Page images
[ocr errors]

Mr. RAHALL. The gentleman from Indiana, Mr. Jontz? The gentleman from Oregon, Mr. DeFazio?

Mr. DeFazio. Thank you, Mr. Chairman. I would just like to follow up with, I am not certain whether it was Mr. Delcour or Mr. Ward testifying last week before theor a couple of weeks ago before the Senate on the issue of royalties. Was it one of you two?

Mr. KNEBEL. It was Mr. Ward who commented in a colloquy with Senator Bumpers.

Mr. DeFazio. I see. And could you just briefly restate your understanding of that colloquy regarding royalties?

Mr. KNEBEL. It is always at your peril when you try to restate what your chairman said. It is not necessarily good for longevity in this city, as you know.

Mr. DeFazio. OK. Well, maybe IMr. KNEBEL. I think the bottom line, Congressman, was the fact that Mr. Ward indicated in his discussion with Senator Bumpers that if indeed it came to pass that a royalty were to be included in some legislation at some future time, that if it were a fair royalty that while it would perhaps impact on high-grading that it would not perhaps close down the industry. But every instance he cautioned it as a fair royalty and something which the industry would have to look at it on a basis as presented.

Mr DeFazio. OK. Do you consider the_since we just had some discussion of Canada, the royalty system in Canada to be fair, as you understand it?

Mr. KNEBEL. I am not qualified to comment on the Canadians, sir We have got enough problems right here in the United States.

Mr DeFazio. OK. So can you point to a system, I mean, are you aware of a system that would be considered to be fair that we could look at as a model for royalties? Mr. KNEBEL Right off the top of my head, no, I can't. Mr. DEFAZIO. All right. I notice that someone has provided, and I am always a bit skeptical of bootleg things, but something that purports to be a summary of an AMC survey regarding the Mining Law and the prospects for generating opposition to reform of the Mining Law. It talks about a number of issues, and one it does come down to is royalties and restoration. I am wondering, it says here that I mean it is polling the general public and deems the general public by 82 to io with 8 undecided thinks that it would not be unfair to assess royalties and require some restoration or reclamation of the public lands. Are you aware of this survey?

Mr. KNEBEL. Yes, sir. We try to sense public opinion in a lot of quarters. What that is is a reaction by the public, not the operator. I think what you have to bear in mind are the comments of Director Jamison who earlier testified that if indeed you put a royalty on you run the very, very serious chance of high-grading; that is, to cut mines out of production. You have got to remember in every thalance there is a global price situation and there is no government subsidy, direct subsidy, and the companies have to compete on a commodity basis, which is world price.

Mr DeFazio. Are we looking at any class of operations here that you think would be particularly impacted? I mean, are we talking

[ocr errors][ocr errors]
[ocr errors]

about heap leach mining in particular or others where massive amounts of material are used to extract very small quantities?

Mr. KNEBEL. Again, I have to go back to the colloquy which our chairman had last week during the Senate hearing, and be indicat sady, ed that you have to look at these on an orebody by orebody basis That you cannot just willy-nilly say 12 percent. Twelve percent will be close down a whole category of mines. Others might very well be able to survive, given the commodity price at a particular time,

Mr. DeFazio. 12 percent of what?

Mr. KNEBEL. You tell me 12 percent of what, sir. That is the whole point.

Mr. DeFazio. Well, are we talking 12 percent of value of the ex: tracted material, 12 percent of the net income? If we are talking 12 percent of the net income, you are looking essentially at an income tax. So there is still 88 percent left.

Mr. KNEBEL. Still 88 percent left. I mean, you still have to look at the world pricing and the disappearance factor of the commodity.

Mr. DeFazio. Yes. But I assume that the technology is somewhat comparable in other nations, that the laws outside of the Third World are somewhat comparable in terms of environmental protec. tions, in Canada and Australia, that they do have systems of tax. ation and royalties in place and somehow they are competitive.

Mr. KNEBEL. I think you will find that the environmental re straints are quite a little bit different in Third World countries.

Mr. DeFazio. I excluded the Third World.

Mr. KNEBEL. Also, safety costs are a great deal higher in the United States.

Mr. DeFazio. Than in Canada and Australia. I would like to compare the United States to other major industrial nations, and not to nations that are essentially being subjected to colonization and abuse. So, although we a. 3 being colonized, but, you know, I am still resisting that trend, treated like a colony.

I would assume that, you know, looking at the Australian or the Canadian system of royalties or taxation would not put the U.S. industry at an unfair advantage. Sure, we could always point to South Africa and say, you know, if we pay people 10 cents an hour, and they get no protection, and they work in a mine that we could become more competitive. And you are working at that disadvantage, I agree. But that is a social cost.

We are also dealing with a public resource here. There is some discussion of the opinions of the public versus the opinions of the industry. You know, these are public lands. So I think the public has some say over, you know, and public opinion should be somewhat important in what we determine here.

So I am just trying to get at, you know, trying to get you to offer us, you know, I mean let's look at some of our major competitors who have somewhat similar systems of government and which one do you think is best to look at for a model for us.

Mr. KNEBEL I appreciate your reaction, sir, and we will certainly look at them. Mr. DeFazio. OK. I would appreciate you doing that.

I am a little curious about the economic impact study that is mentioned. Now, I guess I am not familiar with it. Coopers & Ly

brand is doing thewho is the expert on this? Are you still on here? Are you the expert on the study too?

Mr. KNEBEL. Yes, sir, I am the one who entered the contract for the study.

Mr. DeFazio. OK. Now, every study has to use certain assumptions and the chairman has raised some questions regarding assertions or Assumptions in your testimony and other testimony regarding his bill. Who is going to be the arbiter of the assumptions that are used? If you take these grand assumptions that, you know, there are going to be these extraordinary impacts and all these new impediments, then, of course, you are going to say, well, gee, 80 percent of the industry is going to go away. So who is going to be the arbiter of what the basic assumptions are that are cranked into the study? Can you give us a little bit of discussion of the methodology?

Mr. KNEBEL. Well, the methodology in selecting the law firm and Coopers & Lybrand which we asked to do it was the result of our Public Works Committee's analysis of the bill. And I think, frankly, what you do when you try to do a study the baseline is the piece of legislation. We are trying to determine just exactly what impact H.R. 918 might have on the domestic mining industry if indeed it were to be enacted. So the baseline is the legislation and the interpretation is based on the views of several attorneys who represent the various mining companies and different private attorneys who have studied the bill.

Mr. DeFazio, OK, Well, then I don't look forward to the study because it will be worthless. I mean, if you make excuse me, sir. Excuse me. If you make an assumption that I mean, you know, your baseline assumption is absolutely essential here and you need a little bit more of an impartial process in determining it. I am against reform. Therefore, I look at this reform and I say this reform would stop 80 percent of all mining activities on public lands. Now, Coopers & Lybrand, you tell me the economic impact of stopping 80 percent of all mining activity on public land. It is devastating. Of course.

Well, you know, I can't remember what the Latin is for that sort of reasoning. You know, I never studied Latin. But it serves you know, it has got an internal problem.

Now, if you want to give us a study that you would like us to look at, and I would be happy to see an impartial study, then let's have somewhat of a less prejudiced analysis of the bill. I mean, you stay in here. I mean, we can put together a program to oppose any change in the mining reform. This is what the AMC survey is all about. This is how we do it. These are the things we put together. We talk about the threat to national security and we talk about this and we talk about that, and we can totally oppose the law.

I am going to give you a piece of advice. And I don't give a lot of advice for free, but I will give you a little bit. The cable industry is not necessarily particularly analogous to you, but in the last Congress the television cable industry, which impacts a great deal of the public, which this legislation does, and the public has a strong opinion about, and to some extent the public has a strong opinion about this and it is developing, had an opportunity to go with what would have been a very modest reform in the last Congress. Well,

[ocr errors][ocr errors][ocr errors]

they got greedy. They killed it in the Senate. They got some of their favorite Senators who have been pimping for them all along, Senator Packwood and others, to hold the bill and kill it in the Senate. Now, suddenly they are confronted with one hellacious reform that they can't live with, and they are saying, my God, you can't do this to us.

Well, they may get that. They could have had something that would have been reasonable they could have lived with, the public would have liked a little bit. It wouldn't have been great. Every. body would have been a little bit happy.

I am suggesting, don't go down the road of saying no way, no how, because you think you can put together this coalition, because you can come up with a report saying no how, no way. Come in and work with us and be a little bit productive, and give us real concerns to deal with, and we are reasonable people and we will do that. That is the piece of advice. It doesn't warrant a response.

Thank you. Thank you, Mr. Chairman.
Mr. KNEBEL. May I respond nonetheless, Mr. Chairman?
Mr. RAHALL. Sure.

Mr. KNEBEL. Congressman, I very much appreciate your advice and your counsel is well heeded, believe me. I believe you were out of the room when I read the statement summarizing our policy position, and we have indeed been very mindful of the concerns and we have looked at areas which we believe can and properly should be changed to indeed impact properly the public perception.

I submit to you, however, that the GAO studies which have been done in this area, they have been criticized by other Government Agencies. If I were to come up here and to present testimony to this Congress without having gone to the trouble of doing a study, I daresay you would suggest that I had not done my homework. Give us credit at least, and give us time to develop a study which can demonstrate the impact of this legislation if indeed it is passed.

Thank you.

Mr. RAHALL. The chair wishes to thank this panel for their testimony.

Before we go to panel No. 3, we are in the process of a roll call vote on the floor of the House, so the subcommittee will stand adjourned for 10 minutes.

AFTER RECESS Mr. RAHALL. The subcommittee will resume its sitting and hear our next panel composed of Michael J. McCloskey, the chairman of the Sierra Club, Washington, DC.; Lynn A. Greenwalt, vice president, National Wildlife Federation, Washington, DC., and on behalf of The Wilderness Society, Washington DC; Philip M. Hocker, president, Mineral Policy Center, Washington, DC., and on behalf of American Fisheries Society, Bethesda, Maryland; Brock Evans, the vice president for National Issues, National Audubon Society, in Washington; and Mr. Paul C. Pritchard, the president of the National Parks and Conservation Association, Washington, DC.

Do we have everybody? OK.

Gentlemen, we welcome you to the subcommittee, and you may proceed in the order I called.

[ocr errors]
[ocr errors][ocr errors]
[ocr errors][ocr errors][ocr errors]



Mr. MCCLOSKEY. Mr. Chairman, I am Michael McCloskey and I am speaking for the Sierra Club here today.

The Sierra Club believes that the need is clear to completely replace the 1872 Mining Law. The record is awash with evidence that this 1872 law legitimizes abuse of our environment. We believe that enacting only limited changes into law now would be losing an important opportunity that ought to be grasped. The problems inherent in the current Mining Law run so deep that only a completely new law will ensure protection of our environment.

We believe that a sound new Mining Law must include three basic elements. It should give explicit authority to Federal land managers to exercise discretion over whether mining takes place or not. It should establish environmental standards for mining operations and hold operators accountable for environmental consequences. This should be done through operating standards, bonding, and uniform Federal reclamation standards. And it should return to the public royalties in return for the use of public lands and the minerals that are taken from those lands.

We believe that the bill before you, Mr. Chairman, H.R. 918, contains many important provisions that move in this direction, and we commend you for introducing it and moving it along. The bill eliminates patenting of public lands and minerals. This has been subject to widespread abuse. It establishes a reclamation fund for abandoned mines. Unreclaimed mines have taken their toll on hundreds of thousands of acres in our Western States. It contains a citizen suit provision, inspection and enforcement clauses, and takes steps to prevent known violators from violating again.

However, we do believe that it needs changes to strengthen it further. It should be revised to give agencies full discretion over mining. Section 201(bX4) doesn't really do that. It only gives Federal land managers the ability to approve or to modify, but not deny, plans of operations if the land-use plan for the area in question allows mining. The bill fails to provide the discretionary system that the Sierra Club believes is critical to protect other values on public lands. This is the most important change that we recommend today. Without the authority to deny mining on a case-byCase basis, H.R. 918 perpetuates one of the key flaws in the current law

We also believe that H.R. 918 should expand the list of areas that are closed to mining to include also units of the National Wildlife Refuge System, the National Trails System, and the National Park System. Moreover, H.R. 918 should more adequately address reclamation problems. Let me give you some examples

56-185 O - 92 - 8

« PreviousContinue »