the u.s. army, through his experiences during and after the civil war. exploring the american story, watch american history tv, saturday on c-span2. representatives from the mining industry testified on possible changes to an 1872 mining law before the senate energy and natural resources committee. the hearing was chaired by joe manchin. this is over two hours.

committee will come to order. we're here today to begin discussing the law of 1872 which governed hard rock mining on public lands and considers ways to bring this outdated law into the 21st century. to put things in perspective, back in 1872, ulysses s. grant was president and established what is now the yellowstone national park. national parks are often called america's best idea, but i don't

think anyone would say the same about the mining law from 1872. it's been more than 13 years since this committee has held hearings on mining reform and it's time to look at a sensible update. i know we can pursue mining, bearing in mind our economic security. that includes making sure taxpayers are getting a fair return on these federal resources and we maintain american competitiveness and encourage the development of secure mineral supply chain. debate surrounding our public lands and natural resources are complicated so i'm glad we have this panel of experts before us for this discussion. i want to thank senator cortez masto for requesting this hearing and helping to bring everyone to the table. i believe it's important that taxpayers don't get short changed on revenue when it comes to resources on federal land, especially when compared to the going rate on state and private land. i also believe it's crucial for the united states to continued to be viewed as an attractive

jurisdiction for mining investment. now more than ever, developing new sources of minerals is vital to our energy independence and national security. it's true that we don't have significant deposits of critical minerals here in the united states. but for the elements that we do have, like rare earth lithium, we need to responsibly develop these domestic sources. and many of those minerals on federal land is in the west. it makes no sense at all to put our lithium ion battery supply chain in the hand of foreign actors like china when we have lithium here that can provide a reliable source and domestic manufacturing. to that end, the energy act we got enacted almost a year ago in the bipartisan infrastructure bill which is pending in the house, would make a significant investment in the domestic critical mineral supply chain. reduce investment in mining on federal lands. however, i believe that this new critical mineral gold rush actually means that mining reform is more timely than ever. for the american public to

support the necessary investments in domestic mining, we need to make sure we have mining laws in place that help to address abandoned mine lands, provide for reasonable land management and insure a fair return to the taxpayers. in 1872, in the aftermath of the california gold rush, the mining law arguably made sense as congress tried to encourage the development of the west. today, one of the most obvious problems is mining failed to require a royalty and continues to mandate the existing claims and patent system. these are resources owned by every single american. the fact that over $5 billion in minerals can be mined each year taken off the federal land and sold without a single penny of royalties is just crazy. it makes no sense at all. also, rather than retooling patents, congress has to pass a fix each year to prevent them from being taken into private ownership for as little as

$2.50. further, modern mining works at an enormous scale using modern technology that would have been inconceivable in 1872. unfortunately, this scale has contributed to enormous abandoned mine problems and the public is often stuck with the bill. unlike the coal country where over coal company has a fund, there's no revenue stream to address the enormous legacy of environmental degradation from hard rock mining in the western united states. it strikes me as fair that tax payers get a share of the profit in exchange for conducting mining operations on public lands. while we may disagree on the precise path reform should take, i hope we can all agree that mining law is outdated and for the current needs of society, industry, and we should carefully consider updates to address these shortfalls. i look forward to the discussion this morning on how to strike the right balance with updates to this antiquated law. with that, i turn to my

colleague, senator barrasso. >> thank you. i agree with you, it's important and timely to hold this hearing today. just like last week's hearing, it comes at a critical moment. for the last nine months, president biden has been pushing an agenda that would dramatically increase our nation's demand for minerals. president biden has plenled to end new sales of cars and pickup trucks that run on gas or diesel. the president insteads wants americans to drive electric vehicles. earlier this year, mark mills testified before this committee that, quote, providing the refined minerals needed to fabricate a single electric vehicle battery requires the mining, moving, and processing, he said, of more than 500,000 pounds of materials. he went on to say, that's 20 times more than the 2500 pounds of petroleum that an internal combustion engine uses over the life of the car. this chart from the international energy agency makes a similar point.

it talks about electric vehicle and how much minerals are needed all the way across. the color coding, blue is copper, you have nickel, and graphite. conventional car is just copper and nickel. and that shows the difference in terms of the minerals that are necessary for an electric vehicle and a conventional vehicle. so at the same time president biden wants to shut down america's natural gas and coal fire power plants, he wants to do more along this line. the president instead doesn't want coal, doesn't want natural gas, he wants utilities to generate electricity from wind turbines and solar panels. mark mills again went on before this very committee and explained, compared with a natural gas power plant, both wind turbines and solar panels require at least ten times as many total tons of mined, moved, and converted into machines to deliver the same quantity of

energy. again, this is a chart, not by me but by the international energy agency, and it makes a similar point. at the top, offshore wind. onshore wind, solar, solar power, nuclear, coal, and natural gas. and the color coding is how much is copper, how much is zinc, how much is chromium, all of which shows much fewer need for these minerals in natural gas and coal than we would have in either offshore or onshore wind or any of these other sources of power. in light of those goals, you would think president biden and democrats in congress would want to make it easier for us to mine in the united states for these minerals that are necessary to do the sorts of things the biden administration's agenda is calling for. but instead, this president and the house of -- and the house

democrats want to make it more difficult, more difficult to get to these minerals that we need. and they seek to eliminate all mining on federal land. so as the chairman said earlier, so many minerals, where are they found? on federal land. last month, house democrats advanced partisan budget legislation. their reckless spending spree. that bill would impose punishing royalties on existing and new mines on federal lands. house democrats also plan to raise fees and impose a tax on mining firms. the fees, of course, would be based, they say, on the amount of dirt they move. you can't make this stuff up. house democrats are planning to tax the dirt. house democrats also want to repeal the last senator mccain's bipartisan legislation to provide access to one of the largest copper deposits in north america. this project would alone create

3,700 jobs in arizona. their proposal is going to devastate communities and workers in wyoming, nevada, arizona, and throughout the west. the house democrats' legislation will also be a giant gift for our adversaries overseas like china and russia. according to the u.s. geological survey, the united states is already very heavily dependent on china and russia for dozens of minerals. many of these minerals are essential to our national defense and our economic security. the last thing that president biden and house democrats should be doing is increasing our dependence on china and russia, but that's exactly what they are doing. i'm open to consider changes to the mining law of 1872. still, we must protect american workers, mining communities in the west, and our nation's competitiveness. we also need to recognize that the mining law of 1872 covers dozens of different minerals. they each have their own market.

which may be dominated by foreign, by state controlled corporations, and countries that are seeking to undercut u.s. mining firms. for that reason, a one-size-fits-all approach is not going to work for me. we also must not limit our vision to the 1872 mining act. for example, congress needs to enact meaningful permitting reform with fixed deadlines for federal agency action. finally, i can only support changes if congress proceeds to regular order and therefore on a broad, bipartisan basis. these changes are too consequential for congress to pursue them through the partisan budget process. thank you, mr. chairman. >> thank you, senator barrasso. i would like to welcome all of our witnesses and thank you for being here today to share your expertise. we have the general council for the gold corporation. we have the president and ceo, we have the vice president of

taxpayers for common sense. we also have katie sweeney, executive vice president and general counsel of the national mining association, and david brown, president and ceo. we're going to start with senator cortez masto with an introduction. >> thank you. first, let me say thank you for holding the hearing today. we so appreciate you working with us as well. i know i urged you to do this. nevada's mining industry is critical to our economy. as you said, it's important for us to work together and find solutions that support the many jobs and businesses it sustains while also investing in our community. so i am looking forward to the conversation today, and i'm so pleased to be able to introduce rich haddock, the general counsel of barrack gold corporation. rich has worked in the gold mining industry for 30 years and has been their general counsel since 2014. since joining the corporation in 1997, he has served in both legal and operation roles

including retail counsel north america, the vice president environmental, and president of north america. prior to becoming an inhouse mine counsel, he had a natural resource and environment litigation practice. mr. chairman, barrack gold corporation began operating in nevada in 1986. in 2019, nevada gold mines were formed which combined the significant assets of the corporation of denver, colorado. nevada gold mine is the largest gold mining complex in the world, and it's operated by barrack. it directly employs more than 7,000 people and more than 4,000 people indirectly through their contractors and local supply chain. many of their employees are third generation miners who have careers with health and retirement benefits for themselves and their families. there's no doubt it is a major economic driver, not only for our rural counties in nevada but

for the state of nevada. so i am so grateful and pleased to be able to introduce mr. haddock as a panelist today. >> thank you, and now mr. haddock. >> chairman manchin, ranking member barrasso, senator cortez masto and members of the committee, thank you for inviting me here today's. i'm rich haddock. 85% of nevada is owned and managed by the federal government. gold mining is the largest hard rock mining activity on federal land, as recognized by the cbo last year. and most of that is in nevada. 85% is from nevada gold mines. that makes mining law an issue of super important in nevada. the mining law has survived so long because it works. while it works, it's not perfect, and there are refinements and improvements that could be made. there are two aspects that are critical. the first we call self-initiation, which is the

ability of the explorer to determine where they want to explore. in other words, where the geology leads them. the second is security of tenure. we believe it shouldn't be divorced from land tenure issues and other aspects of the mining law. the argument that hard rock mining pays nothing for mining on public land, it's achieved through royalties, taxes, direct equity or a combination of those. the u.s. approach is not yet included a federal royalty in the mix for locatable minerals and has focused on income tax, much like other federal systems such as australia and canada. in our business, it's a significant multiplying effect in the sense we contract with a wide array of providers who also pay their corporate income taxes. our federal system has been his toeically the state to impose mining taxes that are royalties. whenever the issue of federal

royalties has arisen in congress, going back to 1994, barrack has supported a reasonable net royalty. today, in line with national mining association's position, we continue to do the same. we support an additional claim fee, earmarked for reclamation of expanded mine land. this would increase u.s. economic to a higher level than developed mining nations such as australia and canada and put it on par with other mining countries. the house proposal would make it less competitive, and the strength of the u.s. economy and greenhouse gas reduction goals in the hands of other governments. there are three foupidational concepts important to this discussion. the first is we turn dirt into gold. the ore removed from the ground itself is worthless. there are complexes in nevada which is one of our three complexes, additional investment in the mills and complex

structure was about $7.5 billion every year, we maintain $1.5. second, the hard rock royalty is not a cost that can be passed on to buyers. third, hard rock metal prices cycle up and down based on factors beyond our control and beyond supply and demand. the cycles are inevitable and sometimes dramatic. any royalty will reduce the amount of ore by making it less economic to mine. it dramatically shrinks the resource by making a greater percentage on economics, thereby eliminating resources, and making less product available for commerce. the gross royalty on hard rock minerals is not a tax on the value of the ore. rather a tax on the investment, like the $7.5 billion investment i mentioned. gross royalty picks winners and losers.

lower grade mines which would generate jobs and provide materials are uneconomic. advantages of the net royalty. it allows them to recoup through commodity cycles and it normalizes the cost of the operation and in that way doesn't discriminate between high and low cost mines or between commodities. it allows the mines to give the u.s. the upside. in some, a net royalty would insure there's a viable mining industry and federal revenues and supplied security long into the future. in closing, i want to acknowledge and thank senator cortez masto for her care and attention to the people of nevada and specifically close to my heart to the rural people. she spends time and effort there, and i appreciate it. i specifically support her -- i specifically thank you for her support of the people in mining. thank you for your time. i'm happy to answer questions

and submit additional material if requested. >> thank you. now we have ms. hannah. >> good morning, chairman manchin, ranking member barrasso and members of the committee. i'm autumn hannah and vice president of taxpayers for common sense, a national nonpartisan watchdog. thank you for inviting me here today to discuss the general mining law of 1872 and its long overdue need to reform. taxpayers for common sense's mission is to protect the taxpayer, advocating for fairness and transparency across the fralt government. as part of that, we believe public lands are taxpayer assets and should insure their value and avoid future liability. the 1872 mining law fails by all these standards. i started my career more than two decades ago, and hard rock mining was one of the first

issues brought to our attention by our founder. he had been advocating for reform of the law since the 1980s, working closely with both republicans and democrats. i had the opportunity in the mid-2000s when a bill led by former house chair ray hall was passed in the house. the reason it had broad support was because the 1972 mining law is so egregious by modern standards. though it governors some of the most precious hard rock minerals and those these minerals belong to the american public, it entitled the industry to take them free of charge. this has led to a massive giveaway of hundreds of billions of dollars in minerals. under the law, a claimant can patent or purchase a mining claim for no more than $5 an acre. the public is prohibited from charging market value for land. to put that in perspective, the 2021 purchasing power of $5 in

1872 was 20 cents. congress began enacting patent grants. they have brin grandfathered, but new patents have not been issued since. however, continuing the decades long process makes little sense to the mining industry or taxpayers. some of thee patented lands turn into huge non-mining windfalls for developers, becoming ski runs and housing developments. the total value of minerals mined on public land and the foregone revenue for taxpayers from not charging a royalty is unknown because insufficient data is collected by the federal government. however, based on limited data from the state of nevada and recently in colorado, in 2020, we were able to estimate the dollar value of hard rock mineral production on land it manages was $5.3 million in fy '19. despite the significant value of these minerals, under the general mining law of 1872, hard rock mining companies are not charged for the value of these resources through a royalty rate. other attractive industries such as oil, gas, and coal pay

royalties for the resources they extract from public land and water. the hard rock mining industry should not be any different. mining companies must compensate taxpayers for extracting resources and provide an adequate revenue stream to restore our public land. we recommend congress enact a gross income royalty for hard rock minerals that is commensurate with other industries and applies to all hard rock production current and future. there are other ways to apply a royalty, but a gross income royalty will be the most transparent, the easiest to administer, and the least likely to be gamed or avoided. as a percentage, a royalty would generate a return for taxpayers proportional to the mineral value. automatically increasing when prices are high and decreasing when prices are low, setting a royalty rate does not preclude flexibility in its administration. setting mineral specific rates could account for variations in the cost of their extraction. additional safeguards could be put in place. other royalty schemes are more

complex and convoluted and this allows for legal gamesmanship which could lead to little in the way of return on the extracted taxpayer assets. in the need for smart fiscal policies, applying a royalty seems like low hanging fruit and could provide taxpayers up to $5 billion in new revenue over the next ten years. unlike many fiercely partisan issues, many know we must update the 1872 mining law. this is underscored by a commission last year with american viewpoint, a conservative polling firm that found updating the mining law garnered the support of 73% of democrats, 67% of republicans, and 72% of independents. they were concerned it isn't fair to give away federal resources and treat hard rock mining different than other industries. the case is clear. no business would set a price for land and stick with it for 150 years. no one thinks simply giving away

valuable minerals for nothing makes sense, and no company should be allowed to leave messes on the land. i look forward to the committee making reform a reality. >> thank you. now we have mr. wood. >> senator manchin, ranking member barrasso and other committee members, my name is chris wood and i'm the president and ceo of trout unlimited. thank you for inviting me to testify here today on reforms to the 1872 mining law. as you all know, abandoned hard rock mines pose one of the greatest water quality problems in the country. as the committee explores options for updating the 1872 mining law, i urge you to advance a royalty or fee structure that is reasonable and fair and that generates significant revenue to clean up land and water affected by abandoned mines. trout unlimited's mission is to bring together resources to care

for and recover our streams so our children can enjoy the joy of wild and native trout and salmon. in pursuit of this mission, we have worked to restore appalachian streams, and we have worked in dozens of communities in the west to help clean up old and abandoned hard rock mines. thanks to the support of our partners in the mining industry, state agencies, foundations, and private donors, we have recovered more than 200 miles of stream from the scourge of abandoned mines. we appreciate your focus on this issue. there is no lobby group for acid mine drainage. there's no consistency or constituency for abandoned mines. it's time, it's past time to make it easier for would-be good samaritans to clean up pollution that they had nothing to do with creating. i often say that tu is the patron saint of forgotten environmental causes. the epa estimates 40% of our

western headwater streams are negatively effected by abandoned mines. these dot the landscape like ticking time bombs waiting to release their brew of zinc and lead, cadmium, arsenic, and other chemicals that are poisonous to people. in the west, there are two primary obstacles to cleaning up abandoned mines. the first is lack of dedicated funding. we applaud the committee for including in its bipartisan infrastructure package a proposal to provide $3 billion for abandoned mine reclamation. that's a great start, but 10 tens of billions of dollars are needed to make our lands and waters healthier. unlike just about every other commodity that is developed from our public lands, there is no excise tax, royalty, or fee associated with the production of hard rock minerals that is then allocated toward restoration and remediation. we need a reasonable royalty to clean up these legacy sites. for coal alone, the abandoned

mine land reclamation fund has rayed more than $11 billion to clean up and make safe coal mine sites in appalachia and around the country. tu cobbles money together from a variety of sources to help pay for abandoned mine cleanup. our staff are like alchemists with their ability to leverage funding. but the scope and the scale of the problem begs for dedicated funding to clean up abandoned hard rock mines just as we have for coal. the second primary limiting factor is liability. when groups such as trout unlimited, groups that have no legal or historic interest in creating the abandoned mine waste, want to clean up these mines, we become part of what the lawyers call the chain of custody. that means that we could spend a few hundred thousand dollars to improve a stream from 25% of water quality standards all the way up to 90%. it might cost another million or two to get that extra 10% increment, and today's law would allow either the government or a

person who decides to file a citizen suit to come after us for the rest. the superfund law are two of the most important laws for holding polluters accountable and forcing the cleanup of many ruined streams and landscapes. the challenge is that companies behind most of the tens of thousands of abandoned mines in the west are long gone and their owners are long dead. conservation can be defined as the application of common sense to common problems for the common good. resolving these two issues will allow the nation to apply a lot of common sense to a lot of common problems. thank you again for the opportunity to testify today. trout unlimited appreciates your leadership and looks forward to helping you. >> i thank you. now we're going to have the senator introduce our next speaker, mr. brown. >> chair manchin, thank you. i'm very excited to introduce

mr. david brown, the president and ceo of wild bend, which is headquartered in billings, montana. it's a family owned mining and manufacturing business that supports 200 direct and indirect jobs in montana and wyoming. mr. brown knows first-hand the day to day work it takes to insure montana jobs are created and protected as they provide for the local communities around their operations. mining provides high-paying jobs, good benefits, and provides much needed local and state revenue, as well as emergency services. he also knows how hard it is to permit new mines in the united states. and how this process puts the united states at a disadvantage, forcing us to be reliant on foreign countries like china. i very much look forward to hearing from him today on how we can make it easier to provide the raw materials and the minerals we depend on for

national defense, high-tech, health care, and energy production. mr. chairman, thank you. >> thank you. now we'll hear from mr. wood. >> i mean mr. brown. >> thank you. mr. chairman, ranking member barrasso, members of the committee, my name is david brown. and i'm the president and ceo of wild bend inc. and represent the third generation of the 70-year-old small family-owned and managed mining and manufacturing business with headquarters in billings, montana, and mining operations in the basin of montana and wyoming. wild bend directly employs 140 associates in our wyoming and montana operations and indirectly, 60 contract miners. we offer some of the highest paying jobs in the area and have a significant impact on the economy of the rural towns and counties where we operate.

wild bend operates in the industrial mineral segment of the mining industry and mines a unique mineral called sodium bent nite. it has quality characteristics that are so unique, it is referred to worldwide as wyoming bentonite. no other country is blessed with the exception quality we have in wyoming. it's used as a base material to create hundreds of different products that are sold worldwide. your automobile engine was made using bentonite using molds to make the castings. the landfill in the community would have environmental issues if wyoming bentonite did not perform as a bottom liner. it would be difficult to drill a drill of any time or install utility lines buried throughout

the country without using this to make the drilling. the wine and beer you enjoy would be cloudy if not for wyoming bentonite, and finally, you would be unhappy and your cat would be unhappy if not for wyoming bentonite's unique properties to form odorless clumps. it's important to note that around 90% of the bentonite we use for our product is obtained from mining claims on federal lands. administered by the dom. our mining has opened efficient mining techniques utilizing scrapers and dozers and a continuest cast-back mining technique we developed to place the burden we remove from one pit directly into the preceding pit. this allows us to spread top soil containing live native plant seed directly on

previously mined and backfilled pits. our mining circumstances and methods are quite different from those found in other types of mining. the deposits we mine are long and very thin, and our disturbance footprint is small. a typical pit is open only a matter of months before the topsoil is replaced and we begin our planned revegetation process. as a result of our mining practices, we have received numerous reswaurdz from state, federal, and nongovernmental agencies for our exceptional environmental stewardship. as small business operating in an industry with inherently low profit margins, and heavy reliance on mineral resources on federal lands, our ability to compete in the domestic and international marketplace is dependent on our ability to access and economically mine these resources. this is why any discussion about changing mining laws, the rules

under which we have always operated, is of particular concern to us. several significant changes in the mining law are being proposed in the hard rock mining section of the house budget reconciliation bill that is currently being negotiated in congress. any discussion of changes to the mining law must recognize that this is an extraordinarily complex issue with 149 years of promulgated regulation and case laws that must be dealt with thoroughly and carefully. the bill provides neither the time nor the appropriate venue for detailed and thoughtful discussion of the issues inherent in such a change. the one size fits all approach to mining law reform will affect our company's ability to remain competitive and possibly our viability to operate and offer good-paying, high quality jobs, not to mention the impact on the nation's supply chain and the

economy of our local community. for all these reasons, i respectfully request this committee recommend to the full senate that the hard rock mining section be removed from the final reconciliation bill before it is sent to the president. i appreciate this committee holding today's hearing, as the first step, and moving this issue via regular order, and i look forward to continuing to work with you throughout this process. that concludes my formal statement. i would be happy to answer any questions. >> thank you. now we'll hear from ms. sweeney. just talk. >> good morning, i'm katie sweeney, executive vice president and general counsel at the national mining association. thank you chairman manchin, ranking member barrasso and committee members for the opportunity to testify. we needed a time when the demand for minerals is skyrocketing. in 2017, the central bank said

it would grow more than 1,000% due to the focus on green technology. more recent estimates from the international energy agency said those estimates may have been far too conservative. as the world began to awaken to the exponential growth in demand, the pandemic unleashed a massive disruption of the supply chain, further exacerbating our mineral vulnerability. the biden/harris administration early on recognized the path to repairing our crumbling infrastructure, transitioning to cleaning energy, is paved with minerals. the administration acknowledged the importance of the mining industry through the january made in america executive order's caution against the use of materials that are not mined in america and the february american supply chain order's focus on mineral supply risk. with $6.2 trillion worth of domestic mineral resources, a highly trained, highly compensated work force, and world-class environmental and

safety standards, we're well positioned to help the administration meet its objectives. this committee has led the way in educating on the important role of mining materials as the front end of the supply chain for a modern way of life. thank you for your leadership on these issues. especially your awareness of the impediments that stand in the way of revitalizing our mineral supply chain. such as the inefficient permitting processes that impair the industry's global competitiveness. this committee has been solution oriented, taking positive steps through the bipartisan american mineral security act and the senate infrastructure package. when it comes to updates to the mining law, we're at a cross roads. the path we take can secure domestic explain chains or divest offshore. with so much in the balance, we question whether budget reconciliation is the right vehicle for this discussion. there are numerous issues outside of the scope of

reconciliation that should be considered in tandem. good samaritan cleanup being a prime example. we would welcome an opportunity to engage in a process not constrained by the confined of reconciliation. appropriate changes to the mining law provide an opportunity to decrease our independence on foreign minerals, promote job creation, drive economic growth, and transition to renewable energy. we believe in loyalty and preservation of security of tenure are necessary to justify the enormous up-front capital investments required to explore more and develop minerals. we also strongly support to use of royalties for abandoned mine cleanup as well as enactment of good samaritan legislation. while modern mining reclamation and regulations will prevent new abandoned mines, the industry acknowledges the legacy sites is

committed to finding solutions. in contrast, the highly partisan house reconciliation approach contains punitive proposals to sideline the u.s. mining industry, including an 8% growth royalty on new operations, a 4% growth on existing operations, and a 7 cent per ton tax on dirt material moved during extraction. these excessive taxes and fees are the wrong path at the wrong time for our country. instead of raising revenue, this approach will lead to premature closure of existing mines and little interest in future u.s. mines. exacerbating our unhealthy reliance on minerals from countries with far less stringent environmental and labor standards. additionally, these new taxes and fees signal extensive paxes already paid. current total royalties, taxes, and fees for u.s. mining operations is around 40%, similar to other major mineral producing countries.

the house reconciliation proposed fees would push the u.s. well above our competitors. compromise is possible, the mining industry is open to reasonable royalties. working together in a bipartisan way, we can assemble a package that helps secure our nation's economic recovery and prosperity for years to come without jeopardizing the mining foundation of our country. thank you for the opportunity to testify. happy to answer any questions. >> let me thank all of you so much. now we'll start the questions. i want to say i come from a coal mining state, i come from an extraction state. i understand royalties. i paid royalties all my life. i never could imagine we would find so many things we produce in this country. i couldn't, because we pay extraction, we pay royalties on top of that, and we're able to compete and survive in the market. that's all. so i know this is all about the money. i just want to make sure that we

don't put undue pressure. you can understand maybe from my point of view, in coal, i know i own land and you're the coal company, i know we're going to negotiate. okay. i know i'm going to be in 7%, 8%, 9%. i know if i own the oil and gas rights, you're going to pay me 12.5%. pretty much those are going rates. and i know if i'm the mining company, i'm responsible now once i start for putting money away for tonnage to take care of basically the burden i leave behind. so we're working through all that. i just have a hard time -- i'm not discouraging anybody. if we can find a pathway forward is what we're looking for. it doesn't put undue pressure, but there's a fairness to it, and that's what we're looking for, and surely, i want to thank senator cortez masto for bringing it to my attention and our committee' attention to understand more of what you all are facing and also the states.

i understand also the severance tax is extremely low on hard rock mining that the states receive. i want to make sure we understand. i had a lot of gas companies with a severance tax in west virginia. i raised the severance tax and they said, if you raise it, we're going tleev. i said please, before you leave, bring your leases back because i'm going to pay you for them. i don't want you to leave mad. i'll pay you. i want you to have a good relationship with the state of west virginia. i never had one person turn a lease on. we all worked and lived with it. so if we do it in a responsible way. i would just ask all of you, and i know mr. haddock and mr. brown, coming from the private sector, i know this has been debated and talked about for a while, and i know you're comparing it with other places in the world that you may compete with. we compete with the world all over in coal. we compete with natural gas and all the things we extract.

we're still doing pretty good. so tell me, is there a pathway forward that we can negotiate and basically that has not been done since 1872? if we go, is there an incremental way to make fairness to this? mr. haddock, you might want to start since you're in the gold business. >> the short answer is yes, mr. chairman, there is. and as i said in my opening statement, we have long supported a reasonable net royalty for a lot of reasons. we think the net royalty is the right approach. >> we don't do any other extraction on that, we do it on gross. >> i understand that. as i said, a gross royalty becomes very regressive on hard rock minerals, the price for which is set in the global market. unlike coal and some of these other commodities where the royalty cost can be ultimately passed on to the end consumer, it cannot be in gold, and that's why in large measure for us, the net royalty is very important.

>> mr. brown, do you have -- >> yes, thank you, senator. i believe there is a path forward. we would absolutely love the opportunity to have a conversation with all of the stakeholders about mining law reform, about royalties, about fees, about all of the other provisions of the mining law. but i believe it needs to be a comprehensive look and not just the slice about the money that we're trying to address today. most of our mineral is mined on federal land. and it's terribly important to us that we have access to those minerals and that we're able to produce those and sell them and make something. we're in an industry that has a very, very thin bottom line. bentonite characterically is

that way. so our story is a little different, perhaps, than some of the other producers. and we would like the opportunity to be able to tell our story. >> that's why we have you here. i want you all to understand, we're not looking to suppress you. we're looking at this as a matter of fairness. that's all i can tell you. we do too much of this all over our country, and i have been involved for all my life around my coal mining town. i understand how this works. and we go with the market. we don't have control over that market price. it goes up, it goes down. basically, they'll stop production for a while because it's not profitable to produce, they'll come back when the market is right. i understand the market forces. i want you all to understand we're trying to understand this, and again, i thank senator cortez masto for helping us understand better how we can segue in to making fairness and putting responsibilities on this in a much more prudent and transparent way. with that, i will turn to my

friend, senator barrasso. >> thanks so much, mr. chairman. ms. sweeney, if i could start with you. the house democrats' reckless tax spending spee is going to impose new fees and royalties on existing mines on federal lands. in addition, the house democrats would impose a dirt tax on any material that's moved during a mining operation. under the house democrats' proposal, american miners will owe the federal government the highest rate of taxes, royalties, and fees in the world. if the house democrats' proposal is enacted, is it fair to expect u.s. mining operations to close? >> absolutely. i think if you look at all three of those very punitive fiscal provisions in the house package that you mentioned, the 4% on the existing and the dirt tax, any one of those could have a profound impact on the industry. you take all three of those and impose them at the same time, you're looking at mines definitely premature closure and

you're not going to attract any additional investments in the united states. other countries, you know, will reap the benefits. >> specifically, mr. haddock, and then mr. brown, how would your mines on federal lands be affected with all these three things? >> importantly, i think, our operations would continue. we can't pick them up, we can't move them, but what would happen is i kind of describe our business as being on a treadmill. we are constantly trying to replace the resources that we deplete as we move through the year. and the way we do that is through investment into exploration investment, through r & d, coming up with ways to convert what would otherwise be waste into ore. it's a very, very large investment. so what happens in our industry

is, you know, we have to balance our capital throughout the world and throughout -- so we would continue to mine our deposits but our growth profile in the united states would continue to decline. and particularly with the growth royalties, it would decline much, much faster. >> mr. brown? >> it would have a significant impact on us. an 8% royalty, a 7 cent per ton so-called dirt tax, understanding in the bentonite industry, we take the overburden out of the pit and put it on the bank, that's the first touch. we put it back in the pit to do the reclamation. the bentonite we touch is often three times before it ever gets to the plant to go through the processing. so i don't fully understand how that tax would apply, but and

then perhaps any of the other fees or the cost of -- the additional cost of monitoring the whole process through our operation, it would create a significant burden to us that very likely we would not be able to pass through to our customers because of the nature of many of our customers. it might very likely open up the possibility of competition from overseas as well. >> you're a 70-year-old family-owned operation. you joined the company in 1980. as you noted in your prepared remarks, it now takes about seven years to permit a bentonite mine on federal land. can you discuss how permitting delays for mining on federal land has grown over the past decade or so, and then discuss the impact of these permitting delays have had on your company in terms of cost.

>> i'll give you an example. it used to be that we were able to permit in roughly 14, 15 months. we just received a permit that was critically needed for our operation, and it took over seven years. had we not gotten that permit, that plant would have been at risk of shutting down in 2022, because we didn't have all of the resources needed for the plant. >> so as you consider, as congress is considering changes to the mining law of 1872, should it also be considering meaningful permitting reform for mines on federal land? >> i believe so. >> thank you, mr. chairman. >> thank you, senator. now we'll have senator cortez masto. >> mr. chairman, thank you. i would love to put this in perspective. i so appreciate you holding this hearing at my request, because i do -- i oppose the reform that

was -- the proposal put forward in the house of representatives because, one, legislation would have an unfair outsized impact on the state of nevada, where most of the land is owned by the government, and it imposes taxes on federal land, but more importantly, moving this type of reform through a short-term budget process would create uncertainty for the industry and an uncertainty that supports thousands of jobs across the country. so it is fair that we have this conversation that is transparent, in public. we bring all the stakeholders together and find a compromise. that's how this process should occur, so i want to thank you for having this hearing and allowing us to work through this process. because i think it is so important. one of the things, though, i do want to stress, and i thank mr. chairman for trying to get out to nevada to see the hard rock mining, but i know because of the climate and the weather and the fires, you were unable

to. but, mr. haddock, if you would, put this into perspective for me. because i know there is a difference between what we have talked about, oil and coal and that type of mining, versus hard rock mining. really oil, gas, and coal are at the mouth of the mine, meaning no refinement or processing is required by the miner for the material to enter the stream of commerce. in contrast, that's a little different than the hard rock mining. so could you talk a little bit and help us understand the processing costs in hard rock mining and how that differs? and that's what you're talking about when you're saying we should be looking at the net royalty, perspective net royalty. we're not taking into account the processing that is different than coal, is that correct. >> thank you, senator. that is correct. in our case, in the case of most gold mining, and for that matter, in the case of other

materials like copper, when you discover a deposit, that rock has no value. the only way you can turn it into value is by, first of all, you have to find it. in our case, we have a deposit where we have spent almost $500 million. now, we're just to the point where we're permitting. then after you discover it, you have to do numerous studies on chemical and physical parameters, and try to figure out how to turn that rock into a sellable product. then, after you do that, you do your feasibility studies. after you've designed the facilities, produce the ore. then you build the facility, an ore processing ability. it's $1 billion a pop. each mill would be $1 billion. we have seven of them right now. then you have to expend the capital every year to continue to maintain that property and

those facilities and to expand them and to refine them to deal with the ore that you encounter. it's a non-stop process that never sends, cycles of investment. then and only then, when you get to the end of the product, the end of the process, do you have a product, a sellable product. after that, as senator manchin said, we are very cognisant of our reclamation obligations, and we have our reclamation cost. that, too, is part of our investment. right now, nevada gold mines carries reclamation bonds of $2.1 billion, which is about twice the entire coal industry in west virginia. so it is continuing investment cycle. >> so let me ask and put it in -- and i know it so well, ms. sweeney, help me put it into layman's terms.

when you scoop the initial shovel of dirt, you don't know what you have until you go through the patented process of processing, to determine whether there is a material worth anything, is that correct? >> absolutely. there are years of exploration activities that take place before you would even know whether you have an economically valuable deposit. there's up front studies you're doing during that same time and lots of information you're collecting. if you're looking at about 1 in every 1,000 exploration activities might become a modern mine, there's a lot of up front work and up front costs, actually, that go into that as well. >> is that why you have concerns about a dirt tax? >> absolutely. >> okay. thank you. i know my time is up. i appreciate it, many chairman. >> now senator lee. >> thank you, mr. chairman. utah is home to the last uranium mill in the united states, the

white mesa mill. now, domestic production of uranium has plummeted over the last several decades. four years ago, when we reached our peak, we were producing in the range of about 40 million pounds a year. but in 2018, towards the end of this chart, we produced just 1.47 million pounds. now, that doesn't mean demand has waned. in fact, demand has remained relatively constant over the entire 70 plus period depicted in this chart. it's just that when domestic production diminishes, we make up for that on the international market. so in 2015, for example, the united states imported 65 million pounds of uranium. house democrats are now wanting to impose some new -- on this part of the economy, as has been mentioned already in this

hearing. in their reconciliation package. one that would institute a royalty on hard rock materials like uranium. this royalty would be 8% for some. that is 8% of gross income for new operations and 4% on gross income for existing operations. i believe it would have a crippling effect on many markets in the united states. ms. sweeney, i'd like to start with you. how does u.s. dependence on material imports, everything from our supply chains broadly to our infrastructure and our energy security, and specifically how could a royalty like that being proposed and the dirt tax affect the supply chain? >> thank you, senator, for that question. i think uranium is a great

example of how we've become excessively over-reliant on foreign sources of minerals over the years. when the information agency can't even provide the actual amount produced in the united states last year because it is proprietary information. there's so few producers. that's a sad state of affairs, but it is one example of many, how we've become incredibly reliant on foreign sources of minerals, even for workhorse minerals like silver and copper that are used in solar and in electric vehicles and every aspect of modern life. we're importing 80% of the silver, and we have a lot of silver resources in the united states. currently, 37% of copper come from foreign sources. these punitive questions that take us outside the total government take of our

competitors are destined to really freeze the investment in the united states. and those -- the other countries will profit from that. some of those other countries are not our allies either. >> right. not our allies and, to put it mildly, aren't anxious to see us emerge as the global frontrunner in green energy technology or any of the high-tech sectors where the united states has some real potential. now, they also, as i mentioned a minute ago, also in the package is what they're calling the reclamation fee, which is, as i understand it, 7 cents would go to the secretary of the interior for every ton of displaced earth. now, help me understand something. it's already the case that mines are required to secure and reclaim all the disturbed areas of mining activity, correct? that's already required. so this provision would end up

requiring honest operators to pay for their reclamation work of other operators. what is the point of this particular issue? isn't this really just imposing an additional burden that could effectively force the relocation of some of these operations overseas? >> absolutely. i think that that fee is incredibly burdensome, and it is really on the movement of dirt which has to take place for you to be able to get to these minerals we need so desperately. >> you mentioned in your testimony that your company has had a significant impact on the world towns where you operate. i think this is the story of a lot of utah operators. you mentioned the impact that the royalty and the dirt fee could have on you and your company and other companies like it. after hearing from ms. sweeney

on the disparate impacts that these -- that might be imposed by the royalty and the dirt fees, would you say that the proposal submitted by the house democrats, namely the imposing of a royalty tax of 8% for new operations and 4% for existing ones, wouldn't that add to market disruptions and potentially force some of these operations abroad? and wouldn't that also have the potential to favor market incumbents and disfavor new entrants to the market, given the disparity between 4% and 8%? >> yes. i would agree with that. there is foreign competition for us. the minerals that we're mining, again, are low value, but they work their way through the value chain and the manufacturing

system, and they become a part of the end product, whatever that is. there's hundreds of end products. so if we increase the cost to wild ban, and wild ban has to increase the cost down the supply chain, it's very likely that our customers will be seeking other sources of supply so that their product can remain competitive and viable. and there are foreign mining companies that would be eager to enter this market in the united states. so it would have a dramatic impact on us. and the other thing i want to mention, we talk about the 8% and the 4%. in our business, we have a plan of operation that encompasses a, let's say, relatively small area. we are updating that plan of operation as we move forward.

so the 4% would apply to what we have today, but when we look at this, we think in the future we're going to be paying 8% under the current proposal. >> senator lee, thank you. >> thank you. >> senator heinrich. >> thank you, madame chair. madame chair, my father did exploration geology for copper long before i was born, in your state. and i remember quite fondly visiting my grandfather at gold mines across inform. -- november. he worked at battle mountain and many others. these are important jobs. it is an important activity. i think it is equally true that there are obvious and important reforms that should be added to the 1872 mining act, especially with regard to cleanup. you heard some of that from mr. wood. i have to say that i'm disappointed that we don't have a witness here today who can testify to the impact that our tens of thousands of abandoned

mines have on neighboring communities. in northern new mexico, a foreign-owned mine plans to open an exploatory mine for gold, copper, and zinc in the river valley. this valley's residents know all too well what can happen when mine waste filters into your water supply. 1991, mining caused a deluge of debris into a river, triggering fish kill and costing the state of new mexico more than $28 million in cleanup costs in dollars at that time. i'm sure it would be much higher today. so this community and its economy are reliant on farming and fishing. neither, frankly, can exist without the small streams that feed into the pacose river. both are at risk if a new mine opens in this location. yet, even though the proposed mining activities are on national forestland, land that

belongs to all of us, there is no way for the forest service under the 1872 mining act to determine that a mine in this particular location is not in the best interest of the public. so unlike oil and gas wells or coal or even a gravel mine under 1872, there's simply no step in the process where the public's interest in the location of a particular mine is considered. because this foreign corporation has purchased mining claims, they have an absolute right to build a mine even over the objections of the entire pacose valley community and the pueblos. so i am glad we're having this discussion. it is long overdue. i do believe there is a compromise to be had here on a reasonable structure. but as we consider these reforms, royalties, reclamation fees, claim fees, we also need to include the voices of the communities that live daily with the consequences of mine pollution. so i want to ask you, mr. wood,

in your view, you've worked all over the west, as well as through appalachia on restoration. are there some locations that are just not the right place for a new mine? places where it is just not possible to create a mine, to build a mine without unacceptable impacts on local streams, rivers, and communities? >> without question, senator. thank you for that question. i mean, a great example of that was an effort that senator makowski was a leader on, in stopping the proposed double mine, which is on state lands, not federal lands. but it's shocking that federal land managers, public servants, don't have the ability to say no to a mine if the mining industry follows the steps. it's the only use of our public lands they don't have the discretion to say no to, whether it imperils indigenous communities, local water supplies. it just seems like there ought to be a way to allow that

discretion while still honoring the investments the industry has made. >> so literally, it's the only use of our public lands where there's no discretion for the agents. >> it's the only use of our public lands where the agency doesn't have the discretion to say no. >> ms. hanna, any absence of a reclamation fee, who pays to cleanup the abandoned hard rock mine. >> that's great, senator. that falls on taxpayers. that's where we see the huge short yn fal shortfalls, in land mines not getting cleaned up. we need a revenue stream, and industry needs to share in the burden with taxpayers. >> how does that compare with other industries, for example, coal mining? >> so there are costs that other industries do take on, trusts created in the coal program, even oil and gas.

so we believe that this is something that the industry could share an effort in and create a real revenue stream and not put real burden on industry. again, we want to see this production happening, and we are supportive of responsible mining. we want to be open to discussions on how to set up that revenue stream so that industry believes that it works for them. and we can see that, that it is working. but we absolutely have this shortfall. there's so many priorities competing for government funds, and this is just -- we think the royalty and reclamation fee would be the way to drive revenue for abandoned mine cleanup. >> madame chair, my time experienced, but i would urge us to maybe not take quite the zealous approach that the house of representatives took, but to find a fair and transparent way for taxpayers to be compensated for these minerals. also to create a revenue stream

so that we can start cleaning up the tens of thousands of abandoned mines that literally -- that i think every western state. >> thank you. senator marshall. >> thank you, madame chair. thank you so much, all the witnesses, for gathering here today. this seems to be the next chapter of the same book. when it comes to making the environment cleaner, healthier, and safer, yet have affordable products. as i sit here and listen to you all talk, i wish, as we think about the permitting process, what a cost it must be to you all. and we're throwing so much money at the permitting process, i wish parts of those monies were being used to make things more environmentally friendly or environmentally cleaning up projects. mr. brown, midnight is a product i've purchased. i just assumed it all came from

wyoming. i had no idea there was any other. we learned today that 20% of it comes from china. if these taxes went into place that the house is talking in their reconciliation bill, would we end up having more come in from china? how would it impact your business, you think? >> well, i believe it would have an impact. the severity of which would have to play out, dependent upon where we could pass those costs down or not. i doubt that we could pass all of them. 20% of what is produced in wyoming is exported. china represents the major -- they're the second largest producer in the world, beyond wyoming. and i would consider them a significant threat to some of the markets that we have. if we're not there providing the

bentonite to our north american customers or international customers, china is likely to be up there right behind us. >> ms. sweeney, my next question is for you. whether we're shipping bentonite in from china or minerals from other countries, we have the shipping cost. what type of environmental impact would those have compared to the mining processes here in the united states? is there -- is it orders of magnitude, exponential? how could you quantify that? maybe it's a range, if at all possible. >> i think it would depend on the countries that are doing the mining and processing. some of them, for example, canada and australia would have similar environmental safety and labor standards. >> let's talk about china and the congo and africa. >> yeah. those are the ones that do not, right? so they don't have the same

labor standards as we do in the united states. if you're look at the congo and some of the cobalt being produced there, there are child labor issues that really, you know, are pretty horrific. we've got an incredibly talented workforce here that -- we've got the right infrastructure. we can make -- we can do it right here in the u.s. we can make this happen. >> thank you. in kansas, we've been fortunate to benefit from the nrda restoration program. we took some previous pit mines, and it is now some of the best fishing and wildlife habitat in america, actually. what are we doing in the mining industry today better than we were ten years ago, twenty years ago? share your story a little, ms. sweeney. what are we doing better these days? we don't have any mining left in kansas. i bet there's some great stories to share. >> there are incredible stories. particularly on the safety and

reclamation side for u.s. mining. if you look at the number of mines that go through a whole year without a single loss time incident, it is spectacular. the reclamation awards given by the department of interior for both coal and hard rock mining are really showing how forward-thinking the industry is, creative. thinking outside the box for what works best, not only for the environment but for their local community, in getting the input from their local communities about, you know, what they want to use that land for next. leaving behind important components of projects, like the treatment facilities for the communities to use. but i think, also, environmental monitoring is a huge difference, really to present some of the future releases that people

worry about most. there's so much more -- >> please, one more quick one. this is for ms. sweeney, as well. does mining support abandoned mine cleanup, and even increasing your contribution? >> absolutely. we would like to talk about a reasonable royalty as well as some fees that would be dedicated to cleanup. >> thank you so much. i yield back. >> thank you, senator. now we'll have senator hickenlooper. >> thank you, mr. chair. it is a pleasure just because 45 years ago, i don't want to date myself, i did take a class on industrial minerals. so this is now coming full circle. i appreciate a lot of your points. a, you worked for many years for my first mentor, investor jim owen. you were fortunate in that. then i did start out as a hard rock geologist.

certainly, i spent enough time mucking around in bentonite and have seen it both in terms of the drilling and extractions, but also in terms of using it as findings for making a -- which i ended up doing after the gee -- geology. the bentonite mine, the gold mine, what the costs are and how you think about that is interesting. i think that's -- it really does suggest, just as we wouldn't create a tax system as exactly the same as we do for oil, oil and gas, it does begin to create that image of how would we go about this. i talked to, ms. sweeney, you first. i ask, to meet the clean energy

goals, and earlier this year, there was a dramatic level of scale-up to get critical levels of minerals worldwide to keep pace with what we really need. i believe i'm someone who believes there should be some level of royalty there. i thought you might take a moment talking about the differences between -- and how it might pencil out, a net royalty and the gross royalty. you don't have to go through the different minerals. i don't think some of the people listening have the familiarity you and i do. >> right. thank you so much for that question. there is a large difference, and i think that rich talked about it in his testimony as well. you know, the gross royalty doesn't allow the deductions for the processing and the refining, which are really a large part of what provides the value for hard rock minerals compared to coal

or oil or gas. and if a gross value royalty is imposed, mining companies are required to pay that royalty, even when the mine is operating at a loss. since a royalty does best without consideration of the difficulty or the cost of processing the materials. there have been quite a few studies, including by the department of interior itself, look at gross versus net royalties. the department has concluded that gross royalty would result in significant job losses. losses to states and federal treasury, mine closures, and discouragement of new mines. i think as senator cortez said, it also encourages operators to leave lower grade ground. >> great. i appreciate that. ms. hanna, i've always instructed -- we still don't really know how much we produce

with so many of these different minerals. i remember that 45 years ago, and i don't think that's changed. independent from a taxpayer responsibility perspective, don't we need a full accounting of how much we produce in this country if we're going to have a policy grounded in reality? >> yes. thanks for the question, senator hickenlooper. we definitely need transparency more, and we need to have that tracking so that we can really understand what is the value of the minerals coming off our land, what production looks like. it's hard to get an assessment of what the impacts would be if we don't have that informatio for when we set these royalties. i do think we have sufficient information to know that the industry, and as i think everyone on the panel is saying, can absorb a royalty, can handle the impact of these new revenue streams, and still be very suck -- successful and profitable. i appreciate you mentioning the differences with various

minerals. we recognize that, as well, and we're open to conversations about how to get those revenue streams for taxtaxpayers. counting is first, how many do we have on federal lands is important. >> to finish up, mr. wood, there hasn't been that much discussion of trout, wildlife, and habitat yet. i do come from a state that is riddled with abandoned mines and has all kinds of problems, both in those designated as sites but especially those that aren't. it takes resources to mine. i thought you mentioned it earlier, but speak more about the good samaritan legislation and how that could be a first step, not a total solution, but a first step. >> thank you, sir. just to expand on your point, gao two years ago estimated there were 550,000 abandoned mine sites just on federal land. the problem is huge in colorado, which has tremendous trout fisherys. within assessment we did listed

125 miles affected by abandoned mine waste. we've been working with industry and conservation groups to try to create a pilot program that would ease some of the liability restrictions tied to the clean water act and the super fund law i mentioned. just 15 pilots that would allow us to prove the concept, that we know how to clean abandoned mines. it doesn't answer the financing issue, but it'd build confidence that we can begin to tackle these problems. >> great. couldn't agree more. i yield back. thank you, mr. chair. >> thanks for yielding back. >> i gave you all the time i had. i didn't have any. >> i thought i was being -- now we'll have senator -- >> can i have senator -- >> yeah. >> i appreciate that. i might follow on what the senator has pointed to in terms

of the -- i was -- i had an opportunity to visit the reopening of resurrection creek near hope, alaska, about a month or so ago. this was a collaboration. it's really encouraging to see industry partnering with the conservation groups. i said if the mining industry and conservation can come together, then quite possibly, democrats and republicans can. although, that's looking a little more sketchy now a day. but i thought it was a good example. mr. chairman, thank you for having this hearing today. senator cortez for encouraging it. this is where these conversations should happen. it should not be happening in a reconciliation bill on the house side or on any side, where you just kind of shove something in and hope we get it right. the fact this mining law has been around since 1872 kind of

says something. i think what we've heard today is nobody is afraid to be talking about what we might want to do to make things better, as long as we make things better rather than trying to thwart and to kill an industry that has been an extraordinary job creator and, really, a source of economic intrigue. we know we can go exactly the other way if we do things wrong and we do things in a manner that is not thoughtful. i think what we have heard today is that to take an 8% royalty for hard rock production, a reclamation fee of 7 cents per ton, and a claim maintenance fee, these are going to take us in the wrong way. so let's talk about ways that we can, again, make sure that we are doing the right things in the right way. my goal, my mission here when it comes to mining is to -- it's a commitment toward working toward reform. it's going to provide the

industry with regulatory certainty that it needs. we know that that is important for making investments. provide a fair return to the public for mining activities on public lands. protect the environment. ensure this industry which, again, has had some of the highest paying jobs in the region, and also provide these building blocks we need for renewable technologies and to have a future here. so i appreciate this conversation. i really appreciate, mr. haddock, what you outlined in terms of just the steps that go into a hard rock mining production and why it is different every single step of the way, in terms of how you get from the beginning of a project to the time where you're actually putting some product out there into the market. i think these are the types of discussion we need to have. i want to turn my question to you, ms. sweeney. this relates to the reclamation

fee. i'm actually kind of curious about this proposal. this is not the first time this has come up. it came up during the obama administration. the epa went through a rigorous exercise to determine whether the hard rock mining industry should be covered under cercla. they decided not to promulgate because, in their words, they were unnecessary and would impose an undue burden on the regulated community. then they said that the proposed requirements would be disruptive to state mining programs. so if you have an administration that had taken a look at this and determined that this was going to not be necessary because it places an undue burden, how is this fee that is being proposed now, the 7 cents per ton, any different than what was looked at under the obama

administration? >> i don't really think that it is different. and thank you for all the work you did on the epa financial assurance, making and working with the industry to make sure that those weren't imposed. but the dirt tax, you know, it also is not a solution to abandoned mine land creation. we have modern regulations in place today that protect our lands and the environment, and there's also over $6 billion worth of financial assurance held to fulfill those reclamation requirements, in case operators are not able to -- >> let me ask about that. within alaska, our department of natural resources, there are cooperative agreements to co-administer a bond pool that companies pay into. under alaska law, we require a reclamation plan be approved before the operation can be

commenced. they review the amounts every five years. then if the operator faces hardship or can't do the cleanup, the agencies reach out to the industry. but every time this has happened, i'm told, the industry has stepped up with the expertise, the equipment, and more to do the cleanup to the agency's specifications. so as a result of the cooperation that we've seen, the bond pool has never needed to be called on in alaska to perform cleanup. so i'm looking at this and wondering if there is an additional reclamation fee of the 7 cents, is there a concern that this additional tax would undercut the willingness of companies then to step up on a voluntary reclamation effort, if they're already going to be forced to be paying more? what happens to what we already have in place if you do this overlay?

>> that is a really interesting question that i have not thought about. i would think that our companies still want to do the right thing and be helpful and clean up the environment, but will the companies be here in the united states anymore if they're paying those kinds of fees? >> fair enough. chairman, my time is up. doi have a lot more questions that i'll submit for the record, but i appreciate the comments from everyone here today. >> senator king. >> given the lack of this industry, principally in maine, i come to this hearing unburdened by knowledge. >> you fit right in. >> chairman. [ laughter ] >> i may have opened up something. >> it's gone downhill from there. >> let me establish some basic principles. sounds like the industry is

agreeing there should be royalties on minerals extracted from federal lands, is that correct? somebody who is representing the industry. >> yes. reasonable net protective royalties, yes. >> what does the word "net" mean? >> net means that there are certain deductions that are allowed for -- for example, for processing -- >> why should it be a royalty based upon the value of the minerals extracted, just as in oil or gas or coal? >> because there isn't a value to the minerals before it gets refined. >> but there's no value to the minerals, why are you digging them out of the ground? >> well, we're putting in the up front capitol -- >> you dig something out of the ground and sell it, right? do you refine it yourself? >> it depends on the company. some of the companies do some of the refining themselves. some do all of the refining themselves. yes, there is no value of -- >> well, this is a value somewhere.

eventually, this is for profit. >> eventually, this is value, correct. >> so why can't the royalty apply to the value that you derive from the mining? seems straightforward to me. >> i think that that's an oversimplification. i don't think it is that straightforward. because, otherwise, you would -- we wouldn't have any investment here in the united states. because there's so much up front capital that goes to mining. >> the royalty only applies after you're making money. it doesn't apply up front. a royalty applies -- you're dig things out of the ground, sell them, get a revenue stream, and you pay a royalty. that's part of the cost of business for these other industries. why isn't that -- why doesn't that operate for you? investors know they're going to make x amount of money, and part of that will be a payment of -- one of the costs is going to be a payment of royalties. >> part of it is when you know you're going to get a return on your investment, as well. i think investors look to that.

>> of course. >> there's a much longer timeframe for hard rock mining than there is for coal and oil and gas. >> i still don't understand why -- >> narrower margin. >> -- money that is generate bid -- generated by the market -- >> and the -- >> an oil producer can't name their price. i don't think that argument holds any water. or hard rock. >> rich, maybe you want to -- >> sure. let me try to address a couple of issues there. because there's a lot of questions in there. if you will, i'll unpack that a little bit. first of all, there's an important difference between the value of the mineral sitting in the ground and the value after it's produced. >> i get that. >> i'll give you the example -- >> i get that. >> let me give you this example. in our industry, when you buy gold in the ground, you may pay $100 an ounce to buy gold in the ground. when you sell it today, it's at

about $1,700 an ounce. it's all the billions of dollars worth of investment that get you from the gold that's $100 in the ground to 1,700 dollars when you sell it. it's a good example of a system that is very transparent and tracks all the minerals produced in the state. nevada knows exactly what they produce because everybody pays it. no matter what the mineral is. in the case of this, what you do is you establish the gross. establish the sell price. there are certain deductions allowable. they're transparent, very clear. this system works very well. what it does is it recognizes the value that's added by the miner in creating it. now, different minerals are different, in the sense that they do have location value. and you're right, oil and gas is

shipped all over the world, but it's at the expense. expense of shipping and the expense of royalty is determines whether or not the royal can be sold profitably somewhere else. the gold industry is different, as is copper. the price for an ounce of gold or for a pound of copper is set in the global market every day. nobody is going to pay you $1,700 plus 8%. so it goes to the mining company. >> oil is set in the global market every day. >> it is. >> i don't see the difference. >> well, there is a difference in the sense that the cost of a royalty does get passed on to a consumer in the case of something like -- >> why wouldn't that be the case of a royalty? i mean, the royalty on oil gets passed on to the consumer, doesn't it? >> it does get passed. >> wouldn't it also on gold? >> no. >> it'd cost you a little more to generate some revenue from

gold. >> no. because it's basically traded every day in a central location, and the price you pay is the spot price that day. >> so is oil. >> nobody is going to pay -- >> so is oil. oil is set at a worldwide commodity market. >> it is set at a worldwide commodity market. but, as i say, there's the location value to oil. there's a location value to coal. there is no location value to metal. >> so i'll ask you the same question. i am out of time. are you willing to agree to a royalty on minerals produced on federal lands? >> yes. that is our position. >> and you have told us, i assume, how that would work? >> we'd like to model it on the nevada pack. >> thank you. >> thank you, senator. >> chair, thank you. mr. brown, thank you for making the trek out here from montana. i want to hear more from you on the provisions that we're seeing in the proposed tax and spending

bill coming from our colleagues across the way, and how that might hurt your business and local montana and wyoming jobs. we know that the house democrats' version of the bill raises taxes on family-owned businesses. it places new royalties on your products. and it makes it harder for you to support jobs in your communities. mr. brown, if the house democrats get their way and they pass this sweeping anti-mining legislation, what would that mean to the montana jobs that you provide and your ability to mine and supply the united states with bentonite? >> well, thank you for the question. i would like to highlight again that we are a small business. and i believe the president has said that any new tax won't impact small business. well, the taxes that we're talking about, the royalties, the increase in the -- the

significant increase in royalties would impact us tremendously. again, our margins are very thin. our ability to absorb an 8% royalty, a dirt tax, however that is defined, and other fees, which may come on top of that, it's going to be very difficult. and it's questionable whether we can pass that to our customers. i believe some of our customers would elect to source materialo then pay that additional cost. so the outcome of this is we may have to curtail operations. we have three plants. we may have to consolidate that production, or, worse case, heaven forbid, shut down the operation. >> and if that happened, that would just move the supply

chain. currently with bentonite, we get it out of wyoming primarily. it'd move to countries like china to meet demand. how would that effect jobs as well as national security? >> well, certainly, it'd affect the supply chain. think of all the manufacturing that occurs uing our product. now, rather than sourcing that from wyoming, they're sourcing it from china. the logistics that have to occur with that, it's going to have an impact on supply chain. likely a negative impact. it's certainly going to impact employment. in montana and in wisconsin, these communities that depend upon wild ban as a major source of employment, it'd impact the community as well. the trickle effects of paying a wage, because it goes through a community of 2,000 people in

wyoming. >> thank you. i want to ask a question to ms. sweeney. the united states is now 100% import reliant on 17 important minerals. 35 of the minerals are considered critical for our national security. 17 of them come from china. these numbers only get worse as demands for critical materials increase. if the u.s. is serious, and i hope we are, about building more sources of energy, including renewable energy, we must be serious about increasing the domestic mining. if the u.s. is serious about protecting the environment, we should be increasing mining domestically and not allowing places like china and the congo, who have terrible standards, to supply the world and the u.s. of critical minerals. ms. sweeney, how does import-dependency on places like china threaten national security, and how does the democrat house bill make that

situation even worse? >> thank you for that question. i think all of these new fees and taxes would definitely put the u.s., you know -- it'd make us less competitive. the total government take would be well beyond our competitors if you add those on top. that, of course, impacts our national security, right? there's so many of these minerals that are critical for our army, our navy, critical to nuclear submarines, critical to almost every aspect of our national defense. certainly, there are a lot of countries out there like china who control, for example, 80% of the rarish market or even more. so they're cornering the market, and we're having to rely on them to protect our own troops. we don't want to see that trend continue. i think there's a lot of these

resources we do have here in the united states. we can mine them responsible my -- responsibly here, and we should. >> thank you. >> senator? >> i don't always agree with senator king, but today i find myself in absolute agreement with him, that he came here today unburdened by any understanding of the hard rock industry. [ laughter ] let me try to put this in simple terms. this isn't oil we're talking about. when you take up a gallon of -- barrel of oil out the ground, you have it, you can sell i. first, not all minerals are the same. whether it is gold, silver, whatever you're after is very different. the cost of getting it out of the ground varies dramatically. it depends on how deep it is, what it's in combination with in the ground. so it isn't that simple. as we pointed out here, when you

do get it out of the ground, it may be just beginning. you don't get a lump of gold out of the ground in most instances. you get it mixed with something else. so you may not even keep it. you may sell it because it has to be milled and extricated very carefully. so it just isn't the same as that. there are other ways of doing this. now, i'm not saying it is impossible. i'm just saying there are other ways to measure it. it is incomparable. you're talking about apples and oranges if you're talking about a barrel of oil out of the ground versus a gram of whatever mineral it is you're after. so before i take any more of my time, let me say, first of all, there's been a lot of talk about dollars and cents. i want to ask ms. sweeney and mr. brown, if you agree with me that in today's world, market forces change the price of commodities very, very quickly.

unlike years and years ago. so that if we do add an additional cost to this, that that is going to affect our competitiveness in the markets almost immediately. would you agree or disagree with that? >> agree. >> mr. brown? >> i'd agree as well. >> we have an expert on this panel who knows how to resolve conflict issues like this. chris, welcome. chris wood and i worked together when i was governor to resolve the roadless issue in idaho. we have -- i know colorado claims to have one, but we have essentially the only roadless rule that has been sustained in district court and in the ninth circuit court of appeals, believe it or not. chris and i worked together on that. thank you, chris. on behalf of the people of idaho, thank you. thank you for your input into that. it was difficult to get the environmental community on board, and have few didn't get on board eventuallily.

the ones that didn't didn't feel good about it after the ninth circuit. everybody at the table got something. in that regard, you and i have been talking about this particular issue since i got here. haven't got it resolved. >> first of all, thank you for your leadership on the idaho roadless rule. it's a model for other natural resource issues around the country. you brought industry and conservation interests together, and we came out with a solution. i think it's right here for us on this issue too. the other thing to commend you on is the good samaritan legislation. you and senator heinrich have been working to come together to figure out how to innocent more -- incent for abandon mine cleanup around the country. >> thank you, chris. i want to underscore an important issue that has been eluded to here, but i think needs even a harder smack than has been talked about here. from my position on the intelligence committee and on the foreign relations committee,

i can tell you that the issue of rare earth and critical minerals is an issue that does not get the attention it needs in this country. i can tell you that we're going to have to focus on that. anybody who thinks china is going to continue to sell us these critical elements if and when we ever get cross-wise with them to a large degree is dreaming. if you don't believe me, ask japan. because they have cut off japan's for a brief period of time. it brought industry in japan to its knees in short order. so in any event, jump ball, who can tell us what we can do better to try to get rare earth and critical minerals out in the united states of america, which is, indeed, a very, very important national security issue? who is first? there's a lot of smart people here. >> senator, i'll jump in, even though i am a gold miner.

like senator hickenlooper, i was once a geologist. the important part of the mining law is this right of self initiation. we talked about it a bit, and a couple contexts are important. chairman manchin said this at the beginning. we don't have all the critical minerals. as a geologist, i'm a little more optimistic. i say we haven't found them yet. we have to have a healthy industry that is exploring and rational and reasonable mining law reform is an important part of that. i think that, you know, the second thing i would say is that the issue comes up of, you know, why can't you say no to a mine? the argument is made that way. the one thing i would point out is we have land use planning. it's part of the federal land management, policy and

management act. it's an amendment to the mining law in the 1970s. there are big swaths in the united states, and in nevada's case, 85% of the federal land, 25% is not available for mine exploration. so what i think is important to understand is that when you find a mineral, you find it where you find it, and you find it on the land that is available. if there are areas important to protect, protect those through the land use process. other than that, we should be encouraging exploration everywhere. >> thank you. >> i want to yield my unused time to senator king to respond. [ laughter ] >> we've lost total control. >> you have. and i want to emphasize that the senator is absolutely right about the national security implications. i'm not unmindful of those at all. i just want to be fair to the people that own the land that's being mined, which is all of the american people. >> senator kelly.

>> fair point. >> you're up. >> thank you, mr. chairman. ms. hanna, i have a question about abandoned mines. and thank you for testifying. this issue is important to arizonians. we have over 200,000 abandoned hard rock mines that we currently know of. most of them are on federal lands. the bipartisan infrastructure bill contains an amendment sponsored by senator heinrich, senator danes, and myself, that would authorize a $3 billion fund to clean up abandoned hard rock mines, subject to appropriation. the house might consider a budget bill that would appropriate $2.5 billion for mine cleanup. these funding levels fit within the budget's top line, but we know it's not going to be

enough. what amount of federal revenue would you estimate is needed to really put a dent in the cleanup ofhundreds of thousands of abandoned mines in arizona and across the nation? >> thank you for the question. senator kelly, it is a very good question. we don't have -- i can't give an exact answer, but it is definitely in the tens of billions of dollars. i think we see year after year we're spending several hundred million to even make a dent among several federal agencies. i think we can do a better job on the taxpayer side. i think it just -- this huge cost shows we need a dedicated revenue stream, and we need industry to share in the burden with federal taxpayers in helping create the revenue stream. it is important to clean them up. these are huge taxpayer liability. they're public health risks, environmental hazards. they need to be cleaned up, and i thank you for your efforts to work on creating those funds from the federal government.

but we'd also like to see the reclamation fees and other things -- and a royalty put into place for revenue stream. >> i imagine that was discussed before i came into the room? i'm assuming it was. the revenue stream and royalty, that we probably had this discussion earlier. >> there has been some discussion. >> okay. good. thank you. mr. wood, i also want to thank you and trout unlimited for testifying today. the navajo nation is just one serious example of why we need to address these abandoned mines. over 500 uranium mines on the navajo land was abandoned after the cold war. as a result, members are dealing with contaminated water and higher rates of cancer. if congress enacts a reclamation fee or some other revenue generator on hard rock mining, should that revenue be prioritized for abandoned mines in the west and for economically

disadvantaged communities? >> yes, sir, thank you for the question. i said earlier, before you were in the room, that an analysis we did shows there are about 122,000 miles of impaired stream around the country, from abandoned hard rock mines. 52% of those supply drinking water for municipalities. absolutely, there needs to be -- the reclamation fee, and i'm not sure there is disagreement with industry here, a reclamation fee, whatever the right fee, whether net or gross, it should be applied to cleaning up the legacy of abandoned mines in the western lands. >> thank you. it is a significant issue in arizona and the more than 500 mines of the navajo nation is having a profound, negative effect on the health of the navajo people. thank you. mr. chairman, i yield back the remainder of my time. >> thank you. mr. hogan? >> ms. sweeney, in your budget -- or in your testimony, you referenced the house budget

reconciliation bill that's under consideration. that testimony, your testimony includes the proposed new fees, taxes, and royalties that would impact mineral producers. how will these policies further hamper u.s. strategic competitiveness, particularly due to chinese's dominance of minerals? >> thank you for the question. they certainly will exacerbate that situation. china will continue to be able to dominate because we will have less mining here in the united states if those fees were imposed. just one of those fees alone could really have an incredible impact on domestic mining. you put those three fees together, and it is devastating impact. you will see mines closed. you will see highways shot.

you will see investment dollars being spent other parts of the globe. they're going to take advantage of that and take advantage of those opportunities. >> so this is clearly an example where the legislation example where the legislation will help china and hurt the united states and make us more dependent on china for critical that we need for our national defense, correct? >> correct. our national defense and for all the objectives of this administration, as well. >> mr. haddock, seems similar question. your company operates in 13 different countries and you noticed our mines in the united states have become drastically uncompetitive. so, again, same thing with more fees and taxes and costs, does that help us or hurt us in terms of becoming competitive and how does that affect your workforce, as well? >> thank you, senator.

any royalty, as i said, is a burden upon the value of your body and diminishes the body and that's why we advocate for net royalties. what is important to understand and i'll just use an example of an analysis we've done. we created a synthetic mine and applied various royalties. it's interesting what happens to a gross versus a net royalty. that's why it is so important to protect the competitiveness. in that mine if the, right now, any royalty gives it over 50% of the net to the government. that much knows to the united states. if that same royalty were applied and the price of gold drops to 1,200 pounds as it was in 2015, the federal government taking 100%. so, that really illustrates that a gross royalty makes it very noncompetitive. we do support a net royalty. it has an impact, but it's an

impact that we're willing to bear and something we're willing to do to participate. >> so, mr. brown, for hard rock mining, what would it mean for your operations and for your workforce? >> any increase in our cost is going to have an impact. the question is what extent can we transfer that additional cost through the value stream to our customers and to the user. we have very little ability to absorb those increased costs because of the very low margins net profit and margin of our business. so, the possibility is that we would have to curtail operations which take production out of the

united states, demand is still there and it has to come from some place which china is the number two producer. >> do you pay all your workers more than $400,000? does every single worker you employ make more than $400,000 a year? >> no. >> then that wouldn't be an accurate statement because there is a clear example where costs passed on to your companies and workers and suppliers and buyers of your product, correct? >> absolutely correct. >> thank you, i yield the rest of my time, mr. chairman. the thing i want you to consider is basically i do believe in my heart of hearts that we're going to pass the bipartisan infrasfrkture bill. with that $3 billion in there. have you identified because i think you have all done a tremendous job on identifying the most critical needs we have

and the most damaging this has done to our country. if you put a list together basically how that would be or how you would recommend your oversight so we could work with interior. >> we can get that list to you right quick, sir. >> if you can do that. if you could, we would like to put your plan together on how you would identify the most critical needs we have in our country, really, truly. and most damaging. use the highest priority and quality and recreational. can you do that? >> we can do that. >> i think we can work through this, i really do. >> i understand net gross pretty good. and i understand where you're coming from. is there somewhere in between and we'll talk. we'll work on this and we'll find a pathway.

i think all of us recognize the time has come to make changes. to make them in the most reasonable way. and with that -- here we go. here we go. ran all the way to the senate and to the house floor and back. senator lankford, you are up. >> thank you, i just ran to the senate floor and not the house floor. they don't welcome me there as much there. y'all, thank you. i think i'm batting cleanup today. >> you are. >> some questions. let me just say first thank you for all the time that you put into the testimony. in your preparation. there is a, you know, when we talked about the united states and our own mineral development here and we look at it as a country whether it be in asia or africa or south america or other

places, anything distinctly different about our geology that we shouldn't go after some of the minerals that are here. in other words, we know there is the presence of some of the minerals here, but something unique about our geology that would say china has that mineral and we have that mineral but china should develop that mineral not us. or south america and australia has it and we have it. i know geology is different. it's not always the same and not always the same depth and not the same economical use. but is there something about our geology that we should say if the mineral is here and there and we should just get it here instead of there. anyone want to comment on that? >> i'll comment, senator. the geology is what it is. and the minerals are where we find them. the united states is a vast land left with a great mineral endowment. because of that, i think it is important for us to continue to explore for every kind of

mineral. and the one thing i can tell you in our industry is the technology is always advancing and the ability to find things that are covered and find mineral deposits that we couldn't have found before is always evolving. so to me the answer is this book isn't written yet. >> right. >> i agree completely. i was last week talking to the association of american state geologists and i asked them, what do you think, people saying do we have all these minerals here and the geologists from utah said, well,gologist, we have 28 of the 35 critical minerals in utah right now and thanks to u.s. geological survey and some of the funds that they've made available to the states, the geologists are now going out and doing more mapping than they have done in decades. and they are excited and enthusiastic and they're finding

rare earth. there's a cobalt belt in missouri. interesting. i was not aware of and it's really impressive what we can do when we put our money and mind to it. >> ms. sweeney, you mentioned in your testimony that permitting can take seven to ten years. am i reading that correctly? >> if you're lucky, it is a major, major mine. you go to multiple other countries, australia. it doesn't take seven to ten years to do the permitting on that. what does it take in other places? >> two to three years in countries with very similar environmental standards and environmental processes. >> so, when you talk about the seven to ten years on permitting, is that for the permitting not including the lawsuits or does that include the lawsuit time? >> that generally does not include the lawsuits. >> so, this is the interesting thing. when i talked to several folks going after rare minerals in different parts of the country,

they would say, yes, i know where they are. i know the permitting process and the unpredictable wild card about this are the lawsuits that can come in that they just trickle in one after another after another and even after the permits nearing the permit closure is still unpredictable. so, their statement is, i'm not going to invest millions of dollars in capital to go do all that has to be done just to have it drug out for 20 years and my capital dry up and a whole series of lawsuits on it. is that right or wrong? how common is that? >> it's fairly common, unfortunately. ium not every mine is challenged and i don't even know what percentage would be but i'm certainly anecdotally familiar with quite a few. >> obviously, we want the outside community to be able to have a voice in this and litigation has been a way to do that and what is a way to be able to solve this. that's not true on building highways and building other things and that's not true.

there are other solutions to be able to try to figure out how to give everyone a voice. what is a solution to this? that is open to everybody. >> i'd love to answer that. thank you for the question, sir. it was mentioned earlier that you can stop mining at the mine use plant. if that was allowed under law would be a perfect solution because you could do things like identify municipal water sheds or sacred sites that shouldn't be subject to mining for the life of the plan. i think that would be a very logical fix to make that would be consistent with other uses of public land. >> but you've also got a situation where a neighbor five miles away says if you start mining there, there will be dust in my house and i'll have to dust my house five times a day and i don't want to see that. that's not geographically right next to you. how do you solve that? >> that's how you do it.

>> i would say that's an issue that we do need to figure out a way to resolve because that's a long-term issue that if we don't find a way to be able to solve how to get predictability in the process of permitting, shrink the length of time on permitting and get predictability in the environmental processing and to be able to get predictability in how long people can drag out a challenge to them, then we can talk about it all we want to but people will invest and actually do it and it will just get held up over and over again. we will talk about how we want to get more electric vehicles and we have the lithium here and we just can't go after it or whatever it might be. cobalt in missouri. we'll still have the same issue. mr. chairman, i appreciate you. this is my last question running back and forth from the floor and always appreciate the time. >> thank you. >> appreciate very much. you can tell an awful lot of excitement and a lot of candid going back and forth.

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