A fair return to the Federal Treasury

September 11, 1999 


NWMA (The Northwest Mining Association) supports a 5% net proceeds royalty imposed on production from federal public lands. A net proceeds royalty places the federal government and the mining company on the same side of the economic equation. An equitable royalty will provide maximum revenues over the long term by continuing to encourage substantial investment in mineral development and avoiding the waste of valuable mineral resources.

·   NWMA supports updating the patent provisions of the 1872 Mining Law.

Current industry proposals provide for the payment of fair market value for the surface of the land in addition to the royalty on the minerals mined. NWMA supports the federal government reserving a "right of reverter" which would provide the Secretary of Interior the right to revoke title to patented lands if the lands are ever used for non-mining purposes.

·   Abandoned mine land reclamation.

NWMA supports making the claim maintenance and location fees permanent and placing one-half of the money collected in an abandoned mine land reclamation fund that would be distributed to state abandoned mine land cleanup programs. We believe half of the fees collected are adequate to cover costs reasonably associated with administering the BLM and USFS mineral programs. We also support depositing all royalties collected into the AML fund.

Reasonable, constructive and balanced Mining Law amendments are the best approach to maximizing the return to the federal treasury while preserving a critical industry essential to providing the mineral needs necessary to sustain America's high standard of living. They are the best approach to ending the seemingly endless debate and bringing some much needed certainty to the process. And, most importantly, we believe the people will see these amendments as fair to all concerned.

IV. The 43 CFR 3809 Rulemaking

Apparently frustrated that Congress would not enact legislation to implement his personal agenda, even when Congress was controlled by his own party, Secretary Babbitt announced that he was going to re-write the surface management regulations (43 CFR 3809) that govern hardrock mining activities on BLM administered lands, saying, "It is plainly no longer in the public interest to wait for Congress to enact legislation that corrects the remaining shortcomings of the 3809 regulations." Since when does an unelected bureaucrat represent the public interest? Secretary Babbitt's attempt to re-write the 3809 regulations has been described by former Secretary of the Interior and four-term Democratic governor of the State of Idaho, Cecil D. Andrus, as "an attempt to "…accomplish some mining law reform through the back door."

Throughout the two and one half-year process, Secretary Babbitt has ignored request after request from the western governors, from Congress and from industry to identify what is wrong with the current regulations. He has refused to consult with the states despite language in a prior appropriations act requiring him to do just that.

Last year, the Western Governors' Association, frustrated with the lack of cooperation from the Secretary, asked Congress to order a study by the National Academy of Sciences (NAS) to determine the effectiveness of the current state-federal regime for regulating the environmental impacts of hardrock mining on federal public lands. Congress appropriated $800,000 for this study and it is due to be released next week.

Secretary Babbitt published a proposed rule in February 1999 with a 90 comment period ending May 10, 1999. The proposed rule virtually ignored the concerns of the western states and the industry. Despite numerous requests for an extension of time and despite the fact that the NAS study was not due out before July 31, 1999, Secretary Babbitt's response was that he had waited long enough, that these rules were necessary to protect the environment, and that he might consider the NAS study in a final rule if he found it relevant. Congress responded by requiring the Secretary to re-open the comment period for at least 120 days after the NAS study is received.

Does this committee really believe that Secretary Babbitt intends to consider the NAS study in the final rule? His track record is that he has already made up his mind and Congress is, again, getting in his way. We believe that Congress must include language in the FY 2000 Interior Appropriations Act that prevents Secretary Babbitt from promulgating a final rule that is inconsistent with the findings of the NAS report. We suggest that you prohibit Secretary Babbitt from issuing a final rule unless Congress first approves it. It is the only thing he will understand.

Secretary Babbitt will argue that the new rules are necessary to protect the environment. They are not. Currently, there are more than 36 federal environmental laws that apply to mining on federal lands. Every western state has stringent environmental laws and regulations that all mining operations must follow. Today, comprehensive, stringent environmental laws and regulations, modern environmental control technology and corporate commitment combine to produce environmentally responsible mining.

An objective examination of the facts clearly reveals that the modern mining industry practices environmentally responsible mining. The leaders of the mining community are fully cognizant of their responsibilities to the environment. American society has sent a clear message to all industries, not just mining, that environmental concerns are important, and we have heard that message. NWMA's Statement of Environmental Principles (attached) reflects the philosophy, and most importantly, the actual practice of the modern U.S. mining industry. These nine principles affirm what we in the industry know to be true, that environmental protection is an essential
element of modern mining.

V. Does Mining Really Matter?

Why are Interior and the Clinton-Gore Administration conducting an all-out war against the U.S. mining industry? Why are they implementing policy after policy that is destroying the very fabric of rural America? They act as if mining is an evil pursuit driven by corporate greed that results in environmental damage, and, therefore, must be stopped. Interior and opponents of mining cling to the somewhat naïve notion that mining is not necessary. Our industry tends to counter with statistics about the number of jobs that will be created, taxes paid, and overall economic benefits to the local economy. All of these are very important to be sure, but they fail to convey to our society why mining must be encouraged if it is to succeed. All past successful societies have encouraged mining, as will all future successful societies.

Modern civilization began from humble agrarian origins. Over time, a few clever people were soon able to discover the basic principles of first copper, then bronze metallurgy. It was not long before these processes were used to develop tools that began transforming society. But unlike today, the people of years past never lost sight of the fact that they were all dependent on what came from the earth for their continued survival, as well as their newly found wealth. These fundamental concepts are as valid today as they were in ancient times, even though our civilization has grown so complex that it is easy to loose sight of them.

The basic fact is that we mine minerals because our society demands that we do so, and that is why a profit can be made from time to time. Mining makes everything else happen. Mining provides the strategic metals and minerals that are essential for agriculture, construction and manufacturing. Minerals are essential in order to satisfy the basic requirements of an individual's well-being -- food, clothing and shelter. Mining makes civilization, our high living standards and today's sophisticated technologies possible. Without mining there is no civilization, pure and simple - no art, no science, no temples. Unfortunately, our society and our government are filled with people who do not understand these basic fundamentals.

According to the National Research Council, one of the primary advantages the United States possesses over it's strongest industrial competitors, Japan and Western Europe, is it's domestic resource base. The U.S. mining industry provides about 50% of the metals used by U.S. manufacturing companies. During most of the 1990's, while global mineral exploration trends are strong, U.S. mineral exploration was on the decline. Unless this trend is reversed, significant declines and domestic mineral production must occur as present reserves are exhausted, and more capital, jobs and tax revenues will find a home outside of the U.S.

Society's demand for mineral products is increasing at an increasing rate. Meeting that demand is an international business - one in which the United States must remain competitive with other nations for scarce investment capital.

As a society we have three choices:

·   We can choose not to meet the increasing demand for mineral products. The result will be a lower standard of living for ourselves and future generations as scarcity of mineral supplies force prices to skyrocket and inflation to once again run rampant. The net result will be a lower standard of living and an increase in poverty.

·   We could meet the demand for increasing mineral products by mining those  minerals outside of the United States. This choice has adverse economic and ecological consequences for our country. Poverty is the worst polluter, for without economic health there can be no ecological health. As a society, can we truly afford to become dependent on other countries to supply our basic mineral raw materials? Can we afford to do without the wealth creating investment dollars, jobs, and taxes? A decline in U.S. mineral production will increase reliance on foreign sources of minerals for our national defense, increase our national trade deficit, and eliminate thousands of high paying skilled jobs in America. If we allow this to happen, how long can our nation remain the world's great economic engine?

·   American society's third choice is to produce the minerals we need to maintain our high standard of living in the United States in an environmentally responsible manner. The consequences of this decision are jobs, economic growth, and a clean, healthy environment. We believe the choice is obvious, but before long-term investments of hundreds of millions of dollars are going to be directed toward the U.S. mining industry, investors must see a predictable legal system, and a government that operates by the rule of law. Investors must know that our government will uphold property rights as their investments prove successful. They will not risk instant losses to "surprise" decisions by unelected bureaucrats. We stand ready, willing and able to work with you to ensure that mining has a long, sound future in the United States.

Thank you for the opportunity to address you today concerning these matters of most importance.

Respectfully submitted this 11th day of September 1999.

Laura Skaer
Executive Director For the Northwest Mining Association
10 N. Post St. #414
Spokane WA 99201
[email protected]