Mr. PRITCHARD. It would seem so. It seems reasonable. It seems that there is a tremendous amount of investment and that that should be taken into consideration.

Mr. DEFAZIO. What about during the prospecting phase where, in particular, the argument I hear, which I am sensitive to, is that a lot of individuals and in my State there are a fair number-small miners, individual miners, are out there prospecting, and they will have staked a claim, and they think they have got something, but they don't know yet, and they have got to do some development, discovery, and then market that? My feeling is that, by assessing it on whether it is net or gross revenue or some combination thereof that is fair, that you would not discourage this activity. Do you think that that is a fair assertion?

I mean if you impose a large annual holding fee per acre or some other burdensome requirement, I think that would discourage prospecting in individuals, but if they haven't gotten to that point yet and they are working with due diligence, it seems to me that that is a reasonable way to deal with that aspect. I want to encourage individual entrepreneurs. I like to see little guys hit it big, especially if they then transfer the rights to an American corporation. Mr. HOCKER. Mr. DeFazio, two points on that.

We talked earlier about the question of holding fees versus diligence requirements. One going to flexibility, which we would recommend, would be that if a miner chooses to do meaningful geologic work on a claim in a given period of time, that he be allowed credit for that if the results of that geologic investigation are lodged with the U.S. Geological Survey. They could be under an embargo for a period of time to protect confidentiality.

There is a very similar provision at work today in many Canadian provinces, and over time that results in a body of geologic data being available for future prospectors, which has become a substantial national resource up there and is so regarded.

On the royalty question, I think that if we get over the debate over whether there will be a royalty or not, then there are a number of subtleties that we can start to look at in how one is implemented, and one might be a minimum level of royalty-that is to say, call it a floor, where production below some number of dollars per year-say $50,000 worth of production per year-would be exempted from royalty although still be, I would think, subject to a rather stringent reporting requirement. I think you need to have that and have a penalty on that if it is not followed. But that would give you some flexibility to permit the small prospector or entrepreneur to go to work.

A word of caution though: One lesson that I am sure we have learned from SMCRA has been the pitfalls that things like the 2acre exemption can lead us into, and I think we have to be cautious about creating the equivalent of strings of pearls or 2-acre exemptions in hard rock mining.

Mr. DEFAZIO. OK. Thank you.

Does anybody else want to comment?

Mr. GREENWALT. Just one brief comment. I refer you, Mr. Chairman and Mr. DeFazio, to appendix B of my written testimony which contains a review of some of the royalty situations and how they may be assessed here and in other countries. I don't pretend

to suggest it is exhaustive in any sense, but it is there and it, I think, is illustrative.

Mr. DEFAZIO. OK. Thank you.

Just one last question, Mr. Evans. There was some considerable discussion-and I am sorry I was a little bit distracted-of the Bingham Canyon, and I am just curious if the gentleman is aware of the country of origin of the ownership of the Kennecott Utah Copper Corporation.

Mr. EVANS. No, I am not. What is it?

Mr. DEFAZIO. British. So the profits and the benefits obviously, some local people are employed and some marginal taxation may occur, but I think we have learned from watching the colonization of the Third World throughout the last century and this century that you never get rich or become an industrial power by allowing other industrial powers to extract your raw materials and take the profits or the precious materials home to be manufactured into finished products, which they then sell back to you, or they use the profits to purchase your private properties out from underneath

you.

So I just thought I couldn't resist the opportunity to point out that. That one, in fact, is on the list of the top 25 leading gold producing mines in the United States. They are No. two. The first two are both British.

Mr. EVANS. I didn't know that. That is interesting.
Mr. DEFAZIO. Thank you.

Thank you, Mr. Chairman.

Mr. RAHALL. Thank you, gentlemen.

Our next panel is composed of Gerald W. Grandey, president, Energy Fuels Nuclear, Inc., out of Denver, Colorado; Paul K. Willmott, president, Umetco Minerals Corporation, Danbury, Connecticut; Mr. Dennis E. Wheeler, president and ceo, Coeur d'Alene Mines, Coeur d'Alene, Idaho; and Mr. Putman Livermore, Public Resource Associates, San Francisco, California.

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

Gerry, do you want to go first?

PANEL CONSISTING OF GERALD W. GRANDEY, PRESIDENT, ENERGY FUELS NUCLEAR, INC., DENVER, CO; PAUL K. WILLMOTT, PRESIDENT, UMETCO MINERALS CORP., DANBURY, CT; DENNIS E. WHEELER, PRESIDENT AND CEO, COEUR D'ALENE MINES, COEUR D'ALENE, ID; AND PUTNAM LIVERMORE, PUBLIC RESOURCE ASSOCIATES, SAN FRANCISCO, CA

Mr. GRANDEY. Mr. Chairman, I would like to add to the list of witnesses previous to me my thanks for holding the hearing today and for truly the indepth look that you personally, those on your staff, and other members of the subcommittee have engaged in over the last months and years on this what I consider to be an extremely important issue.

I am also gratified that we can follow the previous panel, because I have this feeling that we are dealing with a lot of facts from the past in order to justify changes to not only the land tenure law but also to the scheme and the suite of environmental laws and regula

thes

tions that we in the mining business have to deal with, and I might note that Mr. Wright, in his testimony today, was one of the handson operators, and I think this panel perhaps gets a little bit close to that qualification as well, and I would like to bring to the panel today a little bit of that real world experience that we have had in the mining arena.

Energy Fuels, as you know, is not only a hard rock producer but has also been extensively involved in the coal mining arena for about 15 years, and so we are familiar with the regulatory regimes not only under SMCRA but also all of the rules and regulations that we have had to live with in developing our hard rock operations. In fact, we permitted, I think, one of the first surface coal mines, a mine that produced about 4 million tons a year under the SMCRA legislation back in the late seventies, one of the first ones to go through that process in the country.

Likewise, once the regulations were developed by the Bureau of Land Management governing the regulation of hard rock mining on Federal land, we had one of the first mines to go through that process. We have, altogether, in the last 10 or so years, permitted eight mines on surface that is regulated by the Bureau of Land Management and two or three mines on surface that is regulated by the United States Forest Service. In addition, our mines and processing operations are subject to regulation by such agencies as the Environmental Protection Agency and the Nuclear Regulatory Commission.

When we first began our exploration program, looking for, in this particular instance, uranium in the northern part of Arizona, we confronted a situation where there were 44 wilderness study areas, wilderness study areas that, while you were allowed to proceed with exploration to a very limited degree, prohibited basically one from developing anything that you found in those areas, and that was a problem that we ended up sitting down not only with the Federal regulatory agencies but also a number of the concerned environmental groups and basically negotiated a way in which our programs could advance while true wilderness values could be set aside and preserved.

Finally, we have actively participated in one of the first resource management plans that has been developed by the Bureau of Land Management. Again, it affects the northern Arizona area, and it is one of the first resource plans, I think, that consciously dealt with the mineral potential of an area as a resource and recognized the value of the mining not only to the local economy but the value of mining to the national economy.

We have done all of that in an environment over the past 10 years when commodity prices have declined. We have seen the price of our primary commodity, which is uranium, go from $40 a pound down to its present level of $9 or $10 a pound. We have constantly had to find a way of reducing costs, of cutting costs, of finding new ways of doing not only the mining but new ways of doing reclamation. Likewise, in the coal industry, as you know, it has gone through its own cycles, and we have had to find ways of cutting costs and becoming more efficient there.

That is why, with that background, that experience that we have had over the last 10 or 15 years, I find the current level of debate

that goes on on this issue so disturbing, because we have focused on practices of the past. This is a land tenure law that we have been dealing with. Society didn't demand that reclamation be done 20, 30, 40 years ago. It didn't allow for reclamation to be done in the cost structure of the commodity.

We have changed. The Mining Law is not something that is 119 years old that has not ever been addressed or ever been changed. There are just a whole host of new statutes, of new regulations, dealing with a lot of values which I think are very important, that have now affected the operation of mines on public lands as well as on private lands, and I think you are now dealing with mining companies in the last part of this century and going forward into the next century which are now used to complying with these kinds of rules and regulations, doing a responsible job of planning, of exploring, of developing, and certainly a responsible job of reclaiming their types of operations.

I think as long as society demands and we as individuals use mineral commodities in our daily lives, we simply can't accept "no mining" as an answer. That is, I think, a tremendous cop-out if we say, "No more." We then just simply transfer the burden of mineral development out of this country, where we have got the wealth and we have got the technology to do it responsibly and right, to other places where "sight unseen" perhaps is better in the minds of some but it is an unfortunate consequence if that is the result. From a practical standpoint, those of us in the mining industry look at this attempt to revitalize or reform the mining law and we say the most important thing that can come out of it is that there be certainty, that there be predictability of result, when we are invited and asked by a country or society or consumers to go out and explore, to go out and develop. If we are successful in risking that money and we find a mineral deposit, then we need certainty that we are able to go forward and realize on that investment, on that risk, that we took, and, yes, we are willing to live with a whole host of rules and regulations that allow us to do that responsibly. If you take a look at the present bill, I think I would say title I in particular goes a long way toward achieving certainty. There are a lot of legal and esoteric arguments that we could talk about vis-avis title I, but I think you are on the right track, and I think, yes, there are changes that could be made, but I for one say, with title I, with some changes, we could live with that as long as that certainty, as long as the predictability, is there which would allow mining companies such as our own to go out into the private sector and raise money, however we do that, and make the investment and take the risk.

Title II, on the other hand, I think we are still greatly troubled by, because to us it looks like it is unnecessary duplication. It looks to us like we are trying to do the same thing that a lot of other Federal and State laws already do, and the great fear that we have is that when we try to do that and we have duplication or we have overlap, we just simply create another procedural regime which allows our somewhat ingenuous critics at times to attack us and delay us.

Of the mines that we have permitted over the last 8 or 10 years and I think I said there were 11 or 12 of them that have

been done under the new regulatory regime-three of those mines on Bureau of Land Management ground have been challenged, and one on the Forest Service's has now been in litigation for 7 years. Yes, we are extremely sensitive about abuses coming the other way, because once you establish that regulatory regime, as we saw with SMCRA, there is a long period of uncertainty where the rules are being redefined, where the litigation goes on, and it becomes extremely expensive to advance either exploration or development. I am going to stop there. I know that you have over the course of the day and over the course of the hearings in the field asked a lot of questions and invite whatever questions you might have.

Thank you.

[Prepared statement of Mr. Grandey follows:]