In February 1997, the Bureau of Land Management (BLM) announced new hardrock mining bonding regulations that would take effect on March 31. The rules came under fire from the House Subcommittee on Energy and Mineral Resources, who held hearings on March 20 and June 19 to examine "the integrity of the process" used to create these rules. Although Chairwoman Barbara Cubin (R-WY) voiced her support for bonding requirements at these hearings, she questioned the Department of the Interior's (DOI) compliance with the Administrative Procedures Act's (APA) provision to solicit meaningful public comment on the rule. The bonding regulation was similar to one that was proposed and received public comment in 1991, but had laid "dormant" for six years until Interior Secretary Bruce Babbitt published the final rule in February. Cubin argued that the rule is substantially different than the original and should have been reopened for public comment and should now be withdrawn for public comment. The Northwest Mining Association (NWMA) agreed, and filed suit against the DOI for violating the APA.
On May 13, the US District Court granted the NWMA motion for summary judgement and remanded the new bonding rules back to BLM after the judge found that BLM had violated federal law. The court found that BLM failed to follow provisions in the Regulatory Flexibility Act that require agencies to consider economic effects on small businesses and also used an unlawful definition of a small mining company. BLM had defined a small mining company in a number of ways, none of which were the SBA definition of less than 500 employees. The court declined to rule on the APA argument "because of the disposition of [the] claim under the RFA." Soon after the court ruling was announced, the House Resources Committee passed a report prepared by the Subcommittee on Energy and Mineral Resources opposing the process used to promulgate the rule. The Democrats on the Committee passed a resolution with dissenting views.
In the FY98 appropriations bill, Congress prohibited the BLM from promulgating any proposal to replace or modify the rule until November 1998. In the FY99 appropriations bill, Congress instructed the National Academy of Sciences Board on Earth Sciences and Resources to complete a report on the "environmental and reclamation requirements relating to mining of locatable minerals on federal lands and the adequacy of those requirements to prevent unnecessary or undue degradation of federal lands." The report language adds that BLM may not promulgate any final regulations until September 30, 1999.
House Committee on Resources
Subcommittee on Energy and Mineral Resources
March 20, 1997
Mr. John Leshy, Solicitor, U.S. Department of the Interior
Mr. Paul Jones, President, Minerals Exploration Coalition
Mr. Karl Hanneman, President, Alaska Mining Association
Mr. Philip Hocker, President, Mineral Policy Center
Chairwoman Barbara Cubin (R-WY)
Ranking Member Carlos Romero-Barcelo (D- Puerto Rico)
Rep. Christopher Cannon (R-UT)
Rep. Jim Gibbons (R-NV)
Rep. Nick Joe Rahall (D-WV)
Chairwoman Barbara Cubin (R-WY) called this hearing to examine "the integrity of the process" used to create new hardrock mining bonding regulations. While Chairwoman Cubin supports bonding requirements, she questioned the Department of the Interior's (DOI) compliance with the Administrative Procedures Act's (APA) provision to solicit meaningful public comment. A bonding regulation was proposed and received public comment in 1991. After laying "dormant" for six years, Interior Secretary Bruce Babbitt published a final bonding rule on February 28, 1997 that become effective March 31, 1997. The Chairwoman and other committee members believe the new rules should have been reopened for public comment, and should now be withdrawn for public comment.
Mr. Leshy's testimony defended the process the DOI used to issue bonding regulations. The Federal Land Policy and Management Act of 1976 "directs the Secretary [of the Interior] to prevent unnecessary or undue degradation of the public lands from...activities conducted pursuant to the Mining Law of 1872." Therefore, it is the Secretary's duty to protect public lands. Bonding regulations were first proposed in 1991, when comments were received and considered. The DOI was then ready to issue a final rule, but deferred to Congress which was attempting to overhaul the Mining Law of 1872. Reform had passed both the House and Senate and was being considered in a conference committee. When it became apparent that Congress could not reach a consensus on mining law reform, the DOI began the necessary paperwork to comply with administrative procedures, a process that took several years. Once that work was completed, Secretary Babbitt issued his rule on February 28, 1997. His reasons for not reopening a public comment period were twofold. First, debate over Mining Law reform has been extremely active and not in a "deep freeze" since the rules were initially proposed. Additionally, the changes in the final draft "are a logical outgrowth of the proposed rule".
In response to questions by Ranking Member Carlos Romero-Barcelo (D-Puerto Rico), Mr. Leshy explained that the program defers to the states when state regulations are as strict or stricter than federal regulations and the impact will be "fairly marginal on small miners." Responding to Chairwoman Cubin's concerns, he reasoned that the comment period could not be reopened now because mining season will soon begin and a short delay for a comment period would postpone implementation for an entire year. Chairwoman Cubin responded that Congress could issue a law to stop implementation, and she would consider that route if a suitable outcome was not reached.
Mr. Paul Jones testified on behalf of the Mineral Exploration Coalition, an industry-supported advocate on public policy issues involving access to, and the safe and environmentally responsible use of, public lands for mineral exploration and development. He was concerned that the process used to create bonding legislation was skewed because of the long lag time since the rule was proposed and the many changes made from the proposed to final rules. He believes "many relevant changes have occurred since 1991 which affect, if not make unnecessary, the recently issued rules." Since similar regulations already exist in most states, he sees no need to rush this process and believes the administration should reopen the rules for public comment.
Mr. Hanneman provided four main reasons for his opposition to the newly issued rule. First, the "six year old process is stale." Important changes have occurred within the regulated community and much relevant information has been evaluated. Secondly, the final rule has substantive changes that could not be anticipated from the proposed rule. He cited bond amounts (the lack of a cap) and type of financial instruments allowed as two areas that underwent massive changes from the proposed to final rule. Mr. Hanneman also found it inappropriate to promulgate the final rule when revisions of 3809 regulations are pending. A task force recently has been formed to examine several facets of Mining Law, including bonding requirements, and their findings will not be considered in the bonding issue. Finally, Hanneman believes the economic impact was not adequately analyzed, and miners will face greater economic harm than predicted.
Mr. Hocker testified for the Mineral Policy Center, a nonprofit organization dedicated to adopting policies which serve the long-term national interest for environmentally-clean and fiscally-responsible management of our mineral resources. While he does not believe the new regulations go far enough in protecting our resources and are "the tip of the iceberg", he supports the process and believes he was given the opportunity to comment before the publication of the final rule.
House Committee on Resources
Subcommittee on Energy & Mineral Resources
June 19, 1997
Mr. John Leshy, Solicitor, U.S. Department of the Interior
Mr. David Alberswerth, Special Assistant to the Assistant Secretary for Land and Minerals Management, U.S. Department of the Interior
Mr. Jere Glover, Chief Counsel, Office of Advocacy, U.S. Small Business Administration
Chairwoman Barbara Cubin (R-WY)
Ranking Member Carlos Romero-Barcelo (D-PR)
Rep. William Thornberry (R-TX)
Rep. James Gibbons (R-NV)
Rep. Donna Christian-Green (D-VI)
Rep. Christopher Cannon (R-UT)
Rep. Chris John (D-LA)
Rep. Nick Rahall (D-WV)
Chairwoman Cubin began by saying that she "can't understand why we'd take a six-year long rule, change it, and then force it down the throats of our constituents." She was referring to the six year lapse that occurred between when the Department of the Interior first proposed the mining bonding rule in 1991, and when the final rule went into effect on March 31, 1997. This House oversight hearing was the second devoted to questioning the Department of the Interior's (DOI) compliance with the Administrative Procedures Act's (APA) provision to solicit meaningful public comment prior to the finalization of a rule. Cubin emphasized that her complaint is not with the content of the rule, but rather with the secretary's refusal to accept sufficient public comment in the almost six year interim period, strictly the process of rulemaking chosen. She referred to the case pending in court filed against Secretary Babbitt by the Northwest Mining Association as evidence of missing efforts to solicit public comments on the proposed rule. In conclusion, Cubin stated her previous request that the rule be suspended for a sixty day comment period. "I hereby ask one more time for the Department to swallow its pride, admit it was wrong to rebuff public comment, set out the time requested for public comment, and publish the rule anew."
Ranking member Romero-Barcelo stated his objection to the use of documents which have been declared privileged in lieu of the pending court matter during the hearing, stating that their entry into the public record might deprive the Department of the Interior of disclosure advantages during the trial. Romero-Barcelo stated that the documents should only be entered into the public record should the Committee vote to do so. In that way, members who disagree with the decision can be so noted. In response, Cubin remarked that she was "astounded by the fact that the government is taking the fifth," but agreed to preserving the documents' privileged status. In conclusion, he stated his support for the final rule, noting that "taxpayers have too long carried the burden of mining clean ups. This rule will temper that."
Rep. Gibbons characterized the final bonding rule as "detrimental and unneeded." He added his opinion that the DOI, in failing to appraise the general public of the rule's final version, violated the Administrative Procedures Act (APA). "The BLM must meet the rules of Federal agencies in making rules."
Mr. Leshy began by stating that the mining bonding rule that went into effect on March 31, 1997 goes back to the Reagan Administration, and many comments were received during the lengthy comment period. He characterized the rulemaking process in question as "normal in our eyes." Leshy went on to say that the BLM has reported no major difficulties in implementing the rule, adding that some states required no changes because the bonding rule was no more stringent than current state law. Mr. Leshy added that the suspension of the rule at this time would create a situation in which the taxpayers must pay rather than the responsible parties. He stated that the rule is needed in order to "protect the taxpayers' interest in not being saddled with unnecessary costs...and to prevent unnecessary or undue degradation of the public lands from, among other things, activities conducted pursuant to the Mining Law of 1872," the latter a mandate given to the Secretary by Congress.
Mr. Alberswerth did not submit testimony.
Mr. Glover focused on the Regulatory Flexibility Act (RFA) and addressing the question of whether or not the BLM complied with the RFA as it relates to establishing the definition of a small entity-in this instance, a small miner. The RFA establishes that agencies shall endeavor to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. According to SBA's regulations, a small miner is one with 500 or fewer employees. Should an agency wish to deviate from this standard definition, the RFA requires that the agency seek the approval of the Administrator of the SBA. "The SBA must certainly be contacted prior to publication of a final rule." In this case, the BLM finalized the rule and then contacted the SBA after the fact regarding RFA compliance. The SBA and the BLM have been in contact and Glover stated that the SBA now believes that "the agency has a better understanding of its obligations under the RFA."
Questions and Answers
Chairwoman Cubin first asked Mr. Glover to comment on the BLM economic impact analysis as well as their failure to comply with the requirements of the RFA. Glover responded that the economic impact analysis is "one of the better ones for the Department of Interior." He added that while he cannot say that, legally, the BLM should have consulted the SBA prior to the publication of the rule since this case is somewhat of a "hybrid" and the law is not altogether clear, the SBA would certainly have preferred such a consultation. Ranking member Romero-Barcelo then asked Mr. Leshy to clarify hi concerns about document disclosure with the pending lawsuit. Leshy specified that the lawsuit alleges that the DOI did not comply with either the RFA or the APA in the rulemaking process. He stated that establishing the documents in the public record might constitute a waiver of court privilege. He added that he is not concerned with the committee's seeing the documents, but rather with what is done after the fact.
In response to Rep. Gibbons' inquiries about implementation difficulties, Leshy specified that there have been no "major" reports of difficulty, and with any new rule there are start-up situations through which to work. Chairwoman Cubin followed up with a run-down of the provisions in the rule which were not apparent to her in the 1991 proposal. She requested that Leshy show her the section of the proposal which led to each segment of the final rule. Unsatisfied with Leshy's answers which spoke more to the value of each provision as opposed to its inclusion in the original proposal, Cubin concluded that "there are significant differences between the first rule and the final rule," and added that the public has not had the opportunity guaranteed by law to add their input.
Rep. Gibbons returned the questioning to definition, and asked both Leshy and Glover to define a small mining entity. Glover adhered to the SBA definition of fewer than 500 employees. Leshy stated that the BLM did not use a specific employee number cutoff, but rather adhered to the definition in an Omnibus Bill of a miner holding ten claims or less.
Cubin again challenged Leshy, stating, "I have to tell you that I don't get this. We're asking for a comment period. A lot of money is being spent on this lawsuit. Why does a sixty-day comment period seem to be a tremendous burden?" Leshy responded that the suspension of the rule would have the potential to greatly burden taxpayers. Cubin's response was simple. "You sat on it for six years...what would sixty days matter?" She then returned to the document disclosure issue, requesting that Leshy submit a list of federal cases supporting his argument.
The questioning then turned to Mr. Alberswerth and allegations of a conflict of interests. He was employed by the NWF prior to accepting a position at the DOI. Cubin alleged that he developed some very strong opinions in a short time, and perhaps had not been at the DOI long enough prior to assisting in the final rule to "know all sides of the issue." Alberswerth responded that, in his opinion, he had been. Cubin also questioned the fact that many of his recommendations regarding mining during his tenure at the NWF made it to the final rule, stating that the cure for conflict of interest problems is to allow public comment. Leshy responded, stating that the DOI does not consider previous employment at the NWF to constitute a conflict of interests, and that drawing on the knowledge gained by outsiders is perfectly acceptable. Alberswerth added that he would see "an appearance of impropriety" only if he were the only commentor, and every one of his recommendations was taken as proposed, a situation that did not play out in this matter.
To Rep. Gibbons' request that he go through the basic procedural requirements when there is a difference in a definitional phase between a proposal and a final rule, Mr. Glover responded that there must be consultation with the SBA, time set aside for public comment, and publication in the federal record.
Cubin concluded with her bottom line that "all of this is so easily done away with by allowing a sixty day comment period." Leshy responded that sixty days will become six to nine months that the taxpayers simply can't afford. Cubin followed up with the comment, "you've abused the system. I guess we'll agree to disagree." To Rep. Cannon's inquiry about the consideration of reissuing, Leshy concluded "we're on solid legal ground." Cannon closed the question and answer segment with the following, "I would encourage you to rethink that. It's a matter of good government."
Please send any comments or requests for information to the AGI Government Affairs Program at email@example.com.
Contributed by Kasey Shewey White and Jenna Minicucci, AGI Government Affairs Program
Posted March 24, 1997; Last updated December 8,1998
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