo Nation President Joe Shirley, Jr. signed a
tribal law banning uranium mining and milling while dozens of community
members and dignitaries looked on. The act finds that based on those
fundamental laws, ``certain substances in the Earth that are harmful to
the people should not be disturbed, and that the people now know that
uranium is one such substance, and therefore, that its extraction
should be avoided as traditional practice and prohibited by Navajo
law.''
President Shirley commented, ``As long as there are no answers to
cancer, we shouldn't have uranium mining on the Navajo Nation. I
believe the-powers-that-be committed genocide on Navajo land by
allowing uranium mining. I don't want to subject any more of my people
to exposure to uranium and the cancers that it causes. I believe we
reinforced our sovereignty today.''
See extensive EPA files and photos regarding sites: http://
yosemite.epa.gov/r9/sfund/r9sfdocw.nsf/
22cc9f7bbf238b0a88257329007884d4/26fbc51aac6a659888257007005e9416!OpenDo
cument.
Abandoned Uranium Mines On The Navajo Nation: http://yosemite.epa.gov/
r9/sfund/r9sfdocw.nsf/c3b003b7d86365a4882573290078b569/
4114c8585baae97c8825728b007ae50d!OpenDocument.
Information source and contact: EPA Site Manager, Andrew Bain, 75
Hawthorne, San Francisco, CA 94105, 415-972-3167, [email protected].
I.1.2) Laguna Pueblo
The Jackpile is now undergoing a $48 million reclamation program-
paid for by ARCO and conducted by the Laguna tribe-aimed at restoring
the landscape to resemble the way it appeared before the exploitation
began. The reclamation estimate for complete restoration back to its
original landscape, including filling all the pits and leveling all the
piles was $400 million--but no one was willing to foot that bill.
Many at an environmental conference held in Laguna, New Mexico said
the current reclamation effort was only partially completed and a lot
of the uranium from the mine waste already had leached into the soil
and water.
``Two tributaries near the mine and the Rio San Jose have already
tested positive for radiation contamination,'' according to Manual Pino
with the Laguna-Acoma Coalition for a Safe Environment. ``It's one of
the best kept secrets of the United States.''
Purley, who lived less than 1,000 meters from Jackpile said she was
not happy with progress of the reclamation project. ``Every time the
rain falls there is still this strange smell by the mine.''
See Department of Energy, Energy Citations Database: Environmental-
Social Aspects of Energy Technologieshttp://www.osti.gov/
energycitations/product.biblio.jsp?osti--id=5882296.
Information source and contact: U.S. Department of Energy, Office of
Scientific and Technical Information, P.O. Box 62, Oak Ridge,TN 37831,
865-576-1188, [email protected].
I.1.3) Lakota-Sioux lands in the Black Hills of South DakotaRiley Pass
Abandoned Uranium Mines
This mining area has the highest grade uranium ore in this country
and even becomes more concentrated once burned on site using diesel
fuel, then it was converted to 80% to 90% uranium oxide per pound. In
its natural state, content is on the order of 3% to 10% per pound.
Although these mines are highly toxic, the U.S. Forest Service has been
deferring to the 1872 mining law and concedes that the mining companies
are not obligated to remediate their strip mine. Therefore, the U.S.
Forest Service requested the U.S. EPA to place the Riley Pass Abandoned
Uranium Mine under Superfund for remediation. The Custer National
Forest, Sioux Ranger District with the assistance of EPA and the State
of South Dakota, has developed a final cleanup plan for the Riley Pass
Abandoned Uranium Mine in the North Cave Hills.
The U.S. EPA gave $22 million to the U.S. Forest Service to
remediate the abandoned uranium mine nearly two years ago. At this
time, after some thirty years the work is scheduled to begin summer of
2007.
See Final Engineering Evaluation and Cost Analysis (EE/CA), Riley Pass
Abandoned Uranium Mine Availablehttp://www.fs.fed.us/r1/custer/
projects/Planning/nepa/Riley--Pass/index.shtml.
Information source and contact: Custer National Forest, Nancy Curriden,
Forest Supervisor, 1310 Main Street, Billings, MT 59105, (406)657-6200,
email: [email protected].
Standing Rock Site
Current water samples by the Standing Rock Sioux Tribe (SRST)
indicate that during this drought period that radionuclide levels in
the Grand River have averaged 5 picocuries/liter to 7 picocuries/liter.
We assume that the radionuclides precipitate in water and become mobile
during rainstorms and snowmelt, we feel that the SRST water samples are
insufficient to conclude that the Grand River is ``safe.'' We also
assume that during extreme rainfalls and snowfalls that the levels
increase exponentially. The SRST water samples also are nearly
identical to the water samples taken by the State of South Dakota last
year and, like the SRST, the State has not considered high
precipitation events as a factor in their reasoning that the Grand
River is ``safe.''
Information source and contact: Charmaine White Face, Defenders of
the Black Hills, PO Box 2003, Rapid City, SD 57709, 605-399-1868.
Attachment Three: Uranium Mining and Nuclear Pollution in the Upper
Midwesthttp://www.defendblackhills.org/joomla/index.php?option=com--
content&task=view&id=98&Itemid=27
I.1.4) Washington State Spokane Reservation
The only uranium mining in Washington State was on the Spokane
Indian Reservation: the Sherwood Uranium Mine and the Midnite Uranium
Mine, owned by a subsidiary of Newmont Mining Company, Dawn Mining
Company, which until 1981 operated the Midnite Mine on the Spokane
Indian Reservation. The open-pit uranium mine, now a Superfund site, is
the source of radiation and heavy metal contamination of Blue Creek,
which flows into the Spokane River arm of Lake Roosevelt. For
information on current situation.
Midnite Mine, located on the Spokane Indian Reservation eight miles
from the Tribal complex in Wellpinit, is an inactive open-pit uranium
mine closed in 1981, leaving behind 2.4 million tons of stockpiled ore
(containing 2 million pounds of uranium oxide) and 33 million tons of
waste rock. Two of the six excavated pits are open and partially filled
with water. Exposed rock from the ore piles generate acid rock
drainage. Radionuclides and heavy metals have contaminated groundwater,
seeps and surface water, including Blue Creek.
Radionuclides of concern at the Midnite mine and in downstream
watersheds include Uranium-238 decay series isotopes such as Uranium-
238, Radium-226, Thorium-230 and Radon-222. Heavy metal contaminants of
concern include: Aluminum, Arsenic, Barium, Beryllium, Cadmium,
Chromium, Cobalt, Copper, Lead, Manganese, Molybdenum, Nickel,
Selenium, Silver, Thallium, Uranium, Vanadium, and Zinc. The waste rock
piles and the ore remaining in the open pits at the Midnite mine have
significant sulfide content leading to acid generating conditions that
release heavy metals and other pollutants into surface and ground
water.
The Midnite Mine operated from 1955-1981 under the ownership of a
subsidiary of Newmont Mining Corporation: Dawn Mining Company. Today
the mine looks like an open wound in the heart of the Spokane Indian
Reservation. Dawn abandoned the pits and 33 million tons of waste rock
they created without conducting reclamation work to either rehabilitate
the site or prevent release of pollutants. As a result, radionuclides,
heavy metals and other pollutants have spread several miles beyond the
mine site, leaving a toxic trail in downstream creeks and valleys and
in downwind plants and hillsides in the central part of the Spokane
Indian Reservation. It is now designated as a federal Superfund site
requiring a $280 million cleanup. The design phase of the clean-up has
been completed; however, the work has not started because EPA has not
been able to get Newmont Corporation to fund the work. This means that
the clean-up costs would fall to the taxpayers to do so.
Recently, the site made news when a helicopter, fighting a forest
fire, took two bucket loads from the unfenced pond about 40 miles
northwest of Spokane on the Reservation. The tailings pond, about a
half-mile from the fire, holds waste from uranium ore processing by a
former Dawn Mining mill at the site. The manager of the mining company
asserted, ``You wouldn't anticipate an aerial breach of security,'' he
said. He didn't bother to mention that you wouldn't expect a toxic lake
of radioactive material to sit out in the open for 30 years either. How
many birds and creatures have made the same mistake the fireman did.
This site is a perfect example of a mining company-Newmont Mining
Corporation--that should not be allowed another mining permit until
this site has been cleaned and reclaimed.
See EPA Files regarding site:
http://yosemite.epa.gov/r10/CLEANUP.NSF/
738cdf3a6d72acce88256feb0074f9f4/25f296f579940d8b88256744000327a5/
$FILE/ROD-Midnite06.pdf
2) www.epa.gov/EPA-IMPACT/2006/September/Day-06/i14686.htm
Information source and contact: United States Environmental Protection
Agency, Ariel Rios Building, 1200 Pennsylvania Avenue, N.W., MC 2843,
Washington, DC 20460, (202) 564-2592.
I.1.5) Tohono O'dham Nation, Arizona
The Cyprus Tohono Mine, on Tohono O'dham land, is operated by
Phelps Dodge/Freeport-McMoran. In 2005, EPA issued an administrative
order requiring the company to clean up tailings containing toxic salt
and uranium on a 450-acre area of its 10,505-acre mine site. This site
leached uranium into the groundwater and fouled a tribal community's
drinking water well. The public water well was relocated to an area
untouched by the contamination. Two of the evaporation ponds and the
mill tailings impoundment are considered to have contributed to
groundwater contamination of an aquifer that was previously the sole
source of drinking water for the North Komelik community.Removal of the
salts and tailings is now underway. These wastes are being piled on a
plastic pad, which will then be capped so that no water can get in to
move the toxic radioactive materials.
Area residents have also reported that in certain wind conditions
dust from the mine blows up into North Komelik, creating potential
inhalation of particulate contamination. Contaminated soil will be
excavated, placed on a liner, and covered with a soil cap. The work
will cost an estimated $18 million will be completed by the mining
company.
EPA Files regarding site: http://yosemite.epa.gov/opa/admpress.nsf/
c0a363bb3b2bde7e852572a000652ed4/
d6d8874eece84349852572090072536c!OpenDocument
Information source and contact: U.S. EPA Region 9, John Hillenbrand, 75
Hawthorne Street, San Francisco, CA, 94105, [email protected],
415/972-3494.
I.1.6) Hopi Land, Yuba City, AZ
Based upon information provided by life-long residents, the Hopi
Water Resources Program, Environmental Protection Office (Hopi EPO),
and Navajo Nation Environmental Protection Agency (NN EPA) are
investigating whether the Tuba City Open Dump site may contain
radioactive and hazardous waste. This mixed waste (radioactive and
hazardous waste) was allegedly dumped during the operation of the
former Rare Metals Corporation of America, a uranium mill tailings
facility located approximately six miles northeast of Tuba City. The
Rare Metals facility processed uranium ore into high-grade uranium from
as early as 1962 to 1968 to support U.S. military efforts.
For entire report, see: http://www.epa.gov/region09/waste/solid/
tubacity.html.
Information source and contact: Pui Man Wong, U.S. EPA Community
Involvement Coordinator, 75 Hawthorne St. (SFD-3), San Francisco, CA
94105, (415) 972-3242 or Toll Free (800) 231-3075, [email protected]
and Gayl Shingoitewa-Honanie, Hopi EPO (Primary Hopi Contact), P.O. Box
123, Kykotsmovi, AZ 86039, (928) 734-3631, [email protected].
i-2. health concerns
I.2.1) EPA Regulations
The physical problems, such as lung cancer and various respiratory
problems were caused by working in the mines. However, the general
populace in the vicinity of the mines also were affected by dust blown
from the mines and tailings. Some of the symptoms took years to
appear--and the chromosomal damage done was even slower to show up.
There's no doubt that the U.S. Government and its agencies have done a
poor job in helping the affected communities recover from economic,
health and environmental contamination. The financial compensation from
the Department of Energy that has been doled out after long
investigations and copious paperwork manifested long after most of the
miners were dead.
Information of health effects from radionuclides from EPASource:
Environmental Protection Agency, Stephen Johnson, Administrator, Office
of the Administrator, Ariel Rios Building, Room 3000, 1200 Pennsylvania
Ave NW, Washington, DC 20468, 202-564-4700.
Radionuclides (including Radon, Radium and Uranium)
hazard summary-created in april 1992; revised in january 2000
Uranium, radium, and radon are naturally occurring radionuclides
found in the environment. No information is available on the acute
(short-term) non-cancer effects of the radionuclides in humans. Animal
studies have reported inflammatory reactions in the nasal passages and
kidney damage from acute inhalation exposure to uranium. Chronic (long-
term) inhalation exposure to uranium and radon in humans has been
linked to respiratory effects, such as chronic lung disease, while
radium exposure has resulted in acute leucopenia, anemia, necrosis of
the jaw, and other effects. Cancer is the major effect of concern from
the radionuclides. Radium, via oral exposure, is known to cause bone,
head, and nasal passage tumors in humans, and radon, via inhalation
exposure, causes lung cancer in humans. Uranium may cause lung cancer
and tumors of the lymphatic and hematopoietic tissues. EPA has not
classified uranium, radon or radium for carcinogenicity.
Please Note: The main sources of information for this fact sheet
are EPA's--
1) Integrated Risk Information System (IRIS)www.epa.gov/iris/
subst/0259.htm, which contains information on oral chronic
toxicity;
2) the RfD (inhalation reference concentration): www.epa.gov/
ttn/uatw/hlthef/hapglossaryrev.html#rfdfor uranium; and
3) Agency for Toxic Substances and Disease Registry's
(ATSDR's) Public Health Service, US. Toxicological Profiles for
Uranium, Radium, and Radonwww.atsdr.cdc.gov/toxprofiles/
tp150.htmlwww.atsdr.cdc.gov/toxprofiles/tp144.html
Health Hazard Information
Acute Effects
--No information is available on the acute effects of uranium,
radium, or radon in humans. (2-4)
--Animal studies have reported inflammatory reactions in the nasal
passages and kidney damage from acute inhalation exposure
to uranium. (2)
--Acute animal tests in rats, mice, and guinea pigs, have shown
uranium to have low to moderate toxicity from inhalation
exposure and high toxicity from oral exposure. (2)
Chronic Effects (Non-cancer)
--Several studies have found no increased deaths in uranium workers
due to kidney disease, however, one study of uranium mill
workers chronically exposed to uranium showed kidney
dysfunction. (2)
--Animal studies have reported effects on the kidney from chronic
inhalation and oral exposure to uranium. (2)
--EPA has not established a Reference Concentration (RfC) for
uranium (soluble salts or natural). (5,6)
--ATSDR has established a chronic inhalation minimal risk level
(MRL) of 0.0003 milligrams per cubic meter (mg/
m3) for uranium (soluble salts) based on renal
tubule lesions in dogs. The MRL is an estimate of the daily
human exposure to a hazardous substance that is likely to
be without appreciable risk of adverse non-cancer health
effects over a specified duration of exposure. Exposure to
a level above the MRL does not mean that adverse health
effects will occur. The MRL is intended to serve as a
screening tool. (2)
--The Reference Dose (RfD) for uranium (soluble salts) is 0.003
milligrams per kilogram body weight per day (mg/kg/d) based
on body weight loss and moderate nephrotoxicity in rabbits.
The RfD is an estimate (with uncertainty spanning perhaps
an order of magnitude) of a daily oral exposure to the
human population (including sensitive subgroups) that is
likely to be without appreciable risk of deleterious non-
cancer effects during a lifetime. It is not a direct
estimator of risk but rather a reference point to gauge the
potential effects. At exposures increasingly greater than
the RfD, the potential for adverse health effects
increases. Lifetime exposure above the RfD does not imply
that an adverse health effect would necessarily occur. (6)
--EPA has medium confidence in the study on which the RfD was based
since it was well designed, but used a small number of
experimental animals; medium confidence in the database
because there are adequate studies on the effects of
uranium in various species; and, consequently, medium
confidence in the RfD. (6)
--Chronic exposure to radium in humans, by inhalation, has resulted
in acute leucopenia, while oral exposure has resulted in
anemia, necrosis of the jaw, abscess of the brain, and
terminal bronchopneumonia. (3)
--Chronic exposure to radon in humans and animals via inhalation
has resulted in respiratory effects (chronic lung disease,
pneumonia, fibrosis of the lung, decreased lung function),
while animal studies have also reported effects on the
blood and a decrease in body weights. (4)
--EPA has not established an RfC or an RfD for radium or radon.
(7,8)
Reproductive/Developmental Effects
--Limited evidence from epidemiological studies suggests that
uranium or radon exposure may result in a decreased ratio
of live male to female births in humans. However, it is
not certain if the effect is from uranium or radon exposure
because the workers were also exposed to other compounds
(2,4)
--Animal studies have reported reduced number of offspring, reduced
fetal body weight and length, and an increase in skeletal
malformations from oral exposure to uranium in animals. (2)
--No information is available on the developmental or reproductive
effects of radium in humans or animals. (3)
Cancer Risk
--Radium and radon are potent human carcinogens. Radium, via oral
exposure, is known to cause lung, bone, head (mastoid air
cells), and nasal passage tumors. Radon, via inhalation
exposure, causes lung cancer. (3,4)
--Smokers exposed to radon are at greater risk for lung cancer
(approximately 10 to 20 times) than are nonsmokers
similarly exposed. (1)
--Studies in uranium miners have shown an increase in lung cancer
and tumors of the lymphatic and hematopoietic tissues from
inhalation exposure. However, it is not known whether the
cancer risk is from uranium itself, or from radon or other
confounding factors. (2)
--EPA has not classified radium, radon or uranium for
carcinogenicity. (2-4)
For full report: See www.epa.gov/ttn/uatw/hlthef/radionuc.html
I.2.2) Health Problems in Native American populations exposed to
uranium mining and its radioactive contamination
For more than forty years, the people of South Dakota, Washington,
Arizona and New Mexico have been subjected to radioactive polluted dust
and water runoff from hundreds of abandoned open pit uranium mines,
processing sites and waste dumps. The following is from a General
Accounting Office report on the amounts paid out to through the
radiation exposure program. There is a preponderance of Native
Americans being compensated because less safety precautions were used
on mines on their lands. There is anecdotal information about this
reality. It should be studied further.
GAO GIVES UPDATE ON RADIATION EXPOSURE COMPENSATION PROGRAM STATUS
Uranium worker data from April 1992 through June 30, 2007
------------------------------------------------------------------------
Claims Claims Claims Total
Category approved denied pending payments
------------------------------------------------------------------------
Uranium Miner 4,560 2,661 208 $455
million
------------------------------------------------------------------------
Uranium Miller 1,000 239 33 $100
million
------------------------------------------------------------------------
Uranium Ore Transporter 217 70 7 $22 million
------------------------------------------------------------------------
TOTAL 5,777 2,970 248 $577
million
------------------------------------------------------------------------
Download GAO Report: Radiation Exposure Compensation Act: Program
Statushttp://www.gao.gov/cgi-bin/getrpt?GAO-07-1037R.
I.2.2.1) Navajo Land, Arizona
The Indian Health Service data shows that cancer death rate on the
reservation from the early 1970s to the late 1990s. Researchers admit
that exposure to mining byproducts in the soil, air and water almost
certainly contributed to the increase in Navajo cancer mortality.
However, the government has never conducted a comprehensive study
of the health effects of uranium mining on the reservation. But
individual scientists working on their own have documented that cancer
rates are higher near old mines and mills. Not only uranium, but other
toxic by-products of mining common in the Southwest, such as arsenic
and heavy metals, have been found in one out of five drinking-water
sources sampled.
See Navajo Uranium Radiation Victims: http://sonic.net/kerry/
uranium.html.
U.S. Army Corp of Engineers Report: See Two-year uranium mine
project benefits Navajo Nation.
www.spl.usace.army.mil/cms/
index.php?option=com_content&task=view&id=317&Itemid=2.
I.2.2.2) Acoma and Laguna Pueblos, New Mexico: Testimony given my
Manuel Pino, Acoma Pueblo, New Mexico to the Swedish Parliament
in 2006
Acoma Pueblo's neighbor to the east is Laguna Pueblo, and about 15
miles from where their borders meet is the Jackpile mine, North
America's largest open pit uranium mine from 1952 until 1982.
``Living in close proximity to that mine, we disproportionately
suffered from the environmental impacts, such as water contamination,
air quality impacts, and environmental degradation to the soil and to
domestic and wild animals,'' Pino said.
``The contaminants from the Jackpile mine spread throughout the
landscape. It came on the wind to our grazing areas, through the jet
stream and the wind and air patterns, which affected our air quality.
Then the monsoons would fill the arroyos and carry the contaminants to
major tributaries that seeped into the underground water table.''
Documented cancer clusters among the Navajo, Acoma and Laguna
tribes eventually led to the Uranium Workers Act of 2000, designed to
compensate miners for exposure to radioactive contaminants. It is
actually an amendment to 1990's Radiation Exposure Compensation Act,
which held standards of exposure to such heights that former workers
and their families were not eligible for compensation. Pino has worked
for years helping Native miners file claims under the UWA.
For full report, see: www.scottsdalecc.edu/news/manuel--pino--
consults--swedish--parliament07.html.
Information source and contact: Manuel Pino, 9000 E. Chaparral Rd.,
Scottsdale, Arizona 85256-2626, United States, Phone: 480-423-6221.
I.2.2.3) Acoma Pueblo, New Mexico
In addition to impact of Jackpile mine on the east side of the
Pueblo, on the west side, there is an impact of ``down-winder''
syndrome from the inhalation of radioactive particulate from mining
waste. High desert winds of up to 70 mph bring dust from the tailings
ponds of the Home stake mine, which inundate the Pueblo regularly.
Although there is not an actual mine site on their land, the Acoma
people have lost a generation of their people to cancer. A new
diagnosis of cancer or a death by cancer occurs on a weekly basis even
today. The Homestake and Mt. Taylor mines are upstream from a perennial
creek that flows through the Pueblo, creating a potential threat to the
water supply of the Pueblo.
Information source and contact: Laura Watchempino, Water Quality
Specialist, P.O. Box 309, Acoma, NM 87304, 505-552-6604.
I.2.2.4) Spokane Reservation, Washington
``People do not know to stay out of the site because of health
dangers,'' Deb Abrahamson of SHAWL Society said, telling of a tribal
hunter who recently shot a llama near the site.
``Although uranium mining made the United States what it is today,
there was no analysis of the impact on our people,'' said Deb, whose
father, grandparents and uncles worked on the site.
``Our people never had a full say in establishing the mine because
of internal marginalization,'' she explained. ``After the Homestead Act
opened reservation land to homesteaders, many people were adopted into
the tribe. That helped disempower and disenfranchise our people.
``Few old-timers remain. The median age of the 2,300 people is now
26,'' she said. In addition, the tribe did not have the money or
education to battle it. Our grandparents, parents, uncles and aunts
never knew about the danger.
``They worked in the mine and brought back yellow cake. My father,
who worked double shifts, was not told he was bringing that radioactive
material home,'' Deb said. ``The tribal health educator and teachers
either lacked information or were in denial.
``We did not link deaths to the mine. Our primary care provider,
Indian Health Services, was a government arm, so why would it gather
data for baseline health survey on radiation?''
Information source and contact: Deb Abrahamson, SHAWL Society, P.O. Box
61, Wellpinit, Washington 99040, United States, Phone: 509-747-3115,
[email protected].
i-3: technologically enhanced radioactive materials
The pervasive nature of uranium mining entering the air, water and
soil of the environment as ``technologically enhanced'' material must
be taken into consideration, particularly for health concerns.
EPA Report: Technologically Enhanced Naturally Occurring Radioactive
Materials in the Southwestern Copper Belt of Arizona
Information source and contact: U.S. Environmental Protection Agency,
Office of Radiation and Indoor Air, Radiation Protection Division, 401
M St., SW Washington, D.C. 20460, October 1999.
executive summary
The U.S. Environmental Protection Agency has been working over the
past several years to better understand the nature and extent of TENORM
that may become concentrated at copper mining sites. This document
presents the information that EPA has compiled on this issue to date.
The literature on the subject indicates the presence of uranium and
thorium in minerals associated with porphyry copper deposits in
Arizona. Copper extraction and beneficiation operations may concentrate
these radioactive materials. Samples taken by the ADEQ from several
copper mines indicate that TENORM has been found to occur above
background levels in surface water and in some mining process and waste
streams. The data also show evidence of TENORM in surface water,
groundwater and soils. The data suggest that dump leaching operations
and solvent extraction-electro-winning procedures, as well as the
practice of recycling raffinate at copper mines, extract and
concentrate soluble radioactive materials. The results show increases
of up to two orders of magnitude over background levels for samples of
all radio-chemicals tested except Rn-222. Radiological data in this
report represent a sampling of mine wastes at specific facilities and
do not necessarily represent other copper operations. Based on the data
presented herein, there is an increased likelihood that copper leach
operations and their associated solvent extraction--electrowinning
circuits in Arizona concentrate TENORM.
findings
In 1992, ADEQ shared with EPA data on TENORM emanating from copper
mines. EPA has continued to work with ADEQ to assemble the available
data. As part of its groundwater and surface water protection programs,
ADEQ requires mining companies to submit APPAs containing facility-
specific radiochemical characterizations. As a result, ADEQ and EPA
have accumulated in excess of 3200 analyses of radionuclides at 15
mining sites in the copper industry. This report reviews the current
information on the occurrence and distribution of TENORM at mines in
Arizona and contains tables of all the available data as of 1997.
Tables 1 through 5 summarize the data according to media,
including: groundwater, surface water, soil-sediment, process
solutions, and process wastes. Instances when the average levels of
radioactivity exceed the federal maximum contaminant levels (MCLs) or
Arizona guidelines are shown in bold. The groundwater media included
about 2220 analyses from about 176 wells at nine mines. The surface
water media included about 197 analyses from nine mine audits, eight
washes, and six creeks at seven mine sites. As many as 25 soil samples
were taken from four mines to support 110 analyses.
Levels in excess of the federal MCLs and state guidelines were
found in groundwater and surface water samples, as well as soil and
sediment samples at abandoned and active copper mines. TENORM
exceedences were also found in groundwater at active and inactive
copper mines. Uranium byproducts were recovered from heap leach dumps
and in-situ operations that feed SX-EW and ion exchange circuits at
several copper mines. Radioactivity was discovered in copper mineral
processing waste streams. Elevated levels of radioactivity were also
found to occur in the process solutions and process wastes. . . . .
Data presented within this report represent a sampling of copper
mines and facilities, and may not necessarily represent all copper
operations in the state. The impacts of copper mining are noteworthy
because of unique conditions, such as the presence of trace uranium
minerals and the mining and extraction methods that unintentionally
extract radioactive materials and enhance its environmental mobility.
Tables 1-5 present data on the mining sites where TENORM has been
documented by ADEQ. These sites are: Cyprus Bagdad (CB), Cyprus Twin
Buttes (TB), Cyprus Sierrita (CS), Phelps Dodge Copper Queen (CQ),
Pinto Valley (PV), Mineral Park (MP), Phelps Dodge Morenci (MM), Phelps
Dodge New Cornelia (NC), American Legion (AL), De la Fontaine (DF),
Hillside (HS), Three R s (TR), Magma Florence (MF), Santa Cruz (SC),
and Magma San Manual (SM). Groundwater, surface water, process solution
and process waste data in Tables 1-5 are expressed in pCi/L, while soil
and sediment data are expressed in pCi/g.
Table 1: Groundwater Statistical Data (except Morenci) (pCi/L)
Radiochemical Mine Sites Number Min. Max. Avg. Std. Dev.
Gross Alpha CB,TB,CS,CQ,PV,MP,NC 129 0 1500 60.3 150.8
Gross Beta CB,TB,CS,CQ,PV,MP,NC 116 0 500 44.4 72.6
U-238 CB,CQ,NC 63 0.06 38.6 5.9 7.6
U-234 CB,CQ,NC 63 1.3 60.4 12.8 14.8
U-235 CB,CQ,NC 56 0 2.9 0.4 0.5
Total Ra PV 16 0.8 122 10.8 30.5
Ra-226 CB,TB,CS,CQ,PV,NC 117 0 130 3.0 13.4
Ra-228 CB,TB,CS,CQ,PV,NC 111 0 122 4.1 12.7
Total-U IB,CB,CS,CQ,PV,NC 119 0 209 12.0 24.9
Rn-222 CB,CQ,PV 23 16 3980 216 1309
Total 7 MINES 813
* Note: Levels of radioactivity in excess of federal MCLs or Arizona guidelines are shown in bold
Table 2: Surface Water Statistical Data (pCi/L)
Radiochemical Mine Sites Number Min. Max. Avg. Std. Dev.
Gross Alpha MP,MM,CB,TR,AL,DF,HS,NC 54 0 1240 83.5 188.4
Gross Beta CB,MP,MM,TR,NC 32 0 128 27.1 34
U-238 CB,TR,AL,HS,NC 19 0.1 678 83.8 168.2
U-234 CB,TR,AL,HS,NC 19 0.2 577 80 141.8
U-235 CB,TR,NC 9 0.04 2.9 1.1 0.9
Ra-226 CB,MP,NC 29 0 71.8 6.4 13.8
Ra-228 MP,CB,TR,AL,DF,HS,NC 18 0 55.5 5.6 13.1
Total-U MP,CB,TR,NC 12 0.01 32.9 6.6 10.9
Rn-222 MP 3 39 120 68.3 44.9
Total 8 MINES 195
* Note: Levels of radioactivity in excess of federal MCLs or Arizona guidelines are shown in bold
Table 3: Sediment and Soil Statistical Data (pCi/g)
Radiochemical. Mine Sites Number Min. Max. Avg. Std. Dev
Gross Alpha AL,DF,HS,MM 25 0.5 395 63.1 90.0
Gross Beta AL,DF,HS,MM 25 22 248 69.4 52.3
U-238 AL,DF,HS 20 0.7 63.3 7.9 14.2
U-234 AL,DF,HS 20 0.9 60.8 10.0 16.6
Ra-226 AL,DF,HS 20 0.7 82.6 10.4 19.7
Totals 4 Mines 110
* Note: Levels of radioactivity in excess of federal MCLs or Arizona guidelines are shown in bold
Table 4: Process Solutions Statistical Data (pCi/L)
Radiochemical Mine Sites Number Min. Max. Avg. Std. Dev.
Gross Alpha MP,MM,MF,SC 43 1.3 8649 1841 1850
Gross Beta MP,MM,MF 41 3.0 3683 975.6 881.7
U-238 MF 2 248 1611 929.5 963.8
U-234 MF 2 254 1745 999.5 1054.3
U-235 MF 2 11.6 598 304.8 414.7
Ra-226 MF,SC 4 19.5 193 86.3 79.1
Ra-228 MF,SC 4 2.0 19 7.8 8.0
Total-U MF,CS,TB 6 0.8 4362 1895.9 1532.9
Rn-222 MF,SC 4 243 3760 1805.7 1593.5
For entire report, see: http://www.epa.gov/radiation/docs/tenorm/402-r-
05-007-rev0607.pdf.
i.4. disposal of toxic waste
Uranium Mill Tailings Radiation Control Act
The Uranium Mill Tailings Radiation Control Act (UMTRCA) of 1978
allows the U.S. Department of Energy (DOE) to regulate cleanup
activities at inactive uranium tailings disposal sites. The statute
provided for the Uranium Mill Tailings Remedial Action Project, which
identified 24 inactive uranium sites (two of which have been delisted)
at which the DOE monitored the contamination, ground water, and
maintenance. These sites also will be part of the Long-Term
Surveillance and Maintenance Program, which provides for surveillance,
ground water monitoring, and maintenance of sites cleaned up under the
UMTRCA Program. In addition, DOE cleaned up properties in the vicinity
of the sites contaminated with residual radioactive materials. DOE's
Office of Environmental Management now calls it ``DOE's oldest and most
successful environmental restoration project.''
UMTRCA amended the Atomic Energy Act by directing EPA to set
generally applicable health and environmental standards to govern the
stabilization, restoration, disposal, and control of effluents and
emissions at both active and inactive uranium and thorium mill tailings
sites. The standards limit air emissions and address soil and ground
water contamination at both operating and closed facilities (42 USC
2022 et seq.).
Title I of the Act covers inactive uranium mill tailing sites,
depository sites, and vicinity properties. Under this Act, EPA must set
standards that provide protection as consistent with the requirements
of RCRA as possible. The standards must include ground water protection
limits. Title II of the Act covers operating uranium processing sites
licensed by the NRC. EPA was directed to promulgate disposal standards
in compliance with Subtitle C of the Solid Waste Disposal Act, as
amended, to be implemented by NRC or the Agreement States. The 1993
Amendments to UMTRCA further directed EPA to promulgate general
environmental standards for the processing, possession, transfer, and
disposal of uranium mill tailings. The NRC was required to implement
these standards at Title II sites.
In 1983, EPA developed standards to protect the public and the
environment from potential radiological and non-radiological hazards at
abandoned processing sites. These standards include exposure limits for
surface contamination and concentration limits for ground water
contamination. DOE is responsible for bringing surface and ground water
contaminant levels at the 22 sites (two sites were delisted) into
compliance with EPA standards. DOE is accomplishing this through the
UMTRCA Surface and Ground Water Projects.
1) U.S. Environmental Protection Agency Abandoned Mine Lands
Team Reference Manual: www.epa.gov/aml/tech/amlref.pdf
2) Radioactive Waste Disposal: An Environmental
Perspectivewww.epa.gov/radiation/docs/radwaste/402-k-94-001-
umt.htm
3) Field Demonstration of Permeable Reactive Barriers To
Remove Dissolved Uranium From Groundwater, Fry Canyon,
Utahwww.epa.gov/radiation/docs/cleanup/402-c-00-001.pdf
Information source and contact for above three reports: United States
Environmental Protection Agency, Ariel Rios Building, 1200 Pennsylvania
Avenue, N.W., MC 2843, Washington, DC 20460, (202) 564-2592.
ii-5. cultural impacts
Public attention is now being given to the cultural impacts on the
indigenous peoples, not only in U.S., but throughout the world. Many
Native American tribes still depend on natural resources for food.
Throughout the world, indigenous peoples in particular have seen their
centuries-old traditions razed by the introduction of industrial-scale
business. From Alaska to Nevada, mining projects have left native
tribes plagued by contaminated waterways and forests, health problems,
upsurges in violence from the influx of outsiders, neglect of local
traditions, and community infighting between those who want jobs at any
price to the environment and those who want to preserve a way of life
that has persevered for several thousand years.
united nations adopts declaration on rights of indigenous peoples, 13
september 2007
The General Assembly today adopted a landmark declaration outlining
the rights of the world's estimated 370 million indigenous people and
outlawing discrimination against them--a move that followed more than
two decades of debate.
The United Nations Declaration on the Rights of Indigenous Peoples
has been approved after 143 Member States voted in favor, 11 abstained
and four--Australia, Canada, New Zealand and the United States--voted
against the text.
A non-binding text, the Declaration sets out the individual and
collective rights of indigenous peoples, as well as their rights to
culture, identity, language, employment, health, education and other
issues.
The Declaration emphasizes the rights of indigenous peoples to
maintain and strengthen their own institutions, cultures and traditions
and to pursue their development in keeping with their own needs and
aspirations. It also prohibits discrimination against indigenous
peoples and promotes their full and effective participation in all
matters that concern them, and their right to remain distinct and to
pursue their own visions of economic and social development.
For complete information, see: http://daccessdds.un.org/doc/UNDOC/LTD/
N07/498/30/PDF/N0749830.pdf?OpenElement.
Information source and contact: The Secretariat of the UN Permanent
Forum on Indigenous Issues, Secretariat of the Permanent Forum on
Indigenous Issues, United Nations, 2 UN Plaza, Room DC2-1772, New York,
NY, 10017, Tel: 1 917 367 5100.
Attachment Four: On the Cultural Impacts of Mining
______
Attachment 1.--Article From Cultural Survival, April 10, 2007
un body holds canada responsiblefor corporations' actions abroad
by Mark Cherrington, Managing Editor
http://www.corpwatch.org/article.php?id=14458
In a groundbreaking decision, the United Nations Committee on the
Elimination of Racial Discrimination (CERD) has told Canada that it
must rein in Canadian corporations operating on Indian land in the
United States.
The finding, issued in early March, was in response to a petition
filed by the Western Shoshone Defense Project about the actions of
Canadian resource-extraction companies operating on the tribe's land in
the western United States. Among other things, the Convention on the
Elimination of Racial Discrimination, which has been ratified by both
Canada and the United States, requires states to ``guarantee the right
of everyone . . . in the enjoyment of . . . economic, social, and
cultural rights ... and the right to public health.'' The Shoshone
petition claimed that these are the areas in which the Canadian
companies are affecting them.
The petition especially targets Barrick Gold Corporation, the
largest gold mining company in the world. Gold mining uses large
amounts of toxic mercury and creates cyanide-laced leaching ponds, both
of which threaten Shoshones' right to health. The blasting used to open
mining sites destroys sacred areas, which violates the tribe's cultural
rights to culture, and mining roads disrupt wildlife, undermining their
traditional ways of finding food. Gold mining also requires vast
amounts of water, which dries up springs and other water sources that
the Shoshone need for health. The Betze mine alone uses 70,000 gallons
per minute, and it is hardly alone. Western Shoshone lands are the
third-largest gold producing region in the world, and there are six
other Canadian gold companies besides Barrick operating there, with
more applications for leases already under consideration.
The Shoshone have targeted Canada in part because the United States
has failed to take any action to protect Shoshone lands. On the
contrary, the U.S. government has declared most of Shoshone territory
to be federal public land open to resource extraction and other
commercial activities. The treaty protecting the original Western
Shoshone territory--some 60 million acres from southern Idaho to
California's Mojave Desert--is still valid, but the government has
gotten around the treaty by invoking a principle it calls ``gradual
encroachment.'' This legal tautology has been discredited by the Inter-
American Commission on Human Rights, but the United States has ignored
those findings.
In fact, the government has been seeking ways of making their lands
even more available to encroachment. Until now, extraction industries
have been operating under a federal lease arrangement, but in 2004
Republican congressman Richard Pombo introduced an amendment to a
budget bill that would allow foreign companies to buy this ``public''
Shoshone land for $1,000 an acre. (The bill was passed by the House of
Representatives but defeated in the Senate.) And a second bill,
introduced by Republican congressman James Gibbons (now governor of
Nevada), would have offered more than 60,000 acres of Shoshone land for
sale to the Canadian company Placer Dome, now owned by Barrick Gold.
The racial discrimination treaty is a binding agreement for Canada,
which, like all state parties, has to submit to biannual review by the
CERD Committee, the treaty's enforcement body. CERD reviews the
country's report (and any accompanying unofficial ``shadow reports''
like the Western Shoshones') and issues observations and
recommendations like the one regarding Canada, which read in part:
``The committee encourages the state party to take appropriate
legislative or administrative measures to prevent acts of transnational
corporations registered in Canada which have a negative impact on the
enjoyment of rights of indigenous peoples in territories outside
Canada. In particular, the committee recommends to the state party that
it explore ways to hold transnational corporations registered in Canada
accountable.''
Will Canada act on that recommendation? One hopeful sign in that
regard is a report published on March 29 by Canada's National
Roundtables on Corporate Social Responsibility and Canadian Extractive
Industries in Developing Countries. Among many recommendations in this
comprehensive government report, are several that stress the need to
protect the rights of indigenous peoples in the areas where Canadian
companies operate.
Attachment 2.--Article From Nuclear Information and Resource Service,
May 3, 2006
confronting a false myth of nuclear power: nuclear power expansion is
not a remedy for climate change
http://www.nirs.org/climate/background/climatetalk_mary_un_050306.htm
May 3, 2006 New York--Nuclear power is being widely promoted as a
``solution'' to global climate change. Unfortunately nuclear power is
not a solution and it is further counterproductive to any real remedy
for human impacts on climate.\3\ Those selling the expansion of nuclear
power are on a par with any salesman of counterfeit medicine; one must
closely examine the motives of anyone associated with nuclear schemes
of any kind.\4\
---------------------------------------------------------------------------
\3\ Amory Lovins, More Profit With Less Carbon, Scientific
American: September 2005.
\4\ See for instance, Dr. Helen Caldicott, Nuclear Madness,
(updated edition) W.W. Norton 1994.
---------------------------------------------------------------------------
In the service of this disinformation campaign U.S. Vice President
Cheney has publicly stated \5\ a falsehood: he asserted that nuclear
power is carbon-free. Nuclear power is not free from carbon emissions.
A number of recent studies have found that when mining, processing, and
extensive transportation of uranium in order to make nuclear fuel is
considered, the release of carbon dioxide (CO2) as the
result of making electricity from uranium is comparable to burning
natural gas to make electric power.\6\ Additional energy required for
decommissioning and disposition of the wastes generated increases this
CO2 output substantially.\7\
---------------------------------------------------------------------------
\5\ Cheney was speaking on C-Span in 2004 when he made the
statement that there is already an alternative fuel developed that ``is
carbon-free''--incorrectly referring to nuclear power.
\6\ Felix Christian Matthes, Nuclear Energy and Climate Change,
2005. Issue Paper # 6, Heinrich Boll Foundation & World Information
Service on Energy, at: http://www.nirs.org/ch20/publications/
nrandclimate.htm
\7\ Andrew Sims, Mirage and Oasis--Energy Choices in an Age of
Global
Warming, 2005. Posted at: http://www.neweconomics.org/gen/uploads/
sewyo355prhbgunpscr51d2w29062005080838.pdf
---------------------------------------------------------------------------
Nuclear power is not only dependent upon fossil fuels for the
production of uranium fuel, decommissioning, and the disposition of
wastes generated: it is also dependent upon a grid that is powered by
other sources of energy, typically coal. This is due to the simple fact
that nuclear reactors cannot ``black start''\8\ --in other words, they
depend on electric power from the external power grid to be able to
come on-line. Transition away from the combustion of fossil fuels
cannot be accomplished solely by the expansion of nuclear power since
it depends on the grid being powered up before reactors can come on-
line.\9\
---------------------------------------------------------------------------
\8\ See Wikipedia on line at: http://en.wikipedia.org/wiki/Black--
start
\9\ See also Lovin's footnote #44 in Amory Lovins: Nuclear Power
Economics and Climate Protection Potential 2005, Rocky Mountain
Institute, E-05-08, posted at: http://www.rmi.org/images/other/Energy/
E05-08--NukePwrEcon.pdf.
---------------------------------------------------------------------------
A second false facet of the promotion of nuclear power as a
``solution'' hinges on the claim that nuclear energy is clean.\10\ The
implication: if you cannot see it, there is no pollution. In truth
nuclear power can only operate because it enjoys some of the most
lenient public ``protection'' standards in the world.\11\ The
destructive activity of radioactivity is to disrupt the structures of
living cells, especially DNA.\12\ The international regulatory regime
for exposure to radiation results in an unfortunate level of human
sacrifice. Considering only the exposure of ``standard'' adult males in
the US civilian population to ``permissible'' levels of radiation, one
official estimate of risk finds that of every 57 men exposed, one will
suffer fatal cancer.\13\ Obviously this same level of radiation
exposure will produce more cancers in children and others who are more
vulnerable\14\ US worker standards have recently been revealed to
produce cancer in 1 in 4 workers.\15\ Recent revelations of massive
tritium releases from US reactors, contaminating groundwater in
residential neighborhoods, exposes the lie that nuclear power is
``clean.''\16\
---------------------------------------------------------------------------
\10\ Nuclear Energy Institute advertising campaign.
\11\ Mary Olson, the Myth of the Millirem, 2004. See http://
www.nirs.org/factsheets/mythmiliremfctsht.htm
\12\ Cindy Folkers, Radiation Basics, 1999. See http://
www.nirs.org/radiation/radiationbasics.pdf
\13\ US Nuclear Regulatory Commission, published in the Federal
Register: Below Regulatory Concern Policy Statement 1990 establishes
that the US radiation standard of 100 millirems a year would result (at
government assessed levels of risk) in 1 in 286 people exposed
suffering fatal cancer. US regulations promulgated in the Code of
Federal Regulations, Chapter 10, Part 20 allow the public to be exposed
to up to 500 millirems a year from combined sources of air, water and
sewage, raising the cumulative level of risk, as assessed by that
agency (which assumes a linear dose-response relationship) to 1 in 57.
\14\ Cindy Folkers and Mary Olson, Radiation and Children: The
Ignored Victims, 2004. See http://www.nirs.org/radiation/
radiationandchildren.pdf
\15\ National Academy of Sciences, Biological Effects of Ionizing
Radiation VII, 2005. Also, Cindy Folkers, US Panel Recognizes No Safe
Dose of Radiation, 2005. See: http://www.nirs.org/radiation/radtech/
nosafedose072005.pdf
\16\ See: http://www.nirs.org/radiation/tritium/tritiumhome.htm.
---------------------------------------------------------------------------
The vast majority of radioactivity in nuclear waste worldwide is
from the production of electricity. Even in the United States, where
for decades a robust nuclear weapons program operated, more than 95% of
the total radioactivity is in waste from commercial nuclear power.\17\
Reactor waste contains materials with half-lives measured in tens of
thousands, and some in millions of years. More than 12,000 human
generations--are required to reduce the hazard of these materials to
acceptable levels. The most concentrated waste is irradiated fuel from
electric power reactors, and the residual wastes from attempts to
``recycle'' or reprocess the fuel.\18\ Other wastes include the entire
massive reactor structure itself when the facility is shut down.\19\
---------------------------------------------------------------------------
\17\ US Department of Energy, Integrated Spent Fuel Database, 1994.
\18\ See High-Level Nuclear Waste Fact Sheet, 1997, http://
www.nirs.org/factsheets/hlwfcst.htm
\19\ See Low-Level Radioactive Waste Fact Sheet, 1992, http://
www.nirs.org/factsheets/llwfct.htm
---------------------------------------------------------------------------
In addition to radiological pollution, nuclear power also
contributes massive thermal pollution to both our air and water. \20\
It has been estimated that every nuclear reactor daily releases thermal
energy-heat--that is in excess of the heat released by the detonation
of a 15 kiloton nuclear bomb blast.\21\ In addition to horrendous
direct impact of this heat on aquatic ecosystems, nuclear power
contributes significantly to the thermal energy inside Earth's
atmosphere, making it contraindicated at this time of rapid global
warming.
---------------------------------------------------------------------------
\20\ Paul Gunter and Linda Gunter, et al, License to Kill, 2000.
See: www.nirs.org/reactorwatch/licensedtokill/LiscencedtoKill.pdf
\21\ See news report posted at: http://www.closeindianpoint.org/
articles/tjn--071103.htm
---------------------------------------------------------------------------
A fundamental element in finding that nuclear power is a false
solution to climate change is that the economics of nuclear power are
not sound--in open markets nuclear cannot compete.\22\ Since splitting
atoms is not a cost-effective source of electric power, it is even less
cost-effective in preventing greenhouse gas emissions. Life cycle costs
for nuclear power generation (in the USA) have been estimated at 12
cents a kilowatt hour, whereas life cycle costs for wind power in the
same analysis is estimated at 4 cents a kilowatt hour.\23\ Others find
that expanding nuclear generating capacity is about twice as expensive
as expanding generating capacity through investment in wind power.\24\
Since the same money will buy 2-3 times more electric power when used
to purchase wind generated electric power, it is clear that prevention
of greenhouse emissions will also be 2-3 times greater when buying wind
generated electricity.
---------------------------------------------------------------------------
\22\ Amory Lovins, Mighty Mice, Nuclear Engineering International,
December, 2005. http://www.rmi.org/images/other/Energy/E05-15--
MightyMice.pdf There are many other citations given by Lovins in his
recent review article on economics of nuclear power, see note #51.
\23\ Nuclear Economics, Safe Energy Communication Council, 1992.
This figure does not reflect full costs of long term waste disposition,
or any health impacts.
\24\ Lovins, More Profit with Less Carbon, see note #3.
---------------------------------------------------------------------------
Wind energy is the fastest growing form of electric power
generation in the world.\25\ This technology leads the portfolio of
renewable energy options, and solar power is also making enormous
strides with significant annual drops in cost of photovoltaic
hardware.\26\
---------------------------------------------------------------------------
\25\ Jim Moltivalli, Catching the Wind, E Magazine, January 2005.
http://www.emagazine.com/view/?2176
\26\ See http://www.eande.tv/transcripts/?date=092805
---------------------------------------------------------------------------
In the USA, the ongoing waste of electric power makes investment in
energy efficiency\27\ protocols and hardware an even more cost-
effective way to reduce carbon emissions. Amory Lovins\28\ finds that a
combination of assertive efficiency programs combined with
decentralized industrial cogeneration of electric power from waste heat
results in 7 times more reduction of CO2emissions than a
comparable investment in expanding nuclear power. A comprehensive
strategy for the USA--a real remedy for reducing greenhouse gases--is
contained in the ``Sustainable Energy Blueprint: A Plausible Strategy
for Achieving a No-Nuclear, Low-Carbon, Highly Efficient and
Sustainable Energy Future.''\29\
---------------------------------------------------------------------------
\27\ Efficiency and conservation are not the same. Conservation is
the suspension of use--efficiency is wise use. The opportunity to
develop using energy efficient hardware, protocols and strategies is
the opportunity to avoid emissions through wise use and relative
reduction in overall demand.
\28\ See note #3
\29\ Sustainable Energy Blueprint: A Plausible Strategy for
Achieving a No-Nuclear, Low-Carbon, Highly Efficient and Sustainable
Energy Future. See: http://healthandenergy.com/sustainable--energy--
blueprint.htm
---------------------------------------------------------------------------
The finding that nuclear energy is not profitable, that it is not
compatible with public health, and that it releases massive heat
directly contradicting climate goals, calls into question the basis
upon which individuals, governments and corporations are seeking to
invest public funds in nuclear expansion. Inquiring minds will ask if
there is an additional agenda underlying this gambit to ``revive''
nuclear power. Before offering some conjecture about such motives,
there remain several points about why nuclear power is not qualified to
remedy our climate fever.
An extensive 2003 study by the Massachusetts Institute of
Technology\30\ investigated the future of nuclear power, including its
potential to combat climate change. MIT's nuclear boosters project that
expanding nuclear generating capacity worldwide to 1000 billion watts
would be required to address the climate problem to any meaningful
degree. This would roughly mean adding one new reactor every two weeks
until 2050. In the USA, some of the last reactors to be built (Vogtle 1
& 2) cost more than $4 billion each! The industry has recently asserted
that it will be possible to build reactors for $ 2 billion\31\--1/2 the
previous actual figure; this however, is speculative. Even taking the
$2 billion industry ``guestimate,'' it would require trillions of
dollars to implement this supposed ``fix.'' It is plain that a similar
investment in efficiency in the USA and other energy-hog nations, and
investment in wind energy worldwide would be a far more cost-effective
use of capital. One can only imagine the results if a fraction of the
residual funds were invested in technology development in solar,
appropriate hydro, appropriate biomass and other sustainable power
innovations!
---------------------------------------------------------------------------
\30\ J. Deutsch and E. Moniz (co-chairs), The Future of Nuclear
Power, MIT, 2003.
\31\ Seattle Times, April 28, 2006, Nuclear Power's New
Generation. http://seattletimes.nwsource.com/html/nationworld/
2002958091--nuclear28.html
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The economic factors outlined above do not consider the
considerable risk associated with operating facilities that are
effectively pre-deployed nuclear weapons.\32\ In the USA the
prospective costs associated with such risks are effectively relegated
to future victims.\33\
---------------------------------------------------------------------------
\32\ On September 18, 2001 Mohamed El Beredei was quoted in the
world press admitting that if a jumbo jet hit a nuclear reactor it
would result in a Chernobyl level release of radioactivity and that in
fact, no reactor in the world could withstand such a hit. Unfortunately
it does not take an airplane to cause a major reactor accident as has
been portrayed in a number of dramatic presentations including China
Syndrome; Meltdown; 24 (2005) and West Wing. See also Frank von Hippel,
Revisiting Nuclear Power Plant Safety, Science 291:201, 2003.
\33\ The USA relies upon a publicly administered insurance program
for nuclear power (the Price-Anderson Act) that provides a system
whereby all reactor operators pay in the event of any one unit having a
major accident--and a liability cap, beyond which the industry does not
have to pay. It is of interest that while an act of terror would be
covered by the program, acts of war are not. The Bush War on Terror has
neutralized all liability for the industry.
---------------------------------------------------------------------------
The financial analyses, as unfavorable as they are already, assume
that splitting uranium is a bona-fide source of energy. There is the
assumption that one does, in fact, achieve the production of new energy
over and above the investment of energy required to create, fuel, and
run the reactor. An in-depth analysis by Jan Willem Storm van Leeuwen
and Philip Smith\34\ challenges this assumption. These authors find
that operating a nuclear power reactor does not always result in new
power production. When all of the energy used to produce uranium fuel,
build the reactor and decommission it (not including long term waste
disposition) are considered, some of the scenarios show that no new
energy is achieved--in some cases no matter how long the reactor is
run! Outcome of the calculations is directly tied to the quality of the
uranium ore used. Clearly it does not make sense to spend trillions of
dollars on a technology that does not reliably produce the desired
product--energy. Given the steep curve on technology costs associated
with implementing hydrogen as a transportation fuel, using uranium as
the base for producing hydrogen production may simply amplify this
black-hole effect.
---------------------------------------------------------------------------
\34\ Jan Willem Storm van Leeuwen and Philip Smith, Nuclear Power:
the Energy Balance, 2002 (revised and posted in 2005 with updates at:
http://www.stormsmith.nl/ )
---------------------------------------------------------------------------
Storm and Smith show that uranium, similar to oil, is subject to a
``peak'' in the availability of high-grade uranium ores, and that these
premium ores are already being exhausted. ``Peak uranium'' is a driver
in the push to ``close the fuel cycle'' and move to plutonium as the
fuel in atomic reactors. Plutonium may be used either in combination
with uranium--as MOX (mixed oxide) fuel,\35\ or alone in high-
temperature breeder reactors, both of which are vulnerable to diversion
of plutonium for nuclear weapons proliferation. \36\
---------------------------------------------------------------------------
\35\ See Basic Info on MOX Fuel: http://www.nirs.org/factsheets/
basicmoxinfo.htm
\36\ Frank von Hippel, No Hurry to Recycle, May 2006 Mechanical
Engineering.
---------------------------------------------------------------------------
2005 marked a deeply disturbing turn in US nuclear policy toward a
plutonium economy.\37\ The Energy Policy Act of 2005\38\ awarded
billions of dollars in direct tax subsidy, tax credits, guaranteed
loans\39\ and other inducements to spawn a new generation of
(partially) publicly funded commercially owned nuclear power reactors
in the US. Nonetheless a major Wall Street credit analyst, Standard and
Poors\40\ responded to the legislation stating that nuclear power is
still ``a risky business practice'' and suggested that it would require
``progress'' in traditional problem areas, such as long-term nuclear
waste disposition for Wall Street to jump into new reactor investments.
High-level nuclear waste is currently stored on corporate reactor
sites.
---------------------------------------------------------------------------
\37\ Margaret Meade and Rene Dubos, The Plutonium Economy: A
Statement of Concern, 1974 for the US Council of Churches, resulted in
a 1976 resolution calling for a moratorium on plutonium fuel use.
\38\ Energy Policy Act of 2005--Conference Report--http://
energy.senate.gov/public/--files/ConferenceReport0.pdf
\39\ Mary Olson, Nuclear Power: The Next Degeneration, 2005.
\40\ See: http://www.mineweb.net/sections/energy/783025.htm
---------------------------------------------------------------------------
For the past two decades the nuclear waste program in the US has
been based on the goal of deep geologic burial. Reprocessing was tried
(and abandoned) 40 years ago-- to disastrous environmental and economic
consequences in West Valley, New York.\41\ The industry found
reprocessing to be unprofitable, and US Presidents Ford and Carter
banned it thanks to the demonstration by India that this technology
results in the separation of nuclear weapons-usable plutonium-239 from
the waste.\42\
---------------------------------------------------------------------------
\41\ Kevin Kamps, Radioactive Wreck, The Nuclear Monitor, 2006.
See: http://www.nirs.org/mononline/nm643.pdf
\42\ Plutonium does not occur on Earth except in trace residues,
where it is produced in tonnage quantities inside all nuclear reactors
that use uranium fuel. In the USA irradiated reactor fuel contains
about 1% plutonium.
---------------------------------------------------------------------------
In November 2005 Congress reversed US policy on reprocessing --in
part driven by the technical failure of the Yucca Mountain repository
program,\43\ and perhaps in part by a desire on the part of the French
nuclear interests (AREVA, Cogema, Framatome) to access the US tax base.
The French have been leaders in nuclear fuel reprocessing and yet their
plutonium MOX fuel business has run dry--lacking international
customers.\44\ In any case, this reversal of decades of US commitment
to a ``once through'' fuel program is deeply disturbing. Aside from
global security issues, plutonium generates even more heat for our
planet to absorb,\45\ has even worse emissions, and in the event of ``a
Chernobyl'' would be twice as deadly.\46\
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\43\ See note 41.
\44\ Cogema is a partner in the US MOX fuel program, ostensibly for
the ``disposition'' of weapons grade plutonium in partnership with
Russia. AREVA is a full partner in the new Bush/Cheney Global Nuclear
Energy Partnership.
\45\ See: MOX at a Nuclear Power Reactor Near You, http://
www.nirs.org/factsheets/moxandreactor.htm
\46\ Dr. Edwin Lyman--Public Health Consequences of Substituting
Mixed-Oxide Fuel For Uranium Fuel in Light Water Reactors, 1999.
Nuclear Control Institute--http://www.nci.org/k-m/moxsum.htm
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Finally, as a crowning point-- nuclear power is not qualified to
operate in extreme weather. As cited above, nuclear reactors--all of
them--depend on energy from the grid to operate. Since the core of a
reactor continues to generate heat for years, even ``off-line,'' it is
vital that emergency cooling equipment be operable around the clock. As
is sensible, every reactor site is equipped with back-up power, most
often in the form of diesel generators. Unfortunately these generators,
in part because of intermittent use, are not terribly reliable.\47\
When both the grid and the back-up power fail, the site is said to be
in ``station blackout.'' According to the US Nuclear Regulatory
Commission, station blackout contributes a full one-half of the total
risk of a major reactor accident at US nuclear power stations.\48\
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\47\ Summary of findings given in: http://www.nirs.org/
reactorwatch/mox/nirsmcguirecatawbacontentions.htm
\48\ U.S. Nuclear Regulatory Commission, ``Severe Accident Risks:
An Assessment for Five U.S. Nuclear Power Plants,'' NUREG-1150, 1990.
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Recent years have seen an escalation in all kinds of extreme
weather: intense heat, drought, blizzards, tornados, and perhaps most
compelling--hurricanes and cyclones. All of these conditions may
contribute to electric grid failures. The loss of grid power will not
necessarily trigger a nuclear crisis, but there is an elevated risk.
Overall blackout risk increases as the number of outages increases.
Nuclear energy is an enormous liability in these turbulent times.
Nuclear power is also incapable of operating in hot water, as
evidenced by the heat waves of 2004. A number of nuclear reactors in
France were not operable.\49\ The reactors were at low power not
because of nuclear safety issues--but rather because of the basic
design of a nuclear reactor. Essentially an expensive, dangerous ``tea
pot,'' a nuclear power reactor harvests the heat from splitting atoms
to make steam, to turn a turbine. The closed loop system relies on the
heat differential between the temperature of the steam, and the
temperature of a condenser, to turn the steam back into liquid to
repeat the process. When the water used to cool the condenser gets too
warm this differential is lost. The steam no longer condenses back to
liquid. When river and lake water gets too hot, electric power cannot
be generated.\50\ As temperatures rise, nuclear power will be less and
less qualified as a means to even try to generate electric power.
---------------------------------------------------------------------------
\49\ French reactors off line 2004
\50\ David Lochbaum, Union of Concerned Scientists
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Now some conjecture about why anyone would campaign for the
``revival'' of an unprofitable, unreliable, dangerous, even fraudulent
technology like nuclear ``power.'' In a nutshell: to retain centralized
control of the supply of energy, as well as control over the timing of
the availability of any ``alternative.''
Fossil fuels--and uranium--are traditionally centralized energy
production models. Efficiency is the ultimate in ``decentralization''
since the factors that will optimize efficiency are unique to each
operation. Wind, solar and other renewable resources can be
centralized, however the inherent value of distributed generation has
become clear in helping to increase overall efficiency of power usage
and minimization of power loss throughout the distribution system.
Distributed generation is also recognized as means to increase grid
stability.\51\ Given the urgency of the climate challenge we face, it
is vital to note that energy efficiency, wind, appropriate hydro,
biomass and solar are all viable, and available at industrial scale
NOW.\52\ However for those holding the reins on fossil fuels--
particularly oil--there is a distinct (and highly profitable) advantage
to forestalling the implementation of any alternative until the full
impact of the oil ``peak'' and resulting energy shortages are
experienced.\53\ While oil is primarily tied to transport, it is
important to note that the Bush administration projects the use of
nuclear power reactors to make hydrogen for use in vehicles.\54\ Since
wind makes more electricity per dollar invested, it is also cost-
effective at generating hydrogen than nuclear. Electric cars charged on
the grid would vastly increase the demand for electric power--far
exceeding traditional electric energy guzzlers like hot water heaters.
---------------------------------------------------------------------------
\51\ See article by Amory Lovins cited in note # 9
\52\ Renewables are Ready-- a guide to teaching about renewable
energy, published by Union of Concerned Scientists.
\53\ It should be noted that not all subscribe to the necessity or
value of experiencing peak oil--see Amory B. Lovins: Winning the Oil
Endgame, 2004. Cosponsored by the US Pentagon.
\54\ Cindy Folkers: Hydrogen Production By Nuclear Power, 2003. See
www.nirs.org/
---------------------------------------------------------------------------
Those who promote nuclear expansion are simultaneously promoting a
deeper agenda to dominate civil society with a model of central
control. Given the security issues associated with nuclear power, (even
more so with the use of plutonium fuel) this control may exceed
compatibility with democracy. Yet one more reason to oppose this false
solution.\55\
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\55\ See also, NIRS/WISE, Nuclear Power: No Solution to Climate
Change, published in the Nuclear Monitor, February, 2005 posted at:
http://www.nirs.org/mononline/nukesclimatechangereport.pdf
---------------------------------------------------------------------------
Attachment 3.--Fact Sheet
uranium mining and nuclear pollution in the upper midwest
1. Uranium mining in South Dakota, Wyoming, Montana, and North
Dakota began in the middle of the 1960s. World War II, which ended with
the nuclear bomb, introduced the use of nuclear energy for the
production of electricity and caused the price of uranium to rise. As
the economy of the Midwestern states depends primarily on agriculture,
when uranium was discovered in the region, many get-rich-quick schemes
were adopted. Not only were large mining companies chopping off the
tops of bluffs and buttes, but small individual ranchers were also
digging in their pastures for the radioactive metal. Mining occurred on
both public and private land, although the Great Sioux Nation still
maintains a claim to the area through the Fort Laramie Treaties of 1851
and 1868.
2. In northwestern South Dakota, for example, the Cave Hills area
is managed by the US Forest Service. The area currently contains 89
abandoned open-pit uranium mines. Studies show that one mine alone has
1400 mR/hr of exposed radiation, a level of radiation that is 120,000
times higher than normal background of 100 mR/yr. There are no warning
signs posted for the general public anywhere near this site! It is
estimated that more than 1,000 open-pit uranium mines and prospects can
be found in the four state region from a map developed by the US Forest
Service.
3. The following agencies are aware of these abandoned uranium
mines and prospects: US Forest Service, US Environmental Protection
Agency, US Bureau of Land Management, SD Department of Environment and
Natural Resources, the Bureau of Indian Affairs and the US Indian
Health Service. Only after public concern about these mines was raised
did the USFS and the EPA pay for a study of one mine this year, 2006.
No studies have been completed on the health effects to humans or the
environment.
4. The water runoff from the Cave Hills abandoned uranium mines
empties into the Grand River which flows through the Standing Rock
Indian Reservation. Three villages are located on the Grand River and
their residents have used the water for drinking and other domestic
purposes for generations. One village still uses the water for drinking
and domestic purposes. The water runoff from the Slim Buttes abandoned
uranium mines empty into the Morreau River which flows through the
Cheyenne River Indian Reservation. Four villages are located on the
Morreau River; however, no data is currently available about their use
of the Morreau River water. Both of these rivers empty into the
Missouri River which empties into the Mississippi River.
5. In 1972, President Richard Nixon signed a secret Executive Order
declaring this four State region to be a ``National Sacrifice Area for
the mining and production of uranium and nuclear energy.''
6. In southwestern South Dakota, the southern Black Hills also
contain many abandoned uranium mines. Nuclear radiation near Edgemont,
SD, has already polluted the underground water of the Pine Ridge Indian
Reservation according to a study completed in 1980 by Women of All Red
Nations. The US Air Force also used small nuclear power plants in their
remote radar stations and intercontinental ballistic missile silos
which also number in the hundreds in this four State region.
7. In Wyoming, hundreds of abandoned open-pit uranium mines and
prospects can be found in or near the coal in the Powder River Basin.
Yet plans are being made to ship more of that coal to power plants in
the Eastern part of the United States. Radioactive dust and particles
will be released into the air at the power plants. Federal tax dollars
totaling more than $2.3 billion dollars as a loan are planned to be
given to a private business, the Dakota, Minnesota and Eastern
Railroad, to increase the amount of coal hauled to the power plants.
8. More than 7,000 exploratory wells have been drilled in South
Dakota and Wyoming surrounding the Black Hills which contain many
sacred places and burial sites. In this process many of these sacred
sites have been destroyed. The wells are 500-800 feet in depth and have
already introduced uranium into the underground aquifers. Now, new
mining companies are trying to avoid South Dakota's slow legislative
process to monitor ``In Situ Leach Mining'' by seeking permits before
the regulations are complete.
Attachment 4.--Article From Mother Jones Magazine, June 7, 2006
By April Dembosky
on the cultural impacts of mining
NEWS: At Alaska's proposed Pebble Mine site, the focus is on
environmental and economic outcomes. But what about the Native culture
and community?
http://www.motherjones.com/news/featurex/2006/06/mining.html
Jobs, jobs, jobs. When mining projects attract criticism from
environmental activists, their most reliable defense has always been
the thousands of jobs the company will provide to an otherwise
economically depressed community. In the battle over the proposed
Pebble gold/copper mine in the Lake Iliamna region of Southwest Alaska,
the debate is no different. Northern Dynasty, the Canadian company
developing the site, is boasting 2,000 jobs during the initial
construction phase and 1,000 permanent jobs for at least 30 years after
that. The promise of an economic boom is very appealing to the locals,
who have watched their traditional fishing economy suffer from falling
salmon prices and rising fuel costs. But numerous locals and advocacy
groups have complained that the potential environmental damage far
outweighs any promises of prosperity: toxic mining chemicals, they say,
might seep into sensitive salmon spawning streams; transport roads will
cut through pristine Alaskan wilderness; noise of heavy machinery and
vehicles will disrupt caribou and moose migration.
But it's not just the land and animals that are under threat.
For the Native Alaskan tribes that depend on these natural
resources for food, their very livelihood is at stake. Throughout the
world, indigenous peoples in particular have seen their centuries-old
traditions razed by the introduction of industrial-scale business. From
Peru to Ghana to Nevada, mining projects have left native tribes
plagued by contaminated waterways and forests, health problems,
upsurges in violence, destruction of local traditions, and community
infighting.
There is little reason for southwest Alaskans to think things will
be any different for them. Herman Nelson, a tribal leader in Koliganek,
downstream from the proposed Pebble site, echoes the concerns of
surrounding tribes. ``Jobs don't impress me very much. The mine is
going to deplete the resources,'' he says. ``It's going to change the
feel of the community, the way we live.''
The Pebble Mine is ``a textbook example,'' says Alaskans for
Responsible Mining advocate Scott Brennan, who has worked closely with
Native tribes battling mines throughout the U.S. ``When this scale of
development comes in, first you lose wild food sources. Next you begin
to lose your relationship with the land. Then your home territory is
flooded with thousands of people from somewhere else. The end result is
erosion and degradation of native culture.''
More than half the world's mines are built on indigenous lands.
Some problems are particular to the geography of the land and the
particular traditions of the tribes, but there are several broad trends
that unite them.
``At first, people only see dollar signs,'' says Dean Stiffarm,
environmental liaison for the Fort Belknap tribe in Montana. But
promises of jobs, cheaper electricity, and reduced property taxes
proved empty for the Montana Fort Belknap tribe. Despite guarantees of
job priority, tribal members were routinely passed over for highly
technical jobs. Then when the mining company declared bankruptcy after
20 years of operation, the natives were left to pay for the upgraded
electricity system and the environmental clean-up.
Negative health impacts are a more subtle outcome. At the Laguna
reservation in New Mexico, 60 miles west of Albuquerque, naturally
growing plants that were a common part of the native diet and medicinal
tradition were destroyed by construction and radioactive dust pollution
from a nearby uranium mine. Supermarkets and a Western medical clinic
took their place. People weren't used to manufactured medicines, which
made some sick and often didn't work. Store-bought high-cholesterol
foods led to rapid increases in heart disease and diabetes. Air and
water pollutants dramatically increased rates of childhood asthma and
kidney infections.
Around Iliamna Lake, locals believe the wild fish and game, rich in
omega 3 oils, keeps them healthy and youthful. If there is an accident
that harms wildlife habitats--chemicals leaching into groundwater, acid
runoff--or, so health aide workers believe, if people get accustomed to
the convenience of store-bought foods, high cholesterol and diabetes
rates will go up. Cecilia Suskuk, an aide at the Iguigig clinic says
that already among local people ``there's more high cholesterol,
because they're incorporating more processed meats into their diet.''
In several communities, the fear alone that resources have been
contaminated stops locals from consuming local water supplies, plants,
or animal stocks. Instead, they rely on less healthy packaged foods and
their kids lose interest in traditional hunting and cooking.
There are other social impacts, like those observed in Wayne
Garcia's native community in New Mexico. When the Anaconda Company
built the Jackpile uranium mine next to the Laguna reservation, there
came a flood of alcohol and methamphetamine with the thousands of new
workers. Garcia, who is the Chairman of the Yerington Paiute Tribe, has
visited the communities around Alaska's Pebble site to share his
experiences. He believes rates of drug abuse and alcoholism among
Natives at Laguna went up over the 30 years the mine was in operation,
which in turn led to increases in domestic violence, child abuse, and
child neglect. ``It was the ripple effect,'' Garcia says.
Manuel Pino, a member of the Acoma Nation, neighboring Laguna,
believes the drinking problems and other changes were due to the shifts
in lifestyle. ``We went from being agriculturalists and livestock
raisers to wage earners,'' he testified at the World Uranium Hearings
in 1992. ``People prioritized their eight-hour-a-day-job over
participating in the ceremonies. Our Elders cry today that the
generation below us cannot speak our language.''
Bonnie Gestring, an advocate in the Northwest office of the
environmental group Earthworks, points out that the rise in violence
puts added strain on small rural public health care and law enforcement
systems. ``It takes a while for services to come up to speed with
increased demand,'' she says. Theoretically, Iliamna Lake residents
could prepare in advance for the changes. But with so much attention
focused on potential environmental hazards and job creation, health
needs are low on the priority list. Northern Dynasty won't complete its
cultural impact study until well after the project is fully developed,
several more years down the road. For now, and when the mining project
ends after 30 to 50 years, it is the communities themselves that are
left to cover the expanded services and public health costs on their
own.
No amount of preparation can account for what Wayne Garcia called
the worst effect of mining in his community: fighting within the tribe.
``We were always taught that family is unity and we have to depend on
each other for support.'' But when money and material possessions took
over as symbols of status and power, an ethic of competition began to
dominate. ``These outside influences come in and you've got jealousy
and greed that erode the family value. Soon you see family against
family.''
Northern Dynasty's COO Bruce Jenkins insists such problems will be
mitigated by company policies. To keep the number of outsiders limited,
for example, hiring preference will go first to local Alaskans, so
long, he adds, as they are ``interested, willing, and able.''
But who exactly are all these local workers who will fill the 1,000
to 2,000 jobs? In the entire Lake and Peninsula Borough, which includes
14 towns spread across 24,000 square miles, the population is just over
1,600. More than 43 percent of the population is under 18 or over 65
years of age; three quarters are Alaskan Native. Even if all those
eligible for a job at the mine take one, the communities around Iliamna
Lake can expect a mass influx of outsiders--enough to more than double
the current population--and all the problems they bring.
Jenkins swears these things won't happen at Pebble. Workers who are
flown in from outside the area or state will be housed in dorms
secluded from pathways frequented by locals, he vows. There will be
zero contact with natives. Alcohol and drugs will be strictly
prohibited, as will fishing and hunting.
``This is still America,'' counters Brian Kraft, coordinator for
the Bristol Bay Alliance, a coalition opposing development of the
Pebble Mine. Employees work in shifts, two weeks on and then two weeks
off. When they're off the clock, Kraft argues, ``they can do whatever
they want''--and that includes taking recreational substances or
fishing and hunting the stocks that locals depend on for food. With a
new road, lake harbor, and port, and cheaper air fares expected to make
travel in and out of the region easier for employees-- and tourists--
the company's rules and promises can go unbroken for only so long.
Still, the allure of a steady income is attractive to many locals.
``I love my people, but I got to tell you something, it is a struggle
to live,'' says Myrtle Anelon of Iliamna. ``You cannot pay your
electric bill, you cannot pay your fuel bill unless you have money.''
She is hesitant to dismiss the Pebble proposal so early in the
development stages. ``If we don't give them a chance, we won't have
nothing.''
Greg Anelon of Newhalen, the administrator of the Iliamna Lake
regional clinic, testified at a Borough hearing that the area villages
desperately needed a new ambulance, fire trucks, and EMS system. A tax
on the Pebble mine could be ``a tool to finance [these] needs.'' To
date, six tribal councils out of more than a dozen have voted in favor
of the mine; several others are waiting for updated mine development
plans before casting judgment for or against.
Dean Stiffarm cautions against such optimism. ``In the beginning,
we didn't see the whole picture, what the mine was going to do to our
environment, our way of life.'' Now, when he meets with tribal
representatives from Alaska who are grappling with how to reconcile
their traditions with a bleak economic outlook, he says, ``I try to get
them to look at the long term impact.''
April Dembosky, a former Mother Jones editorial fellow, is a
freelance writer in San Francisco.