[House Report 105-569]
[From the U.S. Government Publishing Office]
Union Calendar No. 322
105th Congress, 2nd Session - - - - - - - - - - - House Report 105-569
ABUSE OF POWER: THE HARDROCK BONDING RULE
__________
R E P O R T
By the
COMMITTEE ON RESOURCES
together with
DISSENTING VIEWS
June 5, 1998.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana GEORGE MILLER, California
JAMES V. HANSEN, Utah EDWARD J. MARKEY, Massachusetts
JIM SAXTON, New Jersey NICK J. RAHALL II, West Virginia
ELTON GALLEGLY, California BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California ENI F. H. FALEOMAVAEGA, American
WAYNE T. GILCHREST, Maryland Samoa
KEN CALVERT, California NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming OWEN B. PICKETT, Virginia
HELEN CHENOWETH, Idaho FRANK PALLONE, Jr., New Jersey
LINDA SMITH, Washington CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California CARLOS ROMERO-BARCELO, Puerto Rico
WALTER B. JONES, Jr., North MAURICE D. HINCHEY, New York
Carolina ROBERT A. UNDERWOOD, Guam
WILLIAM M. (MAC) THORNBERRY, Texas SAM FARR, California
JOHN B. SHADEGG, Arizona PATRICK J. KENNEDY, Rhode Island
JOHN E. ENSIGN, Nevada ADAM SMITH, Washington
ROBERT F. SMITH, Oregon WILLIAM D. DELAHUNT, Massachusetts
CHRIS CANNON, Utah CHRIS JOHN, Louisiana
KEVIN BRADY, Texas DONNA CHRISTIAN-GREEN, Virgin
JOHN E. PETERSON, Pennsylvania Islands
RICK HILL, Montana RON KIND, Wisconsin
BOB SCHAFFER, Colorado LLOYD DOGGETT, Texas
JIM GIBBONS, Nevada
MICHAEL D. CRAPO, Idaho
------
Subcommittee on Energy and Mineral Resources
BARBARA CUBIN, Chairman
W.J. (BILLY) TAUZIN CARLOS A. ROMERO-BARCELO*
JOHN J. DUNCAN, Jr. NICK JOE RAHALL, II
KEN CALVERT SOLOMON P. ORTIZ
WILLIAM M. (MAC) THORNBERRY CALVIN M. DOOLEY
CHRIS CANNON CHRIS JOHN
KEVIN BRADY DONNA CHRISTIAN-GREEN
JIM GIBBONS [VACANCY]
LETTER OF TRANSMITTAL
----------
House of Representatives,
Committee on Resources,
Washington, DC, June 5, 1998.
Hon. Newt Gingrich,
Speaker of the House of Representatives,
Washington, DC.
Dear Mr. Speaker: By direction of the Committee on
Resources, I submit the Committee's report to the 105th
Congress on ``Abuse of Power: The Hardrock Bonding Rule.'' The
report is based on a study conducted by the Subcommittee on
Energy and Mineral Resources. The report was adopted and
ordered reported to the House of Representatives by voice vote
on May 20, 1998.
Sincerely,
Don Young,
Chairman.
C O N T E N T S
----------
Page
Executive Summary................................................ 1
Introduction: Committee Review of Bonding Rule for Hardrock
Mining......................................................... 4
Part I: How the rule was made.................................... 5
A. Introduction.............................................. 5
B. First period (January 1990-September 1992)................ 6
C. Second period (August 1993-November 1994)................. 7
D. Third period (late November 1994-February 1997)........... 8
Part II: Problems with DOI's rulemaking process.................. 8
A. Fair and meaningful public input denied................... 8
Administrative Procedures Act problems................... 8
Staleness issue.......................................... 9
Substantial modification issue........................... 9
B. Forcing undue hardship on small businesses................ 10
Regulatory Flexibility Act violated...................... 10
Efforts to comply with Regulatory Flexibility Act (RFA)
nullified.............................................. 11
Major defects in determination of effects result in
erroneous conclusions.................................. 11
Determination of effects not considered in rulemaking.... 12
RFA requirements ignored................................. 13
C. Appearance of impropriety................................. 14
D. A significant regulatory action is concealed.............. 16
E. Poor record keeping undercuts legitimacy of the rule...... 18
Part III: DOI's uncooperative attitude........................... 20
A. Example One--Avoid, dodge and delay....................... 20
B. Example Two--Misleading answers to important questions.... 22
C. Example Three--The litigation excuse...................... 22
Part IV: Analysis and conclusions: DOI's actions corrupted the
rulemaking process............................................. 23
Appendix A--Exhibits............................................. 26
Appendix B--Exhibits............................................. 108
Union Calendar No. 322
105th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 105-569
_______________________________________________________________________
ABUSE OF POWER: THE HARDROCK BONDING RULE
_______
June 5, 1998.--Committed to the Committee of the Whole House on the
state of the Union and ordered to be printed
_______________________________________________________________________
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
Executive Summary
In February 1997, the Bureau of Land Management (BLM)
published a ``Final Rule on Hardrock Bonding,'' which amended
its surface management regulations under the Federal Land
Management Policy Act (FLPMA). The Committee on Resources has
jurisdiction over FLPMA and the regulations issued pursuant to
this law, jurisdiction that is delegated, in this case, to the
Subcommittee on Energy and Mineral Resources. The Subcommittee,
in concert with the Full Committee, undertook its Congressional
oversight responsibility after concluding that the process for
developing the new rule was seriously flawed.
The hardrock bonding rule provides an example of rulemaking
at its worst. Documents obtained by the Committee clearly show
that undue interference of political appointees at the
Department of Interior (DOI) in the BLM rulemaking was so great
that the integrity of the rulemaking process itself was
discredited. The political bosses controlling the regulatory
authority at DOI used their power to implement an agenda that
Congress had refused to enact--even when controlled by their
own party. In doing this, DOI silenced the voice of those who
participated in the legislative process through their elected
representatives, thereby denying them participation in our
democratic process.
The problems with the hardrock bonding rulemaking result
from the refusal of a few, high-level political appointees in
DOI to obey the laws that govern the rulemaking process,
thereby demonstrating contempt for both the spirit and the
letter of the law. These bureaucrats refused to comply with the
Administrative Procedures Act (APA) and Regulatory Flexibility
Act (RFA), concealed the significance of the new rule,
obstructed the impartiality of the rulemaking process, excluded
interested parties from participating in the rulemaking process
in a meaningful way, attempted to prevent Congress from
carrying out its Constitutional oversight responsibilities, and
tried to use various inapplicable claims of ``privilege'' to
hide these actions. These actions, taken together, constitute a
coordinated effort by DOI policy-makers to affirmatively
mischaracterize the hardrock bonding rule's import and impact
and prevent any Congressional oversight of their actions. These
politically-motivated bureaucrats did not allow interested
members of the public an opportunity to comment on the rule
once they had dictated its contents.
The hardrock bonding rulemaking process can be divided into
three periods: (1) development and publication of a draft rule
for public comment followed by completion of a final rules
package for publication (January 1990 through September 1992);
(2) DOI management decision to disregard previous rulemaking
efforts and issue a new, substantially different bonding rule
without further public comment (August 1993 through November
1994); and (3) extensive rewriting of the preamble several
times by the regulation writers in an attempt to evade legal
problems with the rulemaking process and meet the mandates they
were given by their political bosses (late November 1994
through February 1997).
One crucial problem with the hardrock bonding rulemaking is
that an upper-level DOI political appointee, who played a major
role in determining the contents of the new rule, appeared to
have a serious conflict of interest. Mr. David Alberswerth,
only recently employed by the National Wildlife Federation
(NWF), laid out the terms of the hardrock bonding rule.
Coincidently, Mr. Alberswerth's co-signed comments on the draft
rule submitted on behalf of NWF and the new rule he dictated
are strikingly similar. Meaningful input into the new
rulemaking from anyone other than environmental advocacy groups
was stifled by refusing to publish the new rule for a period of
comment by other interested parties.
The final rule violates the APA because: (1) it was based
on information that was more than six years old; (2) it is a
substantive alteration of the draft rule; and (3) interested
parties were denied participation in the rulemaking process in
any meaningful way through a period of public comment after
substantive alterations were made. Examples of substantial
modifications made to the regulation are the requirement that
reclamation cost estimates be certified by a professional
engineer, a standard which was not mentioned at all in the
notice of proposed rulemaking, and changing proposed maximum
bonding amounts per acre to minimum bonding amounts. The latter
alteration was made even though the notice of proposed
rulemaking stated that in order to ``reduce the impacts on
industry . . . these bond caps would be intended to be in
effect for 3 years after promulgation of the final rule, and
their adequacy would be reevaluated at that time.''
Either of these substantive changes to the draft rule may
in and of itself be enough to trigger a violation of APA. For
example, the professional engineer certification requirement
was not mentioned at all in the notice of proposed rulemaking.
However, when all of the changes to the draft rule are
considered together, there is no doubt that the new bonding
rule is substantively modified from the draft rule. Many
interested parties, who did not comment on the draft rule
because they had no reason to believe that it would have a
material effect on them, certainly would have commented on the
new rule.
DOI's RFA violations include: (1) no effort to address the
concerns of small business entities; and (2) major defects in
the analysis of the effect of the regulation on small entities
in the Determination of Effects of Rule (the Determination of
Effects), including use of an illegal definition of a small
entity. This definition is illegal because DOI did not bother
to adhere to any of the requirements, including consulting with
the Small Business Administration's Office of Advocacy,
mandated by the RFA if an agency wishes to deviate from the
lawful definition of a small entity; thus, the Determination of
Effects is invalid. If the primary document which DOI relies on
to certify that the final rule has no significant effect on
small entities is illegal, the resulting certification cannot
be legal.
DOI concealed the fact, shown by its own analysis, that the
hardrock bonding rule was a significant regulatory action with
an annual economic impact exceeding $100 million. This effect
is greatly underestimated because DOI made no attempt to
consider the effects incurred when a project is delayed or
canceled because certification by a professional engineer
cannot be obtained due to uncertain risks associated with
calculation of reclamation costs. By concealing the fact that
the bonding rule was a significant regulatory action, DOI
avoided more rigorous scrutiny of the new rule and evaded the
legal requirement to consider alternatives to the rule.
There is no doubt that the hardrock bonding rule is
significantly different from the draft rule, nor is there any
doubt that political appointees at DOI denied the general
public an opportunity for full and meaningful input into the
rulemaking. The new rule was published despite warnings from
BLM regulation writers and DOI solicitors that they had significant APA
concerns.
DOI's actions, taken together, constitute a coordinated
effort by politically-motivated bureaucrats to misrepresent the
hardrock bonding rule's import and impact. These individuals
continually mischaracterized the economic effect of the rule
and the nature of the alterations made to the rule to deny
interested members of the public full and meaningful
participation in the rule-making process. Even if the notice of
proposed rule-making was facially sufficient, it is rendered
inadequate by DOI's affirmative mischaracterization of the new
rule.
After the new regulation was published, DOI attempted to
obstruct the Committee from carrying out its Constitutional
oversight responsibilities. A drawn-out string of dilatory
tactics was initiated after all documents pertaining to this
rule-making were requested. Some records were produced by DOI
pursuant to this request, but many documents were withheld from
the Committee under a prospective claim of ``privilege.'' DOI
also tried to impose rules and conditions under which the
Committee could have access to documents. After DOI's dilatory
tactics continued for more than three months, the Committee
subpoenaed the documents. The delay in producing the requested
documents thwarted efforts of the Committee to properly
undertake its Constitutional oversight duties. Two Subcommittee
hearings on the matter had already been held and remaining days
in the first session of the 105th Congress were limited.
This hardrock bonding rule reflects a prevalent perspective
within the upper levels of DOI, an attitude that if Congress
does not enact their favored legislation, it is appropriate to
establish the failed legislation through new regulations. This
attitude turns the Constitution into a sham. Under the
Constitution, Congress possesses the ultimate power to regulate
or dispose of lands belonging to the United States. The
Executive Branch (DOI) holds only such regulatory power over
these lands as delegated to it by Congress. DOI possesses no
power to act because Congress failed to enact policies
advocated by DOI. Congress has a right to refuse to act.
When bureaucrats make laws on behalf or in lieu of
Congress, those legislative hurdles so carefully constructed by
the authors of the Constitution are circumvented and the
restraints on promiscuous lawmaking are demolished. Government
as a result runs riot, and the people's voice through their
elected representatives is muted.
Introduction: Committee Review of Bonding Rule for Hardrock Mining
On February 28, 1997, the Bureau of Land Management (BLM)
published a ``Final Rule on Hardrock Bonding'' (the Rule) in
the Federal Register (v. 62, No. 40, p. 9083; Exhibit 1), which
amended its surface management regulations at 43 CFR subpart
3809 pursuant to the Federal Land Management Policy Act
(FLPMA). According to DOI, the new rule requires submission of
financial guarantees for reclamation of all hardrock mining
operations greater than casual use, increases the types of
financial instruments acceptable to satisfy the requirement for
a financial guarantee, and amends the noncompliance section of
the regulations to require the filing of plans of operations by
operators who have a record of noncompliance.
The Committee on Resources has jurisdiction over FLPMA and
the regulations issued pursuant to this law under Articles I
and IV of the U.S. Constitution, Rules X and XI of the U.S.
House of Representatives and Rule 6 of the Rules for the
Committee on Resources (Committee Rules), jurisdiction that, in
this case, is delegated under Rule 6(a) of the Committee Rules
to the Subcommittee on Energy and Mineral Resources. The
Subcommittee has a continuing responsibility under Rule 6(a) of
the Committee Rules to monitor and evaluate administration of
laws within its jurisdiction. In relevant part, Rule 6 states:
``Each Subcommittee shall review and study, on a continuing
basis, the application, administration, execution, and
effectiveness of those statutes or parts of statutes, the
subject matter of which is within that Subcommittee's
jurisdiction; and the organization, operation, and regulations
of any Federal agency or entity having responsibilities in or
for the administration of such statutes, to determine whether
these statutes are being implemented and carried out in
accordance with the intent of Congress.''
The Subcommittee, in concert with the Full Committee,
undertook its Rule 6 responsibility when, on March 6, 1997,
Chairman Don Young and Subcommittee Chairman Barbara Cubin
initiated a review of the rule-making process for the new BLM
bonding regulation. They had concerns about the regulation
because:
(1) The new regulation was stale because the comment
period closed on October 9, 1991, nearly six years
previously.
(2) The regulation was substantively different from
the draft rule published in the Federal Register.
(3) The BLM did not comply with requirements of the
Administrative Procedures Act (APA) or the Regulatory
Flexibility Act (RFA) in the rule-making process.
Congress delegates rule-making power under FLPMA to the
Department of Interior (DOI) on the presumption that the agency
will act responsibly and guarantee a fair rule-making process
with full and meaningful public input. Congress also has the
responsibility to ensure that these objectives are met to the
maximum possible extent. In conducting oversight, the Committee
is simply asking DOI to demonstrate that DOI has respected both
the letter and the spirit of the laws passed by Congress which
govern the rule-making process and bonding of federal hardrock
mining operators.
DOI conducted a long, drawn-out sequence of dilatory and
delaying tactics from March through mid-August to avoid turning
embarrassing documents over to the Committee. These tactics
ceased only after the Committee subpoenaed the documents.
As a result of this delay, Chairman Young and Subcommittee
Chairman Cubin requested this report which analyzes and appends
relevant documents (Appendix A, Exhibits) that show whether DOI
abused the rule-making process in making this rule and whether
DOI conducted rule-makings authorized under FLPMA in accordance
with the intent of Congress as expressed in the APA and the
RFA. This report is developed for Members of the Committee on
Resources so that they may undertake their legislative and
oversight responsibilities under the Constitution, the Rules of
the U.S. House of Representatives, and the Rules for the
Committee on Resources.
Part I: How the Rule Was Made
A. Introduction
From Subcommittee on Energy and Mineral Resources hearings
held on March 20, 1997 (Rpt. No. 105-8), and June 19, 1997
(Rpt. No. 105-24), and a review of documents obtained by the
Committee, the hardrock bonding rule-making process can be
divided into three major periods: (1) development and
publication of a draft rule for public comment followed by
completion of a final rule package for publication (January
1990 through September 1992); (2) decision by DOI political
appointees to disregard previous rule-making efforts and issue
a new, substantive different bonding rule without further
public comment (August 1993 through November 1994); and (3)
extensive rewriting of the preamble several times by regulation
writers in an attempt to circumvent APA deficiencies in the
rule-making process while meeting the mandates they were given
by DOI political appointees (late November 1994 through
February 1997).
B. First Period (January 1990-September 1992)
The development of a final rules package for bonding of
hardrock mining operations during the period from January 1990
through September 1992 (hereinafter referred to as the 92
iteration) is well documented in BLM Bond Policy Chronology
(Exhibit 2). As a result of a General Accounting Office report,
vocal Congressional criticism of BLM bonding practices in the
late 1980's, and a recommendation by a BLM mining task force,
BLM Director Cy Jamison asked for a proposal that would
implement mandatory bonding for all operators under the general
mining law. A bonding proposal presented to the Director on
January 11, 1990, was approved and circulated for comment
within BLM. After internal BLM review, the draft bonding rule
was published in the Federal Register on July 11, 1991 (Exhibit
3).
The draft rule required all operators to post financial
guarantees. ``Notice level operators'' (less than 5 acres
surface disturbance) were required to post a maximum bond of
$5,000 whereas plan level operators (more than 5 acres of
surface disturbance) were required to post a maximum bond of
$1,000 per acre for exploration activities and $2,000 per acre
for mining activities. Operations utilizing cyanide were
required to post a bond covering 100 percent of their
reclamation costs regardless of surface disturbance. The
proposed rule also required operators with an established
record of noncompliance to conduct all activities under a plan
of operations and to post financial guarantees equal to 100
percent of their reclamation costs.
The comment period on the draft rule, after an extension,
ended on September 9, 1991. Comments were evaluated and
language for the final rule reviewed by BLM in the ensuing
year. The 92 iteration was ready for publication in the Federal
Register by the end of September 1992, but the package stalled
in the Solicitor's Office at DOI (Exhibit 4A). The 92 iteration
differed from the draft rule in that bonds for notice
operations were changed from a maximum of $5,000 to a maximum
of $1,000 per disturbed acre or any part thereof and the
noncompliance provision was substantially rewritten to add
``death penalty'' provisions. A standard bond forfeiture clause
and penalties for violations were added. Violators were made
subject to a maximum fine of $1,000 or a maximum prison term of
12 months under a provision of FLPMA.
The 92 iteration was apparently redone several times in an
effort to address concerns of small business entities that
lacked access to surety bonds or sources of capital available
to large mining companies. Also, a memo dated November 29, 1991
(Exhibit 4B), expresses concern that some of the proposed
changes, particularly the forfeiture, ``death sentence'' and
penalty provisions, were substantial enough to require re-
publication as a proposed rule to comply with the APA.
The changes in the 92 iteration were far less substantive
than ones later included in the ultimately published final
rule. The 92 iteration was left to the incoming Clinton
administration after the 1992 election and, according to
Exhibit 4A, remained in the Solicitor's Office essentially on
hold until well into 1993.
C. Second Period (August 1993-November 1994)
The second period of activity on the hardrock bonding rule-
making began in early August 1993 when the 92 iteration was
retrieved from the Solicitor's Office and sent to Mr. David
Alberswerth, Special Assistant to the Assistant Secretary for
Land and Minerals Management. Mr. Alberswerth, a political
appointee, apparently held the 92 iteration until the Fall of
1994, when after review, he initiated several memos (Exhibits 5
and 6) and at least one meeting (Exhibit 7) during the latter
part of October and early November.
This spurt of activity culminated in Mr. Alberswerth's
memorandum to Mr. Hord Tipton (then acting Director of BLM),
dated November 8, 1994 (Exhibit 6), in which he laid out the
revisions to be made to the 92 iteration and directed that the
preamble was to be modified to reflect these changes. Mr.
Alberswerth insisted on the following modifications to the 92
iteration:
1. Bonds should be required for all operations on
public lands (except for ``casual use''), regardless of
``prior record.''
2. Bonds should be set at a level to cover 100
percent of the costs of reclamation, with bonds for
operations requiring an approved plan of operation set
at a minimum level of $2,000 per acre, and ``notice''
operations set at a minimum of $1,000 per acre.
3. Financial instruments used to provide financial
guarantees of reclamation should not allow equipment
liens or bonds, nor property or mortgage bonds.
4. Each individual operation should be bonded to the
full estimated costs of reclamation--``Statewide'' and
``nationwide'' bonds should not be allowed.
5. Since all operations would be required to be fully
bonded, provision should be made for phased bond
release on a case-by-case basis at the discretion of
the authorized officer.
Mr. Alberswerth also emphasized that the bonding
requirements must provide a guarantee \1\ that reclamation
would be completed, rather than act as an economic incentive to
encourage satisfactory completion of reclamation, the stated
purpose in the 92 iteration. The Alberswerth modifications
significantly changed the nature and scope of the proposed rule
(for clarity, the Alberswerth modification is hereinafter
referred to as ``the Rule'').
---------------------------------------------------------------------------
\1\ The problem with this approach is that it assumes that all risk
can be avoided, but risk is the inescapable partner of any human
endeavor. In reality, there are no guarantees. Managing or reducing
risk is achieved by defining its nature so that we can make rational
choices among alternatives. As Arthur Rudolph, developer of the Saturn
5 rocket said, ``You want a valve that doesn't leak, and you try
everything possible to develop one. But the real world provides you
with a leaky valve. You have to determine how much leaking you can
tolerate.'' However, using Mr. Alberswerth's approach, the risk of a
leaky valve would be reduced by doing away with valves altogether or
making them so expensive that few could afford one. Neither of these
alternatives is a wise choice in a contemporary society based on
economic growth, improved quality of life and technological progress.
---------------------------------------------------------------------------
D. Third Period (late November 1994-February 1997)
Regulation writers at BLM spent the remaining time from
November 1994, until the Rule was issued in February 1997,
modifying and rewriting the preamble again and again in an
attempt to evade APA problems that they had identified while at
the same time meeting mandates given them by high-level DOI
political appointees. An obvious question that arises is ``Why
not encourage meaningful public input into the rule-making
process instead of spending 27 months trying to conceal
problems caused by not allowing a one or two month public
comment period?''
Much time was also spent writing a Determination of Effects
of Rule after the fact to justify DOI's certification that the
Rule had no significant impact on small business entities.
Several significant changes and new requirements, which were
not a part of the modifications listed in Mr. Alberswerth's
November 11, 1994 memo, were also added to the 92 iteration.
These new changes included: (1) a requirement that a third
party professional engineer certify the estimated reclamation
costs; and (2) acceptance of statewide and nationwide bonding.
The reasons for the requirement for a third party
professional engineer to calculate reclamation costs cannot be
drawn from the record. The professional engineer requirement,
which was not in the draft rule published in 1991, first
appears in a draft dated February 20, 1995. There is no
evidence from the record in the Committee's possession
explaining the origin of this requirement nor was any
justification given for it in the preamble.
The reasons for the decision to accept statewide and
nationwide bonding are not obvious from the record but can be
discerned after considerable effort on the part of the
examiner. This decision was apparently made because DOI
solicitors determined that if these bonds were prohibited, the
rule-making would unquestionably be a significant regulatory
action as well as an undeniable APA violation.
Part II: Problems with DOI's Rule-making Process
A. Fair and Meaningful Public Input Denied
Administrative Procedures Act problems
The Administrative Procedures Act (APA, 5 U.S.C 500-559) is
the basic statute governing the process whereby agencies of the
executive branch propose informal rule-makings to implement
statutes within their jurisdiction. A general requirement of
APA is that an agency solicit public comment on a proposed
rule-making, digest the comments received, and explain their
disposition in the preamble to a final rule-making before the
new rules become effective. Court decisions concerning the
intent of APA make clear that the Act requires fair and
meaningful public input.
In the initial examination of the Rule, Committee staff
concluded that DOI had apparently violated APA because:
1. the comment period closed on October 9, 1991,
nearly six years prior to the date that DOI issued the
Rule; and
2. the Rule was significantly different from the
draft rule published in the Federal Register requiring
a new round of public notice and comment.
Documents provided by DOI to the Committee show that DOI's
own lawyers and regulation writers were very concerned that the
bonding regulation violated provisions of the APA (Exhibits 8-
13). They warned their superiors at DOI about APA problems and
advised them to finalize a rule for bonding requirements
limited to notice level operators and propose the rest as a
draft rule for public comment (Exhibit 9 and 12). This
recommendation was ignored.
Staleness issue
The Rule was published on February 28, 1997 (Exhibit 1),
almost six years after the comment period on the draft rule had
ended on October 9, 1991. During this time, many states had
passed new reclamation and bonding laws or implemented
significant, new regulations covering these areas. Alaska, for
example, was in the initial stages of implementing a new
bonding and reclamation law when the 1991 comment period
closed. In the March 20th hearing before the Energy and Mineral
Resources Subcommittee, Paul Jones, Executive Director of the
Minerals Exploration Coalition, a group that routinely tracks
mineral exploration permitting requirements, testified that
since the comment period had closed on the draft rule in 1991,
Colorado, Montana and Nevada had substantially revised their
regulations and that Arizona and New Mexico had issued
completely new regulations. Since DOI failed to re-open the
record on the Rule for comments by interested parties, out-
dated information was used in the rule-making process.
Substantial modification issue
A new round of public notification and comment is not
necessarily triggered by the APA just because an agency makes
substantive modifications to a draft rule. In determining if a
new period of publication and comment is required, the courts
usually use one or both of the following tests:
1. whether the final rule is a logical outgrowth of
the notice and comments made during the rule-making
period following publication of the proposed rule, and
2. whether the notice of proposed rule-making fairly
appraised interested parties so that they had an
opportunity to comment.
The Rule contained a number of alterations of the draft
rule (Exhibit 14), such as the requirement that bonds be set at
a level to cover 100 percent of the costs of reclamation;
minimum bond of $2,000 per acre for ``plan'' operations instead
of a maximum bond of $2,000 per acre; minimum bond of $1,000
per acre for ``notice'' operations instead of a maximum bond of
$1,000 per acre; and prohibition of equipment, property and
mortgage bonds. One other noteworthy change is the requirement
that reclamation cost estimates be certified by a professional
engineer, which was discussed in a previous section.
DOI argues that the change from a bonding cap of $1,000 per
acre for notice operations ($2,000 per acre for plan
operations) to full cost bonding with a floor of $1,000 per
acre for notice operations ($2,000 per acre for plan
operations) is a logical outgrowth of the draft rule.
Requirement of full cost bonding voids any bonding caps.
However, how are bonding floors or minimums a logical outgrowth
of full cost bonding? Under 100 percent bonding, there is no
more justification for minimum bonding levels than maximum
bonding levels. In fact, with minimum bonds, a miner may
actually have to bond for more than 100 percent of reclamation
costs.
DOI's logical outgrowth argument is also difficult to
defend when the notice of the proposed rule (July 11, 1991;
Exhibit 3) stated that to ``reduce the impacts on industry . .
. these bond caps would be intended to be in effect for 3 years
after promulgation of the final rule, and their adequacy would
be reevaluated at that time.'' In light of this statement,
there was no reason for any member of the public to anticipate
the final form of the Rule.
A substantive change to the draft rule such as the
professional engineer certification may alone be reason enough
to trigger a violation of APA, since this change was not
mentioned at all in the notice of proposed rule-making and the
change has no support in the rule-making record. The logical
outgrowth of nothing is nothing.
However, when considered together, there is no doubt that
all of the changes in the Rule (Exhibit 14) make it
significantly different from the draft rule. Political
appointees at DOI denied an opportunity for full and meaningful
public input into the rule-making. Many people, who did not
comment on the draft rule because they had no reason to believe
that it would have a material effect on them, would certainly
have commented on this new, substantively expanded regulation.
DOI failed to meet either one of the tests used to determine
whether or not the APA requirement for meaningful public
comment has been met.
B. Forcing Undue Hardship on Small Businesses
Regulatory Flexibility Act (RFA) violated
Political bosses at DOI showed disdain for the provisions
of the Regulatory Flexibility Act (RFA), which Congress enacted
in 1980 to curb government regulatory abuse of small
businesses. A primary purpose of the RFA is to prevent a
disproportionate adverse economic hardship caused by regulatory
actions from falling on the shoulders of small business
entities. RFA requires federal agencies to prepare and publish
an initial regulatory flexibility analysis when proposing a
regulation and a final regulatory flexibility analysis when
issuing a final rule if such rule will have a significant
economic impact on a substantial number of small entities. The
RFA exempted an agency from these requirements if the agency
certified that a rule would not have a significant effect on
small entities. Agencies routinely avoided RFA requirements by
making this certification.
Recognizing that the certification exemption provided an
overly broad loophole in RFA, Congress passed the Small
Business Regulatory Enforcement Fairness Act (SBREFA) in 1996,
which required that agencies must provide more substantial
reasons for their certification if they wanted to avoid
preparing a full regulatory flexibility analysis. SBREFA also
provided for judicial review of an agency's decisions under
RFA.
DOI has four major problems with RFA and the Rule: (1) the
modifications made to the 92 iteration by Mr. Alberswerth
nullified all of DOI's previous efforts to address the concerns
of small entities; (2) the analysis of the effect of the Rule
on small entities in the Determination of Effects contains
major defects leading to erroneous conclusions; (3) the
Determination of Effects was completed just days before the
Rule was published and could not possibly have been seriously
considered by DOI in making the Rule; and (4) the definition of
a small entity in the Determination of Effects is illegal,
rendering the RFA analysis invalid.
Efforts to comply with RFA nullified
As previously discussed, the 92 iteration was apparently
redone several times before the Clinton Administration came
into office, in an effort to address concerns of small business
entities (Exhibit 4A) that lacked access to surety bonds or
sources of capital available to large mining companies. To
address these concerns in the 92 iteration, DOI allowed the use
of equipment liens and real estate mortgages as collateral for
a bond. However, Mr. Alberswerth directed BLM regulation
writers to eliminate equipment liens and real property
mortgages as collateral for a bond (Exhibit 4B), nullifying
previous efforts to address the concerns of small business
entities.
There would be no attempt by DOI to address the concerns of
small business entities in the rule-making. As Mr. Karl
Hanneman, President of the Alaska Miners Association, testified
at the March 20th hearing, ``They [DOI] eliminated the right to
use real property or mining property, that is your house or
your mining property. They eliminated the right to use your
mining equipment, so for most small operators in Alaska the
assets that they might otherwise have available to meet a bond
have simply been removed.'' To make matters worse, required
bonding levels on many small entities were further increased by
DOI, creating an even greater burden on small mining entities.
Major defects in determination of effects result in erroneous
conclusions
The Determination of Effects used by DOI to justify the
Department's RFA certification of the Rule is based on
confusing and contradictory definitions of a small entity.
According to the Determination of Effects, a small entity for
the purpose of DOI's analysis is ``an individual, small firm,
or partnership at arm's length from the control of any parent
companies.'' The Determination of Effects goes on to say that
``The juniors and majors (not considered small entities), as
discussed in the previous paragraphs, and entities under their
direct control, have access to lines of credit and internal
corporate cash flows that are not available to small
entities.'' This definition is based on how a business is
legally structured or organized rather than on the number of
employees. Both small and large entities exist in all of these
categories.
DOI then goes on to make the inaccurate assumption that
small entities will only be operating under a notice--not under
a plan of operations. Compounding this error, DOI assumes that
one-third of the notice level operations are small entities
whereas the rest are plan level operations. The rationale for
this appears to be based on an analysis showing that about one-
third of the mining claimants in Arizona and Nevada filed
assessment work (had less than ten mining claims) in lieu of
paying an annual fee of $100 per claim. According to DOI's
logic, small entities cannot have more than ten mining claims
or operate under a plan of operations. What this has to do with
the number of employees of an entity, one can only guess.
An example of a small entity operating under a plan of
operations and having more than ten mining claims is Alaska
Placer Development, which operates a gold mine in Livengood,
Alaska. This company has 14 employees and would be a small
entity under any definition. Karl Hannemann, President of
Alaska Placer Development, testified at the March 20th hearing:
``They [DOI] estimated the cost to plan operators [of the Rule]
in Alaska is $470,000. Under this proposal, the cost to my
operation alone would be $312,000 or 66 percent of this total.
I am only one of 59 operators. It is clear that they have
misestimated the economic impacts.'' Clearly, DOI's analysis of
the Rule's impact is based on faulty assumptions and bad
interpretations, leading to results that grossly understate the
effect of the Rule on small businesses. Thus, the Determination
of Effects does not justify the certification that the Rule has
no effect on small entities.
Determination of effects not considered in rule-making
The Determination of Effects was done only after the Rule
had been finalized, and it was completed only days before the
Rule was published in the Federal Register. The major tenets of
the Rule were largely determined in Mr. Alberswerth's memo
dated November 8, 1994 (Exhibit 4B). Remaining modifications to
the Rule were decided by the end of June after a series of
meetings within DOI concerning remaining issues with the Rule.
The Solicitor's Office approved the Rule in September, 1996,
subject to seeing the Determination of Effects (Exhibit 15).
The Determination of Effects was compiled from October 1996 to
mid-February 1997, and DOI was still completing major sections
of the Determination of Effects in early 1997, just prior to
publication of the Rule on February 28, 1997. The ink on the
Determination of Effects was barely dry on the day the rule was
published. In fact, DOI decided on February 24th to omit the
date ofthe Determination of Effects in the preamble because
they ``didn't need to highlight how recent the Determination of Effects
was.'' (Exhibit 16)
Very little, if any, of the Determination of Effects could
have been taken into account by DOI when making the Rule.
Congress intended that a federal agency consider the effects of
a rule on small entities during the rule-making process and
modify the rule, if necessary, to lessen disproportionate
impacts on them. The record shows that DOI superficially
examined the effect of the bonding rule on small entities only
after the rule-making was essentially completed.
RFA requirements ignored
DOI did not comply with requirements of RFA in preparing
the economic analysis of the Rule. In the Determination of
Effects, a ``small entity'' was defined as ``an individual,
small firm or partnership, at arm's length from the control of
any parent companies.'' This definition is not the definition
presently allowed in section 3 of RFA (5 U.S.C. 601). A
different definition can be used only if three conditions are
met:
1. the definition is determined after consultation
with the Office of Advocacy of the Small Business
Administration;
2. an opportunity for public comment is provided; and
3. the new definition has been published in the
Federal Register.
During the hearing on March 20, 1997, DOI Solicitor John
Leshy was queried whether DOI consulted with the Office of
Advocacy of the Small Business Administration (SBA), as
required by law, in developing its definition of a ``small
entity'' since the definition used in the Determination of
Effects differed from the one used by the SBA. Mr. Leshy
testified that he did not know the answer and would provide it
to the Committee at a later date.
In a letter dated March 24, 1997, Chairman Cubin formally
requested that DOI provide a written answer to this question
for the hearing record. She further stated her belief that the
Rule should be withdrawn if DOI did not comply with procedural
requirements required by law.
Mr. Leshy replied on April 3rd that DOI used the ``guidance
of the Congress'' as provided in the Omnibus Reconciliation Act
of 1993 in defining a small entity. Based on this argument, he
maintained that DOI defined a small entity as a miner having
ten mining claims or less since that was the definition used by
the Omnibus Reconciliation Act.\2\ Chairman Cubin countered
that the Omnibus Reconciliation Act of 1993 did not amend the
RFA and again asked for an answer to the question originally
posed at the March 20th hearing. On May 12th, Mr. Leshy replied
(Exhibit 17) that ``for reasons stated in our letter of April
3, 1997, we believe that we have complied with the applicable
provisions of the Regulatory Flexibility Act.'' He further said
that DOI analyzed the effect of the bonding rule on small
business in the Department's Determination of Effects and
contended that DOI complied with the ``applicable provisions''
of RFA.
---------------------------------------------------------------------------
\2\ This specious assertion is based on a lack of understanding
about why ten claims was used as the benchmark in the Appropriations
bill. This Committee was consulted when that provision was being
drafted in 1992. Ten claims or less was the only available statistical
breakdown of claims kept by the BLM, and a precise number of
claimholders falling in a particular category of claims was needed to
obtain a cost estimate on the provision from the Congressional Budget
Office.
---------------------------------------------------------------------------
Chairman Cubin also wrote the SBA's Office of Advocacy on
May 7, 1997, and asked if the office had been consulted by DOI
about the Rule. From the documents supplied by SBA (Exhibit
18), it is apparent that DOI first contacted the SBA on April
2nd, three days after the Rule became final and almost two
weeks after the March 20th hearing. It is quite clear that DOI
failed to comply with RFA requirements in promulgating the
Rule. In fact, DOI contacted the SBA only after this issue was
raised during the March hearing in an attempt to get SBA to
agree with DOI's action after the fact. This calls into
question the veracity of Solicitor Leshy's replies of April 3rd
and May 12th. If Solicitor Leshy and DOI had complied with the
SBA consultation requirements in RFA, then there would have
been no need for after-the fact attempts to establish the
appearance of compliance.
The definition of a small entity used in the Determination
of Effects is an improper definition under RFA because DOI did
not bother to follow the process mandated by law if an agency
wishes to deviate from the legal definition of a small entity;
thus, the Determination of Effects is invalid. If the primary
document which DOI relies on to certify that the Rule has no
significant effect on small entities is illegal, the resulting
certification cannot be legal.
C. Appearance of Impropriety
Mr. David Alberswerth, a political appointee who was a
special assistant to the Assistant Secretary for Land and
Minerals Management, a high-level policy-making job, played a
major role in the evolution of the Rule (Exhibits 4A, 5, 6, 8-
10, and 20). Prior to accepting his appointment in late June
1993, Mr. Alberswerth was Director for the Public Lands
Division of the National Wildlife Federation (NWF), a national
environmental advocacy group. He was a well-known environmental
activist and a vocal critic of the mining industry. In fact, he
co-signed NWF's comments (Exhibit 19) on the draft rule in
1991. DOI documents show that from early August 1993 until
publication of the Rule, Mr. Alberswerth was deeply involved in
determining the contents of the Rule and that it is largely a
product of his decision-making authority. He also apparently
initiated the concealment that the hardrock bonding rule was a
significant regulatory action (Exhibit 8).
As discussed previously, an August 6, 1993, memo (Exhibit
4A) to ``Dave'' from ``Dan'' makes it clear that Mr.
Alberswerth was actively involved in developing what was to
become the Rule, less than two months after he joined the
Clinton Administration. In the November 8, 1994, memo to the
acting Director of the BLM, Mr. Hord Tipton (Exhibit 6), Mr.
Alberswerth laid out the major points that the final hardrock
bonding rule would contain. These points largely mirrored the
NWF comments (Exhibit 19) on the draft rule that he co-authored
in 1991.
Many of the restrictive provisions of the Ethics in
Government Act concern themselves with the end of the
government employment relationship: limits on activities by a
federal employee after leaving the government. The Ethics Act
contemplates further limits on current employee activities,
however, by establishing the Office of Government Ethics, with
a Director empowered to promulgate regulations ``pertaining to
the identification and resolution of conflicts of interest''in
matters before the executive branch. 5 U.S.C. App. IV 402(b)(2).
Accordingly, the Office of Government Ethics (OGE) has published, at 5
CFR 2635.501 et seq. and 2638.501 et seq., regulations intended `` to
ensure that an employee takes appropriate steps to avoid an appearance
of loss of impartiality in the performance of his official duties.'' 5
CFR 2635.501(a). One focus of the regulations involves official actions
which could affect the interests of a previous employer. Throughout the
regulations, the thrust is to avoid any appearance of partiality.
Section 2635.501(a) of the regulations states that, absent
prior authorization, ``an employee should not participate in a
particular matter involving specific parties which he knows is
likely to affect the financial interests of a member of his
household, or in which he knows a person with whom he has a
covered relationship is or represents a party, if he determines
that a reasonable person with knowledge of the relevant facts
would question his impartiality in the matter.'' (Emphasis
added). An OGE ethics pamphlet designed to clarify issues for
government employees states: ``You should not act on a matter
if a reasonable person who knew the circumstances of the
situation could legitimately question your fairness.'' \3\
``The general rule,'' according to the OGE, ``is that if your
participation is going to raise eyebrows, you will need to stop
working on the matter unless your agency specifically
authorizes you to participate.'' \4\
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\3\ USOGE, A Brief Wrap on Ethics: An Ethics Pamphlet for Executive
Branch Employees, February 1995, p. 11.
\4\ USOGE, Take the High Road: An Ethics Booklet for Executive
Branch Employees, January 1995, p. 14.
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A ``covered relationship'' is defined in section 2635.502
(b)(1)(4) as including ``[a]ny person for whom the employee
has, within the last year, served as officer, director,
trustee, general partner, agent, attorney, consultant,
contractor or employee.'' Mr. Alberswerth was a lobbyist
employed by the NWF until June 1993, on whose behalf he filed
official comments pertaining to DOI's proposed bonding
regulations. As an employee of the NWF, he obviously had a
``covered relationship'' with them. In November, 1994, he was
in the Clinton Administration making final decisions on those
same bonding regulations (Exhibit 6). The ``Dan to Dave'' memo,
written on August 6, 1993 (Exhibit 4A), shows that Mr.
Alberswerth first involved himself in BLM's bonding policy less
than two months after going to work in his policy-making
position at DOI. Any action prior to June of 1994 is subject to
rules governing the ''covered relationship'' he had with NWF.
Any reasonable person would question his fairness.
The OGE regulations do not provide a definition for the
term ``party.'' Black's Law Dictionary defines ``parties'' as:
``persons who take part in the performance of any act, or who
are directly interested in any affair, contract, or conveyance,
or who are actively concerned in the prosecution and defense of
any legal proceeding.'' Mr. Alberswerth's former employer, NWF,
actively lobbied and officially commented on the proposed
bonding regulations, making NWF directly interested in the
outcome.
Mr. Alberswerth knew that the bonding rule was a matter in
which his former employer--and those NWF represented--had a
strong interest. He signed and filed the comments on the
proposed bonding rule on behalf of NWF. In fact, the cover
letter that he signed, which accompanied NWF's specific
comments on the proposed rule, emphasized that NWF and its
members had a strong interest in the outcome of the bonding and
reclamation regulations (Exhibit 19).
If these prohibitions were still somehow too unclear for
Mr. Alberswerth to understand, he should have relied on section
2635.502(a)(1), which states: ``In considering whether a
relationship would cause a reasonable person to question his
impartiality, an employee may seek the assistance of his
supervisor, an agency ethics official or the agency designee.''
The OGE advises federal employees to double-check if there is
any doubt: ``If you have a situation that you think might raise
such a concern, then you should talk to an ethics official at
your agency. He or she will be able to tell you whether or not
there is an appearance problem and give you advice on how to
deal with it.'' \5\ At the June 19th Subcommittee on Energy and
Mineral Resources hearing, Mr. Alberswerth testified that he
never asked for advice, or received a waiver, to resolve these
ethical questions.
---------------------------------------------------------------------------
\5\ See footnote 3.
---------------------------------------------------------------------------
Imagine how Mr. Alberswerth, a frequent critic of the
mining industry, would have reacted had DOI hired a former
mining industry lobbyist to make judgements and decisions about
the very same regulations for which he had lobbied, and then,
this former mining industry lobbyist had acted to prevent any
interested parties such as NWF from commenting on the new rules
in the rule-making process.
In fact, Mr. Alberswerth has raised questions in the past
about the impartiality of even long-term public servants such
as James Cason, President Bush's nominee to be Assistant
Secretary of Natural Resources at the Department of
Agriculture, because Mr. Alberswerth felt he was biased in
favor of industry: ``We're going to tell the Senate Agriculture
Committee we believe he's totally unsuitable,'' Alberswerth
said, adding that he believed Cason's position is ``so pro-
industry * * * it's appalling.'' ``He's a person we simply
cannot trust to be an arbiter on those issues.'' \6\ He also
attacked retiring Reagan Administration Interior official Bob
Burford for having an anti-environmentalist agenda that
affected his impartiality: ``Burford successfully set back the
clock. That was his agenda.'' \7\
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\6\ Inside Energy, September 9, 1995.
\7\ San Diego Union Times, July 9, 1989, p. A25.
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Mr. Alberswerth's agenda is the agenda of his former bosses
at NWF, and his bias appears in the outcome of the rule. To
preserve fairness in the rule-making process for hardrock
bonding, Mr. Alberswerth should have either recused himself
from this rule-making or published his version of the rule for
public comment--giving others, particularly those to be
regulated--an opportunity to meaningfully and fully participate
in the process. Mr. Alberswerth did neither. His actions during
the rule-making process showed partiality to one advocacy group
that participated in the rule-making comment period, while
ignoring the input of most other participants. His regulation
should have been published for public comment so that those
left out of the rule-making could have a voice in the process.
D. A Significant Regulatory Action Is Concealed
In the informal rule-making process, a significant
regulatory action is defined as anyregulatory action that is
likely to result in a rule having an annual effect on the economy of
$100 million or more or adversely affecting in any material way the
economy, a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or state, local, or tribal
communities (Executive Order 12866). Major regulatory actions receive
greater scrutiny before an agency can finalize the rule. The resulting
rule undergoes greater review and must meet tougher legal standards. If
DOI could avoid identifying the Rule as a significant regulatory
action, it would likely bypass close scrutiny of the Rule by the
public, the Office of Management and Budget, Congress, the courts and
to a large extent, the affected parties.
For example, under Executive Order 12866, the agency is
required to provide the Office of Management and Budget with
the following information:
1. An assessment, including the underlying analysis,
of benefits anticipated from the regulatory action
together with, to the extent feasible, a quantification
of the benefits;
2. An assessment, including the underlying analysis,
of costs anticipated from the regulatory action,
together with, to the extent feasible, a quantification
of those costs; and
3. An assessment, including the underlying analysis,
of costs and benefits of potentially effective and
reasonably feasible alternatives to the planned
regulation, identified by the agencies or the public,
and an explanation why the planned regulatory action is
preferable to the identified potential alternatives.
Also, a significant regulatory action requires more
stringent analysis of a proposed rule's effect on small
business entities, and a final rule cannot take effect until
Congress has had a 60-day period in which to review the rule.
From documents in the Committee's possession (Exhibits 8
and 9), it is apparent that DOI's own analysis showed that the
Rule would have an annual economic impact of $100 million on
Nevada and Arizona alone; thus, the Rule was a major rule.
Rather than follow the procedures laid out for a significant
regulatory action, political appointees at DOI tried to conceal
this fact by giving the Nevada State BLM Director discretionary
authority to exclude Nevada from some of the bonding
requirements (Exhibit 10). This ``solution'' is a charade.
Giving discretionary authority conveys the power to deny as
well as the power not to deny. This action merely obfuscated
the $100 million effect of the Rule.
The requirement that a professional engineer must certify
the reclamation costs also adds millions of dollars to the
economic effect of the Rule. DOI limited the analysis of this
requirement to a direct calculation of the costs of obtaining
certification of the estimated total number of bonds that would
be obtained.
DOI made no attempt to consider the resulting costs when a
project is delayed or canceled because certification by a
professional engineer cannot be obtained due to uncertain risks
associated with calculation of reclamation costs. One example
of this problem is provided by a copper mining project owned by
Summo Minerals Corporation. The project, located in an
industrial area in Lisbon Valley, Utah, was in the final stages
of permitting, having received its permits from the State of
Utah and a favorable Environmental Impact Statement and Record
of Decision (ROD). The ROD provided for a $2.6 million initial
bond, increasing to $8.6 million in the third year to cover
reclamation costs. Almost all analyses of this project conclude
that bonds covering groundwater standards could not be
determined until enough data was collected to quantify these
costs with reasonable certainty. The latter can not be done
until mining has been completed to a certain depth below the
surface. The ROD provided that the bond amount would be
reviewed and adjusted when the groundwater issues could be
realistically evaluated. The ROD was appealed by the NWF and
the Mineral Policy Center who argued that the new bonding rule
applied, and the Interior Board of Land Appeals ruled that the
new regulations require that the bond must be determined up
front. Whatever bond amount is determined up front will not
meet the certification requirement because no professional
engineer is going to certify reclamation costs in cases where
there is a lack of reliable data to support these calculations.
This mine, with an estimated capital cost of $48 million,
offers significant economic benefits to one of the poorest
counties in Utah. It has an average annual payroll of $5.4
million and will employ 140 people for a ten-year period.
Corporate and employee income taxes are estimated at $7.6
million yearly. This project, on the verge of construction when
the Rule was published, is now in limbo because of this
regulation; thus, the Rule has destroyed jobs and extinguished
millions of dollars in crucial state and local tax revenues.
The preceding example combined with DOI's own analysis
clearly show that the Rule has an annual economic impact
exceeding $100 million, which is concentrated in a handful of
western states. DOI's action to conceal the fact that the
hardrock bonding regulatory action was a significant rule-
making avoided a more rigorous review, forestalled greater
public input into the Rule, and short-circuited meaningful
public input into the rule-making.
By hiding the fact that the bonding regulation was a
significant rule, DOI was also able to avoid considering any
alternatives to the Rule. One alternative which appears to work
well is a bonding pool. Alaska has operated a state-run bonding
pool since 1992. A miner pays a deposit, refundable upon
completion of reclamation, as surety and pays a non-refundable
charge, currently amounting to about 33 percent of the
refundable deposit. The non-refundable charge goes into a bond
pool to pay for the full cost of reclamation in the event of a
default. Alaska's reclamation law was passed with the help and
support of miners, and there have been no bond forfeitures or
draws against the bond pool since its inception. A similar
approach by DOI could ensure reclamation was completed, free
scarce capital for investment in more productive uses and have
significantly less impact on small business entities.
E. Poor Record Keeping Undercuts Legitimacy of the Rule
A consensus has emerged under the APA that a rule-making
record or file should be created in informal rule-making. In
Citizens to Preserve Overton Park v. Volpe, the Supreme Court
stated that, although agency action is entitled to a
presumption of regularity, ``that presumption is not to shield
[the] action from a thorough, probing, in-depth review.'' 401
U.S. 402 (1971). The importance of a rule-making record in the
review process was enunciated in Home Box Office, Inc. v. FCC
where the District of Columbia Circuit Court said, ``there can
be no doubt that implicit in the decision to treat the
promulgation of rules as a `final event' in an ongoing process
of administration is an assumption that an act of reasoned
judgement has occurred, an assumption which further implicates
the existence of a body of material--documents,
comments,transcripts, and statements in various forms declaring agency
expertise or policy--with reference to which such judgement was
exercised.'' 567 F.2d 9 (D.C. Cir.), cert. denied, 434 U.S. 829 (1977).
The Court went on to say that it is the record in existence at the time
that an agency publishes a final rule which is used ``to test the
actions of the agency for arbitrariness or inconsistency with delegated
authority.''
In enacting rule-making statutes, Congress has specifically
required an agency to maintain a record to support a final
rule. Some rule-making statutes explicitly require the agency
to maintain the record for judicial review, a few even going so
far as to provide detailed record-keeping requirements.
The requirement for a rule-making record for informal rule-
making is also dealt with in Executive Order 12291 on Federal
Regulation which states that prior to approving any final major
rule, an agency shall:
[M]ake a determination that the factual conclusions
upon which the rule is based have substantial support
in the agency record, viewed as a whole, with full
attention to public comments in general and the
comments of persons directly affected by the rule in
particular.
DOI failed to meet the above standard after October 1992.
Prior to this date DOI kept a supporting record, entitled BLM
Bond Policy Chronology (Exhibit 2), documenting each action on
the bonding policy, but this record was not maintained after
September, 1992. After the BLM Bond Policy Chronology ends, DOI
is unable to identify, much less provide support for, changes
made to the Rule during the rule-making process. Several
examples of a defective rule-making record, such as the
professional engineer certification requirement have been
discussed previously, but several other examples include DOI's
inability: (1) to identify and document modifications to the
Rule on at least six occasions; and (2) to identify or provide
documents that were faxed to SBA on April 18, 1997.
Many of the documents that DOI supplied the Subcommittee
had dates that reflected the date that the document was printed
in response to the Committee's document request rather than the
date on which the document was originated, making it very
difficult for the Committee to determine either the sequence or
the justifications for decisions made during the rule-making
process. However, Committee staff found the following filing
data on some of the draft preamble documents in its possession:
Amended throughout per SOL 1/19/95.
Amended throughout per SOL 7/28/95.
Amended throughout per SOL 5/30-31/96, 6/21-6/24/96,
8/4/96.
Amended per OPA 11/7/96 at p. 5-6, 29-30.
Amended throughout per SOL 2/5/97.
From the above notations, it is clear that the proposed
rule underwent at least six rewrites. To better understand the
rule-making process that DOI used in developing the Rule, the
Committee asked DOI to provide a summary of the major changes
and the reasons for each of the changes to the proposed rule
made for each rewrite cited. DOI Solicitor Leshy answered that
``rather than designating a change as `minor' v. `major', each
commentator merely provided suggested deletions and additions
to the rule. As we have stated previously, we believe that any
changes made to the rule were well within the scope of changes
allowable under the Administrative Procedures Act and none of
the changes made were `major' in the sense of suggesting that
reproposal of the rule was appropriate.'' Using Solicitor
Leshy's logic, no rule-making record is necessary if the rule-
making agency makes a determination that any changes made to
its rule are within the scope allowable under the APA.
One example of key documents that DOI has been unable to
locate or even identify are those documents which were faxed to
SBA's Office of Advocacy on April 18, 1997. In a letter dated
July 1, 1997, Solicitor Leshy responded to the Subcommittee's
request: ``Let me also take this opportunity to respond to your
June 17 letter requesting any material the Office of the
Solicitor faxed to the SBA's Office of Advocacy on April 18,
1997. . .We have not been able to determine what materials were
faxed to the SBA's Office of Advocacy on that date because we
did not separately identify in our files or anywhere else what
materials we transmitted.'' Contacts with SBA are important in
establishing a record of compliance with RFA, yet DOI cannot
even identify what documents they provided to SBA. One can only
wonder how many other actions during this rule-making lack any
documentation whatsoever.
DOI did not maintain an adequate supporting record for this
rule-making after September 1992; thus, the rule-making is
essentially undocumented from August 1993 through February
1997, when it underwent major alterations. Several decisions
made during this rule-making, such as the professional engineer
certification requirement, have no justification at all in the
record and other important decisions and meetings, such as
those dealing with the RFA certification, are inadequately
documented. Much of the reason for this appears to be because
this rule-making was done by political bosses at DOI. These
individuals saw no reason to allow meaningful public input into
their decisions, to let a fair and impartial rule-making
process interfere with implementing their plans or to provide
any explanation for their rule-making actions.
Part III: DOI's Uncooperative Attitude
A. Example One--Avoid, Dodge and Delay
DOI impeded this Committee from conducting its oversight
responsibility by using dilatory tactics and trying to impose
rules and conditions under which this Committee could have
access to documents.
DOI initiated a drawn-out string of dilatory and delaying
tactics (Appendix B) shortly after March 12, 1997, when
Chairman Cubin requested all documents pertaining to this rule-
making in order to prepare for an oversight hearing scheduled
for March 20, 1997. Some records were produced by DOI pursuant
to this request, but many documents were withheld from the
Committee under a prospective claim of ``privilege.''
During the March 20, 1997, hearing, Chairman Cubin
reiterated her request for withheld documents, pointing out
that only the President, not DOI, could assert executive
privilege and that the Congress and the Subcommittee have
oversight responsibility under Articles I and IV of the U.S.
Constitution, Rules 10 and 11 of the U.S. House of
Representatives and Committee Rule 6 that requires virtually
unfettered access to nearly all DOI documents.
Moreover, as to judicially created attorney-client and
deliberative process privileges for litigation, precedent
dictates that those privileges do not apply to Congressional
Committees. Chairman Cubin stated that it is ``for the Congress
to determine at its sole and sound discretion to accept any
claim of any attorney privilege that the executive exerts.''
Additional documents were produced after the March 20th
hearing. However, many were improperly dated, and DOI continued
to withhold others. The new documents gave rise to more
questions, the most serious being that a political appointee
who played a major role in formulating the Rule appeared to
have a conflict of interest. More documents were requested, and
an additional hearing was held on June 19, 1997.
After the June 19th hearing, DOI continued to refuse to
provide copies of embarrassing documents, timely responses or
direct answers to questions. DOI claimed and enlarged upon
previous inapplicable assertions of confidentiality and
privilege to excuse withholding or limiting access to key
documents from the Subcommittee. At one point, DOI ``offered''
to allow designated members of the majority and minority staff
of the Committee to make an appointment to come to DOI and
``inspect'' requested documents. The Subcommittee refused any
preconditions because they restricted when and under what
conditions Congress could perform its oversight responsibility.
This is a precedent that the Subcommittee had no desire to set
for routine document productions.\8\
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\8\ While not accepting DOI conditions, Committee Staff did go to
DOI and look at the documents. They were certainly embarrassing.
However, with one possible exception, which the Committee has not
released, a court would most likely order DOI to produce all of these
documents as part of the rule-making record.
---------------------------------------------------------------------------
After DOI's dilatory tactics continued for more than three
months, the Committee authorized Chairman Young on July 16,
1997, to issue a subpoena requiring that the documents be
produced by August 15, 1997. The subpoena was issued on July
30, 1997, and DOI finally provided the documents on August 19,
1997.
The delay--from March through mid-August 1997--in producing
the ultimately subpoenaed documents thwarted efforts of the
Subcommittee and Committee to properly undertake their duties
under Article I and Article IV of the U.S. Constitution, Rules
X and XI of the Rules of the House and Rule 6 of the Committee
Rules. Two Subcommittee hearings on the matter had already been
held and remaining days in the first session of the 105th
Congress were limited.
B. Example Two--Misleading Answers to Important Questions
Regarding DOI's compliance with the RFA, Solicitor Leshy in
his May 12th letter (Exhibit 17) to Chairman Cubin stated,
``Among other things, before providing you with our reply to
your letter of March 24, 1997, we discussed this matter with
the Office of Advocacy, Small Business Administration. We
explained our legal interpretation of the applicable provisions
of the Regulatory Flexibility Act, the mining laws, and the
analysis set forth in the BLM's Determination of Effects.''
This statement was clearly intended to leave the impression
that the SBA did not have a problem with DOI's analysis.
However, a memo dated April 21, 1997, from SBA to the DOI
Office of the General Counsel (Exhibit 18), states, ``Our
recollection of that conversation (April 2nd) is that initially
Advocacy told you that the Bureau of Land Management was not in
compliance with the Regulatory Flexibility Act because you did
not define a small entity in compliance with SBA's definition
of a small entity in the mining industry. After giving you our
initial opinion, you stated that the definition of a `small
miner' was mandated by statute. We responded that if the
definition of small miner was mandated by statute, then the
statutory definition would prevail.''
The memo further states that, ``With regards to the
`statutory mandate', Advocacy was under the impression that the
mandated definition was not from the `Omnibus Reconciliation
Act of 1993.' Advocacy believed that the mandated definition
was specific to the regulation that you were attempting to
implement.''
Thus, SBA clearly disagreed with the position Solicitor
Leshy conveyed to Chairman Cubin in his letter dated May 12,
1997.
C. Example Three--The Litigation Excuse
After the Subcommittee was well into its review, a private
party filed suit to set aside the Rule because it also believed
that rule-making process was illegal. DOI continued to refuse
to produce copies of embarrassing documents using the lawsuit
as their reason. Solicitor Leshy said in his June 11, 1997,
letter to Mr. Duane Gibson, Resources Committee Staff, ``Given
the pendency of the litigation, we believe the federal court,
and not the Subcommittee, is the proper forum for determining
the extent to which these documents are subject to disclosure
to the plaintiff or the public.'' \9\ This absurd position
ignored the responsibilities of the Congress under Article I of
the U.S. Constitution.
---------------------------------------------------------------------------
\9\ The voluminous correspondence between DOI and the Committee
concerning various arguments of ``privilege'' and the litigation excuse
are included in Appendix B. Appendix B illustrates the protracted
series of numerous dilatory tactics employed by DOI to obstruct the
Committee's access to important documents needed to carry out its
oversight responsibilities under Articles I and IV of the U.S.
Constitution, Rules X and XI of the U.S. House of Representatives and
Rule 6 of the Committee Rules.
---------------------------------------------------------------------------
DOI's position that a pending lawsuit shields the
Department from disclosing documents to Congress turns the
Constitution into a sham. Litigation is not cause to delay or
condition turning over documents to Congress. The Congress'
oversight responsibility and obligation is Constitutionally
derived; therefore, Congress' power to obtain information in
furtherance of its oversight reviews is almost plenary. DOI
must turn over the information unless there is a
constitutionally-based excuse. A legitimate excuse is executive
privilege, which is, by its nature, invalid in a rule-making.
Using DOI's logic, the mere filing of a lawsuit would shield an
agency from Congressional oversight. Congress would rarely be
able to effectively carry out its oversight responsibilities
since the U.S. Government is being sued over many of the
contentious issues before Congress.
Part IV: Analysis and Conclusions: DOI's Actions Corrupted the Rule-
Making Process
The Committee is very concerned about the attitude that
appears to be prevalent in DOI from Interior Secretary Babbitt
on down to the middle management levels that are staffed by
political appointees. This attitude was expressed by Secretary
Babbitt in a memo, dated January 6, 1997, concerning 43 CFR
3809 regulations. He said, ``It is plainly no longer in the
public interest to wait for Congress to enact legislation that
corrects the remaining shortcomings of the 3809 regulations.''
Solicitor Leshy used a similar argument during the hearing on
March 20th to justify DOI's hardrock bonding informal rule-
making. In response to a question, Solicitor Leshy replied that
DOI had put the rule-making ``on hold until Congress solved the
problem for us.'' He went on to say, ``Now Congress did not
solve the problem, so in early 1994 we resumed the process of
going forward with a final rule.''
Mr. Alberswerth also used this refrain in justifying the
modifications to the draft rule in his November 8, 1994, memo
(Exhibit 6) saying, ``Since Congress did not enact
comprehensive changes in the Mining Law, it is now appropriate
to modify and finalize new bonding regulations.'' In fact, from
an earlier memo written on October 25, 1994, by Mr.
Alberswerth, it appears that DOI is attempting to rewrite the
draft bonding regulations to incorporate failed legislation
that it supported. In this memo, Mr. Alberswerth states:
Rates for individual operations should be set at a
level that ``is not less than the estimated cost to
complete reclamation if the work were to be performed
by the Secretary in the event of forfeiture (see House
offer to Senate of 7/26/94, p. 23).''
DOI supported the mining law bill passed by the House and
opposed the Senate bill.
Under Article IV, section 3 of the U.S. Constitution,
Congress possesses the ultimate power to regulate or dispose of
lands belonging to the United States. The Executive Branch
(DOI) holds only such regulatory power over these lands as
delegated to it by Congress. The Executive Branch possesses no
power to act because Congress failed to enact policies
advocated by DOI. Congress has a right to refuse to act. As
Congressman Chris Cannon (R-UT) told Mr. Leshy at the March
20th hearing, ``I do not think it is proper for the Department
to substitute its judgement for Congress and if we have issues
that are difficult here they ought to be perhaps left to wait
on us.''
The political appointees controlling the regulatory
authority at DOI used their power to implement an agenda that
the Congress refused to enact--even when controlled by their
own party. In doing this, DOI silenced the voice of many of
those who participated in the legislative process through their
elected representatives, effectively denying those with
differing opinions participation in our democratic process.
The legislative process was meant to be cumbersome, with
numerous checks and balances to ensure that law-making is
something more than a casual affair. But when bureaucrats make
laws by regulation on behalf or in lieu of Congress, those
legislative hurdles so carefully constructed by the authors of
the Constitution are circumvented and the restraints on
promiscuous lawmaking are demolished. Government as a result
runs riot, and the people's voice through their elected
representatives is nullified.
One of the Committee's chief concerns in this particular
case of rule-making is whether DOI followed procedural law and
rules laid down by numerous past Congresses to ensure an
impartial regulatory process. Congress delegates rule-making
power to a federal agency on the presumption that the agency
will act responsibly and guarantee all interested parties full
and meaningful participation in an open and impartial rule-
making process. The American people deserve a fair and open
rule-making process which is accessible to all groups with an
interest in a proposed regulation--not a politically driven
regulatory system that is used by those in control of the
Executive Branch to punish their perceived opponents and deny
them any voice in determining regulations they are expected to
obey.
As the Supreme Court stated in Sierra Club v. Costle:
Under our system of government, the very legitimacy
of general policymaking performed by unelected
administrators depends in no small part upon the
openness, accessibility, and amenability of these
officials to the needs and ideas of the public from
whom their ultimate authority derives, and upon whom
their commands must fall. 657 F.2d 298, 410 (D.C. Cir.
1981). Furthermore, the importance to effective
regulation of continuing contact with a regulated
industry, other affected groups, and the public cannot
be underestimated. Informal contacts may enable the
agency to win needed support for its program, reduce
future enforcement requirements by helping those
regulated to anticipate and shape their plans for the
future, and spur the provision of information which the
agency needs.
Unfortunately, development of the hardrock bonding rule
provides an example of rule-making at its worst--rule-making
dominated by politics. Documents obtained by the Committee
clearly show that the undue interference of upper echelon
political bosses at DOI in the BLM hardrock bonding rule-making
process was so great that the integrity of the rule-making
process itself is discredited. It is also apparent that high-
level, political appointees at DOI did not intend to reopen the
comment period to interested parties, particularly the
regulated community, once they decreed their changes to the
Rule.
Mr. David Alberswerth, an upper level DOI political
appointee, had recently been closely associated with one of the
12 largest national environmental groups. In fact, in laying
out the terms of the Rule, the input during the draft rule-
making from anyone other than environmental advocacy groups was
essentially ignored. The similarity between Mr. Alberswerth's
comments on the draft rule submitted on behalf of NWF in
October 1991, and the major changes he mandated be made to the
92 iteration in his November 1994 memo, are striking.
Mr. Alberswerth's directive substantially altered the
direction that BLM regulation writers were moving with bonding
regulations in both the draft rule and the 92 iteration. Mr.
Alberswerth changed the objective from using a bond as a tool
to encourage reclamation to using it as a means to make it as
expensive as possible for mines to operate on public lands.
Hisapproach is designed to tie up as much scarce investment capital as
possible in a bond, a relatively inefficient use of resources. More
reasonable alternatives, which could accomplish the same objectives at
far lower costs, were never considered.\10\ At the same time, Mr.
Alberswerth denied miners any meaningful input into these decisions,
which were designed to have a major impact on their operations.
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\10\ This approach punishes everyone in the mining industry, not
just the few problem operators. Solicitor Leshy testified at the March
20th hearing that ``most members of the mining industry are responsible
operators who live up to their reclamation obligations. . . .''
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According to the notice of the proposed rule (July 11,
1991; Exhibit 3), DOI was capping the bonding amount in order
to ``reduce the impacts on industry . . . these bond caps would
be intended to be in effect for 3 years after promulgation of
the final rule, and their adequacy would be reevaluated at that
time.'' Mr. Alberswerth totally abandoned this approach, even
going so far as to require operators to post bond for any
additional reclamation costs that would be incurred if the BLM
did the reclamation. Certainly, interested parties cannot be
expected to anticipate the Rule from this notice of the
proposed rule-making.
The memo also rendered comments made during the public
comment period by anyone other than environmental advocacy
groups moot and annulled previous efforts by the BLM to reach
out to the regulated community, particularly small entities, to
win needed support for its program. From November 4, 1994,
onward, meaningful input into the Rule was to be denied to
anyone who did not agree with DOI political appointees.
Mr. Alberswerth's memo determining the Rule is significant
because it shows that the rule-making was arbitrary and
capricious. In reality, the normal rule-making process ceased
on November 4, 1994. A rule-making is an ongoing process that
assumes that an act of reasoned judgement has been made by the
agency with expertise in the area covered by the rule. BLM, the
agency with expertise in mining and direct responsibility for
regulating mining on public lands, was shut out of the rule-
making process. Hereafter, BLM's role would be to mold a
preamble to fit the Rule dictated by DOI political bosses. The
lack of a record justifying decisions made in the rule-making
process indicates that these political appointees lacked the
necessary experience to make the reasoned judgements required
during the rule-making process.
DOI political bosses acted to move the Rule to publication
despite warnings from BLM regulation writers and DOI lawyers
that there were significant APA concerns with the Rule. These
personnel met with Mr. Alberswerth in early June to express
their concerns (Exhibit 8). An E-mail to Mr. Hord Tipton,
acting Director of the BLM, from Mr. Rick Deery stated that all
of the participants in this meeting (presumably excluding Mr.
Alberswerth) agreed on the APA issue (Exhibit 9). Other than
the meaningless word-smithing to hide the significant rule
issue, these concerns were ignored by upper level DOI policy-
makers.
The problems with the hardrock bonding rule-making result
from the refusal of a few imperious, high-level, politically-
motivated bureaucrats to obey the laws that govern the rule-
making process. These political bosses refused to comply with
laws such as RFA, obstructed the impartiality of the rule-
making process, excluded interested parties from participating
in the rule-making process in a meaningful way, attempted to
prevent and obstruct Congress from carrying out its
Constitutional oversight responsibilities, and tried to use
various inapplicable claims of ``privilege'' to hide these
actions.
The above actions, taken together, constitute a coordinated
effort by DOI policy-makers to affirmatively misrepresent the
Rule's import and impact. Even if the notice of a proposed
rule-making is facially sufficient, the courts have ruled in
Natural Resources Defense Council v. Hodel that the notice is
rendered inadequate by an agency's affirmative
mischaracterization of the rule's import and impact. 618 F.
Supp. 848 (ED Cal 1985). DOI continually mischaracterized the
economic effect of the rule and the nature of the alterations
made to the rule by Mr. Alberswerth to deny interested members
of the public full and meaningful participation in the rule-
making process.
Appendix A--Exhibits
Exhibit and description:
1. Notice of Final Rule (published February 28, 1997).
2. BLM Chronology 1983 to September, 1992.
3. Notice of Proposed Rule (published July 11, 1991).
4A. Memo from Dan to Dave dated 8/6/93.
4B. Memo Laying Out Groundwork for Final Rule dated 11/29/
91.
5. Memo dated 10/25/94 from Dave Alberswerth to Bob
Armstrong, John Leshy, Mike Dombeck, and Patty Benecke on Hard
Rock Bonding Regulations.
6. Memo dated 11/8/94 from Dave Alberswerth to Hord Tipton.
7. Handwritten Notes on Meeting Held on 11/2/94.
8. Memo dated 6/14/96 to John Leshy from Dave Alberswerth
on Status of Hardrock Bonding Rule.
9. Memo dated 6/19/96 from Rick Deery to Hord Tipton
Concerning ``Just Talked to Dave A--Forwarded--Reply--Reply''.
10. Memo dated 6/19/96 from Rick Deery to Ted Hudson and
Natalie Eades Concerning ``Just Talked to Dave A--Forwarded''
With Memo dated 6/17/96 From Annetta Cheek to Rick Deery
Concerning ``Just Talked to Dave A'' Attached.
11. Memo dated 6/3/96 from Annetta Cheek to Ted Hudson.
12. Memo dated 6/7/96 from Annetta Cheek to Monica Burke.
13. Memo dated 6/17/96 to Rick Deery from Annetta Cheek on
Bonding.
14. Side by Side Table Comparing Draft Rule and Final Rule.
15. Memo dated 9/17/96 from Sharon Allender to Hord Tipton,
Mike Schwartz and Rick Deery Concerning ``Bonding Regs''.
16. Changes dated 2/24/97 Made by Ted Hudson to Preamble.
17. Letter dated May 12, 1997, from John Leshy to Chairman
Cubin.
18. SBA Communication dated 4/21/97 from Shawne Carter and
Jennifer Smith to Natalie Eades and A Note (undated) from
Natalie Eades to Shawne Carter and Jennifer Smith.
19. Comments by National Wildlife Federation on Draft Rule
(Submitted by Dave Alberswerth and Cathy Carlson).
20. Memo dated 2/11/97 from Dave Alberswerth to Mike
Schwartz Concerning ``Comments on 2/11/97 draft DOE on hard
rock bonding reg.''.
Appendix B--Exhibits
Exhibit and description
1. Letter from Chairman Cubin to Interior Secretary Babbitt
dated March 12, 1997.
2. Letter from Chairman Cubin to Deputy Interior Solicitor
Cohen dated March 20, 1997.
3. Letter from Deputy Interior Solicitor Cohen to Chairman
Cubin dated March 21, 1997.
4. Letter from Chairman Cubin to Interior Secretary Babbitt
dated May 14, 1997.
5. Letter from Interior Secretary Babbitt to Chairman Young
dated May 21, 1997.
6. Letter from Interior Solicitor Leshy to Chairman Cubin
dated June 9, 1997.
7. Letter from Mr. Duane Gibson to Deputy Interior
Solicitor Cohen dated June 9, 1997.
8. Letter from Interior Solicitor Leshy to Mr. Duane Gibson
dated June 11, 1997.
9. Letter from Interior Solicitor Leshy to Mr. Duane Gibson
dated June 11, 1997.
10. Letter from Honorable George Miller to Chairman Young
dated June 11, 1997.
11. Letter from Chairman Young to Honorable George Miller
dated June 11, 1997.
12. Letter from Interior Solicitor Leshy to Chairman Cubin
dated July 1, 1997.
13. Letter from Deputy Interior Solicitor Cohen to Mr.
Duane Gibson dated July 7, 1997.
14. Letter from Interior Solicitor Leshy to Chairman Young
dated July 15, 1997.
15. Letter from Chairman Cubin to Deputy Interior Solicitor
Cohen dated July 15, 1997.
16. Letter from Deputy Interior Solicitor Cohen to Chairman
Cubin dated July 16, 1997.
17. Memo dated July 21, 1997, from Mr. Lloyd Jones to
Chairman Young.
18. Memo dated July 22, 1997, from Mr. Doug Fuller et al to
File.
19. Letter from Chairman Young to Honorable George Miller
dated July 22, 1997.
20. Letter from Chairman Young to Honorable George Miller
dated July 29, 1997.
21. Memo dated July 31, 1997, from Chairman Young to
Members, Committee on Resources.
DISSENTING VIEWS ON THE REPORT
The catalyst for the Majority report is a 1997 regulation
issued by the Bureau of Land Management (BLM). This rule was
designed to enhance protection of the environment by requiring
that all mining operations secure adequate financial guaranties
to assure that the taxpayer not be left with the bill for
cleaning-up after irresponsible miners.
Since 1981, BLM has required mining operators to provide
bonds, or financial guaranties for reclamation of the public
land disturbed by mining activities. However, that regulation
was flawed in a number of aspects. The General Accounting
Office (GAO) found in 1988 that at least a half million acres
of land abandoned by hardrock miners needed to be reclaimed at
taxpayers' expense (U.S. General Accounting Office, Federal
Land management: An Assessment of Hardrock Mining Damage, April
1988). Consequently, using statutory authority under the
Federal Land Policy and Management Act (FLPMA) that requires
the BLM to ``take any action necessary to prevent unnecessary
or undue degradation of the public lands'' by ``regulation or
otherwise,'' in 1991, the Bush Administration published a
proposed rule to reform the hardrock mining bonding
requirements.
When the Clinton Administration came into office, Congress
was actively debating comprehensive reform of the 1872 Mining
Law. After the 1994 elections, it became obvious that the new
Republican-led Congress was no longer interested in this
subject. The Administration reinitiated promulgation of the
mining regulations that had been deferred pending Congressional
action, publishing a final rule on bonding in February 1997. In
the last year, DOI has also issued new rules relating to the
use and occupancy of public lands for mining purposes (also
after a six-year hiatus but not opposed by the mining industry
or the Majority) and is currently revising the surface
management rules for hardrock mining.
On May 12, 1997, in response to the new rules, the Mountain
States Legal Foundation filed suit in U.S. District Court for
the Northwest Mining Association, seeking to overturn the
bonding regulations. Mountain States asserted that DOI violated
the Administrative Procedures Act (APA) and the Regulatory
Flexibility Act (RFA) by improperly issuing the regulations.\1\
Subsequently, the Arizona Mining Association and Nevada Mining
Association filed amicus briefs in support of Northwest. The
Department of Justice (DOJ) argued on behalf of DOI the Court
should issue a ruling in favor of DOI as the Northwest Mining
Association had failed to establish that the BLM has not
complied with the APA and the RFA.
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\1\ Northwest Mining Association v. Babbitt; Civil Action No. 97-
1013 (JLG). Mountain States Legal Foundation, which litigates on behalf
of conservative interests and causes, appears to have a close working
relationship with Republican Members of the Committee. In addition to a
mutual interest in seeking to overturn the mining bonding regulation,
Mountain States gained access to subpoenaed White House documents which
were released in a Republican staff report on the establishment of the
Grand Staircase-Escalante National Monument (Committee Print 105-D,
Nov. 7, 1997). Mountain States had filed suit in federal district court
in Utah on June 13, 1997 to overturn the monument declaration and filed
a revised lawsuit Mountain States Legal Foundation v. Clinton; Civil
Case No. 2:97CV-0863G (Dec. 15, 1997), after release of the Republican
staff report containing the subpoenaed documents. Moreover, Mountain
States directly represented four Republican Members (Reps. Chenoweth,
Pombo, Schaffer, and Young) seeking to prevent the Administration from
implementing the American Heritage Rivers Initiative. Chenoweth, et al.
v. Clinton; Civil Action 1:97CV02954 (Dec. 12, 1997).
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On May 13, 1998, the U.S. District Court for the District
of Columbia ruled in favor of the mining association, finding
that the DOI had violated a procedural requirement of the
Regulatory Flexibility Act by not properly consulting with the
Small Business Administration on the definition of ``small
business'' used in the rule. The BLM had relied on the
statutory definition of ``small miner'' provided in the Omnibus
Budget Reconciliation Act of 1992. The Court did not find that
the DOI had violated the APA.
As a result, the rule was remanded to DOI. Normally, this
would mean that DOI would reissue the rule as a proposed rule,
solicit and consider comments and then issue a final rule.
However, Congress placed a rider on the FY 1998 DOI
Appropriations bill last year that will prevent the DOI from
issuing new rules on hardrock mining activities, including
bonding, until November 14, 1998. In the interim, it is unclear
what steps, if any, are available to DOI to assure that mining
operations are adequately bonded.
The 100-plus page report prepared by Majority Committee
Staff contains many confidential documents secured under a
subpoena. These confidential documents are part of the DOI's
deliberative process on the development of the bonding rule.
The DOI supplied these documents to this Committee under
subpoena only after the Committee Majority refused to respect
the DOI's determination to keep these documents confidential
(See attachment 1). The report unfairly accuses DOI of engaging
in delaytactics to defer turning the documents over to
Congress. In fact, the DOI Solicitor has spent months attempting to
negotiate a protocol with the Majority for use of confidential
documents. The Department sought this assurance to protect its position
in the litigation brought by the mining industry after the Republican
majority had released other confidential documents. Democratic Members
of the Resources Committee have similarly sought, without success, a
protocol to establish effective and fair procedures for the
solicitation, management and disposition of confidential documents. On
February 12, 1998, all 23 Democratic Members of the Resources Committee
requested that Chairman Don Young convene the Committee for the purpose
of devising such a protocol.
By issuing this report, with the privileged documents
appended, the Majority proves the Department's concerns to have
been well founded.
The Majority report closely parallels the arguments made by
the Northwest Mining Association in its lawsuit. The arguments
presented by industry to the District Court are essentially the
same as those made in the Majority report. Both documents
include the same examples to support their allegations. For
example, both the report and the industry brief erroneously
cite an issue now pending before the Interior Board of Land
Appeals relating to the Summo Corporation's plan to develop a
large copper mine in Utah. Both documents specifically target
and denigrate Mr. David Alberswerth, a political appointee in
the Clinton Administration, who served as a special assistant
to the Assistant Secretary of Lands and Minerals. Prior to his
public service, Mr. Alberswerth worked as the Director of the
Public Lands and Energy Program of the National Wildlife
Federation. By issuing this report, the Majority usurps the
traditional role of the Courts and provides to the mining
industry litigants documents that would not be available to
them through either the Courts or through this Freedom of
Information Act.
The Majority report ignores the need for an adequate bond,
or financial guaranty, to cover the estimated costs of mining
reclamation on public lands. Mining causes serious
environmental problems for local communities across the United
States and throughout the world, including perpetual water
pollution caused by acid mine drainage, cyanide spills and
heavy metals contamination, wildlife habitat destruction and
fish kills and creation of toxic waste rock despite existing
environmental laws and regulations The GAO noted in 1988 that
424,049 acres of public land were unreclaimed. More recently,
in 1993, the Mineral Policy Center, a nonprofit public interest
group, estimated that more than 557,000 abandoned hardrock mine
sites exist throughout the United States. Mine effluents have
polluted more than 12,000 miles of American rivers and streams
and 180,000 acres of our lakes and reservoirs. Such
contamination presents a growing threat to underground
aquifers.
Superfund was created by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA) which
as enacted to ameliorate hazardous waste sites across the
country, including abandoned hardrock mine sites. The law
requires the U.S. Environmental Protection Agency (EPA) to
identify and investigate actual or threatened releases of
hazardous wastes The worst hazardous waste sites are placed on
the National Priorities List (NPL) for emergency intervention
and priority cleanup. Although the government attempts to
identify parties responsible for the contamination, taxpayer
money is used to clean up sites where responsible parties
cannot be identified or are unable to pay cleanup costs.
Sixty-six hardrock mine sites were listed on the NPL as of
August 1996. (Hardrock mine sites representing six percent of
the 1,100 sites on the list. Hardrock mine sites, many of which
stem from 1872 Mining Law claims, are among the largest and
most expensive Superfund sites to remediate.
Acid mine drainage is a major contaminant at several NPL
mine sites, including Iron Mountain outside Redding,
California, and Bunker Hill, near Kellogg, Idaho. A threat to
human health and aquatic life, Acid mine drainage also leaches
potentially toxic heavy metals from surrounding rock. Every
day, thousands of pounds of copper and zinc leach into surface
waters surrounding Iron Mountain, and have contributed to
drinking water contamination and major fish kills.
Similar conditions exist at Bunker Hill--one of the largest
Superfund sites in the nation. The abandoned silver mine has
deposited Acid mine drainage in the south fork of the Coeur
d'Alene River for more than 90 years. A lead smelting operation
on the site has emitted extensive toxins to surrounding soils
and nearby communities, including some six million pounds of
lead and 860,000 pounds of zinc.
The four contiguous Superfund sites in the Clark Fork River
Basin, Montana, comprise the country's largest hazardous waste
repository. The Anaconda Smelter at Mill Creek, the Milltown
Reservoir, Silver Bow Creek, and East Helena, together cover
some 57,000 acres (approximately 90 square miles) and encompass
two entire cities--Butte and Walkersville, The area contains
millions of cubic yards of tailings, slag, and flue dust, and
billions of gallons of arsenic-laced groundwater and surface
water. Besides arsenic, other heavy metals detected in soil and
water (including drinking water) include cadmium, copper, lead,
and zinc.
Cyanide is a serious contaminant frequently associated with
hardrock mining. Used to leach gold from piles or ``heaps'' of
crushed ore, cyanide has become a major contaminant only in the
last 20 years, as such ``heap leach'' technology has come into
increasing use to exploit remaining low-grade deposits. Not
only do the heaps and mill tailings become hazardous waste, but
cyanide itself will leach other metals besides gold, including
arsenic and lead.
The most notorious example of cyanide contamination is the
Summitville Mine Superfund site in southwestern Colorado, a
heap leach gold mine that had been in operation only seven
years before being taken over by EPA in 1992. Summitville
suffered from a serious of poor design and management
decisions, including the placement of the ore heap behind a dam
in a narrow valley, not on level land; damage to the heap liner
due to faulty installation; and the lack of any liner
whatsoever for an on-site waste rock pile. After the mine's
start-up, nearby watersheds and groundwater were contaminated
by cyanide solution leaking through the torn liner, and by acid
runoff from the waste pile. After the operators declared
bankruptcy, EPA, using the emergency provisions of CERCLA,
intervened, stabilizing the site and beginning the cleanup. As
of August 1996, EPA put cleanup costs at Summitville at $142
million. Had Summitville been adequately bonded the federal
taxpayer would not be paying for this cleanup now.
In 1993, EPA estimated that reclamation of the 52 hardrock
mine sites then listed on the NPL would cost a minimum of $15
billion. However, only a small percentage of abandoned hard
rock mine sites are targeted for cleanup under Superfund.
Moreover, progress in cleaning up and de-listing these sites
has been slow with only three hardrock mining sites deleted
from the NPL, while 12 new sites have been added.
blm's bonding policy
Prior BLM regulations gave each BLM State Director
discretion to decide whether to require a bond at all and the
amount that such a bond should equal for operations
encompassing more than five acres on public land. Operations
covering less than five acres, approximately 80 percent of all
operations, were not required to carry a bond or any other
financial guaranty.
On July 11, 1991, in response to criticism from Congress
and others that these rules were inadequate, BLM issued a
proposed rule calling for certification from the operator for
operations covering five acres or less that a bond had been
secured in the amount of $5,000. Operations on more than 5
acres were required to secure financial assurance in the amount
of either $1,000 or $2,000 per acre depending on the type of
activity proposed. Operations using cyanide would be required
to post a 100 percent financial guaranty to cover the cost of
reclaiming the cyanide heap. Casual-use operations causing
negligible damage would not require a financial guaranty. To
avoid duplication, BLM proposed allowing an operator the use of
a state bond if it were equal to at least 75 percent of the
amount required by BLM.
Following the close of the public comment period in October
1991 through June 1992, the BLM organized and revised the
proposed rule to accommodate the 218 comments provided by three
citizen-petitions, 58 public interest groups, 51 business
entities or associations, 22 government agencies and 135
individuals, not including the petitions. The comments
addressed three major perspectives. A number of comments
addressed the adequacy of the bond levels, self-certification
and the number of financial instruments available under the
rule. The commentors expressed concern that the bond levels
were too low and that BLM should require full cost bonding for
all mining operations. Those expressing concern regarding self-
certification and the use of certain financial instruments
questioned the efficacity of the rule. Mining associations and
some individuals agreed that the rules were necessary but
expressed reservations regarding the cost of a $5,000 bond
proposed for smaller operations. Finally, many of the
individuals asserted that the rule would force small miners out
of business.
An audit released by the USDI Inspector General in March
1992, found that the proposed rule would not provide an
adequate financial guaranty. As the Inspector General
concluded, ``BLM's proposed amendment to the regulations
governing bonding of mining operators does not provide the
financial guaranty necessary to ensure that funds will be
available to reclaim mining sites abandoned by mining
operators.'' In addition, the Inspector General strongly urged
the BLM to modify the rule to require all operators engaged in
mining activities greater than casual use to ``post financial
guarantees with the Bureau that are commensurate with the
anticipated type and size of the operations.''
Since the Bush Administration had placed a moratorium on
promulgation of new rules, BLM sought an exemption to enable
promulgation of the final rule which was received in August
1992. The BLM readied the rules package during the next few
months. However, Secretary Lujan did not approve the final
rules prior to the Presidential elections and subsequent change
in Administration. As noted previously, the Congress, then
under Democratic leadership, was actively considering
comprehensivemining reform. Therefore, Secretary Babbitt
deferred completion of the rule pending resolution of Congressional
action. Consideration of the bonding rule resumed following the 1994
elections, when the Republican Party assumed control of the Congress
and the future of mining law reform became more difficult to predict.
In February 1997, the DOI issued its final rule on bonding
including modifications made in response to comments received
on the proposed rule. The proposed rule would have required
each small miner to put up a $5,000 bond; the final rule
requires the greater of either $1,000 per acre bond or the
estimated costs of reclamation. The final rule would therefore
impose a potentially lower cost than the proposed rule for
those miners occupying less than five acres of public land.
Also, the final rule allows use of bonding pools in Nevada and
Alaska. Both of these provisions respond to the concerns
expressed by the smaller mining operators that they would not
be able to secure or afford financial guaranties.
The Majority report criticized the DOI for not factoring in
the implementation of new state laws or regulations. However,
they fail to recognize that the final rule allows the
substitution of any state requirement that is as strict as the
federal baseline established in the rule.
The final rule requires the certification of a professional
engineer that the estimated costs of reclamation. Contrary to
the evidence in the record, the Majority report inaccurately
asserts that BLM did not support the requirement for a
professional engineer certification in the rulemaking record
(see Exhibit 7 of the Majority Report).
administrative procedures act
The Majority asserts that BLM violated the APA because the
final rule was based on information that was more than six
years old. Although a proposed rule can become outdated, the
APA ``does not establish a `useful life' for a notice and
comment record.'' Action on Smoking and Health v. CAB 713 F2d
795, 799-800 (D.C. Cir. 1983). The District Court in its May
13, 1998 ruling did not find that DOI violated the APA.
The Majority argues that there was a substantial alteration
from the draft rule to the final rule that required an
additional public review and comment period. In its brief to
the Court, DOJ argued that the final rule was a ``logical
outgrowth'' of the draft rule and therefore did not require
additional public review and comment. The preamble to the final
rule states: ``Some comments generally disapproved of [the
proposed rule's] expansion of possible security instruments [to
allow use of equipment bonds] stating that there appeared to be
no problem in getting traditional surety bonds. Contrary to
this view, it appears that there may be a problem for the
smaller operator . . . the list is expanded State and municipal
bonds . . . Whatever additional risk may be involved is offset,
at least somewhat, by the amendment requiring that financial
guarantees be equal to an independent professional engineer's
estimate of reclamation costs. It is important to recall, in
this connection, that the financial guarantee and the duty to
reclaim are backed up by criminal penalties, and by the
provision that the operator is not free of liability if the
guarantee is cashed in and found insufficient.''
Further, as noted in the DOJ brief, in Kooritzky v. Reich,
17 F.3d 1509, 1513, (D.C. Cir. 1994) the Court stated: ``It is
an elementary principle of rulemaking that a final rule need
not match the rule proposed, indeed must not if the record
demand a change. [cites omitted]. The reason is plain enough.
Agencies should be free to adjust or abandon their proposal in
light of public comments or internal agency reconsideration
without having to start another round of rulemaking. The
necessary predicate, however, is that the agency has alerted
parties of the agency's adopting a rule different than the one
proposed.''
BLM made changes in the final rule specifically in response
to comments received on the draft rule from States, another
federal agency, the regulated community and other interested
parties. For example, the BLM stated in the preamble (Federal
Register, Vol. 62, No. 40, Friday, February 28, 1997, page
9094):
In response to the comments regarding bond levels,
BLM has amended the rule to require bonds that would be
needed to pay for 100 percent of the amount that would
be needed to pay for reclamation by a third-party
contractor using equipment from an off-site location.
This will ensure that, if the bonded party fails to
perform its reclamation responsibilities, BLM will have
access to adequate funds to reclaim the lands, and
thereby protect the interest of the public, including
federal taxpayers.
and
The guarantee amount of $5,000 * * * generated the
largest number of comments * * * In drafting the
proposed rule it was assumed that notice-level
operators would use the full 5 acres allowed and be
bonded for the same at the proposed exploration level
cap which was $1,000 per acre. Many comments should be
based on actual acreage disturbed. This suggestion has
been adopted in the final rule.
and
As discussed below, in response to comments, a
procedure for phased release or reduction of bonds as
reclamation phases are completed has been included in
the final rule.
regulatory flexibility act and the small business administration
The Majority report is especially critical of the DOI for
deleting certain provisions of the proposed rule that were
aimed at satisfying small miners' concerns. As an example, the
Majority notes that the Alaska Placer Development Co.,
employing 14 people, operates a gold mine in Livengood, Alaska,
would not fit within the statutory definition of a ``small
miner'' incorporated in the rule. Congress created the ``small
miner definition'' in the 1992 Omnibus Budget Reconciliation
Act as part of the provision that established rental fees for
mining claims. Under that law, a ``small miner'' is one who
hold ten or fewer mining claims. ``Small miners'' are not
required to pay the $100 per 20-acre mining claim that others
holding more than ten claims must. The Majority also fails to
note that the final rule enabled BLM to negotiate a Memorandum
of Understanding with the State of Alaska (as well as Nevada
and others) that allows Alaska Placer, and other similar small
mining operators, to meet their bonding requirements through
the State's bonding pool, a relatively low-cost option aimed
specifically at small miners' needs and financial concerns.
The report also criticizes the DOI for deleting the
provision of the proposed rule that would have allowed small
miners to use ``equipment bonds'' (i.e., pick-up trucks,
bulldozers, etc.) as a legitimate bond or financial guaranty.
Under the proposed rule, BLM would repossess the ``equipment''
or home of a miner who failed to reclaim public land disturbed
by his mining activities. Several commentors on the proposed
rule suggested that this provision be eliminated since such
instruments would not be entirely liquid and which might not
cover the costs of reclamation and the BLM agreed. However,
according tothe preamble of the final rule, the BLM concurred
with the concern that acquisition of financial guarantees could be
problematic for small mining operators and therefore, allowed the use
of state and municipal bonds. The final rule retained additional
options for the smaller mining operation. This was intentional as noted
in ``Exhibit 5/6'' of the Majority report, a memorandum from Mr.
Alberswerth to his superiors, that states.
The BLM proposal allows use of a wide variety of
financial instruments to be substituted for bonds,
including liens on mining equipment, nationwide and
statewide bonds, mortgages, etc.
Property bonds, collateral bonds, equipment liens
frequently are inadequate to guarantee reclamation
(ref. The Mid-Continent coal mine Colorado). The
challenge here is to provide enough flexibility in the
type of financial instruments allowed, while minimizing
the risk to the government. I think [emphasis added] we
should at least rule out equipment liens and property
bonds, as well as nationwide and statewide bonds.
DOI decision makers concurred with Mr. Albersweth's
recommendation to eliminate equipment bonds. However, the
decision makers did not accept his recommendation regarding
statewide or nationwide bonds. The final rule allows statewide
and nationwide bonds to be used. In Nevada and Alaska, BLM
allows small business entities to use statewide bonding pools.
In so, doing, BLM clearly acted in consideration of small
business concerns.
These facts notwithstanding, the Court did find that DOI
violated only the procedural requirement of the RFA by not
consulting with the SBA on the definition of a ``small
entity.'' The substance of the rule was not challenged. The
mining industry argued and the Court upheld only that BLM did
not use the proper definition of ``small entity'' when it
certified that the rule would have no ``significant impact'' on
a substantial number of small entities (small businesses).
Consequently, the Court remanded the rule to BLM so that it may
reconsider the impact the rule will have on small miners. As
the Court noted, ``While recognizing the public interest in
preserving the environment, the Court also recognizes the
public interest in preserving the rights of parties which are
affected by government regulation to be adequately informed
when their interests are at stake and to participate in the
regulatory process as directed by congress. For this reason. .
. the Court remands the final rule to the BLM for procedures
consistent with this opinion.'' [emphasis added].
appearance of impropriety
The Majority report aggressively questions the
impartiality, fairness and professionalism of Mr. David
Albersweth. The Majority report mentions Mr. Alberswerth no
less than 56 times. Despite assurances from Representative
Cubin to the contrary during two oversight hearings in 1997,
the report argues that because Mr. Alberswerth worked for the
National Wildlife Federation before his tenure as Special
Assistant to the Assistant Secretary for Land and Minerals, his
involvement in the development of the final rule constitutes a
``serious conflict of interest.'' The transcript from the March
1997 Subcommittee Oversight hearing contains the following
dialogue:
Mr. Alberswerth. But there is no conflict of interest
here at all. I have no financial interest in this
matter. The organization I worked for had no financial
interest.
Mrs. Cubin. I am not implying that there is a
conflict of interest. I am not implying that at all.
Not only does the Majority report conflict with the
statements of the Subcommittee Chair, but it also inaccurately
describes Mr. Alberswerth's duties. As the Committee hearing
record clearly shows, Mr. Alberswerth was a special assistant
who advised others but did not make policy himself. As
Solicitor Leshy testified under oath: ``So that is all
assuming, by the way, that someone in Mr. Alberswerth's
position is a real decision maker on the rules. Mr. Alberswerth
obviously played a role here, but the decision makers on the
rules, in fact, were the Assistant Secretary for Land and
Minerals, the Director for the BLM. On the legal issues it was
my office and obviously the Secretary ultimately has
responsibility as decision maker on these rules. . .''
The Majority report exaggerates Mr. Alberswerth's authority
within the Department by misrepresenting his actions related to
the development of the rule. Further, the report fails to note,
or otherwise reference, sworn testimony by both Mr. Alberswerth
and Mr. John Leshy, Solicitor of the DOI, that Mr.
Alberswerth's prior employment did not constitute a conflict of
interest. According to Solicitor Leshy during the March 1997
oversight hearing: ``A rulemaking such as we are concerned with
here with the bonding rule is a legislative matter, not an
adjudicatory matter, so it is quite clear, and I can cite you
and am happy to supply court cases that address the subject,
that in a rulemaking kind of process, the fact that Mr.
Alberswerth signed comments for an outside organization on a
rule in no way limits his ability to work on the rule inside
the government because it is considered a legislative type of
function.'' Finally, at no time during the Subcommittee's
meetings, did the Chair call an expert on the question of
conflict of interest to support or refute the Administration's
interpretation of the ethics rules. On June 1, 1998, DOI
Solicitor John Leshy wrote to Chairman Don Young outlining the
DOI's objections to the Majority's characterization of Mr.
Alberswerth, ``so that the baseless and harmful character of
these allegations of misconduct can be exposed.'' (Attachment
3)
the role of the minority
Throughout the development of this report the Majority has
disregarded the legitimate role of the Minority. In 1997, all
the Democratic Members of the Resources Committee requested of
the Chairman that the Committee adopt a protocol covering the
solicitation and management of documents that are sought during
investigations in the name of the Committee. The Senior
Democrat has personally raised this issue several times with
Chairman Young. However, there still is no procedure in place
to assure the Minority a fair role in these Committee
activities. Nor can the Interior Department or anyone else who
provides confidential material to the Committee rest assured
that it will be treated with caution or discretion.
We are pleased that in this case, the Majority sought
Committee authorization to issue subpoenas, which was provided
on a 20 to 19 partisan vote. And, we appreciate that the
Majority report was subjected to a vote before its release to
the general public. However, we remain very concerned at the
total lack of procedures, safeguards and guarantees for the
Minority and for those providing confidential materials to the
Committee.
conclusion
The Majority report erroneously characterizes the
regulatory action of the Clinton Administration, taken as a
result of Congressional inaction in addressing the need for
comprehensive mining reform as supplanting the role of Congress
by issuing new rules for bonding mining operations. However,
theExecutive Branch clearly possesses the authority to issue
appropriate regulations under existing law to protect the public lands.
Under FLPMA, the DOI is required to take any action necessary to
protect the public lands from unnecessary or undue degradation.
The 1988 GAO report estimated that 424,049 acres of federal
land were unreclaimed from hardrock mining operations in 11
western states. At that time, GAO estimated the reclamation
costs for these lands to be about $284 million. Had these sites
been adequately bonded, industry funds, not taxpayer dollars,
would have paid for remediation. Ironically, the Majority's
report does not address the need to save the taxpayers from
picking up the multi-million dollar cost of reclamation.
The Majority report states that the Department's
regulations are ``illegal'' and that their promulgation
violated the Administrative Procedure Act and the Regulatory
Flexibility Act. The Majority report concludes that the bonding
regulation is illegal. However, the Court found only that DOI
had violated a procedural requirement to consult with the Small
Business Administration. The substance of the rule was not
challenged.
This report does indeed address an ``abuse of power'' but
an abuse by the Majority that is using the powers of this
Committee to aid and abet the mining industry, all the while
running roughshod over the duties of the judicial system and
the financial interests of taxpayers.
attachment 1--excerpt from february 28, 1997 oversight hearing--
confidentiality
Mrs. Cubin. You may be aware that I wrote the Secretary
asking for internal documents within the Department which may
shed light on the final decision on why this decision became
final. These have not yet been provided to me.
I appreciate the Department for providing the Subcommittee
with some of the documents that I requested for this hearing.
However, the Congress and this Subcommittee have a
responsibility under House Rule 10 and 11, Committee Rule 6 in
Article 1 of the U.S. Constitution that requires this
Subcommittee to have virtually unfettered access to nearly all
departmental documents.
Therefore, I expect all requested documents to be
produced----
Mr. Romero-Barcelo. Madam Chair.
Mrs. Cubin. Mr. Barcelo.
Mr. Romero-Barcelo. I just wanted to make sure, I
understand that the Department believes some of the documents
to be turned over are considered privileged documents and if
that is so I am sure that before they turn over the documents
they would like to enter into some kind of a written agreement
or stipulation to make sure that those privileged documents are
not made available to anyone else.
Mrs. Cubin. Mr. Barcelo, I would suggest to you that is not
within the authority nor the purview of the Department. The
President, yes, but the Department, no.
Mr. Leshy. May I speak to that issue?
Mrs. Cubin. Please.
Mr. Leshy. The concern expressed by Congressman Romero-Mr.
Barcelo is exactly right. We have no desire to withhold
documents that you have requested. We will make them available
to you. The procedure we are trying to work out here on quite
short notice, since we got the document request I think last
week, is a procedure that we have worked out with any number of
congressional committees, I think including this one in the
past, which is to just have an understanding that the documents
we turn over to you will not be disclosed outside of the
committee without at least checking with us, because they
involve things that could become privileged in litigation and
if they are disclosed----
Mrs. Cubin. Well, Mr. Leshy, why did we have to have this
hearing for you to tell us that?
Mr. Leshy. We have told you that previously. My deputy
wrote the committee counsel a letter a couple days ago, I
believe, which spelled all this out. They have had numerous
phone conversations. I thought it was well on its way to being
resolved. We are asking for no special treatment here.
We have worked this out with Congressman Burton's
committee, we have worked this out with any number of other
committees under which we make available documents that could
be sensitive where we could waive privilege if litigation
ensued over a matter, documents that we would normally keep
privileged and not disclose in litigation. All we are trying to
work out is an understanding of how these documents will be
treated. We are not trying to withhold any documents.
Mrs. Cubin. Just because you give them to us does not waive
the privilege in a judicial process.
Mr. Leshy. We have to have an understanding about what you
are going to do with the documents in order for us to be
assured when we turn them over that the privilege----
Mrs. Cubin. And I believe you have had that under--I
believe that you have understood very well. I believe that you
have been very disagreeable about providing those documents to
us but there is no question there has never been--how simple
can it be? We want to understand how the decision for the final
rule was derived and we need these documents. How simple can it
be?
Mr. Leshy. We have reached arrangements like this with any
number of other committees without difficulty. We are simply
trying to reach an equivalent understanding here. We have had
no problem in this area. We have had numerous discussions with
your counsel and your staff on this. I thought we were working
this out.
Mrs. Cubin. We can get you a letter today if it will be
satisfactory and I hope the documents will be coming forthwith.
Mr. Romero-Barcelo, do you have questions?
Mr. Romero-Barcelo. Do I understand it is all right to word
the agreement, to make an agreement as to how the committee is
going to proceed with what is considered privileged documents?
Mrs. Cubin. We will agree to discuss why we need the
documents. However, we are not obligated to do that and I would
like to make that very clear on the record. I will give them
written assurance as to how we will handle the documents if
that is the problem.
Mr. Romero-Barcelo. Is that a concern of the Department?
Mr. Leshy. The Concern of the Department is simply that
some of the documents that have been requested, that we are
willing to supply, are documents that we could assert a
disclosure privilege on if the matter concerning these rules
ends up in litigation, and we need to just have an assurance,
an understanding with the committee, about how those documents
will be treated.
Again, this is something we have worked out with any number
of congressional committees on matters like this. This is not
anything unique to this arrangement, and we have worked this
out without problem everywhere else. I am not sure why we are
having a problem here.
attachment 2--excerpt from the march 1997 oversight hearing--conflict
of interest
Mr. Leshy. Could I interject here, Madam Chair? This issue,
we have looked at this issue in many different contexts in the
past. To the extent that you are raising a possible conflict of
interest concern about someone coming in from outside into
government to work on a matter, that is the same matter that
they had represented or worked outside the government, in the
rulemaking context, the rule and the principles are very clear.
A rulemaking such as we are concerned with here with the
bonding rule is a legislative matter, not an adjudicatory
matter, so it is quite clear, and I can cite you and am happy
to supply court cases that address the subject, that in a
rulemaking kind of process, the fact that Mr. Alberswerth
signed comments for an outside organization on a rule in no way
limits his ability to work on the rule inside the government
because it is considered a legislative type of function.
And frankly, the purpose for that, and the courts talk
about this, is it is important that the government at all
levels, including the executive branch have access to
expertise, and it is certainly an advantage to hire employees
who know something about the issues that they are working on.
And often the way those employees get that experience and
knowledge is by working for industry associations or other
environmental groups, and it would be a severe problem for the
government generally, and that, again, goes to the legislative
branch as well as the executive branch, if people were disabled
from coming in and lending their expertise to rules that they
participated in on the outside.
So that is all assuming, by the way, that someone in Mr.
Alberswerth's position is a real decision maker on the rules.
Mr. Alberswerth obviously played a role here, but the decision
makers on the rules, in fact, were the Assistant Secretary for
Land and Minerals, the Director for the BLM. On the legal
issues it was my office and obviously the Secretary ultimately
has responsibility as decision maker on these rules. . .
Mr. Alberswerth. But there is no conflict of interest here
at all. I have no financial interest in this matter. The
organization I worked for had no financial interest.
Mrs. Cubin. I am not implying that there is a conflict of
interest. I am not implying that at all.
Mr. Alberswerth. Thank you.
june 1997 oversight hearing
Mr. Alberswerth. I would say, sir, that I think an
analogous situation in terms of my role in the development of
this rule is analogous to a congressional staff person's role
in the development of a legislation. That is I make
recommendations. My job is to make some recommendations to
various individuals in the Department who had decision making
authority with respect to this matter. I was not the decision
maker, and I made those recommendations, very similar to the
congressional staff person making recommendations to a Member
of Congress or a committee. And I think my role is very
analogous in that regard, so I think what you might want to ask
yourself is would you apply the same sort of standards to a
congressional staff person as you would to me in this instance?
Mr. Cannon. The point is if you continue, you have a
definition of covered relationship, including any person for
whom the employee has within the last year served as financial
or as officer, director, trustee, general partner, et cetera.
It seems to me there are two issues here that I would like to
understand. In the first place, you were employed by NWF and
received a salary, and therefore had an interest; and in
addition, I understand you were a director. Don't those with
particularity qualify you as having to be in a position where
you need a prior authorization before you participate in that
process?
Mr. Alberswerth. The National Wildlife Federation has no
interest, no financial interest whatsoever.
Mr. Cannon. You had a financial interest because they paid
you a salary. You also had a covered relationship because you
were a director. Is that true?
Mr. Alberswerth. No, sir, I was a director of the program.
I was not on the board of directors.
Mr. Cannon. Oh, okay.
Mr. Leshy. I should go back because I think there is a
fundamental misunderstanding. First of all, he severed all his
ties when he came to the Department. Second, the regulation you
were quoting talks about a particular matter, and the rules and
the case law in this are quite clear. A legislative rulemaking
is not a particular matter. That was the point I was trying to
make earlier. In other words, the principles and the
constraints that you apply when you come into government or go
out of government in terms of working on particular matters
that you worked on in one place or another, a legislative rule
is not a matter. It is well understood that is the case. The
courts basically said that. So we really don't have that kind
of problem in this case. Everybody in the Department knew where
Mr. Alberswerth came from the knew of his interest, but he has
not, in our view, behaved inappropriately at all by working on
this kind of rule, having worked on it outside, because it is
not a particular matter involving a particular party.
U.S. Department of the Interior,
Office of the Solicitor,
Washington, DC, June 1, 1998.
Hon. Don Young,
Chairman, Committee on Resources, House of Representatives, Washington,
DC.
Dear Chairman Young: I write to register our objection to
the accusation in the report the Resources Committee issued
last week (Abuse of Power: The Hardrock Bonding Rule) that Mr.
David Alberswerth of this Department has or had an appearance
of a ``conflict of interest'' in his work on the Department's
hardrock mining bonding rule (the Rule). Report, pp. 2, 14-17.
It reaches this conclusion through its analysis of 5 CFR
Sec. Sec. 2635.501 and .502, provisions of Subpart E
(``Impartiality In Performing Official Duties'') of the Office
of Government Ethics (OGE) Standards of Ethical Conduct for
Employees of the Executive Branch.
For several reasons, we believe the regulations cited in
the Report do not apply to Mr. Alberswerth's situation.
First and most important, the cited regulations do not
apply to Mr. Alberswerth's work regarding the bonding
rulemaking because it is not a particular matter involving
specific parties within the meaning of the applicable OGE
regulations. The regulations make clear that rulemakings and
regulations are not such matters. See 5 CFR Sec. 2637.102(a)(7)
and 5 CFR Sec. 2637.201(c)(1).
The restrictions of 5 CFR Sec. 2635.502, dealing with the
appearance of loss of impartiality, apply only where a
``particular matter involving specific parties'' is
involved.\1\ At 5 CFR Sec. 2635.502(b)(3) OGE defines
``particular matter involving specific parties'' as having
``the meaning in Sec. 2637.102(a)(7) of this chapter'', thus
adopting that definition. That definition is contained in a
section of OGE's regulations dealing with post-employment
issues. It provides (emphasis supplied):
---------------------------------------------------------------------------
\1\ The Report correctly points out that the OGE regulations do not
define ``party''. This is because OGE has traditionally focused heavily
on the entire phrase ``particular matter involving specific parties,''
an issue with which it deals regularly in the conflict of interest
laws. The Report ignores that focus, and instead cites a general
definition of ``parties'' from Black's Law Dictionary to conclude that
Mr. Alberswerth's former employer was a ``party'' to the rulemaking.
(7) Particular Government matter involving a specific
party means any judicial or other proceeding,
application, request for a ruling or other
determination, contract, claim, controversy,
investigation, charge, accusation, arrest or other
particular matter involving a specific party or parties
in which the United States is a party or has a direct
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and substantial interest.
This list of covered items does not include regulations,
legislation, or general policy issues.
5 CFR Sec. 2637.102(b) (6) and (7) go on to supplement the
definition of particular matter (with or without specific
parties); specifically, 5 CFR Sec. 2637(b)(6) cites to 5 CFR
Sec. 2637.201(c) for an interpretive definition of ``particular
matter involving a specific party or parties.'' This latter
regulation states in part: ``Rulemaking, legislation, the
formulation of general policy, standards or objectives, or
other action of general application is not such a matter.''
(emphasis added)
5 CFR Sec. 2637.102(b)(7) cites to 5 CFR 2637.204(d) for an
interpretive definition of ``particular matter (without
parties)''. This latter regulation makes it clear that the
phrase ``particular matter'' without the qualifier ``involving
a specific party or parties'' must be read to include
regulations. This further confirmation that OGE intended there
be a different meaning to the term ``particular matter'' when
it is used with the extra phrase ``involving a specific party
or parties'' (or some version thereof), as contrasted with
situations where there is no extra phrase. The regulation cited
in the Report (5 CFR Sec. Sec. 2635.501 and .502) employs the
extra phrase, thereby eliminating consideration of policies,
regulations, and legislation from the prohibition.
In short, 5 CFR Sec. 2635.502(b)(3)'s adoption of the
definition of 5 CFR Sec. 2637.102(a)(7) for ``particular matter
involving specific parties'' leads inexorably to the conclusion
that rulemakings are not covered by 5 CFR Sec. Sec. 2635.501,
.502. Thus, the bottom line is that the activities of Mr.
Alberswerth to which the Report refers are not covered by 5 CFR
Sec. Sec. 2635.501, 502, because they are not ``particular
matters involving specific parties.''
Even if the regulations discussed above did cover
rulemaking, Mr. Alberswerth did not violate them. As the Report
points out, the regulation indicate that an employee should not
participate in a particular matter involving specific parties
when the employee has a ``covered relationship'' with one who
is a party or represents a party to the matter. 5 CFR
Sec. 2635.502(a). A ``covered relationship'' is defined in 5
CFR Sec. 2635.502(b)(1)(iv) to include situations in which the
employee has been an employee of a person within the last year.
Mr. Alberswerth joined the Department in June of 1993 from
the National Wildlife Federation, His one year ``cooling-off''
period expired in June 1994.
The Committee cites no concrete evidence that Mr.
Alberswerth participated in Departmental decisions on the
content of the Rule prior to November of 1994, more than
sixteen months after beginning his employment at the
Department. During all of this period, the bonding rulemaking
was on hold as the Secretary sought to devote the Department's
full attention to getting Mining Law reform through the
Congress, where the House and Senate had each passed wildly
differing reform bills.
The Report suggests that evidence of Mr. Alberswerth's
participation in Departmental deliberations on this issue
during the one year cooling off period is found in an August 6,
1993, note from ``Dan to Dave''. (Report, p. 15) It seems clear
that merely being a passive recipient of an internal message
relating to the bonding rulemaking does not make Mr.
Alberswerth a participant in the matter. To conclude otherwise
would in essence allow any employee--or indeed, any person
outside the Department--to put a Departmental official in
violation merely by sending them a message, whether or not the
recipient responded in any way.
Finally, 5 CFR Sec. 2635.502(b)(1) Note States: ``Nothing
in this section shall be construed to suggest that an employee
should not participate in a matter because of his political,
religious or moral views.''
The inclusion of this Note in the regulation is a
recognition that federal political appointees should not be
restricted under the standards on an appearance of loss of
impartiality in 5 CFR Sec. 2635.501 because of their political
affiliation. Mr. Alberswerth has been in a Schedule C political
appointee position since his appointment in June of 1993. He
was, therefore, appointed because of his political affiliation
and the need of the administration to have his political views
factored into its decisions. Even if the regulation cited in
the Report otherwise applied in this situation, the note in the
regulations supports the conclusion that it was not so
intended.
Finally, I should also note that at no time prior to the
publication of this report did anyone on the Committee or its
staff interview Mr. Alberswerth or anyone else at he Department
regarding these allegations. Mr. Alberswerth in fact testified
under oath at the subcommittee hearing on June 19, 1997, and
responded to a number of questions regarding his role in the
development of the rule in question. The following is the
transcript of the relevant portions of the hearing, as
published on the Committee's website:
Mr. Alberswerth. But there is no conflict of interest here
at all. I have no financial interest in this matter. The
organization I worked for had no financial interest.
Mrs. Cubin. I'm not implying that there is a conflict of
interest. I'm not implying that at all.
Mr. Alberswerth. Thank you.
Later on in the hearing, Mrs. Cubin reiterated that she
``did not imply in any way that there was a conflict of
interest'' with regard to Mr. Alberswerth's role in the
development of the hard rock bonding rule.
We believed that the subcommittee chair's statements that
no conflict of interest existed or would be implied ended the
matter. We are, to say the least, surprised that your committee
would nearly a year later, without further discussion, issue a
report alleging the appearance of such a conflict.
We have serious problems with other aspects of the report
which we would be happy to discuss with you and the Committee's
staff and put in writing if necessary. Because of the personal
nature of the allegations against Mr. Alberswerth, however, we
see a particular need to ensure that those allegations do not
stand unanswered. I request that you include this letter in the
record so that the baseless and harmful character of these
allegations of misconduct can be exposed.
Sincerely
John D. Leshy,
Solicitor.
George Miller.
William D. Delahunt.
Donna M. Christian-Green.
Lloyd Doggett.
Maurice D. Hinchey.
Carlos Romero-Barcelo.
Peter A. DeFazio.
Dale E. Kildee.
Bruce F. Vento.
Eni F.H. Faleomavaega.
Nick Rahall.
Frank Pallone. Jr.
Robert A. Underwood.
Sam Farr.
Calvin M. Dooley.
Neil Abercrombie.
Edward J. Markey.
Solomon P. Ortiz.
Owen B. Pickett.
Adam Smith.
Patrick J. Kennedy
Ron Kind.
Chris John.