Skip banner
HomeHow Do I?Site MapHelp
Return To Search FormFOCUS
Search Terms: millsite, House or Senate or Joint

Document ListExpanded ListKWICFULL format currently displayed

Previous Document Document 8 of 8.

More Like This
Copyright 1999 Federal Document Clearing House, Inc.  
Federal Document Clearing House Congressional Testimony

June 15, 1999


LENGTH: 8147 words


Statement of Mineral Policy Center Presented by Stephen D'Esposito President, Chief Executive Officer Mineral Policy Center To the Subcommittee on Forests and Public Land Management of the Committee on Energy and Natural Resources Regarding Recent decision by the Departments of Interior and Agriculture to enforce legal limits on mine waste dumping on public lands. Chairman Craig, members of the Subcommittee: Good afternoon. My name is Stephen D' Esposito-I am president of Mineral Policy Center. Thank you for inviting Mineral Policy Center to testify before this subcommittee on the recent decision by the Departments of Interior and Agriculture to enforce legal limits on mine waste dumping on public lands. Background on Mineral Policy Center Mineral Policy Center (MPC) is an environmental organization dedicated to protecting the environment and communities from the adverse impacts of mineral development, and cleaning up pollution from past mining. Our national office, based in Washington D.C., provides support to citizens across the country and around the world. Our field offices in Colorado and Montana assist communities throughout the western United States concerned about the impact of mineral development in their backyards. WC is a non- profit organization with more than 3,000 members. Hundreds of community groups and organizations support our efforts to reform the 1872 Mining Law, improve public policy and industry practices related to mining, and protect our public lands from irresponsible hardrock mining. MPC believes that responsible mining can and does occur on our public lands. As an organization that took a strong position that the emergency appropriations bill, which provided relief funding for Kosovo and victims of Hurricane Mitch, was no place for a rider on this important environmental issue, we welcome the opportunity to come before this subcommittee. As we stated in our March II, 1999, letter to Senator Gorton, "we can all agree, we think, that this issue should be resolved in an open debate about the whole Mining Law-not via a rider that would expand the Mining Law for the first time in 127 years. " MPC s Position on Mining, Mines, and the 1872 Mining Law Mineral Policy Center supports responsible mining policies and practices. Responsible mining policies would recognize that on certain-public lands there are resources, and potential uses, more valuable than mining- that environmentally significant parcels of our public lands should be protected from mineral development; and that mining companies should meet the highest environmental protection standards. Responsible mining policies would also give taxpayers a fair return for valuable land and mineral assets, and eliminate government subsidies to mine on public lands. Mineral Policy Center recognizes that there are mining companies that seek to operate in a manner that protects the environment and other natural resources and restores the land after mining. We believe that a substantial sector of the industry is legitimately struggling with issues of environmental protection and environmental and social sustainability. Listen to the words of the President of Placer Dome, John Wilson, in a speech to the Pacific Basin Economic Council on May 20th 1997: "We in Placer Dome have concluded that if a mine cannot afford the full cost of state-of-the-art systems, then it should not be developed There is no trade-off. No mine developer has the right to impose on an ecosystem damage from acid rock drainage just for the sake of economic activity, returns to investors, jobs and other benefits... The key message here is that there is no room for compromise in environmental protection. Part of MPC's job is to expose situations where the industry has compromised environmental protection, and create pressure for better mining practices and policies. But we also recognize the mining industry for what it is doing right and what it is trying to do right. In 1989, Mineral Policy Center applauded Homestake's McLaughlin Mine for its reclamation plan. At the Viceroy Gold Corporation's Castle Mountain mine in California's Mojave Desert, the company instituted a plan to conserve water, a precious resource in the desert.' In MPC's 1997 publication, Golden Streants, Poisoned Streann, we dedicate an entire chapter to responsible mining practices. The industry has developed mining technology and techniques that can mitigate and prevent significant environmental impacts. These should be put to use, industry-wide. Over the years, mining companies have sought the expertise and advice of MPC. After the Ok Tedi tailings spill at the BHP mine in Papua New Guinea, MPC visited the mine site, at the invitation of the company. While recent company reports unfortunately reveal that the company has been unable to adequately remediate the impacts of the spill, we believe that its in the interest of all involved to conduct a thorough evaluation so that lessons are learned and the same mistakes are not repeated at other mines. MPC has been invited by Placer Dome to critique and evaluate their new sustainability policy and performance. We have accepted the invitation because we believe that Placer Dome's policy is an important undertaking. Are we still critical of some of Placer Dome's actions and operations? Yes. Do we think that Placer Dome's policy will lead to on-the-ground results? We are not yet sure. But we think Placer Dome is engaged in a critically important undertaking, one that deserves our attention and will hopefully benefit from our input. Placer Dome is now using its environmental and social sustainability policy to market itself as the world's gold leader. And recently, Freeport McMoRan approached MPC for comments and recommendations regarding an upcoming audit of its operations in Indonesia. Mining companies that operate responsible mine sites will not get the credit they deserve because public perception will be defined, to a great extent, by the worst industry actor-the one that has mishandled the spill, walked-away from the cleanup, showed disregard for community impacts, or polluted local streams and aquifers. The 1872 Mining Law, and lax environmental mining polices, actually contribute to this problem because there are few incentives for responsible and efficient operations and it promotes mining over all other land uses, irrespective of the merits of those other uses. For every McLaughlin mine there is a Summitville or a Zortinan-Landusky and stories of taxpayer funded cleanups in the tens or hundreds of millions of dollars. Guess which stories get the headlines? The 1872 Mining Law sends the wrong signals to mining companies. It does not reward responsible behavior and it fails to penalize those with poor performance records. It is a haven for bad actors. Yet, some in the industry will continue to make the claim that new environmental reforms, or even today's environmental requirements, will destroy the industry. Perhaps it is because they believe their companies are poorly poised to operate in an environment that mandates and rewards environmental performance. While there are technical and engineering solutions to many environmental problems, technical solutions will not be enough to fully address the broader environmental, economic, social, and cultural issues that this subcommittee, and all members of Congress, must grapple with. Reforming the Mining Law is not, after all, a matter of a technical fix. It is one thing to design a safe and efficient mine, it is quite another to design public policy that results in good decisions about the use of public land and resources. Good public policy must provide a basis for weighing environmental, social, economic, and cultural issues, as well as technical issues. For example, in some instances even the best designed, operated and potentially reclaimed mine should not be built because it is planned for a location that should be protected. For mining law reform to be a success this subcommittee must grapple with these underlying issues. To the extent that WC has a spotlight we will continue to shine it on what the industry is doing wrong and we will also highlight what the industry is doing right. Perhaps most importantly, we will also shine it on places that expose the shortfalls of the 1872 Mining Law, including valuable parcels of public lands, such as the Okanogan Highlands in eastern Washington. The remainder of this testimony is presented in three parts: 1) an analysis of the shortcoming of the 1872 Mining Law and a description of necessary reforms, 2) WC's analysis of the recent decision to limit mine waste dumping by enforcing millsite limits, and 3) recommended actions. The Mining Law is Obsolete: It's Time For Mining Law Reform The 1872 Mining Law fails to offer adequate protection for our public lands, for the environment, or for the taxpayer-and it no longer works for the mining industry. Today, the prospector's pan has given way to giant earth-moving machines that literally crumble mountains and dig pits the size of small towns. Recovery of gold nuggets by hand has been replaced by the use of potentially lethal chemicals such as cyanide that leach microscopic flecks of gold from massive piles of pulverized rock. Today's prospectors are multi-national corporations and their mine sites occupy hundreds of acres of our public land. Of course, those who crafted the Mining Law in 1872 could not have envisioned the potential environmental impacts of modem mining. The law is a relic of an era when the federal government's policy was to encourage settlement and development of the western United States, and when the environmental protection of public lands was not a national objective. The law was crafted over 127 years ago to address the issues raised by a rush of small-scale pick-and-shovel prospectors onto Western public lands. It was written to encourage mineral development on public lands, to define how miners would gain access to land, and how they would protect their claims from other miners. The modem mining industry has outgrown the entire 1872 Mining Law. The Federal Government owns over 662 million acres of public lands, 29 % of the land in the country, most of it located in the western United States.' That land is to be held in trust for all Americans. The land includes our national parks, wilderness areas, scenic rivers, and national forests. Some of these valuable lands are protected from mineral development, but on most of these lands, multinational mining companies get virtually free access, taxpayer subsidies, and are permitted to operate massive mines with devastating environmental impacts. The legacy of this outdated law is all to clear-there are now more than 500,000 abandoned mines scattered across every region of the country.' The abandoned mine problem should serve as a wake-up call. So should the Summitville mine disaster in Colorado, and the problems that are unfolding as we speak at the Zortman-Landusky mine in Montana. Mining has polluted 12,000 miles of rivers and streams and 180,000 acres of lakes.' Cleanup costs could be as high as $72 billion. Public land is given away to mining companies for as little as $2.50 or $5.00 an acre, with little return to the taxpayer. And, on most public land, mining trumps all other potential land uses. The cost of inaction is multi-billion dollar taxpayer giveaways to mining companies in the form of the transfer of valuable public lands and minerals. To date, MPC estimates that over $240 billion dollars worth of publicly owned minerals have been transferred to mining companies. Because there is no royalty for mining on public lands, taxpayers lose at least $200 million in income to mining companies annually. The Economic Case For Mining Law Reform Some will argue that now is not the time to reform the Mining Law because mining companies are already suffering as a result of today's low minerals prices. But minerals prices have, and always will, fluctuate. It is in the public's interest to take action that will stimulate other commercial and non-commercial uses of our public lands, including preservation. And it is in our interest of the American people to pursue environmental objectives that will lead to job creation in mining communities or former mining communities, such as abandoned mine cleanup. Although mining will continue to be an important element of national and local economies, there are clearly economic, environmental, and social benefits derived from other industries and other uses of our public lands, some of which outweigh the benefits of mining. The time is now for this Congress to address the in adequacies of current U.S. policies. As Dr. Thomas Michael Power of the University of Montana points out: "There is nothing in economic theory or empirical economic experience to suggest that commercial economic value is always greater than noncommercial economic value. In fact, that often will not be the case. . . " A mining industry that is rewarded for its environmental performance, and penalized for its environmental mistakes, will be a healthier industry, both in the United States and around the world. It is in the interest of this subcommittee to create incentives for better environmental performance on our public lands. Improved environmental performance will increase the competitiveness, marketability, and performance of U.S. mining companies. More and more experts are concluding that our environmental and economic health, and our security, will improve if we use our valuable raw materials more wisely. We should use fewer resources, use them more efficiently, generate less waste, and re- use more. Policies that benefit extraction should be revised so that we reward, rather than penalize, re-use and recycling. It is in our national interest to broaden our definition of the mining industry to include not just those companies that extract metals, but those that recycle. There is no justification, economic or otherwise, for policies that provide public subsidies to mining companies, creating an incentive for inefficient mine operations on public lands, perhaps in places that are best used for other purposes. These subsidies lead to an unfair economic advantage for some companies and may result in inefficiencies and over-supply. As a matter of economics and environmental protection, and in order to build stronger local economies, we should begin today to address the massive cleanup liability that exists on our public, state and private lands. We should begin a national cleanup program for the hundreds of thousands of abandoned mines. We believe good environmental policy also makes good economic policy- profitable mining and environmental protection are compatible, Today, as a result of the 1872 Mining Law, we actually subsidize inefficient and wasteful mining on our public lands both through direct taxpayer subsidies and as a result of the lack of environmental safeguards. It's time to put an end to the subsidies and favors that mining companies receive on public lands. The net results of 1872 Mining Law reform will be healthier communities and healthier ecosystems, jobs creation, and, we believe, a healthier mining industry.' Members of this subcommittee, responsible for protecting our public land heritage, and concerned about our overall economic health, should consider some fundamental questions about current public lands policy related to mining. Why have we singled out mining companies, operating on public lands, for what amounts to multi- billion dollar corporate welfare payments, especially when we are struggling with issues such as how to save Social Security and Medicare? Consider these excerpts from the testimony of Dr. W. Thomas Goerold, a noted minerals economist to the Senate Energy and Natural Resources Committee, Subcommittee on Mineral Resource Development and Production, on September 13, 1990: "Current domestic hardrock mineral producers sometimes claim that paying for federal minerals would be so burdensome that it would force a significant portion of them out of business. A cursory examination of the evidence does not support these claims. Producers- ofleasablemineralsfoundonfederallandshavepaidroyaltiesand land rentals since 1920 and no one questions the health of these industries. Moreover, miners of hardrock minerals have a long history of routinely paying royalties and rental payments when these same minerals are found on state or private lands. " "Hard-rock mineral miners maintain that there is still ajundamental difference between hardrock minerals production and other businesses, as well as between hardrock minerals firms and other mineral producers that pay land rental and royalty fees to the Federal Government for use of publicly owned resources. Contrary to industry claims, these purported distinctions do not justify the privileged treatment accorded producers of hardrock minerals. 7he Office of Technology Assessment supports this view. The OTA believes that the distinctions between leasable (generally energy and chemical minerals requiring government permission and payment of lease and royalty fees) and locatable minerals are more artificial than real. " Do hardrock miners on federal lands have more importance than automobile manufacturers, retail store owners, or any other business not eligible for similar government subsidies? Are hardrock miner producing minerals from federal lands more important than these same producers mining state or private lands? One argument advanced by mining interests against the imposition of royalties for federal hardrock minerals is that the Federal Government already taxes the profits of these companies. 7his is a misleading argument-most non-mineral businesses do not obtain the inputs to their firms from the federal government at no cost, yet virtually all pay a federal income tax. Royalty and rental free mineral operations are analogous to a gift of steel and rubber to automobile manufacturers, or free office rental to an accounting firm, courtesy of the U.S. Government.' Mining companies pay royalty rates for hardrock minerals produced from state lands that typically range from 6.25 to 15 percent gross or net profit on gold production. There are also federal land parcels in Minnesota, Missouri and Illinois where miners pay royalties for extraction of hardrock minerals. And even on federal lands, mining companies pay royalties to other mining companies, but not to the taxpayer." In October 1993, Newmont Mining Corporation leased 1872 Mining Law claims on BLM Land at Grassy Mountain in Oregon from the Atlas Corporation. Newmont paid a $22.5 million cash bonus and a 5 percent net smelter royalty on production. The net impact of this policy is to make mining more attractive on federal land than on other lands. "The Federal government by forgiving this normal mineral business cost has distorted the distribution of economic activity, discouraging mining on private, state, and tribal land and encouraging it on Federal land."" Continuation of this policy is not in the country's economic interest. What is Comprehensive Environmental Reform of the Mining Law? Environmental reform of the 1872 Mining Law should include an end to land giveaways (called patenting), a fair royalty for mining on public lands, protection of important public lands from mining, strong environmental safeguards, and a national abandoned mine cleanup program. End the Giveaways-Taxpayers Deserve A Fair Financial Return The system of patenting valuable public land at $2.50 or $5.00 per acre should be abolished. Patenting is not necessary to mine on public lands. These prices were bargains in 1872 when the government was seeking to settle the West, today they are beyond belief. k royalty for mining on public lands should be set at between 8% and 12.5% based upon a "gross production" or true "net smelter" return. The royalty should be fixed at an amount that constitutes a fair return to the public and generates sufficient revenue to begin cleaning up the 557,000 abandoned mines across the United States. Some Lands Should be Protected From Mining, Give Land Managers Discretion - Land managers should have the authority and discretion to protect environmentally significant public lands, weigh other land uses, and deny permits for poorly planned mines. A mining permit application must clearly demonstrate, before mining begins, how the mining and reclamation project will occur so as to minimize environmental impacts. Land managers must have the authority to deny mining permits in environmentally fragile areas, or critical wildlife habitats and areas otherwise found to be unsuitable for mining. Enact Environmental Safeguards- Environmental safeguards must protect water resources and prevent significant long-term environmental damage. These environmental safeguards should include provisions for water protection, full cleanup and reclamation, environmental operating standards, enforcement requirements, and guarantees that the mining company will pay for full closure and cleanup. Public Participation- The public must have the right to fully participate in mine decisions on public lands. This includes access to information, the right to comment on permit and regulatory actions, the right to petition the government to designate an area unsuitable for mining, the right to file citizen complaints, the right to accompany an inspector to a site, and citizen suit provisions to compel enforcement. Abandoned Mine Cleanup- A program to clean up the hundreds of thousands of unreclaimed and abandoned mine sites must be instituted. Such a program should be funded by a mineral royalty, rental fees, and through other sources such as a reclamation fee. Misleading Mining Law Reform Over the years, a number of bills have been introduced in the Senate under the reform label that are actually not true reform bills because they fail to adequately address the fundamental environmental and fiscal shortcomings of the Mining Law. These bills typically contain miniscule royalties and wide loopholes for escaping royalty payment, fail to address important environmental protection issues, and do not allow land managers to weigh other uses of public lands. A telltale signs of a sham reform bill is the use of a "net proceeds" royalty. The "net proceeds" royalty allows companies to deduct so many costs before paying a royalty that the taxpayer ends up with almost nothing. Why Do Environmental Organizations Representing Millions of Members Support the Millsite Decision To Limit Mine Waste Dumping on Public Lands? MPC believes the millsite ruling, effectively enforcing limits on mine waste, is based upon an accurate interpretation of this provision of the 1872 Mining Law. It is widely accepted that the Mining Law's millsite restriction does not meet the needs of many of today's mining operations, but neither does this antiquated law meet the needs of taxpayers, communities near many of today's mines, or the environmental health of our public lands. The massive waste piles produced at many of today's mines have outgrown the Mining Law. In a March 23, 1999, letter to Secretary of the Interior Bruce Babbitt and Forest Service Chief Michael Dombeck, Mineral Policy Center, Friends of the Earth, Natural Resources Defense Council, Sierra Club, The Wilderness Society, U.S. Public Interest Research Group, Okanogan Highlands Alliance, Western Organization of Resource Councils, and Grassroots Environmental Effectiveness Network (GREEN) petitioned the government to reject the Plan of Operations for the Crown Jewel Mine because it was over the millsite claims limit. To quote from the letter: In this case, the federal land agencies must determine whether to approve a mining plan that is proposed on public lands that do not contain valid mining and millsite claims under the 18 72 Mining Law. Anumberofotherproposedopenpitgoldminesonfederallandfacesimilariss ues. 1he most pressing examples include the Imperial Project in southern California and the Yarnel/Mine adjacent to the town of Yarnell, Arizona. 7hus, your decisions at Crown Jewel will have ramifications across the West. For more than twenty years the government has been permitting illegal mine waste dumping on public lands. To allow Battle Mountain Gold to proceed with the Crown Jewel mine, without challenging the decision, considering the Solicitors Opinion of November 7, 1997, would have amounted to implicit acceptance of this practice, and that mining companies could choose to ignore portions of the law that they do not like. The Okanogan I-Eghlands might not have the name-recognition of Yellowstone National Park but it deserves protection nonetheless. This forested mountain rising from rolling hills supports farms, ranches, hunting, and fishing. It is the headwater for five creeks. Despite the money spent by Battle Mountain Gold, the mine plan is, for a number of reasons, deficient. The Washington Department of Ecology even predicts that the mine will violate water quality standards." Over 7,000 linear feet of headwaters would be destroyed. Acid mine drainage is likely a threat. Withdrawing groundwater will reduce the flow of water to the five creeks, and there will likely be a significant loss of wildlife." This assumes that everything goes as predicted. Too often today, we find that predictions of long-term environmental impacts are optimistic, underestimating the problems that actually result once the mine begins operation. What Fundamental Environmental Problem Does The Milsite Decision Address? The recent millsite ruling, which is the subject of this hearing, seeks to address a fundamental environmental problem--today's mines are dramatically larger and produce more waste than the pick-and-shovel operations that the Mining Law was written to govern. In the late 1970s to early 1980s, the widespread adoption of chemical leaching technology made the mining of extremely low- grade mineral ores economically feasible. With chemical leach technology, such as cyanide leaching, it takes several tons of ore to yield one ounce of minerals. Once the mineral is extracted, the tons of leftover tailings and waste material must go somewhere. Consequently, land for waste disposal is at a premium. A modem pit mine is dug hundreds of feet deep. The waste material from a 20 acre, several hundred feet deep hole may not fit on 5 acres. Management of this waste presents a significant public policy challenge since waste from mines can pollute surface and groundwater resources with acid mine drainage and heavy metals such as arsenic. Cyanide and other processing chemicals can also lead to water contamination problems. The Law Supports the Millsite Decision In order to mine on public land, under the Mining Law of 1872, miners must stake a claim for the land they intend to use. There are two basic types of claims: mining claims and millsite claims. Mining claims contain the mineral, such as gold, to be mined. To be valid, the claim must contain a valuable mineral deposit, one that can be mined economically. Mining claims can be up to 20 acres in size. Millsite claims were originally intended for facilities that allowed the ore to be processed; today they are used for processing facilities and to dump large piles of waste rock and tailings (i.e. what's left after the mineral has been extracted). To be valid, a millsite claim cannot contain a valuable mineral. The logic being that land containing such minerals would be underutilized if used only for processing facilities or waste piles. On March 25, 1999, the U.S. Departments of the Interior and Agriculture released a joint decision stating that they were "unable to approve the proposed Plan of Operations" for the Crown Jewel Mine, in Okanogan County, Washington." They rejected the Plan of Operations for this large open-pit, cyanide-leach gold mine in eastern Washington State, because it did not comply with the requirements of the Mining Law of 1872 (30 U.S.C. 22) that limit claimants to one 5-acre millsite claim for each mining claim. Specifically, the mining law holds that millsite claims are limited to 5 acres in size and allows only one 5-acre millsite claim per mining claim. It has been recognized that in some instances, each 5-acre millsite claim allowance, per mining claim, can be broken up into more than one, smaller, millsite claim as long as the total does not exceed 5 acres. The language of the Mining Law is crystal clear. In regard to lode claims, "no location made on and after May 10, 1872, of such nonadjacent land shall exceed five acres." For placer claims the law was amended in 1960 to state, "no location made of such non-mineral land shall exceed five acres." According to the Department of the Interior, Battle Mountain Gold (BMG), the mine operator, proposed to use 117 unpatented mill sites, totaling approximately 565 acres, and to develop 15 lode mining claims. 15 The Mining Law limits BMG to a maximum of 75 acres of mill site claims. It is interesting to note that the position of BMG, at least according to DOI documents, has not been that DOI's interpretation of the Mining Law was incorrect. Rather, BMG argued that the decision should not be applied to the Crown Jewel mine since a Record of Decision, regarding the final EIS, had already been issued. The March 25, 1999, decision references the November 7, 1997, Solicitor's Opinion entitled "Lintitations on Patenting Millsites under the Mining Law of 1872." This 1997 Opinion reviews the millsite limit in detail. The conclusion is unequivocal: "the plain language of the Mining Law indicates that only one five- acre millsite claim per mining claim may be patented." The Solicitor's recommendation is as follows, "Because the statute does not support issuing patents for millsite claims totaling more than five acres per placer or lode claim, the Department should reject those portions of millsite patent applications that exceed the acreage limitation. In addition, the Bureau of Land Management should not approve plans of operation which rely on a greater number of millsites than the number of associated claims being developed unless the use of additional lands is obtained through other means." The Opinion also finds that BLM regulations (43 C.F.R. 3864) also specify a limit of one 5-acre millsite claim per valid mining claim. This is true of both the first regulations issued by the General Land Office in 1872 and the current BLM regulations. Before the March 25th decision mining companies were sometimes permitted, albeit illegally, more than one 5-acre millsite claim per mining claim. Although the Bureau of Land Management and the U.S. Forest Service have permitted multiple millsite claims in some instances, they had no basis under the Mining Law, or under regulations, for such approvals. In the notes to the Solicitors Opinion there is a description of the results of a survey of BLM State Offices on the issue. The evidence presented in the notes is that there was "no general or uniform policy or practice among the BLM State Offices" and that many patents issued were not for multiple millsites--i.e. they did not violate the millsite limit. Clearly, mine patents have been, and are being, approved for mines that are within the millsite limit. The Solicitor's Opinion notes that the current BLM's Handbook for Mineral Examiners may be the source of the problem. It provides for the granting multiple millsite claims, per mining claim. However, as the Solicitor makes clear in his opinion, no authority is cited for these statements." While this explains why some BLM field staff may have approved plans of operations that were over the millsite limit, it does not change the fact that the limit exists in both the Mining Law and BLM's regulations. History Supports the Millsite Decision There is ample evidence that Congress, DOI, and many in the mining industry understood the strict millsite limit contained in the Mining Law. Prior to 1960, the Mining Law allowed millsite claims only in connection with vein or lode claims, not with placer claims. In 1960, Congress explicitly amended the Mining Law to permit the location of millsites in connection with placer claims. The legislative history of the amendment makes it clear that Congress and the Department of Interior understood both the millsite limits in the existing statute and the amendment which permitted only one five-acre millsite claim in connection with a placer claim. The amendment was passed and signed only after input from the Department of Interior caused Congress to remove language that would have permitted millsites "for each individual claimant" and allowed for a larger millsite claim of "IO acres for each individual claimant." The amendment was changed as requested by DOI, which sought to have the millsite limit for placer claims match that of lode claims. The report language was explicit: T he word "ten" was stricken and the word "five" inserted in lieu thereof. The purpose of this amendment is to restrict the area of a millsite in conjunction with a placer claim to 5 acres of land to make it conform with the allowable millsite acreage for lode claims which has been the statutory requirement since 18 72 ... T he words 'for each individual claimant" were stricken so as to impose a limit of one 5-acre millsite limit in an individual case preventing the location of a series of 5- acre millsites in cases where a single claim is jointly owned by several persons .... In essence, S.2033 merely grants to holders of placer claims the same rights to locate a 5-acre millsite as has been the case since 1872 in respect to holders of lode claims, and the committee unanimously urges enactment. In 1968, the leading mining industry trade association (the American Mining Congress, the predecessor of today's National Mining Association), in a statement submitted to the Public Land Law Review Commission, acknowledged that the law permits only one millsite claim per mining claim. "When the mining law was enacted in 1872, provision was made for the acquisition of five-acre millsites to be used for plant facilities on mining claims. The typical mine then was a high-grade lode or vein deposit from which ores were removed by underground mining. The surface plant was usually relatively small, and acquisition of five-acre millsites in addition to the surface mining claims ... adequately served the needs of mines ... Today, the situation is frequently different ... A mine having 500 acres of mining claims may, for example, require 5,000 acres for surface plant facilities and waste disposal areas. It is obvious that such activities may not be acquired through five-acre millsites. " " (emphasis added) In 1974 in United States v. Swanson, 14 IBLA 158 the Interior Board of Land Appeals stated that: A claimant is entitled to receive only that amount of land needed for his milling and milling operations, and this amount can embrace a tract of less than five acres. 1he statute states that the location shall not "exceed five acres. ". . . The reference to five acres in the statute is clearly a ceiling measure, not an absolute, automatic grant. In 1979, the Congressional Office of Technology Assessment confirmed this interpretation of the Mining Law's millsite provision. There could be as many millsites as there are mining claims, and each millsite would be at most one-fourth the size of the typical 20-acre claim, so that millsites, in the aggregate, would be one-fourth the size of the ore body encompassed by the claims. The Impacts of Enforcing the Millsite Decision Will this be the end of mining on public lands? No, there are mining methods, such as underground mining, that do not necessarily require such vast amounts of space for processing and waste dumping. It is also important to remember that open-pit mining takes place on non-federal lands. In those instances, mining companies successfully assemble the necessary lands through acquisition, leases, or by purchasing mineral rights. As the Solicitor's Opinion made clear, mining companies can seek to acquire necessary millsite acreage through land exchanges and special uses permits. Both methods do require the company to meet additional hurdles. Under FLPMA, payment must be at fair market value, rather than $2.50 or $5.00 per acre, and land managers could exercise discretion to prevent "unnecessary" or "undue" degradation of public lands. But these are not unreasonable conditions. The decision may have an impact on marginal, low-grade deposits. But there is no reason why federal policy should be used to subsidize the mining of such deposits on public lands. In fact, it should be the government's policy to create a level playing field for all mining companies-whether the land is owned by the federal government, the state, or private citizens. We do not expect open-pit mining to end on public lands as a result of this decision, nor would we expect, does DOI or the Forest Service. What will the economic impacts of this decision be on the industry? The economic impacts of this decision on the entire industry, much less on a particular company, are difficult to predict. As a report from Lehman Brothers demonstrates, the primary determinants of the health of mining companies today, especially gold mining companies, are metals prices, oversupply, and the decisions of central bankers worldwide. However, to truly assess the potential economic impacts of this decision on the industry or any particular company, one would have to look at a range of issues including the proportion of open-pit mining that takes place on public land, For example, of the open-pit mines likely to be opened in the next 5 years, how many are on public lands in the United States and how many of those are likely to be significantly impacted by this decision? Answers to questions like this are necessary to accurately predict the potential economic impact of this decision. There is no doubt that this ruling presents a challenge to Battle Mountain Gold and any other mining company that was planning to open a large-scale open pit mine on public lands in the future and expected that DOI or the Forest Service would grant them more public land for waste dumping than they are legally entitled to. But the provision should not be overturned simply because mining companies do not like it, or expected an exemption to the Mining Law. What is at issue here is not just the impact on Battle Mountain Gold, or other mining companies. There are significant economic impacts on surrounding communities that must be weighed. Dr. Power, chair of Economics at the University of Montana gave this opinion of the potential economic impacts of the Crown Jewel Mine, "Given that the quality of the region's natural environment is an important part of its economic base and the source of the region's ongoing economic vitality, anything that threatens that natural environment has also to be seen as threatening that economic base and economic vitality. " It is undisputed that the applicant has spent significant financial resources in support of the Crown Jewel Mine. It is also true that the local community groups and Confederated Tribes of the Colville Reservation have spent considerable (albeit fewer) resources in opposition to the mine. However, this is irrelevant to the agencies' decision making process. The federal government's duty to uphold the law is not dependent on the amount of money a project applicant, or any other person, has spent in pursuit of its objectives. What are the environmental impacts? This ruling simply enforces the status quo that should have been enforced by DOI and the Forest Service. For those mines that need additional public lands, outside those already granted by the Mining Law, DOI and the FS will have additional environmental tools and greater discretion. Do we expect that some mines, those proposed in environmentally-sensitive places, will be rejected as a result? We hope so. Do we expect that DOI will permit some mines through means such as land exchanges and special use permits? Yes. Our Recommendations The millsite limit should be enforced until the Mining Law is reformed. It is certainly ironic that the industry is now complaining about, and seeking to change, a specific provision of the law that they have fought for 127 years to protect. But we do not think that the law should be amended, and weakened, as a favor to one company, or even an entire industry. A broad and full public debate on reforming the Mining Law is what is needed. Today, at this hearing, we are looking at this problem from the wrong side. The problem is not the millsite limit. The millsite limit is a symptom, the problem is that the 1872 Mining Law is outdated. It does not fit today's mining industry, it does not protect taxpayers, and it does not protect the environment. Congress, and those in industry, should see this decision as an opportunity to address the fundamental problem of the 1872 Mining Law. The industry should not be granted one-time exemptions to the parts they do not like or that no longer fit. Some believe that since this provision has not been enforced in the past, it should not be enforced now. We disagree. The law should be followed and enforced. If I drive down a stretch of interstate every day for ten years and drive at 75 mph despite the fact that the speed limit is 65 mph, and never get a ticket, it does not mean that the speed limit has magically become 75 mph. If a state trooper decides to pull me over and give me a ticket, the speed limit is still 65 mph, even if it has never been enforced on that stretch of road. The state trooper will not buy the argument that the law is not the law simply because it has never been enforced on this particular stretch of road, nor will a judge. Unless the law is changed the speed limit should be enforced. Until the 1872 Mining Law is reformed the millsite limit should be enforced. Some believe that our interpretation of the millsite limit under the 1872 Mning Law, and the one followed by the Departments of Interior and Agriculture, is legally flawed. We disagree. But for those who hold this view there is an obvious remedy and it is not this subcommittee or the Congress. It is the courts. Some believe that there is an urgent need to address this issue with a narrow rider on an appropriations bill, addressing only this issue. There should be no rush to judgement. There is no need. What is needed is a thorough consideration of all of the issues and all of the potential impacts and consultation with all interested parties. It is not the job of Congress to solve the problems of one company, or the perceived problems of one industry. This subcommittee and the larger Congress has an obligation to weigh the interest of the mining industry, the taxpayer, communities that live near mines, and environmental organizations--i.e. the broader public interest. Some believe there is an urgent need to address this issue because of concerns about retroactivity. We do not think a rush to judgement on these important issues should be driven by such concerns, and we do not believe this issue should be applied retroactively. If necessary, we would support a resolution or amendment specifying that there would be no retroactive application of this issue. Our objective is not to penalize mining companies that may have benefited from the incorrect application of the Mining Law by either DOI or the Forest Service. Our objective is that this provision now be applied. Some will argue that because of today's low metal prices, now is not the time for reform of the Mining Law. There is no doubt that the current economic situation, driven by low metals prices, poses significant problems for some companies and at some mines. The lower gold prices have forced companies to stop production at higher cost mines and to look for ways to produce more efficiently and effectively, just like any other business. These economic conditions have presented opportunities for some companies, especially those with low operating costs and strong financial positions, and for gold companies that practice hedging. In the past two years, the average total cash cost for gold mines world wide has fallen from approximately $265 per ounce to $200. The industry has begun to adapt to market forces- some companies have benefited others have not. Some gold companies, as a result of hedging, have been selling gold at an average of $400 per ounce. But a discussion of the current market for metals, and the health of particular companies, actually misses the point. When mining companies mine on private and state land they pay royalties. In Montana and California the royalty is approximately 5%." Newmont Mining currently pays a private land owner in Nevada a 18% royalty." There are companies mining profitably today and paying a royalty. The challenge for this committee is to set a royalty that is fair to the taxpayer and that makes sense irrespective of metals prices at any particular point in time. After all, once a royalty is set, it should be appropriate for both good times and bad times for metals prices. That is precisely why we propose a royalty that is a percentage of production, not a flat fee. The Way Forward, Comprehensive Reform of the 1872 Mining Law We recommend that this subcommittee hold public hearings on Mining Law reform and attempt to resolve any issues related to millsite limits as part of comprehensive reform of the Mining Law. Why? Because these decisions should be made in the context of a larger assessment of the environmental and economic merits of a particular mine plan. As a matter of policy we think this issue should be resolved as part of comprehensive Mining Law reform. We do not support a rider to an appropriations bill that would grant an exemption to the millsite limit and amount to de facto expansion of the Mining Law. The entire Mining Law is outdated and obsolete, we should reform all of its provisions, not just the one's that some in the industry object to. Further, an issue of such significance, should not simply be attached to a spending bill, It should be debated on its own merits. If this subcommittee is determined to seek resolution of just the millsite issue, and not other elements of the Mining Law, the appropriate action would be a stand-alone bill to amend the Mining Law. While we would disagree with the merits of such an amendment, we would support the process, because it would allow an full and open debate of the issue and a vote tied specifically to the merits. Votes would not be held hostage to the pressure to pass spending bills and other political considerations. Conclusion There is growing public frustration with the privileges and prerogatives of mining companies operating on our public lands. The regulatory decision-making process is broken. The root cause is the 1872 Mining Law. Citizens are growing increasingly frustrated because they perceive the decision-making process as stacked against their interests. Mining companies are now frustrated as well. They complain about the pace of regulatory decisions, the costs, and now the 1872 Mining Law, which they have spent decades and untold millions seeking to defend. It is time for a fix. But the fix is not a one-time Band-Aid designed by the industry to fix the part they do not like. Such a solution will only increase public frustration and outrage. The public supports comprehensive Mining Law reform. Voters in Montana have taken their frustrations to the polls-last year passing a ban on cyanide leach mining. There is a growing chorus of editorial opinion in support of Mining Law reform and in opposition to one-time favors to mining companies. Today, much of the public is unwilling to accept the results of mining regulatory decisions because they believe the regulatory decision making process is broken. Because of the abuses allowed by the Mining Law, citizens do not believe they have had their day in court. They believe the playing field is not level, that the deck is stacked against them. Reform of the 1872 Mining Law would dramatically alter this equation-creating a level playing field and a fair decision making process. Even those who oppose specific mine proposals are more likely to accept the decisions that result from such a process. In our view, such a result is in the interest of the general public, concerned community groups, environmental organizations, and the mining industry. This is the challenge that is in front of this subcommittee today.

LOAD-DATE: June 17, 1999

Previous Document Document 8 of 8.


Search Terms: millsite, House or Senate or Joint
To narrow your search, please enter a word or phrase:
About LEXIS-NEXIS® Congressional Universe Terms and Conditions Top of Page
Copyright © 2001, LEXIS-NEXIS®, a division of Reed Elsevier Inc. All Rights Reserved.