This is why he did it, to prevent price movements while killing mining.
The Clinton-Gore Administration's war against mining
By U.S. Representative Don Young
web posted September 27, 1999
The Clinton-Gore Administration is determined to implement national policies that reduce mining in the United States. Under Secretary Bruce Babbitt, the Department of Interior (DoI) virtually operates as an arm of the Sierra Club. The Department continually promotes policies, pushed by national environmental groups, which combine the use of strict land use regulation and costly fees to curtail mineral production from federal lands.
The latest of Interior's seemingly endless stream of policy initiatives against mining is a memorandum, known as the Solicitor's "millsite" opinion, in which the Department's chief lawyer rewrites existing law. This opinion is being used to prohibit a mine on public land from using more than 1 acre of land in support of the mine for every 4 acres within the actual mining area. Support acreage for a mine is used for mill facilities, maintenance shops, waste rock disposal, tailings ponds and transportation facilities. Interior's arbitrary limit on support acreage is simply not workable for many mines, particularly surface operations.
Interior's acreage limits apply to any mining operation governed by the general mining laws of the United States. Affected operations are primarily located in twelve western states containing over 92 percent of U.S. public lands and accounting for nearly 75 percent of domestic metal production. Also, much of the United States future mineral supplies likely occurs on these public lands.
The "millsite" opinion was first applied on March 29,1999, in an ambush of Battle Mountain Gold Co. and Crown Resources, partners in the proposed Crown Jewel mine in Okanagan County, Washington. Approval of the Plan of Operations for the Crown Jewel mine, originally granted in early 1997, was rescinded because the project had too much support acreage, based on the Solicitor's "millsite" opinion. Coming without warning, this action caused the shareholders of Battle Mountain and Crown Resources to suffer significant losses on the day it was announced.
The Plan of Operations for Crown Jewel was submitted in 1992. Environmental groups challenged the permit approvals in court, but they lost on every substantive ruling. During the entire permitting process and ensuing legal challenges no one -- not Interior, nor any environmental group -- ever raised the excess support acreage issue.
Based on the approval of the Plan of Operations granted in 1997, Washington State proceeded with its permitting effort. By February 1999, over fifty state and local permits had been obtained for the mine, and abond exceeding $50 million was posted. Eighty million dollars had been spent on this project, and permitting alone cost some $20 million. According to the Director of the Washington Department of Ecology the [Crown Jewel] permitting process has represented "the most rigorous environmental analysis the state has ever conducted on a project of this type...No other proposal has received this level of environmental scrutiny."
Although the Solicitor maintains that the law clearly supports his ruling, it conflicts with past practices of the Interior Department and contradicts both the Bureau of Land Management and Forest Service manuals, which say that as much acreage as is necessary for the safe and practical operation of a mine may be granted for mining purposes without regard to any arbitrary limit. Rather, the grant size is determined by the amount of land actually used for mining or milling-related purposes. Moreover, prior to the Crown Jewel case, Interior has never taken an action to limit the acreage used by a mining operation on the basis stated in the "millsite" opinion, and in numerous instances, Interior has approved mining operations where the acreage exceeds the limits in this opinion. For operating mines in the latter case, Interior can revoke their Plan of Operations and shut them down, using the "millsite" opinion.
Those familiar with mining law practice flatly disagree with the Solicitor's "millsite" opinion. They say that Congress enacted the General Mining Law of 1872 to encourage mining on federal lands; thus, any arbitrary acreage limit on land needed to support a mining operation makes no practical sense. They also argue there has never been any express numerical limitation on the support acreage for a mine and the enormous body of case law interpreting the mining law contains no example supporting the Solicitor's "millsite" opinion.
Other recent Interior policy initiatives against mining include creation of large, mine-free buffer zones around units of the national park system, again by means of a Solicitor's opinion, and an attempt to implement costly new bonding regulations for mining without complying with laws governing rule-makings.
A second recent Solicitor's opinion rewrites the Organic Act for the National Park Service as amended to give the Secretary of Interior authority to regulate lands outside of park boundaries. Based on the Solicitor's opinion, Interior Secretary Babbitt is considering closing the most promising area in southeast Missouri for new lead deposits to prospecting or mining. The justification for this action is the "need to protect" a unit of the National Park System located about 15 miles away. The area considered for closure is southwest of the district which produces about 85 per cent of the primary lead needs of the United States. Southeast Missouri has been the primary source of lead in the United States since the mid-1800's and contains the greatest concentration of lead deposits in the world. Closing the region to prospecting will effectively end lead mining in southeast Missouri once present mines are exhausted. The scientific basis for concern that lead mining may degrade a National Park System unit some miles away does not exist.
The Interior Department (DoI) issued stringent final bonding regulations for mining which were strikingly similar to comments made on the draft rule by the National Wildlife Federation (NWF). The lobbyist who signed NWF's comments on the draft rule later left NWF to join the Clinton Administration's Interior Department. This former NWF lobbyist is the same high-ranking Interior official who influenced the final bonding rule and pushed it through the rule-making process without allowing public comment. A lawsuit was filed to overturn the rule because Interior did not comply with requirements of the Administrative Procedures Act or the Regulatory Flexibility Act in making the rule. A summary judgement by the U.S. District Court rescinded the rule after finding that Interior violated the law in making the regulation.
Should we be concerned that DoI is conducting a war against the nation's mining industry? Does mining really matter?
Mining is important to all Americans. Mining is a basic economic activity which supplies 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 our civilization, our high living standards and today's sophisticated technologies possible.
According to the National Research Council, one of the primary advantages the United States possesses over its strongest industrial competitors, Japan and western Europe, is its domestic resource base. The domestic mining industry provides about 50 percent of the metal used by U.S. manufacturing companies. The United States is among the world's largest producers of many important metals and minerals, particularly copper, gold, lead, molybdenum, silver and zinc, and still has substantial domestic reserves of these metals.
During most of the 1990's global mineral exploration trends were strong, while U.S. mineral exploration was on the decline. Unless this trend is reversed, significant declines in domestic mineral production must occur as present reserves are exhausted. Much mining investment capital has already taken flight to other countries. Mining of metals and other mineral commodities is an international business -- one in which the United States must remain competitive with other nations for scarce investment capital.
As for the United States right now? Investors are following sage advice given more than four centuries ago by the great German mineralogist, Georgious Agricola: "The miner should not start mining operations in a District which is oppressed by a tyrant, but should carefully consider if the overlord there be friendly or inimical." After the Crown Jewel fiasco, the brokerage firm, ABN Amro, warned investors, "mining companies with limited U.S. exposure are likely to prove safer investments during the upcoming months than those with substantial U.S. exposure."
The Interior Department and the Sierra Club seem to believe that our Nation is better off taking a national security risk and importing its mineral raw materials than producing them at home. This policy will put the United States in direct competition with Japan and other Asian nations for available world mineral resources. Japan is the world's largest importer ofnickel, copper, iron and manganese and is ranked second in zinc and lead imports.
Aware of its reliance on imported minerals, Japan has negotiated long term supply contracts with foreign mines and financed construction of new foreign mines to supply Japanese manufacturers. If U.S. mineral production declines, foreign sources must replace the lost production. Japan already has locked up much of the world's mineral production under long term contracts at favorable prices. U.S. manufacturers will be forced to bid up the price on whatever mineral supplies are available on the spot market.
Political appointees controlling the regulatory authority at Interior are using their power to implement rules that Congress, even when controlled by their own party, has refused to enact. In a recent memo ordering revision of surface mining management regulations, Secretary Babbitt clearly asserted this policy, 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 [surface management] regulations."
Before long term investments of hundreds of millions of dollars are considered, investors want a predictable legal system, and a government that operates by "the rule of law." -- not by whim or fancy. They want to know a government will uphold property rights once an investment proves successful. Banana republics are characterized by rewriting laws on impulse. No one in full possession of their faculties will risk instant losses on their investment due to a "surprise" decision by a bureaucrat.
If we allow federal agencies, like the Interior Department, to unilaterally rewrite rules to satisfy a political agenda, how long can our nation remain the world's great economic engine? A decline in U.S. mineral production will increase reliance on foreign sources for minerals for our national defense, increase a worrisome national trade deficit and annihilate thousands of high paying skilled jobs in America.
Reprinted with the permission of the Lincoln Heritage Institute.
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