more than new plugs here. I think we have got to at least maybe put in points and do the timing, and maybe we have even got to pull the heads here and work on the valves. But I think we have got to go a little further than just, you know, sort of oil change or whatever the administration is recommending, if we want to extend this analogy a little bit.

I will try one that is maybe a little easier. I would think that every American could agree on this. Are you aware of any other nation in the world that allows American-owned corporations to come in and mine minerals on their land for free?

Mr. JAMISON. Run that by me once more.

Mr. DEFAZIO. Well, 17 of the 25 top producing hardrock operations in the Western United States on public lands are foreigncontrolled or owned, and yet they are not paying the U.S. Government any royalty. They are not paying anything for the use of those lands and the extraction of those materials. And, as you noted, a lot of the stuff is sent overseas to be processed, so we don't even get the value-added manufacturing jobs, nor do we get the tax for processing when they are finished.

So can you tell me what other nation has a similar system? Can a U.S.-owned firm go to Australia, stake a claim, pay the government nothing, export the raw material, process it in the United States and basically escape even taxation in Australia?

Mr. JAMISON. I don't think they escape taxation, sir. And I don't think that the companies-they have to have an American subsidiary that runs them to qualify for a mining claim and to operate. They pay taxes just like any other

Mr. DEFAZIO. Cy, I know that tax isn't your area, so I am going to give you a little slack here. But you know and I know that is not true. We have these ways of attributing these massive costs and shifting them around between countries, and it just so happens that, Gee, they incur all these really high costs in extracting the material here in the United States and they just happen to make their profits somewhere else, like in, you know, Indonesia or someplace where they don't tax corporations. There is a lot of shifting and hiding that goes on here, and we aren't enforcing any sort of unitary tax on these people, so we aren't getting at the profits.

But let's go beyond that. So you think that these foreign firms should be allowed, without paying the Government a royalty, to deplete precious resources on our public lands? You think foreign companies should be able to come in and do that? Even if their nation won't allow reciprocity, even if the United States can't go to Australia and a U.S. firm stake a claim, they should be able to come to the United States and stake a claim? The Japanese should be able to have claims, the Canadians, the British, everybody. The United States says, Hey, we're free traders. Come on in, guys, take our public resources. And by the way, you don't even have to pay

Mr. JAMISON. Mr. DeFazio, I can't agree with your premise to start with, so I am not going to answer the question, because it is kind of a trap.

Mr. DEFAZIO. Well, then OK. So you don't agree. So therefore what we have here is an administration that supports foreign

claims and patenting on public land in the United States with no reciprocity. That is your position.

Mr. JAMISON. That is just not true.

Mr. DEFAZIO. Well, then do you want to require reciprocity before they can stake claims here? Yes or no.

Mr. JAMISON. Yes. We feel that if a company does the same way the oil and gas industry does it.

Mr. DEFAZIO. OK. So will you examine the laws of the nations that have major claims and see if U.S. companies are allowed access, free access to their public lands? Because I think you will find in Great Britain and in Australia, and probably even in the socalled Free Trade Agreement with Canada, it is not allowed.

Mr. JAMISON. We would disagree with you there, sir. Our companies can go. We operate daily in Canada.

Mr. RAHALL. So U.S. firms can go to Australia and stake a claim on public lands and pay no fees and extract the material?

Mr. JAMISON. They have to do it under their laws, sir. They don't have the same system that we do.

Mr. DEFAZIO. Right. They tax or charge royalties. They think that they are not going to give away a precious resource to foreign corporations. OK. Well, we don't agree on that one either, then. All right.

Mr. JAMISON. That is correct.

Mr. DEFAZIO. I will search further for agreement.

There are a number of documented cases of very extensive costs incurred by the public, both State and Federal, for abandoned claims. And that, in a brief perusal here, you seem to have some problems with the fund which Mr. Rahall would establish and a similar fund which would be established in my bill.

Do you think the taxpayers should continue to carry the burden here, or do you think we should find a way of extracting additional funds for the industry, depositing it in some sort of fund to protect the U.S. taxpayers against paying for the detritus left when other people have extracted their profits and run?

Mr. JAMISON. We think you ought to look at that issue as a separate one and do a separate bill on that if you wanted to, and we can sit down and discuss it in detail. It is my understanding, the fund would go back and predate 1981 for cleanups. So you basically have people who are mining today that are probably doing an admirable job and are going to be paying for cleanups of the past. Is that exactly the fairest way to do it? I don't know that yet.

If you want to do that, I don't think we are opposed to seeing some type of cleanup system. We do a lot through the Superfund right now, and for some of the huge ones like up in my State of Montana associated with the copper mines there.

So, you know, it is a problem. We are going to have to address it. We don't deny that. But I think you need to look at it in a bigger picture because you are just having one portion pay for the whole works, and I don't think that is correct.

Mr. DEFAZIO. Well, right now, basically what we are saying is that anyone who consumes anything that was produced on these lands should pay; i.e., we will tax all Americans to pay for these things because we live in a world where our cars are made for minerals that are extracted from the ground, so therefore you will pay

part of your tax bill this year to reclaim the mistakes made or neglect. And I don't think that that is a fair way either.

Mr. JAMISON. And I didn't imply that it probably was. I just think that we need to really carefully look at that and see the whole picture, and where we are going, how do we split it with the States, are we going to have a State role in it. All of these other things need to be carefully reviewed and defined before we sign onto any one of those.

Mr. DEFAZIO. OK. Well, I would welcome any suggestions. I guess the point I have is I mean, you are pointing out a number of things here that I think are more than this sort of soft brush, fine tuning you are talking about. Yet, you know, you are saying the administration doesn't have a proposal. And I guess I am concerned because now it does begin to sound like the spotted owl in that Congress should do something, but you try and do it and we will tell you whether we like it or not. I think it would be preferable for the administration to make a proposal on those areas where they think reform is necessary and those can be incorporated into you know, either passed separately or incorporated into the legislation.

Mr. JAMISON. I thought we were going to make this whole hearing without talking about spotted owls, but I guess not.

Mr. DEFAZIO. I am still waiting for the bill. But anyway, we will-well, let's not get into spotted owls because I spend too much time with that.

But I just hear you. I mean, you have detailed a couple of areas here. One is, I mean, you are looking at some fair way of extracting revenues through royalties or taxes or otherwise, and you would agree that the common minerals needs reform, and you wouldn't be opposed to some sort of a fund but you don't know how much should be apportioned to the States and Federal Government and who exactly should pay it or how it should be paid. Well, these are all the kinds of things we are trying to deal with here.

Mr. JAMISON. We want a couple of other things changed, since we are giving the laundry list. We want to eliminate the $2.50-anacre patenting fee. That is ridiculous. You know, you could justify it a mining person can justify it because they probably spent tens of thousands of dollars to get to that point. The public can't buy that. Also, there are some options on that. We could split the estate, as Mr. Leonard mentioned. We could fair market the estate out. We could have even kind of a hybrid of the two. Maybe patent it with a reverter; after the mining is done it comes back.

There is a whole host of options there that we want to see a change on. We put up the options. Grab one and run.

Mr. DEFAZIO. Well, it sounds like you are proposing a pretty major reform. We are getting past the minor tune-up here.

Mr. JAMISON. Well, we will change the oil and that is good enough.

Mr. DEFAZIO. I think you are going a little further.

OK, with that. I haven't had a chance to even give a brief perusal to Mr. Leonard's testimony because Mr. Jamison's was lengthy. So I would reserve further questions so I have an opportunity to ask them in writing, Mr. Chairman.

Mr. RAHALL. Sure. The record, as I stated in the beginning, will be open for 10 days after this. That would include questions that you wish to submit in writing to any of the witnesses.

Thank you, gentlemen. I have no further questions.

Mr. JAMISON. Thank you.

Mr. LEONARD. Thank you, sir.

Mr. RAHALL. Our panel No. 2 is composed of the following individuals. I understand Mr. Milton Ward could not make it. He is the president and ceo of Freeport-McMoRan Inc. But he will be represented by Jack Knebel, president of the American Mining Congress. Also on the panel will be David W. Delcour, president, AMAX Resource Conservation Company, on behalf of the American Mining Congress, Washington, DC.; John L. Neff, the secretary of the Northwest Mining Association, Spokane, Washington; and John H. Wright, certified professional geologist, from Grand Junction, Colorado.

We have all four panel members?

Mr. KNEBEL. Yes, we do, Mr. Chairman.

Mr. RAHALL. You may proceed in the order I called. And, Jack, we welcome you and you may lead it off.

PANEL CONSISTING OF JOHN A. KNEBEL, PRESIDENT, AMERICAN MINING CONGRESS; DAVID W. DELCOUR, PRESIDENT, AMAX RESOURCE CONSERVATION COMPANY, ON BEHALF OF THE AMERICAN MINING CONGRESS, WASHINGTON, DC.; JOHN L. NEFF, SECRETARY, NORTHWEST MINING ASSOCIATION, SPOKANE, WA; JOHN H. WRIGHT, CERTIFIED PROFESSIONAL GEOL. OGIST, GRAND JUNCTION, CO

Mr. KNEBEL. Thank you, Mr. Chairman, members of the committee. We commend you for having held these hearings, and I am especially heartened that you haven't lost your sense of humor through it.

As you indicated, my name is John Knebel. I am president of the American Mining Congress. I appear today on behalf of the Congress in the absence of Mr. Ward, who is out of the country. I would request that his full statement be included for the record. Mr. RAHALL. Yes. All testimony is going to be made a part of the record today.

Mr. KNEBEL. Thank you, Mr. Chairman. Mr. David W. Delcour, the president of AMAX Resource Conservation Company and chairman of the AMC Public Lands Committee is at my right. He will address the policy implications and specifics of your legislation, and I intend to limit my comments to the AMC policy position with respect to Mining Law reform.

The American Mining Congress, as you know, periodically reviews its position on key issues affecting the mining industry. The Mining Law policy is no exception.

The American Mining Congress has maintained that the general Mining Law works very well and can continue to accomplish the basic policy goal of allowing orderly and market-directed exploration and development of minerals on public lands consistent with publicly recognized environmental standards. Although AMC has responded to the more strident criticisms, there remains a public perception

that abuses continue to occur in implementing the Mining Law. In an effort to address these past abuses and to demonstrate the industry's interest in maintaining responsible mineral entry on the public lands, AMC has identified several areas in which steps can be taken to respond to public concerns without vitiating the essential components of the Mining Law.

With respect to residential occupancies, we believe that the Secretaries of the Interior and Agriculture should exercise existing authorities to require the construction of any residential dwelling on unpatented mining claims be approved under a plan of operations authorizing such structure. With respect to reclamation, we believe that the Secretaries of the Interior and Agriculture should exercise existing authorities to amend surface management regulations to more specifically and clearly set forth their authorization to require environmental regulations of activities on unpatented mining claims.

With respect to surface disturbance by small mining operations, the Secretary of the Interior has adequate authority to modify or delete the provision in the Bureau of Land Management Surface Management Regulations exempting mining operations occupying 5 acres or less from the requirement of filing a plan of operations. With respect to patenting, in addition to the requirements already found in the general Mining Law, the mining industry does not object to paying fair market value for the surface estimate of a mining claim at the time the patent is issued, provided that there are prompt and fair procedures for determining such value and the process of mine development is not unreasonably delayed.

On the matter of the annual holding fee, the AMC has no objection to claimants being given the option in some years of paying an annual holding fee or performing the work.

There are a number of general Mining Law issues that are critical to the future of mining and mineral development which must be preserved in any consideration of changing the Mining Law. These issues include access to the public lands and the right to selfinitiation, the right to earn secure tenure by discovery of a commercial orebody, all of which are presently embodied in the exist ing law. Any modifications affecting these basic principles are likely to threaten the industry's ability to explore for minerals and to develop new mining properties.

Mr. Chairman, the five basic tenets underlying your bill, H.R. 918, which you referred to when you introduced it, can all be addressed without doing violence to our primary requirements in the Mining Law. Your objectives are already embodied in current law or regulations, or they can be carefully incorporated by modification of existing regulations or by careful amendment of current law. An entire new system of laws and regulations is simply not necessary. To repeal the established successful body of law embodied in the general Mining Law with brand-new language requiring extensive regulatory implementation is going to halt new mining activity for a number of years, even if judicial challenge could be avoided.

The legislation which you have introduced completely changes the system under which mining is initiated and conducted on public lands and will substantially increase the cost. Because of