A Mother Lode of Arrogance

Babbitt, BLM Flout Law
to Punish Miners

by D. Dowd Muska,

n a Tuesday morning in late July the headquarters of the Department of the Interior in Washington, D.C. received a visit from U.S. marshals. The officers were on official business, and brought with them a document to deliver to Interior Secretary Bruce Babbitt. It was a subpoena.

The Resources Committee of the U.S. House of Representatives had grown tired of the Bureau of Land Management’s refusal to release documents pertaining to its new hardrock mining regulations. (The BLM is a sub-agency of the DOI, and thus Babbitt’s name appeared on the subpoena.) The Subcommittee on Energy & Mineral Resources, chaired by Rep. Barbara Cubin (R-Wyoming), had requested the BLM papers in March. Yet the agency stonewalled for over four months, and finally a frustrated Rep. Don Young (R-Alaska), chairman of the Resources Committee, pushed for subpoena authority. Young had harsh words for Babbitt and the DOI: "It appears as if the Department of the Interior simply doesn't want Congress to have these documents. Unfortunately for them, it is clear that Congress has the right to review all the documents. With this subpoena authority, we'll see how far the Department wants to go in keeping these documents away from the subcommittee."

It's not every day that U.S. marshals serve papers on a member of the cabinet, and media disinterest in the Babbitt subpoena is perplexing, since it was the highest-profile development in a significant land-use dispute. This latest battle in what some call the "War on the West" has implications for not just the mining industry,

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but for overall federal land policy. It also demonstrates the increased willingness of Washington bureaucrats to usurp congressional authority, and de facto legislate by themselves.

Changing the Rules

On February 28 the Federal Register, the executive branch publication containing the full text of all future federal regulations, printed a change to the rules governing hardrock mining activity on BLM-administered properties. (Hardrock mines extract metals such as copper, silver and gold.) The new regulations primarily impacted mining operations in Alaska, Arizona, Idaho and Nevada—states where the BLM controls large tracts of land. The changes modified the financial guarantees, or bonds, mining operators must provide to ensure proper environmental restoration of the land disturbed by their activities. No longer were small (under five acres) mining operations exempted from providing assurances they would reclaim their sites satisfactorily. Now, small miners needed to post a bond equal to the greater of either 100 percent of the projected costs of reclamation or $1,000 per acre of their operation.

The regulations expanded some of the assets allowed to be posted as bonds, such as letters of credit and market-based securities, but eliminated other types of financial assurances such as first-time mortgages. They also required that unless a mine is covered by a state bonding program, a certified professional engineer (an objective analyst whose fee is covered by the mining company) must vouch for a mine’s projected reclamation costs.

The new regulations were not proposals, they were final decrees. On March 31, the BLM’s revised bonding provisions went into effect.

The Industry Responds

At a quick glance, the BLM's new rules do not appear to be unique. They establish more regulatory hoops for miners to jump through and generate additional costs which disproportionately fall on smaller operators. Nothing out of the ordinary there—after all, bureaucrats in the nation's ever-expanding federal government constantly search for ways to extend the scope and depth of the powers they have over any industry, and are seldom sensitive to small businesses’ bottom lines. Why should mining bureaucrats be any different? But these regulatory changes were indeed unique, and since first seeing print in the Federal Register the rules have prompted a firestorm of debate, a nasty congressional-executive branch dispute and the filing of a lawsuit in U.S. District Court—as well as the drafting and introduction of a bill, sponsored by Nevada Rep. Jim Gibbons, to set aside final implementation of the bonding provisions.

Opposition to the revised regulations developed for many reasons. But unquestionably, miners were most upset over the way the BLM dealt with public input on the new rules. Back in 1991, the BLM took comments on revisions to the agency’s existing hardrock bonding regulations. Yet for five and a half years, the agency did not act on its proposals, not until February 28 of this year. The BLM printed the new rules as final despite the fact that many provisions had changed significantly from the ‘91 proposals, and entirely new provisions were added as well. For example, the final changes to the list of financial instruments allowed to serve as bonds did not appear as they were written in 1991. Noted Alaska Miners Association President Karl Hannemen: "They eliminated the right to use … your house or your mining property. They eliminated the right to use your mining equipment, so for most small operators … the assets that they might otherwise have available to meet a bond have simply been removed. That is a substantive change from the proposal and demands further review."

But although the ’91 rules differed from those now in effect in significant ways, BLM officials continue to assert that the public comments taken over five years ago are applicable to the substantially-different regulations of today. The BLM’s shaky defense of its public comment procedure provoked sharp reproach from the mining community and many in Congress. As Cubin noted, very few proposed federal regulations are "put on the shelf, ignored, and then picked up five and one-half years later." Nevada Rep. John Ensign concurred in testimony before Cubin’s committee: "In the case of this final rulemaking, it appears that little or no effort was afforded to the public to communicate with the BLM in regards to this action."

The additional financial burdens placed on miners—such as the requirement for a certified professional engineer to independently evaluate projected costs of reclamation—obviously raised the industry’s ire as well. But money wasn’t the only issue. Industry representatives and state officials have made great strides in recent years toward wise reclamation policies and most feel additional federal controls are simply not needed. Several states, including Nevada, have bonding "pools" to which miners contribute deposits and premiums in order to guarantee that their sites will be reclaimed. "Adequate regulation exists in states where exploration occurs on public lands," testified Minerals Exploration Coalition Executive Director Paul Jones. "Thus the need to rush into this new rule is not necessary." "The supposed ‘problem’ that this bonding rule is purported to address does not appear to exist," added the Northwest Mining Association Bulletin. "Every mining state has reviewed and amended … pertinent rules and regulations since 1991. The need for new federal bonding rules has not been evaluated in light of these recently passed reclamation bonding laws."

Some in the mining community even predict the new minimum financial guarantees placed on mine operators will affect present reclamation efforts. "The BLM has created a disincentive for current reclamation to go forward with [this] kind of a financial hammer," says one industry representative.

In characteristic fashion, Young bluntly summarized the frustrations many miners felt with the agency’s new rules: "Washington, D.C. does not want the opinion of the Congress, it does not care what the states have done and it has no intention of allowing any public input into this decision."

Who's Behind It All

Environmentalists responded to the BLM rules in a predictable manner. The Mineral Policy Center (MPC) charged the bonding revisions didn’t go far enough. The organization issued a press release the day of the notice in the Federal Register claiming the new bonding policy "defers to state bonding levels—which are ludicrously low; fails to specify or define reclamation standards; and allows hardrock miners to self-certify their bond or insurance rather than require an independent source of proof."

Yet greens shouldn’t complain too loudly about the "weakness" of the new regulations—they may be criticizing one of their own. Sources say David Alberswerth, Special Assistant to DOI Assistant Secretary Bob Armstrong, was one of the key architects of the 1997 rules. In 1991, Alberswerth was the Director of the Public Lands and Energy Division of the National Wildlife Federation. Many provisions in 1997’s final rules eerily match the suggestions Alberswerth made in his 1991 comments. At that time he had charged that the BLM’s proposed bonding policy was "biased in favor of industry concerns." Five and a half years later, with a political appointment to a senior position in the Department of the Interior, Alberswerth was in a position to fix what he saw as the BLM’s "failure … to address the problems with its hardrock surface management program."

But some allege the impetus for the final rules came from even higher up the chain of command. According to Alaska Miners Association Executive Director Steve Borell, Alberswerth himself was responding to dictates from above: "There is no data to show there was a need [for the new regulations]. It was a need for Babbitt, Al Gore, and [Council on Environmental Quality Chair] Katie McGinty—they want to slap mining in the face. They're going to do it at every turn in the road, and this is just one example."

In fact, mining industry representatives believe few, if any, BLM field officers pressed for the new bonding reclamation regulations or were even asked for their input. Laura Skaer, the executive director of the Northwest Mining Association (NWMA), says Washington sprang the final rules on the agency’s rank and file, giving "no direction at all to state [BLM] offices about how to implement the new regulations—no forms, no guidance documents." Skaer further states that miners with questions about the new rules have received different answers from different BLM offices, which only reinforces her belief that Washington did not adequately notify its field personnel of the coming changes.

The top-down allegation seems more credible given the BLM’s unwillingness to address the specifics of the charge. Tom Gorey of the BLM's public affairs office in Washington simply states that the assertion is "brought up in different contexts" regarding BLM policies, but is not applicable in this case since the new rules are "consistent with the secretary's overall efforts to ensure better reclamation of public lands."

The Do-Nothing Congress Defense

As the mining industry spread the word about the BLM’s new rules and considered an appropriate response, Congress exercised its oversight authority. Cubin’s subcommittee conducted a hearing on March 20, 11 days before the final regulations were to be enacted. At the hearing, John Leshy, Solicitor of the Department of the Interior, vociferously defended the BLM’s decision to adopt the final bonding rules. Leshy mouthed what would soon become the administration’s party line on the regulations: that congressional failure to adopt comprehensive mining reform during President Clinton’s first term necessitated actions by the bureaucracy.

"I must reject the suggestion that we somehow behaved irresponsibly by suspending work on the final rule after we published the draft rule in 1991, while we waited for Congress to grapple with and we hoped enact acceptable reform of the Mining Law," argued Leshy. "In fact, deferring to Congress and waiting for it to act in the 103rd and 104th Congress was a very responsible thing to do."

Yet even if the agency concluded congressional indecisiveness required it to act, a mechanism was already in place within the BLM to address hardrock bonding. In January, Babbitt established a task force to review the full range of regulations governing hardrock mining surface management, commonly referred to as the "3809 regulations." "It is plainly no longer in the public interest to wait for Congress to enact legislation that corrects the remaining shortcomings of the 3809 regulations," he wrote in a memo authorizing the task force’s creation. To this day, neither the secretary nor BLM officials have been able to adequately explain why final rules on bonding were enacted while the task force reviewing hardrock mining regulations at large was still at work. As Cubin stated, "If the Secretary could not wait for [the] task force to review the current bonding regulations for the revision of the entire 3809 section, at a minimum I think he could have directed the final rule to have been reproposed after a 60-day period where there could be up-to-date, meaningful input from the public."

But many see both the new rules and Babbitt’s 3809 task force—formed because the secretary was no longer willing to "wait for Congress"—as serious breaches of the nation’s constitutionally-mandated separation of powers. As Alaska Miners Association President Karl Hanneman observed, "If Congress does not see fit to enact certain laws, on what basis does the Secretary gain justification for proceeding on his own?" There is a growing belief that the BLM’s new rules provide further proof that federal bureaucrats place themselves above the lawmakers they ostensibly answer to. Gibbons, appearing on NPRI’s television program You Think About It, agreed with Hanneman: "The BLM is trying to make Congress irrelevant in the whole process of legislation by doing what it cannot get through Congress through the regulatory process."

Miners Go to Court

Clearly the industry has a vocal advocate in Cubin as well as members of Congress from states with substantial mining operations on BLM lands. (Both Nevada’s Congressmen serve on the Resources Committee; Gibbons serves on Cubin’s subcommittee.) But the wheels of Congress grind slowly, and miners seeking more immediate relief began to consider the litigation option. One industry organization, the Northwest Mining Association in Spokane, Washington chose to sue Babbitt, BLM Acting Director Sylvia V. Baca, the DOI and the BLM.

NWMA’s Board of Trustees voted unanimously to hire the Mountain States Legal Foundation (MSLF) to represent the Association’s 2,900 members in an attempt to invalidate the bonding regulations. On May 12, MSLF President William Perry Pendley filed a complaint with the United States District Court for the District of Columbia, which has jurisdiction over the decisions of cabinet agencies. The next day, the Minerals Exploration Coalition, Colorado Mining Association, Montana Mining Association and Utah Mining Association issued a joint press release in support of NWMA’s lawsuit.

The NWMA’s 13-page complaint puts legal muscle behind several of the mining industry’s concerns. Specifically, the suit alleges the BLM’s new bonding rules violate two federal laws—the Administrative Procedures Act (APA) and the Regulatory Flexibility Act (RFA). The APA’s "notice and comment" and "basis and purpose" provisions may have been violated by the agency’s adoption of final rules containing both new and altered provisions than those proposed in 1991:

"The BLM never notified the public that the final rules would contain new and substantially altered provisions, nor did the BLM allow the public to comment on the new and substantially altered provisions."

The RFA was possibly violated by the BLM’s failure to consult with the Small Business Administration to approve its definition of certain mining operations as "small entities." "[The BLM] violated the RFA because … they … adopted a new definition of ‘small entity’ for proposes of the mining industry … failed to provide an opportunity for public comment … and … failed to publish, prior to its implementation, the new definition in the Federal Register." The regulations may also be unlawful under the RFA because the BLM did not adequately assess the economic impact of the final bonding rules on such ill-defined small entities.

The BLM responded to NWMA’s complaint on July 18, and stood by the assessment offered by Leshy in March: "There is no question in my mind, we are on very solid legal ground." Despite the strength of Pendley’s arguments, the agency didn’t give an inch—it denied that any of its actions in issuing the new bonding regulations violated federal law.

The BLM then filed a motion for summary judgment with the court, asking Judge June L. Green to dismiss NWMA’s complaint. As Nevada Journal goes to press NWMA’s attorneys are preparing a response to the government’s motion.

Nevada’s Congressional Delegation Reacts

While it only affects one tenth of one percent of the state’s land, mining provides more jobs for Nevadans than any other industry but gambling. The Nevada mining industry directly employs 13,190 people who earn an average salary of $46,280 (well in excess of the state average of $26,626). Mining in Nevada is currently in the midst of what some have called a "second renaissance," with a rapid increase in gold production in recent years—the state now ranks as the fourth largest producer of gold, behind only South Africa, Australia and the Commonwealth of Independent States (the former Soviet Union).

So when a key state industry was hit with new federal regulations, Nevada’s congressional delegation took notice. As members of the House Resources Committee, both Gibbons and Ensign played a large role in the March 20 congressional hearings. As a witness, Ensign stressed the need for public comments on the new rules. As a member of the minerals subcommittee, Gibbons was able to address the solicitor directly, and grilled Leshy on a number of key points. After the hearing, Gibbons expressed outrage at the solicitor’s apparent indifference to his concerns. In an interview with the Elko Daily Free Press, Gibbons said "I personally watched the solicitor come to us and demonstrate arrogance. He doesn’t care about the impact of these proposals. He has no concern about what it would do to jobs."

Nevada Senator Harry Reid—always willing to employ Sagebrush Rebellion rhetoric when it suits his political needs—lashed out at Babbitt in an April press release: "With nearly 90 percent of Nevada under federal control, you just cannot change laws and rules affecting peoples’ lives and livelihoods without sitting down and addressing their concerns and gathering public input." (The senator lost that righteous indignation several months later, and was anything but hostile to Babbitt during the Lake Tahoe Presidential Forum.) Reid has reportedly drafted an amendment to the Department of the Interior’s appropriations bill which suspends the new bonding regulations, but his office did not return repeated phone calls requesting further information on the bill.

Inspired by the success enjoyed by Nevada’s bonding pool—which since established in 1989 has never had a default—Gibbons drafted and introduced HR 1917, a bill shifting authority for reclamation bonding to state governments. "States are much better equipped to offer solutions to local problems," said Gibbons. "The resources and knowledge needed to deal with these issues are not to be found in ivory towers about the East Coast." At this time, however, the law’s chances appear somewhat slim. HR 1917 has yet to pick up any co-sponsors, and no hearings have been held on the bill.

The Larger Picture

Mining has touched less than one quarter of one percent of the nation’s land. Each American citizen requires an average of 40,000 pounds of new minerals every year. All mining operations must currently comply with over three dozen federal environmental laws, including the Clean Water Act, Clean Air Act and Endangered Species Act.

But despite these facts, many in the environmental community despise mining. The BLM bonding battle is but one part of a much larger war—the conflict over the General Mining Law (GML) of 1872. Under the GML, mining companies need not pay a royalty, or portion of the revenue generated from mines located on federal lands, to the federal treasury. This so-called perk has allowed environmental groups to attack miners as recipients of obscene corporate welfare—freeloaders who bilk the country out of huge sums of tax dollars.

Babbitt himself both echoes and acts upon the beliefs of many in the anti-mining community. In 1994 a federal magistrate ruled the secretary had willfully withheld mining patents from companies which under the GML had lawfully sought to extract metals from public lands. This past May, he went so far as to celebrate the 125th anniversary of the 1872 law with a cake to illustrate the "outrageous gift" it gives mining companies. (How the secretary can conduct such acts of political theater and at the same time claim his agency is sympathetic to miners adversely affected by the BLM’s new rules is anyone’s guess.) There may indeed be valid reasons to reexamine how and when mining companies should be allowed to use public lands to extract mineral resources. But criticisms of a century-old law should not drown out a serious examination of the BLM’s actions in issuing hardrock bonding regulations in 1997.

Similarly, the bonding dispute should not be brushed aside as yet more partisan bickering between Congress and the executive branch. As perhaps best illustrated in Nevada, Democratic and Republican elected officials alike at both state and federal levels have worked together to mitigate the damage done by the BLM’s new rules. (The bipartisan National Association of Counties has also passed a resolution in opposition to the BLM rules.) Any citizen concerned with the proper delegation of the branches of government, despite his or her political affiliation or views on whether the mining industry is "paying its fair share," needs to be concerned with the BLM’s actions in this matter. The agency’s decision to issue the new regulations at all, and its behavior since it first made the rule changes public—refusal to extend the public comment period, use of specious legal claims to stonewall congressional requests for documents—only fuels speculation that the revised bonding rules are not sound, justifiable public policy but rather a deliberate attempt to punish the mining industry.

Conclusion

Supporters of the BLM’s new regulations base a great deal of their argument on what they see as a pressing need to reform the way federal lands are used by private, for-profit mining interests. The Mineral Policy Center admitted as much in its response to the BLM’s initial notice in the Federal Register. The new bonding regulations, intoned the MPC, should be "the tip of the iceberg" of much larger, broader mining reform.

But whether or not the GML should or should not be modified has, in truth, very little to do with the legitimacy and legality of the BLM’s new hardrock bonding regulations. While mining foes seek to divert attention away from the BLM’s unusual—and quite possibly, illegal—issuance of the new provisions, the ongoing congressional investigation, and possibility of a federal law to overturn the rules and NWMA lawsuit will make it difficult to ignore what many see as another example of all-too-typical BLM arrogance.

As Cubin noted in March, "the issue of bonding is not what is at point here, the issue is to ensure the integrity of the process." Clearly the "process" employed by the BLM in this matter was flawed, and the agency now faces much deserved criticism. Perhaps the agency will successfully defend its revised bonding policies. But regardless of the outcome, the BLM’s actions in this dispute have already strengthened the notion that the Clinton administration has little regard for—and is quite possibly at war with—the livelihoods of many in the West.u

David Muska is Contributing Editor of Nevada Journal.


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