STATEMENT OF THE WESTERN REGIONAL COUNCIL SUBMITTED TO THE HOUSE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS HEARING ON MINING LAW LEGISLATION WASHINGTON, D.C. Chairman Rahall, Ranking Member Vucanovich, and Members of the Subcommittee: I am Karen Galatz, Vice President of First Interstate Bank of Nevada, a wholly-owned affiliate of one of the largest banking organizations in the country, First Interstate Bancorp, headquartered in Los Angeles. First Interstate serves more than 5 million households through its 1,100 full-service banking offices throughout the Western United States. I am presenting this statement for Donald D. Snyder, Chairman and Chief Executive Officer of First Interstate Bank of Nevada, on behalf of the Western Regional Council. As you know, the Western Regional Council (WRC) is an organization of chief executive officers of fifty corporations with significant business activities in the Western United States, including a cross-section of most major business and industry sectors of our region, including major financial, engineering, transportation, utility, construction, agriculture, forest products, accounting, mining, manufacturing and other enterprises. Much of the data and information in my statement, today, comes from an economic impact report and a position statement developed by the WRC. These documents will be provided to Committee members, and I ask that they be included in the hearing record along with my written statement. So, why is a banker, on behalf of a broad-based economic development organization, testifying today? Because, despite our expanding and diversifying economy, mining continues to be an essential activity to the economic well-being of many communities in the West, and the structure of the Mining Law is important to the economic viability of the mining industry in our region. Since mining operations are predominantly in rural areas in the West, their importance to our regional and local economies is greatly magnified. First Interstate provides banking services to more than 650 communities throughout the Western United States. Many of these communities depend to some degree on mining for their livelihood; some of these communities depend on mining for their very survival. In Nevada, for example, 85 percent of all personal income in Eureka County and 63 percent of all personal income in Lander County is from mining earnings. The same is true in most other Western states--70% in Greenlee County, Arizona; 77% in San Juan County, Colorado; 42% in Custer County, Idaho; 27% in Jefferson County, Montana; 28% in Grant County, Mexico; 35% in Lawrence County, South Dakota; 19% in San Juan County, Utah; etc. Many Western cities began as mining towns, and mining remains a significant employer throughout the region. In Nevada, for example, gold production directly or indirectly provided over 44,000 jobs in 1990, 20% of Northern Nevada's workforce. In addition to the thousands of jobs in the mining industry, itself, mining, as a primary industry, has a significant "multiplier" effect. (Recent studies conclude that actual mining employment figures can be multiplied by 3.0 in Idaho, 2.4 in Arizona, and comparable "multipliers" in other Western states to reflect the real number of jobs created by or dependent upon mining in both rural and urban centers of the West.) More significantly, because they are among the higher paying jobs, the impact of mining employment in our region is even greater. Nationally, the average weekly earnings in mining was $589 in January of 1990, versus the average of $338 for total private industry. In my own state of Nevada, in 1989, the mines paid an average of $36,000 per person, more than any other major industry. Household earnings induced by the Nevada mining industry accounted for 4.4% of the State's personal income. In many cases, mine operations are the largest taxpayers in our rural towns and counties, as well as in some of our states in the West. Mining in Nevada is providing approximately $83,900,00 in state and local taxes. Mining operations are usually the hub of their communities. The stores, the gas stations and the banks share in the success of the mine in their community. The roads, sidewalks, local swimming pools and sometimes the schools in the rural West were often paid for or built by the local mine operator. Mines provide day care in some communities, they provide scholarships and are big supporters of local events events that benefit our employees and their families. This economic activity also has national and international implications. We recently learned that the United States just passed the Soviet Union to become the second largest gold producing nation in the world. (South Africa is the largest gold producer.) My state of Nevada leads the U.S. in gold production, producing about 62% of the total. Mining plays a crucial role in our country's balance of trade with other nations. If they aren't mined in the United States, the metals used in domestic manufacturing of autos, computers, electronics and other goods must be imported, putting additional strain on an already bulging trade deficit. Importantly, as a result of technological, productivity and other advances in this area, the U.S. mining industry is competitive in world markets, even as many other basic industries decline. In summary, the region served by First Intersate Bank accounts for more than 70 percent of the total U.S. production of metallic minerals and mining services. Mining has been and will continue to be a much more important component of Western economies than of the United States as a whole. What does the economic importance of the mining industry to our region have to do with the Mining Law and the pending legislation to reform that law? Mining exploration entails great risk and significant costs. Mine development is extremely capital intensive. The flexibility inherent in the structure of the Mining Law has, for over a hundred years, established a fragile balance between risk and incentive, cost and return. This balance is supported by two principles that miners call "self-initiation" and "security of tenure". Legislative or other changes that alter or create uncertainty in a mining company's property rights in minerals on public lands, add significant costs or risks to mineral exploration or |