MINUTES OF THE meeting
of the
ASSEMBLY Committee on Natural Resources, Agriculture, and Mining
Seventy-Second Session
April 2, 2003
The Committee on Natural Resources, Agriculture, and Miningwas called to order at 1:31 p.m., on Wednesday, April 2, 2003. Chairman Tom Collins presided in Room 3161 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Tom Collins, Chairman
Mr. Jerry D. Claborn, Vice Chairman
Mr. Kelvin Atkinson
Mr. John C. Carpenter
Mr. Chad Christensen
Mr. Marcus Conklin
Mr. Jason Geddes
Mr. Pete Goicoechea
Mr. John Marvel
Mr. Bob McCleary
Mr. Harry Mortenson
Ms. Genie Ohrenschall
COMMITTEE MEMBERS ABSENT:
None
GUEST LEGISLATORS PRESENT:
Assemblywoman Sheila Leslie, Washoe County District No. 27
STAFF MEMBERS PRESENT:
Linda Eissmann, Committee Policy Analyst
Erin Channell, Committee Secretary
OTHERS PRESENT:
Tracy Taylor, P.E., Deputy State Engineer, State Engineer’s Office, Nevada Division of Water Resources
Glenn Miller, Ph.D., Professor, Department of Environmental and Resource Sciences, and Director of the Graduate Program, Environmental Sciences and Health, University of Nevada, Reno
James R. Kuipers, P.E., Consulting Engineer, Great Basin Mine Watch
Lois Snedden, Vice President, 1997-1999, Sierra Club
Joe Johnson, Toiyabe Chapter, Sierra Club
Allen Biaggi, Administrator, Nevada Department of Conservation and Natural Resources, Division of Environmental Protection (NDEP)
David Gaskin, P.E., Bureau Chief, Nevada Bureau of Mining Regulation and Reclamation, Division of Environmental Protection (NDEP)
Robert L. Vaught, Forest Supervisor, Humboldt-Toiyabe National Forest, U.S. Forest Service
Mary Beth Donnelly, Newmont Mining Corporation
Thomas P. Mahoney, Newmont Mining Corporation
James Chavis, Vice President, U.S. Government Relations, Placer Dome America
Russell A. Fields, President, Nevada Mining Association
Chairman Collins read the following statement into the record:
I encourage testimony before this Committee, and encourage lobbyists and concerned persons to provide legislators with information. If you are planning to testify in front of this Committee, you should sign in on the attendance roster in the back of the room. In fact, if all of you would sign in, it would be most helpful for us to keep a record of who might be interested in a particular piece of legislation. Before beginning to testify, please present a business card to the Committee Secretary or some other piece of identification. If you have other materials to be distributed to the Committee, make sure to bring 20 copies. Any material for the use of the Committee becomes the property of the Committee.
I would remind all of you that NRS 218.5345 makes it a misdemeanor to knowingly misrepresent any fact when testifying or otherwise communicating to a legislator. I have the authority, under NRS 218.5345, to swear in witnesses appearing before the Committee, which makes such misrepresentations a gross misdemeanor.
I would also remind any of you wishing to testify before the Committee to turn on the microphone prior to speaking, clearly state your name for the record, and direct all questions and responses through the Chairman.
I also request everyone to please turn off your pagers, beepers, and cell phones.
Assembly Bill 488: Makes various changes concerning ditches. (BDR 48-1293)
Chairman Collins reopened the hearing on A.B. 488.
Assemblyman Carpenter, District No. 33, stated that he met with the State Engineer’s Office on A.B. 488, and they had come to an agreement on the amendments. Copies of those amendments (Exhibit C) were provided to the Committee by Tracy Taylor, Deputy State Engineer. Mr. Carpenter said he thought this bill would help a great deal in situations where developers and others were covering up the irrigation ditches. Mr. Carpenter proposed one additional amendment to the bill (Exhibit D) that would require the person who was subdividing the property to cover expenses for research, parcel maps, mailing, and other expenses.
Tracy Taylor, P.E., Deputy State Engineer, State Engineer’s Office, Nevada Division of Water Resources, concurred that he and his staff had met with Assemblyman Carpenter and that they agreed with the proposed amendments. He stated, for the record, that in Section 1, subsection 2, which read, “The State Engineer shall prepare a report as to the condition of the ditch,” the word “condition” meant that they would inspect the ditch prior to any development on the property to make sure the ditch could deliver water. The State Engineer’s report would address how the ditch functioned and its ability to deliver water.
Assemblyman Goicoechea asked Assemblyman Carpenter if the bill addressed who would prosecute if there were violations, and what the penalties would be.
Assemblyman Carpenter said that after the State Engineer’s Office inspected the ditch, they would take the report to the proper law enforcement agency, which he believed would be the District Attorney’s Office. There was a section of existing law that made it a misdemeanor to cover up or destroy an irrigation ditch.
ASSEMBLYMAN MARVEL MADE A MOTION TO AMEND AND DO PASS A.B. 488.
ASSEMBLYWOMAN OHRENSCHALL SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
Assembly Bill 321: Limits types of surety that may be filed for permit to engage in exploration project or mining operation. (BDR 46-358)
Chairman Collins opened the hearing on A.B. 321, sponsored by Assemblywoman Sheila Leslie.
Assemblywoman Sheila Leslie, Washoe County District No. 27, said that this was the first time she had testified before the Committee, and she apologized for having to return immediately afterwards to the Health and Human Services Committee because they were voting on bills today. She presented the Committee with two exhibits: Exhibit E, a copy of her prepared testimony, and Exhibit F, an Enron Chronology and two Reno Gazette-Journal gold mining articles, dated March 29, 2003.
Assemblywoman Leslie stated that it was obvious, from the number of persons in attendance, that A.B. 321 was a bill that had drawn a great deal of interest from both sides. Everyone knew that mining was very important to Nevada’s rural economy. The mining industry provided jobs in both operations and support industries in many areas of the state that were economically challenged. Nevada was the third largest gold producer in the world, behind South Africa and Australia. Mining provided well-paying jobs, with an average income of about $55,000 per year. Mining companies directly employed approximately 12,000 people in Nevada, acted as patrons in communities where they conducted operations, were benefactors to local schools, contributed to many service projects, and were major donors to the University of Nevada’s Mackay School of Mines. Ms. Leslie said she appreciated the fact that, last week, the Newmont Mining Corporation (Newmont) had donated $2.5 million to the Mackay School of Mines.
Assemblywoman Leslie said she fully agreed with bumper stickers in northern Nevada that said, “Mining: It works for Nevada.” She stated that she also believed that it was equally true that Nevada had worked very well for mining. She said that Nevada and the mining industry had had a mutually beneficial relationship for many years, and they wanted to keep that relationship strong. A.B. 321 was not an anti-mining bill. It was not even a pro-environmental bill, although it would ensure that mining-damaged land would be reclaimed. A.B. 321 was a taxpayer protection measure.
In Nevada, before a mining company was given a permit to mine, they had to agree to financial assurances that money would be available to clean up the site in the event the company went bankrupt or otherwise failed to perform. Those assurances could take various forms such as letters of credit, surety bonds, trust funds, insurance policies, and cash. Nevada also accepted a form of assurance called a “corporate guarantee.”
Assemblywoman Leslie stated that, unlike other forms of financial assurances, corporate guarantees were a promise that the mining company would not go bankrupt. The state used a series of financial tests to determine whether a company could qualify for a corporate guarantee. In Nevada, mining companies that qualified for corporate guarantees could use them for up to 75 percent of the required financial assurance for reclamation costs. To qualify for a corporate guarantee in Nevada, a mining company had to demonstrate their financial health to the Bureau of Mining Regulation and Reclamation. The Bureau reviewed the documents with a third party financial consultant and conducted yearly reviews of the company’s finances. They were able to remove the corporate guarantee and demand other forms of sureties if they believed the company was in financial peril. Of course, if the company was in financial peril, they might have trouble getting other forms of financial assurance.
Assemblywoman Leslie said that representatives from the Nevada Department of Environmental Protection and the Nevada Mining Association were present. They would explain the details of corporate guarantees. Ms. Leslie said they were likely to tell the Committee that the system was working fine, especially after regulations were strengthened in 2001 when the Paradise Peak Mine went bankrupt. She said to expect testimony that corporate guarantees presented little risk to the taxpayer.
Assemblywoman Leslie said she believed that corporate guarantees were risky for the state, because they were essentially promises by the companies that they would not go bankrupt and would be able to come up with the money when land reclamation was necessary. The two largest gold mining companies in Nevada, Barrick and Newmont, currently exhibited financial health and prosperity. In fact, in one of the newspaper articles (Exhibit F), the Newmont Mining Corporation announced that their fourth quarter net income nearly quadrupled due to increased sales and higher prices of gold. Certainly, their financial health today was not in question. Nevertheless, with such healthy finances it was also true they could obtain other kinds of sureties, such as letters of credit, trust funds, or bonds, which posed less risk to Nevada taxpayers.
Assemblywoman Leslie said that the other handout (Exhibit F) was an “Enron Chronology” showing a time line of the collapse of Enron, which she provided to illustrate how quickly a major corporation could disintegrate. Ms. Leslie emphasized that she was not suggesting that the management of Newmont or of Barrick Mines were similar to Enron’s. On the other hand, if anyone had suggested to the people in Houston, Texas, in 2001, that Enron would disintegrate so quickly, it would have been equally unthinkable.
Assemblywoman Leslie said that mining companies claimed that being forced to provide sureties in forms other than the corporate guarantee would tie up their capital, and they would not be able to expand and create more jobs in rural areas of Nevada. Ms. Leslie said it was important to note that corporate guarantees were not currently allowed on federal lands; neither the BLM (Bureau of Land Management) nor the U.S. Forest Service allowed corporate guarantees. Representatives were also present from those two federal agencies who would explain the rationale behind that policy.
Assemblywoman Leslie said that the Committee would also hear testimony that the surety market had dried up after the September 11, 2001, disaster, that they were very expensive, and that it was next to impossible to obtain sureties these days because surety companies were not eager to insure against risks 20 years into the future. She said there were experts at this hearing that would represent both points of view and answer technical questions.
Assemblywoman Leslie asked the Committee to ask themselves this question, “If surety companies are not willing to take such risks, why should the taxpayer?” In conclusion, she said she had cosponsored A.B. 321 with colleague, Assemblyman Jason Geddes, to allow the Committee to decide if the taxpayers were adequately protected by corporate guarantees for mining reclamation in Nevada. Ms. Leslie said she believed the Committee would hear both sides of the issue and was certain they would make the best decision for the state of Nevada.
Assemblyman Jason D. Geddes, Washoe County District No. 24, a native of Gabbs, Nevada, said that the mining industry was a vital part of Nevada’s economy and had been since the founding of the state. Citizens benefited greatly from the direct impact of the industry, as well as indirectly from the products they created. The mining industry had been and continued to be a great community partner. In Gabbs, the mine had built a swimming pool, parks, athletic fields, and other infrastructure. Such was the case throughout Nevada. Mr. Geddes had often known mines to contribute to the cost of building schools, parks, and other facilities.
Assemblyman Geddes reiterated that A.B. 321 was not anti-mining, but it was legislation designed to protect Nevada taxpayers from potentially enormous liabilities. The current procedures for establishing a bond to ensure reclamation allowed that up to 75 percent of the bond could be posted as a corporate guarantee. The essence of the bill would be to eliminate that 75 percent portion by phasing it out over 5 years. A corporate guarantee allowed a company to demonstrate, through their financial strength, that they would be able to pay for the necessary cleanup. In case of bankruptcy, the state would be left with two options: abandon the site uncleaned, or transfer the liability to the taxpayers.
A.B. 321 would seek to phase out corporate guarantees over the next 5 years. The current amount of corporate bonding was around $240 million. If corporate guarantees were to be phased out, one option would be to secure letters of credit. Assemblyman Geddes talked with a northern Nevada bank executive and asked him to calculate the actual cost of switching the Nevada mining industry to letters of credit, based on existing corporate bonds. The chart (Exhibit G) showed that it would cost the entire industry nothing from 2003 to 2005; in 2006, it would cost the industry $440,000; in 2007, it would cost the industry $878,000; and in 2008, and every year thereafter, it would cost the industry $1.3 million.
Assemblyman Geddes stated that would cost the entire mining industry a little more than $1 million per year to convert to letters of credit, which was equal to the cost of one new “haul truck” per year. Assemblyman Geddes suggested that, instead of burdening Nevada taxpayers with $242 million of potential liability annually, the mining industry should consider the $1.3 million that they would spend annually to secure letters of credit as the cost of doing business in Nevada. Assemblyman Geddes concluded that he felt A.B. 321 was a good solution to the problem of corporate guarantees.
Assemblyman Marvel asked how much reclamation cost the state of Nevada currently, and how it would be transferred to taxpayers.
Assemblywoman Leslie said that the liability would be transferred to taxpayers if a mining company went bankrupt, could not fulfill their corporate guarantee as promised, and there was no insurance or surety. If that happened, Nevada taxpayers would be responsible for cleaning up the polluted land. The other alternative was not to clean up the site, such as the situation at Paradise Peak.
Assemblyman Geddes said that the Nevada Department of Environmental Protection (NDEP) would be responsible for the cleanup, and, if sufficient funds were not available to NDEP, they would not clean it up.
Assemblyman Marvel asked if there was a history of the state of Nevada having to pick up the costs.
Assemblyman Geddes said there was a history of mines closing under the corporate guarantee situation. The entire Division of Minerals, one of the largest divisions of NDEP, was cleaning up old mine sites from the prehardrock mining days.
Assemblyman Marvel said those were orphan mines from the 1800s.
Assemblyman Geddes agreed they were, and if newer mines went bankrupt, they would be orphan mines, too.
Assemblyman Marvel said the newer mines were completely different today than they were in the 1800s. He said that, with companies as strong as Newmont and Barrick, corporate guarantees were as good as sureties.
Assemblyman Geddes replied that with that strength they would be as good as a surety, which was why he focused on a letter of credit, because he did not have much faith in sureties since Enron’s collapse.
Assemblyman Marvel said that sureties were difficult to obtain. He read on the Internet that sureties were almost nonexistent anymore, and that September 11, 2001, had caused the problem. He did not think Newmont and Barrick should be compared with Enron. Both Ms. Leslie and Mr. Geddes agreed. Mr. Marvel did not think this legislation was necessary.
Assemblyman Christensen said that his understanding was that, in the last few years, the NDEP had strengthened laws regarding corporate guarantees and increased the frequency of mining company reviews in order to protect the state of Nevada. He asked if representatives from that department would be testifying today.
Assemblywoman Leslie said that representatives from the NDEP would testify at the hearing. She said Mr. Christensen was correct that, when the Paradise Peak Mine failed in 2001, new regulations were established, and the mining industry believed that those regulations had taken care of the problem.
Assemblywoman Leslie said that the NDEP was the agency responsible for reviewing bank statements and for ensuring that companies with existing corporate guarantees, amounting to $240 million, continued to perform. Not being a financial expert, Ms. Leslie said she would be more comfortable with a letter of credit, where a bank would evaluate the financial stability of the mining company. She said she did not mean to criticize NDEP, which was doing the best it could. However, she did not believe that level of oversight was adequate.
Assemblyman Geddes said he agreed with Assemblywoman Leslie.
Assemblyman Conklin asked Assemblywoman Leslie how many different mining companies operated in Nevada.
Assemblywoman Leslie asked Mr. Conklin to pose his question to the mining industry representatives who would testify today.
Assemblyman Conklin was concerned that the discussion would be about Barrick and Newmont, and he thought there were many more companies that should be included in the discussion.
Assemblywoman Leslie said there were three mining companies that currently held corporate guarantees in Nevada: Newmont, Barrick, and Glamis. Many mining companies did not qualify for corporate guarantees and did not participate in the program.
Assemblyman Conklin asked if the greater risk to Nevada was from the larger companies with current corporate guarantees or from the other companies working without corporate guarantees.
Assemblywoman Leslie said that was not the issue. The smaller, shakier companies would not qualify for corporate guarantees. This was a long-term issue. Some of the mines would not be reclaimed for 20 or 30 years. She said she did not feel she was in a position today to feel comfortable about the condition of any company 20 or 30 years into the future, regardless of their size. Mining companies were often sold to foreign-owned companies or operated as subsidiaries of larger corporate conglomerates. She said it was good fiscal management to protect Nevada taxpayers, as had the federal government, by not allowing corporate guarantees for companies mining on federal lands. She would like to see Nevada follow that example.
Assemblyman Mortenson said that he was reading on the Internet about a Superfund Site at the Summitville Mine in Colorado, which would cost $120 million to clean up because the mining company had declared bankruptcy and walked away from the problem. He said the site was being cleaned up by the Environmental Protection Agency (EPA). Mr. Mortenson questioned how the responsibility for cleanup costs was determined; for example, he wondered if EPA paid for reclamation on federal lands and the states paid for reclamation on state lands.
Assemblywoman Leslie said they would like to defer those questions to the experts who would testify later.
Assemblyman Atkinson asked what the consequences were to taxpayers of the Paradise Peak Mine that failed in 1997.
Assemblyman Geddes said that the financial consequences to taxpayers at this point were zero because no cleanup was in progress. No reclamation had occurred at the Paradise Peak Mine beyond the original bond. In that situation, the corporate bond was transferred from FMC Corporation, a large national corporation, to another mining corporation. In that case, the posted bond was not enough to cover the cost of the cleanup, and, currently, no cleanup was in progress. The 2001 regulations had been written to rectify that situation.
Assembly Atkinson concluded that, if there were no additional taxes levied on taxpayers, he did not see anything wrong with the existing system. He did not want to change things if they were not broken. He asked the question because he said he was having a hard time understanding where this entire bill was headed. He said it did not sound like anything was wrong.
Assemblywoman Leslie said Mr. Atkinson would hear lots of testimony today about what was wrong. She said that in the case of the Paradise Peak Mine just mentioned, the land had not been reclaimed. Assemblywoman Leslie said, as an environmentalist and as someone who cared deeply for Nevada, she was not comfortable with that. The mining company had promised to clean up the land when they were done mining because mining always damaged the land. Land was a nonrenewable resource. When that mining company went bankrupt, the corporate guarantee system failed because they did not keep their promise to leave the land as they found it. They just walked away, and the land was not reclaimed. She said she was not satisfied knowing that could happen.
Chairman Collins asked if she was saying that gold was no longer being made, and so the only remaining gold was existing gold.
Assemblywoman Leslie replied that it was land that she referred to as a nonrenewable resource.
Glenn Miller, Ph.D., Professor in the Environmental and Resource Sciences Department and Director of the Graduate Program in the Environmental Sciences and Health Department at the University of Nevada, Reno (UNR), stated that his doctorate was in Agricultural Chemistry and that he had worked on mine closures, acid rain streams, and mine reclamations for 15 years. Dr. Miller was currently involved in a major project for ARCO at the Leviathan Mine in California. He came to testify in support of A.B. 321. For the record, he stated that he did not represent the University of Nevada or any environmental organization. The following documents were submitted by Dr. Miller: a copy of the prepared text (Exhibit H), the exhibit folder (Exhibit I), and the photographs (Exhibit J).
Dr. Miller commented that two members of the Committee were also at the Legislature when the Committee passed a reclamation bill. Over the last 14 years, they could all be proud of the good choices that industry and the Legislature had made on the reclamation bill that passed in 1989. Back then, Newmont had been a major player in passing that legislation, and he would always appreciate their perseverance in not giving up in the final days of the debate.
He said that the reclamation legislation had accomplished a great deal, and the bill had done its job well. Dr. Miller was proud to have been a part of it. He said that the success of that legislation was mainly because everyone became educated to the problems of reclamation and mine closures. The good news was that reclamation issues had narrowed, were better focused, and had fewer impacts than on earlier reclamation sites, like the Leviathan Mine, that were now Superfund Sites with tremendous associated costs to taxpayers for reclamation.
Dr. Miller pointed out that the issue of the day was financial surety. A simple overview of mining practices over the past 20 to 30 years was that mines came and mines went, and mines would be abandoned if there were financial liabilities or if they had to put money up to close. Mining was, by nature, a temporary use of the land. When an ore body was discovered, a mining company extracted the valuable materials. Ultimately, when mining stopped, the mine should be closed and the land restored.
Realistically, once a company had completed mining, there was little economic incentive to stay on the land. Historically, and even now, without strong regulations, there was not much incentive to close a mine because that was where the costs were. Closing was also where most bankruptcies had occurred in Nevada. When times were good in the early 1990s, with the price of gold at $380, everyone was happy. In 1997, when the price dropped, over 10 companies, representing nearly 40 sites in Nevada, went bankrupt, which cost taxpayers significantly. Those costs were not direct costs to Nevada taxpayers, since the costs were borne mostly by the U.S. Forest Service (USFS), the Bureau of Land Management (BLM), and the Nevada Division of Environmental Protection (NDEP), all agencies funded by taxpayer monies.
Dr. Miller said that a properly closed mine was one that did not present a substantial risk for pollution, was left in a safe and stable configuration, and had a productive postmining land use. Everyone agreed on the goal and that financial responsibility was critically important. The question was what does “financial responsibility” mean. The issue of corporate guarantees was that it was a promise based on the current price of gold. Liabilities, costs, and cleanup became problems when the price of gold dropped or when a company made bad decisions.
Pegasus, for example, was a large company with two sizeable mines in Nevada and several in Montana. Pegasus experienced severe difficulty when they made a bad investment in Australia, which cost them $500 million. Before that, they were in good shape financially.
ASARCO USA was one of the strongest and most powerful mining companies in the nation ten years ago. No one would have predicted then that they would be in bankruptcy today. The company fell on hard times and was sold to Grupo de Mexico, who, as part of a larger strategy, sold off ASARCO USA’s valuable South American properties. Bankruptcy had not happened yet, but some documents in the back of the packet discussed that issue. EPA had been very aggressive about trying to remedy what happened to ASARCO USA, although they had not yet been successful. If the company did go bankrupt, it was very likely that the United States would inherit a liability of between $300 million and $800 million.
Dr. Miller was not suggesting that was likely to happen to many companies in Nevada. He sincerely hoped that Newmont, Barrick, and Glamis Mining companies would continue to make money. The problem was who would take the risk and responsibility for the mining companies’ combined $240 million in liabilities. He said that Assemblyman Marvel’s point was well-taken.
Arimetco had a project nearby called County Line, with a $6 million bond, which was excessively low. At the time, 75 percent was bonded by a corporate guarantee, which meant there was only about $1.5 million available to clean up liabilities totaling $20 million to $30 million. The dust from the tailing facility could be seen blowing from 20 to 30 miles away. It had a pit lake on an unstable slope and was a dangerous place to visit. There were also environmental issues associated with the pit lake.
Most of the large mines in Nevada that had corporate guarantees were in the Humboldt River Basin, and most of the larger companies were also into acid-generating rock, which was the same issue that was now problematic at Leviathan. There were substantial risks to rural residents of Nevada, who also received many economic benefits from the mines, because they were the population most likely to feel the impacts. The question was if those risks were sufficiently important to give away the bonding capability by the state, or should the state require an additional form of surety.
Dr. Miller said there were arguments that a surety was hard to obtain. Before issuing a surety bond, the insurer first reviewed a company’s books and determined that the company was worthy for the amount of the bond. The company then signed on, stating that they had insurance backup, and that, if the company failed, someone would pay for the cleanup.
Sureties were a problem because sureties had not been beneficial to Nevadans. When companies went bankrupt, surety companies argued that they had not expected to have to pay, and often refused to pay. Bonding companies were no longer providing sureties to mining companies unless they thought they would not have to pay.
Because of the surety problem, the state of Nevada was now liable for damages by high-risk mining companies which could not qualify for sureties, as well as for reclamation costs for companies that were under-insured or under-bonded. Those were the issues; who should carry the liability, and who should bear the responsibility if a mining company failed or if their bonding failed?
Dr. Miller said the argument for A.B. 321 was that the liability should be placed on the owners of the businesses that created the problem: on the mining companies. He said that Assemblyman Geddes’ calculations were useful because the on-going cost to mining companies for obtaining letters of credit, $1.3 million per year after 2008, was, although not a trivial amount, not that large either. Mining was a beneficial industry that, by nature, could not help but impact the land severely and cause a financial liability.
Dr. Miller said that the price of gold had been increasing, so it was a good time to pass this legislation because the money was available. A year ago, it was not the right time because the price of gold was depressed.
Dr. Miller said that Nevadans did not want to live with polluted lands.
Assemblyman Mortenson asked if Dr. Miller could clarify the difference between state responsibilities and federal responsibilities for reclamation on mined property.
Dr. Miller said that the agencies had worked well together to forge a cooperative reclamation process. On private lands, there was usually no federal influence, except perhaps an agreement, so reclamation on private lands would be the responsibility of the state. The state had authority for reclamation on all lands in Nevada. On the other hand, everyone had a bottom line for as far as they would go. BLM and the USFS were no longer accepting corporate guarantees as surety because, as outlined above, it was not a secure financial instrument. In other states, there had been great reclamation expense, although not so much in Nevada to date. For example, in Montana, at least $30 million of taxpayer money would be used to clean up some mining sites.
The state had authority over reclamation for all lands in Nevada and could set a higher standard than could the BLM or the USFS. Dr. Miller pointed out a letter in the packet he submitted (Exhibit I, page 9), which was written to Robert V. Abbey, BLM, from Allen Biaggi, NDEP, that stated that if a mining company in distress could not fulfill the obligations of their corporate guarantee, the state would not assume those obligations. No entity, company, or agency in Nevada would pick up the bill. Federal agencies would have to assume the liabilities.
Chairman Collins asked what the date of the letter was. Dr. Miller said that it was dated August 30, 2000.
Dr. Miller said that the question of who should pay for mining land reclamation in Nevada was the issue. “Frankly, many of those sites will just be left like they are,” he said. “They will just be a mess for literally hundreds of years.” However, Dr. Miller also emphasized that, with all the current legislative problems, he would not be out front urging state legislators to clean up mine sites. On the other hand, in the Humboldt River Basin, many people depended on the quality of that water for agriculture, especially in Lovelock. If an acid rain stream entered into those fields, then someone needed to do something.
For example, he reminded the Committee of the Superfund Site at the Summitville Mine in Colorado, where the mining company declared bankruptcy and walked away. It was estimated that state and federal agencies would spend over $120 million for reclamation before the clean up was complete.
Assemblyman Goicoechea said he was going through the folder Dr. Miller handed out and had noticed the map (Exhibit I, page 4) entitled “Mine Sites in Bankruptcy within Nevada as of July 15, 2000.” He said that, to his knowledge, all of those mines had cash reclamation bonds in place.
Dr. Miller said that most had some bonds in place, but that many had insufficient bonding. He said Mr. Goicoechea should ask Craig Smith about how easy it was to collect the bond, how long it took, and the difficulties with Pruett Ranches management. That mine was bonded sufficiently, but it would not have been sufficient if he had had to do the work as an employee of BLM. He said that the BLM did a fine job on that particular mine.
Dr. Miller said that both Atlas Gold Bar and Atlas Gold Canyon were bonded at an insufficient level for closure. Arimetco in Yerington had no bonding at all, and it was a huge mess. Arco had part of the Yerington mine because of Anaconda, but there was also a huge liability with Arimetco there. Arimetco’s Paradise Peak was greatly under-bonded. Arimetco’s MacArthur Mine and Arimetco’s County Line Mine had very little corporate bonding. He said many of these had satisfactory closure, but some did not.
Assemblyman Goicoechea said that his point was that it had nothing to do with corporate surety.
Dr. Miller agreed, but that it was related to bankruptcy issues. He said Mr. Goicoechea made a good point. He wanted to make clear that the only corporate surety on that list was Arimetco. He said they were discussing two very strong companies today, but ASARCO USA was also a very strong company ten years ago. That was the issue: Who should bear the liability?
Assemblyman Goicoechea said the point he wished to make was that there were cash reclamation bonds in place, which was what A.B. 321 required, so Dr. Miller was apparently not addressing the issue.
Dr. Miller said that since the issue of bankruptcy had been raised, he thought people would be interested to know how many mining companies went bankrupt. He did not mean to indicate that all the companies on the list were bonded with a corporate guarantee.
Chairman Collins asked if all the listed sites were more than just mining claims, and if mining activities had actually taken place at those sites.
Dr. Miller said it varied. There were six major mines on the map, and several smaller mines and reclamation sites. He said it was a list of bankruptcy sites, and the map came from the BLM.
Chairman Collins asked if they were all gold mines. Dr. Miller said they were not gravel mines, but mostly gold, silver, and, perhaps, a copper mine. He was not sure.
Chairman Collins asked if any were sites where someone drove a loader around just to meet the minimum requirements for a mining claim. Dr. Miller said that was not the case. These were active mines and much larger sites than that.
Assemblyman Goicoechea said he was familiar with many of these mines, especially the ones in White Pine and Eureka Counties. He said that the Alta “Pan Am” was an exploration site with no active mining there. The Alta Easy Junior had almost all been reclaimed. Dr. Miller said that reclamation was complete on some of those sites.
Chairman Collins asked if they were still taking care of their problems, even though they were in bankruptcy. Dr. Miller said that was not likely, and he should ask the BLM representatives. He said that it was a BLM map and did not include the USFS mine sites.
James R. Kuipers, P.E., Consulting Engineer for and representing Great Basin Mine Watch, said he wanted to take a minute to outline his professional qualifications. He was born in a mining family and spent over 25 years in the hardrock mining industry. He grew up with a grandfather who taught him to mine underground, to build a mill, and to be a miner. He graduated in 1983 from the Montana School of Mines with a B.S. in Mineral Process Engineering and spent time as a mine manager, as a project manager, and as a senior engineer, both at the operations and at the corporate levels (Exhibit K). He was a registered professional engineer (P.E.) in the states of Montana and Colorado. During the last eight years, Mr. Kuipers said he had worked extensively on behalf of public interest groups, state, federal, and tribal governments addressing mining environmental issues.
Mr. Kuipers said he had been working on reclamation, closure planning, and financial assurance of mine sites since 1985, including primary involvement with over 10 different mine sites, which included: Jarbidge, Nevada, in 1985; Austin Gold Venture in Central Nevada, 1986 to 1988; and Manager of the North Umberland Mine in Nevada in 1992. Mine sites in which he had been involved were some of the largest and most expensive to remediate, such as the Butte Silver Bow/Clark Fork River Superfund Site.
Chairman Collins asked, first, if Mr. Kuipers could please narrow his comments to the bill, and, secondly, did the initiative that shut down mining in Montana cause or affect some of those problems.
Mr. Kuipers answered that the Montana initiative did not cause those problems. He said he was quite familiar with the initiative, and that it had no impact whatsoever on the Montana mines he had listed.
Mr. Kuipers added that he had written a book “Hardrock Reclamation and Bonding Practices in the Western United States,” a 500 page volume which contained all the regulations and 20 case studies of mine reclamation and bonding in the United States (Exhibit K).
Mr. Kuipers stated that financial assurance was designed to ensure that money would be available for a governing authority to conduct legally required mine reclamation and closure in case the responsible mining company declared bankruptcy or otherwise failed to complete post-mining activities. The amount of financial assurance was typically determined and/or approved by the federal or state agency, was usually required prior to mining, and may be updated occasionally.
Mr. Kuipers said it was key to understand that financial assurance was a prerequisite for responsible business practice. The same type of financial assurance was required in the construction business and for any business that performed work for state or federal governments. The main reason financial assurance was necessary was that it insured that the polluter paid for pollution and not the taxpayer. He said that financial assurance was a reasonable cost of doing business, and he had never heard a single company say they could not do business because of the cost of financial assurance.
Mr. Kuipers said that there were three different forms of financial assurance:
Forms of cash were the preferred form of financial assurance because it was the most secure and readily available. Various acceptable equivalents were:
· Irrevocable letters of credit or bank guarantee
· Certificates of deposit
· Government bonds
· Trust fund
Mr. Kuipers stated that cash financial assurance, together with an accurate assessment of reclamation requirements and costs, was the best protection for taxpayers where reclamation and closure required funding longer than 5 or 10 years, such as water treatment that could last for 10 to 20 years or even 1,000 years in some cases (Exhibit K). The only practical way to assure financing of the project was to require a cash trust fund, which was the vehicle of choice in cases where long-term treatment would be necessary.
The second form of financial assurance was surety bonds and insurance. Surety bonds and insurance were guarantees from an insurance company, or the equivalent, that they would pay for the performance of reclamation and closure work if the mining company did not do so. Surety bonds and insurance were intended for low-risk circumstances where the provider could hire another contractor to perform the work. For example, in construction where there was a bonded contractor, if the contractor did not complete the work, the surety company would hire another contractor to finish the job. In most cases, the surety company would be out only 5 percent to 20 percent of the total cost. Payments from surety bonds might be reduced by 10 percent or 20 percent in negotiations. Surety bonds and insurance could be cancelled, and surety companies were subject to bankruptcy problems.
Mr. Kuipers continued to explain the three kinds of financial assurances. The third form of financial assurance was self-guarantees, which included parent company guarantees and corporate guarantees. A parent company or corporate guarantee was a pledge made by a mining company, or its parent company, to do the necessary reclamation. These kinds of guarantees may be accompanied by financial tests. Of the various states that accepted corporate guarantees, all had different tests. The only thing common to all was that they were not likely to provide a meaningful assessment of a company’s financial abilities to cover the costs of reclamation and closure. Often companies passed the test and six months later could not pass the test or provide funds for reclamation.
Mr. Kuipers said that this form of financial was problematic in that, once a company was no longer able to fulfill a self-guarantee, how could they provide the cash when they were no longer profitable and no longer making the money that would allow them to pay for a surety bond. The only way to prevent that from happening was to not allow corporate guarantees in the first place.
Mr. Kuipers emphasized that no hard assets, cash, or cash equivalents stood behind a corporate self-guarantee. When a mining company appeared in bankruptcy court, they were viewed as an unsecured creditor and would be lucky to walk away with anything.
Looking at what other states accepted as financial assurance, Mr. Kuipers said that the following states and government entities did not allow or accept corporate guarantees as financial assurance for hardrock reclamation (Exhibit K):
· Alaska
· California
· Idaho
· Montana
· Oregon
· South Dakota
· Washington
· U.S. Forest Service
· Bureau of Land Management (Nevada excluded)
Mr. Kuipers said that the only reason the BLM had accepted corporate guarantees for the last 20 years in Nevada was that they were operating under the presumption that the state of Nevada was guaranteeing the cost of reclamation and cleanup on behalf of the mining companies. As the letter dated August 30, 2000, illustrated, when BLM finally understood that the state would not guarantee the cost of mining cleanup, they had some serious concerns about the fact that they had accepted corporate guarantees for so many years.
Mr. Kuipers said that New Mexico did not allow self-guarantees, but they did allow third-party guarantees, and, in some cases, parent corporations were allowed to provide third-party guarantees. A good example would be Unocal Oil Company, which New Mexico allowed to provide a corporate guarantee for Mollycorp.
He explained that Arizona, Colorado, Nevada, and Utah were the only states that currently accepted corporate guarantees. Arizona allowed corporate guarantees for their numerous copper mines, with a combined liability of at least $74 million. Mr. Kuipers said that most of Arizona’s mines were quite old and were nearing the end of their useful life. It was likely that Arizona could be dealing with billions of dollars of liability from their failure to extract sound financial assurances for those mines. Colorado and Utah rarely used corporate guarantees, although they were allowed. Mining companies in those states had not found it necessary to use corporate guarantees.
Nevada had over $240 million in corporate guarantees, worth more than half of all other states combined. Mr. Kuipers’ perspective was that Nevada’s liabilities rested on the price of gold and the uncertain future of three major mining companies.
Mr. Kuipers than presented several case studies (Exhibit K):
Summitville, an open pit heat bleach gold mine, was the first major mining reclamation and bonding situation that elevated the issue in the eyes of the public. At Summitville, both the state of Colorado and the federal government, including EPA and the U.S. Forest Service agencies, were responsible for the site. The actual projected reclamation and closure cost was currently $180 million. At the time the mining company went bankrupt, they had a $4.5 million surety and property bond with the state of Colorado. The state was only able to collect on the surety bond, because the property bond had prior liens that were honored first.
Mr. Kuipers said he was very familiar with this mine bankruptcy, which occurred in Montana in 1998. It turned out to be fortunate that Pegasus Gold had $75 million in surety bonds in Montana. The current projections for cleanup of Pegasus Gold mines was for over $100 million at the Zortman and Landusky Mines, $12 million at the Beal Mountain Mine, and $2 million at the Basin Creek Mine, which only left them $40 million short. Without the $75 million surety bond, or if most of the financial assurances were in corporate guarantees, they would have been short $115 million.
A surety bond and letter of credit for $16 million was in place to cover $30 million to $50 million in estimated cleanup and closure costs.
ASARCO negotiated a $100 million settlement with EPA after a projected cleanup cost of between $200 million and $1 billion in estimated liability to the states and to other federal agencies.
Chairman Collins said that Mr. Kuipers’ presentation had been lengthy, and there was about 1 hour left for the opposition. Mr. Kuipers said he would conclude his testimony.
Mr. Kuipers concluded that A.B. 321 would encourage corporate responsibility and fiscal accountability for mining operations in Nevada. It would be beneficial for both the state and for the industry. The bill would also ensure that taxpayer liability was significantly reduced for mine reclamation and closure in Nevada. A.B. 321 was fair and reasonable and allowed for a phase-out of existing corporate guarantees, and was in the best interest of the state and its citizens because it would encourage a sustainable mining-based economy.
Lois Snedden, Chairman of the Sierra Club’s National Mining Working Group, said she was not testifying as a scientist because it was not her area of expertise. Ms. Snedden wanted to speak on a personal level because she grew up in mining camps in the southwest United States (Exhibit L).
Ms. Snedden’s father spent his entire career with American Smelting and Refining Company. When he retired, he was the Vice President of ASARCO’s worldwide mining operation, which were headquartered in New York. At its inception in the Nineteenth Century, ASARCO invested in smelting and refining of ore that other companies took out of the ground. Later they discovered there was more profit if they mined the ore they processed. That formula made ASARCO one of the most profitable mining companies. She thought that ASARCO would be around forever. However, in 1999, ASARCO moved south. Grupo de Mexico outbid Phelps-Dodge for ASARCO assets. ASARCO had polluted sites all over the United States. Recently, Grupo de Mexico, ASARCO’s parent company, purchased ASARCO’s most profitable mine, located in South America. Consequently, ASARCO’s assets were probably no longer sufficient to meet its obligations for cleanup and reclamation.
Ms. Snedden concluded by saying she had learned that there was no guarantee that a strong company today would be strong in 20 years. Ms. Snedden stressed that taxpayers of Nevada should not have to pay for reclamation and restoration, as did taxpayers in Idaho on the ASARCO’s properties in Coeur d’Alene. She urged the Committee to support A.B. 321.
Chairman Collins asked if mining had moved from the United States to South America because of Nevada’s federal and state regulations.
Ms. Snedden said that South America had had large gold deposits for a long time. ASARCO USA had owned mining properties in South America for years, at least since the 1940s.
Assemblyman Marvel asked if there was currently any mining at all in Montana. Mr. Kuipers answered that there was still mining in Montana.
Mr. Marvel asked what kind of reclamation laws they had in Montana. Mr. Kuipers said that Montana had the strictest reclamation laws in the United States.
Mr. Marvel asked if they still had a severance tax. Mr. Kuipers said there was a severance tax, but only on coal, not on metals.
Assemblyman Marvel asked if Mr. Kuipers had performed any financial analyses on Nevada mines. Mr. Kuipers said that he had. Assemblyman Marvel asked which ones might be in jeopardy. Mr. Kuipers said he had only looked at a few of the 80 major mines in Nevada. Of those he had examined, the Gold Quarry Mine in northern Nevada had very large reclamation liability. The company had estimated their reclamation liability at over $100 million which was mainly in the form of a corporate guarantee.
Assemblyman Marvel asked if there was a list of the mines he had evaluated in his statement. Mr. Kuipers said he did not provide that. Mr. Marvel asked if Mr. Kuipers would provide a list of those companies to the Committee. Mr. Kuipers said he would do that.
Assemblyman Carpenter distributed to the Committee backup to his analysis of Great Basin Mine Watch, which was titled a “Summary of Recent Appeals of Newmont Projects, February 2003” (Exhibit M), and several newspaper articles (Exhibit N) for their perusal. Essentially, his analysis was that they were “just out to shut mining down.” He said Mr. Kuipers probably would disagree, but he had watched them over the years. The handout (Exhibit M) showed the environmental appeals they had filed against Newmont Mining Corporation. The list showed that, between December 2000 and January 2003, Great Basin Mine Watch filed seven lawsuits related to Newmont mining practices, conditions, and activities in Nevada. Mr. Carpenter said that Newmont Mining Corporation had been operating in Nevada for 30 to 40 years, providing jobs for Nevada communities. He said he believed that the Great Basin Mine Watch had no other mission in life except to close mining down. Assemblyman Carpenter said, “Every time you turned around, they were filing appeals.”
Regarding Dr. Miller’s statement about the Humboldt River Basin, Mr. Carpenter said that the river flowed because of the snow in the Ruby Mountains and the North Fork and the Jarbidge. To his knowledge, there had never been any acid or salt pollution in the Humboldt River. He said he would appreciate it if the Great Basin Mine Watch would come up with a meaningful issue. As far as Mr. Carpenter was concerned, all the issues Great Basin Mine Watch raised related to the Humboldt River were “bogus.” He did not think that the Humboldt River would dry up because of mining. Mr. Carpenter said it upset him that, while mining had provided good jobs to workers that allowed them to raise their families and provided a decent income, Great Basin Mine Watch was filing appeals on everything the mines tried to do.
Assemblyman Atkinson asked when ASARCO USA filed bankruptcy.
Dr. Miller said that they had not yet actually filed for bankruptcy. There had been a series of negotiations and the EPA had filed a lawsuit against them to keep them from selling a profitable property in order to prevent a huge liability to a company with no assets in northern Nevada. The big asset was the South American mine. There was unanimous recognition of a huge liability, and a great fear that ASARCO USA’s resources would not be enough to cover the liability. He said rather than “bankruptcy,” a better phrase that described the situation would be “financial distress” or “near bankruptcy.”
Chairman Collins said he saw a member of the Great Basin Mine Watch on television a few nights ago saying that the water in Battle Mountain would have to be “filtered forever.” If there was any basis in fact to that statement, Chairman Collins asked someone from Great Basin Mine Watch to supply the evidence to the Committee.
Joe Johnson, Toiyabe Chapter, Sierra Club, said he wished to go on record as supporting A.B. 321. Secondly, he believed that the testimony had demonstrated that, even though mining companies might be very strong financially, the state of today’s financial analyses had very little bearing on the recovery at shutdown. Examples had been cited of major international mining companies that 15 years ago would have had the strongest of financial profiles and balance sheets that were now nonfunctioning entities. He said people tended to look at defining the high-profile mining companies by their beneficial activities and the jobs they provided. Other mining companies could qualify for sureties now, and their financial analyses were very accurate. The independent appraisers and NDEP did a very good job of assessing the financial capabilities of the companies in existence today. They also had a very strong inability to assess what those companies would be worth in 15 years. Mining had always been, by nature, a high-risk venture.
Mr. Johnson said he was a registered geologist and had worked as a professional geologist in Nevada most of his life. He said he was a strong supporter of the mining industry. However, personally, he said that the bonding surety, as defined in the regulating statutes, offered very little protection to the taxpayers of the state of Nevada over the long term.
Allen Biaggi, Administrator, Division of Environmental Protection, said that with him was his colleague, David Gaskin, P.E., Bureau Chief, Nevada Bureau of Mining Regulation and Reclamation.
Mr. Biaggi stated that A.B. 321 would make important and sweeping changes to Nevada’s mining laws and would ultimately remove corporate guarantees and other forms of security from the list of financial assurance mechanisms (Exhibit O).
Since its formation in 1990, the State Reclamation Program had worked well to ensure the physical stability of reclaimed exploration projects and mines in order to provide for public safety and a productive postmining land use. To do this, the Legislature wisely required mines to have financial mechanisms in place to ensure reclamation was accomplished when the mining was finished. The statutes currently allow a number of financial instruments to the industry to meet that requirement, including corporate guarantees.
Mr. Biaggi said that, in the late 1990s, as a result of depressed precious metals prices, a number of challenges were presented to the State Reclamation Program in terms of the scope of reclamation, the way the bonding obligation was calculated, and the frequency of corporate guarantees and how they were evaluated. On top of this, the September 11, 2001, terrorist attacks changed the perspective of the surety and bonding industry in providing financial insurance mechanisms, not only for the mining industry, but also for others, including the health care and construction industries.
Mr. Biaggi said that NDEP recognized and responded to these challenges by establishing a Mining Bonding Task Force to identify problems and potential solutions associated with financial mechanisms. It also established a Corporate Guarantee Review Panel to review not only individual corporate company guarantees but also the corporate guarantee system in general. Finally, from the lessons learned from mining bankruptcies that occurred in the late 1990s, the NDEP put into place a number of institutional regulatory changes that it believed made the program stronger and reduced the potential for liability to the public.
“The public policy decisions before you today in the form of this bill,” said Mr. Biaggi, “were significant and far-reaching.” They involved a delicate balancing act between levels of risk, liability, public health, and environmental quality versus the economic vitality of a most important industry and one that was critically important to Nevada’s rural communities.
Mr. Biaggi then turned over the remainder of the NDEP’s testimony time to Mr. Gaskin, who would provide details regarding their position on the legislation.
David Gaskin, P.E., Bureau Chief, Nevada Bureau of Mining Regulation and Reclamation, Division of Environmental Protection, said that the major change to current mining reclamation requirements in the proposed bill occurred on page 1, Section 1 (Exhibit O). This section currently allowed a number of different mechanisms for financial assurance, including trust funds, surety bonds, letters of credit, insurance and corporate guarantees. Each form of surety carried a certain amount of risk, from possible financial failure of mine operations as well as possible failure of the financial institution. The general requirements were established to minimize risk to the state without imposing overly burdensome requirements on the mining industry. This section addressed the risk involved with the use of corporate guarantees. The control and minimization of such risk was accomplished in a number of ways:
· Through regulatory requirements
· Agency policy
· Judgment of the administrator of the NDEP
The regulations under Nevada Administrative Code (NAC) 519A contained specific financial criteria an applicant must meet to obtain a corporate guarantee. When the price of metals dropped in the late 1990s, those criteria were put to the test.
Mr. Gaskin said that one company with a corporate guarantee, a copper mining company from Arizona, called Arimetco Incorporated, declared bankruptcy in 1997. The company abandoned its operations, including the Yerington and Paradise Peak mines, in early 2000. This placed the state of Nevada and the BLM, its partner in reclamation bonding, in the position of having to deal with closure and reclamation of a mine with only a fraction of the necessary funding. The state managed to prevent immediate environmental impacts through the NDEP’s emergency mitigation and restoration funding. Some of the expense was reimbursed by Atlantic Richfield, owner and previous operator of the Yerington mine. The state was working with the numerous parties involved to accomplish permanent closure and reclamation.
Mr. Gaskin stated that the NDEP reevaluated its ability to address mine bankruptcy and abandonment because of the Arimetco situation and the economic climate. In cooperation with the mining industry, a major revision was made to the reclamation regulations to give the NDEP the authority to require bonding for process fluid stabilization. Previously, bonding could only cover the cost of physical reclamation. However, it was recognized that stabilization of fluids could present the largest reclamation cost at a mine site.
NAC (Nevada Administrative Code) 519A was revised in July 2000, and the NDEP now had the authority to ensure that adequate surety was in place to cover stabilization of process solutions. In September 2000, another significant measure was taken by the NDEP. The reclamation regulations were revised to establish a trust fund for short-term fluid management, known as the Interim Fluid Management (IFM) fund. Fees were assessed on mine operators to provide a fund of $1 million. That money was used by the NDEP to manage fluids at abandoned sites until resources were made available from the surety. Mr. Gaskin said that those two measures had greatly advanced the NDEP’s ability to address bankrupt and abandoned mines (Exhibit O). Mr. Gaskin added that there had been no bankruptcies of mine operators since 1999.
Additionally, a number of revisions were made to address the adequacy of the regulatory criteria for corporate guarantees. After a thorough review and discussion with environmental groups and industry, the reclamation regulations were revised in October 2001 in three areas:
1. Provide for a periodic review of the financial health of mining companies versus a one-time qualification. This would assist in accounting for economic fluctuations.
2. Provide the NDEP the flexibility to adjust the amount of reclamation obligation covered by corporate guarantee. Previously corporate guarantees were automatically set at 75 percent of the total reclamation obligation. This flexibility would allow the NDEP to adjust individual corporate guarantees as necessary to address risk.
3. NDEP ensured that financial information was prepared in accordance with the United States Generally Accepted Accounting Principles (USGAAP). This allowed foreign-based corporations to be fairly evaluated.
Along with the regulatory revisions, Mr. Gaskin said that the NDEP also developed a corporate guarantee policy that described the qualification process, defined document requirements for periodic reviews, and established the Corporate Guarantee Review Panel. The panel was established to advise the ADEP Administrator in making decisions regarding corporate guarantees. The panel consisted of representatives from the NDEP, the Division of Minerals, the Risk Management Division, and a Certified Public Accountant (CPA) from the public.
The total amount of financial assurance in Nevada that was represented by corporate guarantees was approximately $230 million, out of the $550 million total financial assurance of all types. Due to mergers and consolidations, they were only dealing with three companies with corporate guarantees at this time:
· Barrick
· Newmont
· Glamis
Mr. Gaskin said that recent revisions to BLM’s regulations now prohibit new corporate guarantees on public land, so it was unlikely there would be many more requests for corporate guarantees in the future. However, they would be managing the existing agreements.
The corporate guarantee system was not without risk (Exhibit O). The key was to control the risk and keep it at an acceptable level. Mr. Gaskin stated that was a balance between two primary factors: the economic health of members of the mining industry, the second largest industry in the state, versus the potential impacts, both financially and environmentally, of bankruptcy and abandoned mining operations. This balance was clearly stated in the legislative findings at the very beginning of the reclamation statutes, NRS 519A.010, which said:
A. The extraction of minerals by mining is a basic and essential activity making an important contribution to the economy of the state of Nevada.
B. Proper reclamation of mined land, areas of exploration, and former areas of mining or exploration is necessary to prevent undesirable land and surface water conditions detrimental to the ecology and to the general health, welfare, safety, and property rights of the residents of the state.
Mr. Gaskin said that the corporate guarantee system was established as a valid means of financial assurance when the reclamation statutes were adopted in 1990. The security of the corporate guarantee system was under constant scrutiny by NDEP, by environmental groups, by the mining industry, and by the public. The changes NDEP had initiated over the past few years were evidence that the system was flexible and could incorporate constructive improvements to maintain the proper balance of risk.
Assemblyman Carpenter asked if Mr. Gaskin had any idea of how much money the mining companies had spent on reclamation since the law was passed in 1990.
Mr. Gaskin answered that he did not have an exact figure, but a large company working in Nevada would typically spend millions of dollars each year on reclamation. They did not wait until a mine was closed to begin reclamation but performed concurrent reclamation while the mine was in operation, shutting down components that were no longer used.
Assemblyman Marvel asked if they were comfortable with corporate guarantees and with the statutory language in the NAC.
Mr. Biaggi answered that he believed the corporate guarantee system was a flexible and living component of the NDEP programs. He said they needed to be constantly vigilant, analyze market conditions, and analyze the mining industry, but they did not view it as a broken system and felt it would adequately serve them for the future.
Assemblyman Geddes asked what the percentages were for all different forms of financial assurance.
Mr. Gaskin said that corporate guarantees accounted for $230 million out of $550 million in total bonding. He did not have a breakdown of the other percentages.
Assemblyman Geddes asked what would be the second highest percentage.
Mr. Gaskin did not have that information.
Assemblyman Goicoechea said he thought that the largest issue, if Newmont and Barrick mining companies were to fold, would be to stabilize those communities, and that reclamation would quickly become a minor issue in northern Nevada.
Robert L. Vaught, Forest Supervisor, Humboldt-Toiyabe National Forest, USFS, said that the bill would not affect the USFS, so he was testifying to provide information about the USFS procedures. Neither did the USFS have any experience with corporate guarantees (Exhibit P). They had required surety since 1974 on all national forest mining operations.
The Humboldt-Toiyabe National Forest had the largest locatable mineral program on national forest lands in the United States and hosted 360 mining operations including the largest gold mine in a national forest. The total surety bonding amount associated with those operations was about $14 million.
The USFS did require surety bonding to increase the assurance that the required reclamation work would be done. The direction came from U.S. Congress and through the regulations associated with that. Their Web site included all the USFS manuals and handbooks. Bond calculations were done in cooperation with the mining companies and included the entire cost of reclamation, including removing equipment, treating hazardous materials, erosion control, earthwork, revegetation, water treatment and monitoring, and administrative costs.
Mr. Vaught stated there was, currently, a Draft National Reclamation Bond Estimate Guide, which was designed to standardize reclamation bonding across the national forest system (Exhibit P). It was currently under review by NDEP and the Nevada Mining Association, and a final version should be out by the end of 2003.
The kind of securities USFS required included:
· Sureties
· Deposited securities
· Irrevocable letters of credit from banks or financial institutions
· Cash, assignment of savings accounts, or certificates of deposit
The USFS had not accepted corporate guarantees as a bonding instrument since 1974.
Mr. Vaught said he would refer the Committee to a complete set of his remarks, which were provided (Exhibit P). There was some additional information that he would not provide verbally because of the time restrictions.
Mr. Vaught added that there were three producing gold mines in the last three years that went into bankruptcy or were abandoned. They were:
1. Mount Hamilton Mine
2. Aurora Mine
3. Griffin Mine
On very short notice, after those bankruptcies, the USFS collected the reclamation bonds and reclaimed the sites. Some were potentially significant to cyanide operations. All three mines were gold mines. To date, $3.8 million had been spent. Over the next few years, $1.5 million to $2 million would be required to complete the reclamation work. The USFS collected about $3.3 million from reclamation bonds. There was an additional $500,000 beyond the reclamation bonding that had been previously calculated, which was needed and which came from the public coffers for all three sites.
Mr. Vaught said that he very much appreciated the state of Nevada, the Nevada Mining Association, and especially Congressman Gibbons, who were very interested in helping to provide the additional $500,000. It was a joint effort; legislation was passed, and there was great cooperation from the Nevada Mining Association and from the state of Nevada.
Assemblyman Goicoechea said that he was familiar with the Mount Hamilton Mine, and he recognized that it was a major cleanup effort, especially with the fluid containment required. He asked Mr. Gaskin if he had correctly heard that the NDEP no longer covered fluid retention or containment under a corporate guarantee.
Mr. Gaskin replied that they had amended regulations and now specifically required bonding for process fluid stabilization, because they recognized that it could be a significant cost in closure of a mine.
Mary Beth Donnelly, Group Executive, Government Relations, Newmont Mining Corporation, said she came to testify in opposition to A.B. 321. She first wanted to thank Dr. Glenn Miller for the compliment. They did work together in 1989 on the Nevada Reclamation Legislation, and again in 1990, on the accompanying regulations. They looked forward to working with Dr. Miller on other mining matters.
Since A.B. 321 addressed the use of corporate guarantees as a financial assurance mechanism, she said she would turn to her financial expert for a brief discussion of why the current law ought to be maintained.
Thomas (Tom) Mahoney, Vice President and Treasurer, Newmont Mining Corporation, said that he came to testify in support of the current state regulations that applied to reclamation. He provided the Committee with detailed written testimony (Exhibit Q) and said he would summarize the points made in his written testimony.
Mr. Mahoney stated that Newmont Mining Corporation was the largest mining company operating in the state of Nevada, and the largest gold producer in the world, with a capitalized value of over $10 billion. Newmont was a United States-based publicly traded company that had been mining continuously in Nevada since 1965, and they had identified resources that would keep Newmont operating in Nevada for at least another 25 to 35 years.
Mr. Mahoney emphasized that hardrock mining operations provided thousands of high-paying jobs in predominantly rural areas of the state, were an integral component of rural economies, and provided important revenues for the state. Over the years, Newmont had tried to work diligently with the Legislature, state regulators, and citizen groups to ensure that mining operations were undertaken in an environmentally sound manner.
A corporate guarantee, stated Mr. Mahoney, was a commitment by a financially strong company, that sufficient funds would be available to satisfy its reclamation obligations to the state. NDEP would only approve the use of corporate guarantees if the company satisfied very stringent financial tests related to its net worth, liabilities, overall assets, and asset within the United States. The financial tests were extremely conservative and were generally more stringent than the financial tests used under other federal or state corporate guarantee programs within the United States. Even the strongest company could only utilize corporate guarantees for, at most, 75 percent of its reclamation financial assurance obligations. In fact, even if a company satisfied all of the financial tests and regulations, NDEP could still decide not to allow a corporate guarantee or could allow it for less than 75 percent of the company’s reclamation obligations.
Regulations already allowed NDEP, on a case-by-case basis, to limit corporate guarantees where circumstances warranted. Under the current regulations, NDEP also must review all corporate guarantees at least annually and more frequently, if appropriate. Therefore, if a company’s financial condition began to worsen after the guarantee was posted initially, NDEP could take steps to reduce, or replace, the guarantee before any reasonable chance of default. There was no need for new legislation to protect the state from default.
Corporate guarantees were not unique to Nevada nor were they unique to mining reclamation programs. To the contrary, they were an accepted form of financial assurance in Nevada and around the country. For example, Nevada allowed corporate guarantees to be used as financial assurance for hazardous waste facilities, used oil facilities, and facilities managing radioactive materials. In addition to Nevada, 5 other western hardrock mining states and 14 coal-mining states also allowed corporate guarantees to be used as financial assurance for mining reclamation.
At the federal level, the EPA, the Nuclear Regulatory Commission, and the Interior Department’s Office of Surface Mining allowed corporate guarantees to be used as financial assurance under a number of programs, including hazardous waste management facilities, municipal solid waste landfills, underground storage tanks, nuclear facilities, and mine reclamation. All those state and federal agencies recognized that corporate guarantees were a safe and cost effective means of providing financial assurances.
Newmont had long supported the requirement that mining companies provide financial assurance for reclamation. In fact, Newmont participated, along with Dr. Miller of the Sierra Club, and the NDEP, in the formulation of the current financial regulations contained in the Nevada Administrative Code. Dr. Miller and NDEP concluded, in 1990, that corporate guarantees were appropriate as a financial assurance mechanism for reclamation, and Newmont believed that that conclusion had stood the test of time.
Corporate guarantees for reclamation had an excellent record of accomplishment. Only once had a Nevada mining company that operated under a corporate guarantee failed. That was in 1997. Because of that single failure, in 2001, the Legislature substantially revised the mining regulations to require annual reviews of corporate guarantees and gave NDEP the ability to reject or limit such guarantees even if the financial tests were satisfied. No subsequent failures had occurred, and they knew of no instances in other states where a mining company using a corporate guarantee had failed. Even in the case of the 1997 mine failure, Mr. Mahoney understood that most or all of the expense initially incurred by the state had been or was being reimbursed.
Mr. Mahoney said there was no credible evidence that the use of a corporate guarantee under the current regulations would create future problems for reclamation or leave the taxpayers liable for reclamation and closure costs.
Newmont was a perfect example of the strength and security provided by this means of financial assurance. Newmont was a financially sound company with operations on five continents. Continuous reclamation was a critical part of Newmont’s operations in Nevada, and they incorporated reclamation planning and budgeting into all its business plans and engaged in concurrent reclamation so there would be no overwhelming reclamation obligation at the end of a mine’s life. In 2002, Newmont spent approximately $6 million in Nevada on reclamation work and expected to spend a similar sum annually for the next 25 years.
Newmont had received numerous federal and state awards for its excellent reclamation practices, including awards from the state of Nevada. Newmont had never defaulted on any reclamation obligation, and Mr. Mahoney could not envision any situation that would cause it to do so. Although Newmont had $164 million in outstanding corporate guarantees for reclamation obligations in Nevada, those guarantees amounted to less than 2 percent of the company’s capitalized value.
The ability to use corporate guarantees was now more critical than ever to the mining industry and the Nevada economy. Historically, the two most common forms of financial assurance used for reclamation had been surety bonds and corporate guarantees. As discussed in the last few years, the surety bond market had largely dried up. In a recent report of the NDEP’s Nevada Bonding Task Force, it stated that the contraction of the surety market was due mainly to:
· Surety and insured losses caused by the economic recession which started in the spring of 2001
· Bankruptcies outside the mining industry
· The huge losses of September 11, 2001
At least two surety bonding companies, Frontier Pacific and Amwest Surety, had been liquidated and most of the larger surety bonding companies were exiting the reclamation business entirely. Surety bond companies were significantly reducing their assurance of new reclamation surety bonds, even the strong companies with significant resources, and were seeking to cancel existing surety bonds where possible. They no longer wished to commit to long-term obligations, such as reclamation obligations, that might not cure for 30 or more years. Unlike a corporate guarantee, which could be eliminated or reduced at any time, surety bonds were irrevocable until reclamation was completed.
Newmont had currently posted at least $99 million in surety bonds in Nevada, and four different companies had underwritten those bonds. Three of the four made it clear to Newmont that they no longer wished to bond reclamation obligations, and they would no longer provide bonds for new projects, or increase bonding capacity for expansion of existing projects. Newmont anticipated that its existing capacity from the fourth bonding company might be fully exhausted within the next few months, leaving the company with no available surety bonding. Newmont projected the need for over $40 million in additional financial assurances over the next 6 to 12 months. If the option for using corporate guarantees were to become unavailable, Newmont would not expand its projects or initiate new projects in the state of Nevada without purchasing letters of credit from a bank for insurance. This would be expensive and would reduce Newmont’s overall borrowing capacity for other projects, some of which would be in Nevada. The ultimate result would be that, by increasing significantly the cost of doing business, less business would be done in the state to the detriment of the state’s economy, in general, and to rural economies in particular.
Finally, Newmont’s reclamation and other environmental liabilities, including those assured by corporate guarantees, were disclosed in Securities and Exchange Commission (SEC) filings. They were available to the public and to the state and could be taken into account by NDEP when deciding whether to allow Newmont to use additional corporate guarantees for new reclamation obligations.
Mr. Mahoney concluded his testimony saying that Newmont applauded Assemblywoman Leslie and Assemblyman Geddes for their commitment to environmentally safe mining in the state of Nevada, which was a commitment that Newmont fully supported and shared. Newmont believed that the existing law and regulations provided NDEP with all the tools and flexibility they needed to ensure that corporate guarantees were a safe and effective method of assuring that mining lands were reclaimed.
Mr. Mahoney said they had confidence in the corporate guarantee as a reliable financial assurance mechanism, and, most importantly, they had confidence in NDEP’s ability to manage the corporate guarantee program effectively and responsibly under the current regulations. He also suggested that it was highly probable that the mining company bankruptcies cited in Nevada by proponents of this legislation represented companies that would not have qualified for corporate guarantees under current Nevada regulations. There was no evidence to suggest that those regulations should be changed.
Assemblyman Geddes asked if Mr. Mahoney thought that one of the larger mining companies on the list, Alta Gold, would not have qualified for a corporate guarantee.
Mr. Mahoney said he would have to look at the information on that company.
Assemblyman Geddes said that, in his testimony, he indicated that sureties were no longer available because of the 30 to 40 year time frame. He asked why Mr. Mahoney thought those surety bonds were no longer available, and why they were getting out of that business.
Mr. Mahoney replied that this was an interesting question. He said that sureties actually had made money in backing mining reclamation liabilities and obligations, but, prior to September 11, 2001, they had relied on reinsurance companies to back some of the sureties that they provided. Those reinsurance companies did not like long-term liabilities and obligations, despite what most in the industry would consider a reasonable loss record. Therefore, it was not a question of sureties not liking mining obligations per se, or having significant historic losses, they just did not like long-term obligations or liabilities and were moving away from those categories.
James A. Chavis, Vice President, U.S. Government Relations, Placer Dome America (Placer Dome), stated that Placer Dome had three operating mines in northern Nevada: Bald Mountain in White Pine County, Cortez Gold Mine in Lander County, and Getchell Gold in Humboldt County. Collectively those mines had over 700 employees, produced over 1.3 million ounces of gold in 2002, and they believe they made a significant contribution to the rural Nevada economy. Placer Dome was opposed to the proposed in A.B. 321 limits on bonding mechanisms currently available in Nevada. Mr. Chavis submitted written testimony in the form of Exhibit R.
Mining was not the only activity in Nevada that used corporate guarantees; however, they were the only industry that was singled out for the reduction and possible elimination of corporate guarantees and that system that was actually working well. Placer Dome’s Nevada mines had over $56 million in bonds. The company made the decision many years ago to utilize only surety bonds to meet those obligations. They were currently the fifth largest gold producer in the world, and Mr. Chavis was confident that they would qualify for corporate guarantees if they chose to move in that direction.
However, the tragic events of September 11, 2001, and subsequent bankruptcies of several high-profile corporations had negatively affected Placer Dome’s ability to increase and maintain the surety bond level at their various mine sites. Those events had caused many insurance companies to exit the bond market. For example, just last year Place Dome completed a new project for which they had to obtain bonding. Twelve companies refused or declined to issue surety bonds for Placer Dome, saying their intentions were either to limit their exposure, to write no additional surety bonds, or to exit the surety bond business entirely. Mr. Chavis said that last year they had to obtain a letter of credit for $8.5 million for that mine at a cost of 1 percent per year.
Mr. Chavis further stated that the nature of the mining business was to discover, permit, build, and commence operations on a new project prior to closure of existing operations. That project required additional bonding for new areas of disturbance to be in place prior to approval of the project by the state of Nevada and the BLM. As indicated above, the ability to acquire additional surety bonds was very limited, and, perhaps, nonexistent. That meant that Placer Dome needed to maintain the currently available alternative forms of financial surety, such as corporate guarantees, to provide surety for reclamation obligations. Nevada currently had one of the best mining reclamation programs in the country, and, perhaps, in the world. An important part of the regulations was allowing corporate guarantees as a form of financial surety.
With the full support of Placer Dome, and the state mining industry, the NDEP reviewed the current regulations and strengthened them a few years ago. Placer Dome believed that Nevada could confidently continue to allow the use of corporate guarantees as financial surety for reclamation obligations. Maintaining that mechanism as a viable form of financial surety provided greater flexibility for mining companies that could meet the rigorous requirements of the state.
Assemblyman Geddes asked Mr. Chavis about the cost of the letter of credit.
Mr. Chavis clarified that the letter of credit was for an $8.5 million bond. The cost was 1 percent, which meant an $85,000 initial payment and, subsequently, $85,000 per year.
Russell A. Fields, President, Nevada Mining Association, stated that he was testifying in opposition to A.B. 321 and submitted written testimony (Exhibit S). He said that the Nevada Mining Association’s membership included mines of wide variety, companies and individuals involved with mineral exploration and development in Nevada, and suppliers of goods and services to the mining industry. Nevada’s mining industry produced approximately $3 billion dollars in mineral products each year and currently employed approximately 9,000 people. The majority of their mining activities were located in rural communities, and mostly in northern Nevada, which was where most of the impacts of mining occurred.
The Nevada Mining Association (NMA) shared a fundamental view with the sponsors of A.B.321. Assemblywoman Leslie and Assemblyman Geddes had a very important view that NMA had shared for many years, which was that the responsibility for performing or guaranteeing that reclamation was done in accordance with Nevada law, regulations, and permit conditions rested with the mining companies, not with the public. The mining industry had supported that proposition since 1989 when the Legislature adopted the State Reclamation Act. The mining industry had continued to support that proposition, as the State Environmental Commission had repeatedly strengthened the regulations over the years, as authorized by the statute. Most of those changes took place in October 2001, and they had been in effect about 1½ years.
Mr. Fields said that while there was no question that the corporate guarantee program for mining in Nevada was in need of an overhaul prior to those regulatory changes, he said there was nothing to suggest today that the program was in need of further changes to achieve their common desire to protect the public from reclamation liability. In other words, the current Nevada program, with its strict review requirements and acceptance procedures, all under control of the state, was not broken. The NMA supported the existing laws and regulations.
The NMA strongly supported the existing law and wanted to avoid removal of corporate guarantees as an important form of financial assurance. As discussed earlier, the commercial surety market for financial assurance instruments for reclamation was not a healthy market, for all the reasons previously cited. That was true for reclamation bonding for hardrock mining, for coal mining, for oil and gas drilling, and for many other areas of commerce as well. The market was very constrained today, and the cost of alternatives was relatively high. To eliminate the corporate guarantee as a viable financial assurance mechanism, for companies that were capable of meeting Nevada’s strict standards, would only put more pressure on an already constrained, expensive, commercial surety market, making those financial surety instruments even less available and more costly.
In conclusion, Mr. Fields stated that the NMA believed that existing law and regulations governing corporate guarantees were not in need of the changes proscribed in A.B. 321.
Chairman Collins asked if there was anyone else who wished to testify on A.B. 321. No one spoke or came forward.
Chairman Collins said that he had received no proposed amendments to the bill; however, he would not take a vote at this time.
He called Mr. Biaggi to the witness table and asked him if it was true that, in his department, he had flexible regulations under statute that were constantly evolving and would he be comfortable with codifying some of those regulations in statute.
Allen Biaggi, Administrator, Nevada Department of Conservation and Natural Resources, Division of Environmental Protection (NDEP), said there were regulatory requirements that could be placed into statutory frameworks that would make them more rigid and less likely to change. He said the NDEP would be happy to work with a subcommittee, or other work group, to evaluate those regulations and how best to put them into statute.
Assemblyman Marvel asked Mr. Biaggi if that would “tie your hands” too much. With changing conditions and changing markets, Mr. Marvel conjectured that it would seem important to have flexibility to write and change regulations.
Mr. Biaggi said they would need to choose those regulations judiciously so that they did not tie their own hands. He said Mr. Marvel raised an important point, and NDEP should be careful not to lose too much flexibility, which could harm the program in the end.
Assemblyman Goicoechea wanted Mr. Biaggi to briefly walk through how NDEP arrived at the breakpoint that divided those who qualified for corporate guarantees and those who did not qualify.
Mr. Biaggi referred the question to Mr. Gaskin, because he was the expert and ran that program.
David Gaskin, P.E., Bureau Chief, Nevada Bureau of Mining Regulation and Reclamation, Division of Environmental Protection (NDEP), stated an applicant for a corporate guarantee had to commit to a lengthy process. There were fixed ratios in the current regulations and financial criteria that had to be met prior to a complete review. A five-year history of the company was part of the application, which was followed by periodic reviews as frequently as necessary to evaluate the company’s financial health. He said they continued to improve the process as they learned more about how to predict financial problems.
Chairman Collins stated that his concern was to address A.B. 321, and he felt that the current draft of the bill was unfair, but he was not weighing in on the economic issues. He said that mining had already lost 3,000 to 4,000 employees in the last few years. He said he would assign the bill to a subcommittee to determine if some of the NDEP regulations might be placed into statute, or not. The Subcommittee members would include:
Mr. Bob McCleary, Chairman
Mr. John Marvel as financial expert with banking experience
Mr. Jerry D. Claborn for his mining and construction experience
Chairman Collins asked if the Subcommittee could meet early next week and report to the Committee as soon as possible.
Chairman Collins closed the hearing on A.B. 321.
Assembly Bill 36: Revises provisions governing program established by State Environmental Commission for regulation of smoke and other emissions by inspection of certain heavy-duty motor vehicles. (BDR 40-196)
Chairman Collins said there was a consensus on A.B. 36 and asked the Committee to look at the amendments (Exhibit T), and he would accept a motion as soon as the Committee had finished their review.
Chairman Collins said that in 1991 and 1993, representatives from the fuel industry and the transportation industry requested the state legislature to put California standards into Nevada law, including the health districts in southern Nevada and in Washoe County. Previous legislative testimony documented that they requested those standards. Now they wanted to withdraw those standards, mainly to address a different weight of vehicle and to address special fuels in a different fashion.
There was no opposition to A.B. 36, since it was being amended. It was up to the Committee to decide if they wanted to eliminate existing standards that were similar to California’s. He said the Committee heard testimony on the bill earlier in the session.
Linda Eissmann, Committee Policy Analyst, stated that this was the third version of the mock-up (Exhibit T). One change to this version was that Section 1 was new, and it added a new definition of “heavy motor vehicle” in order to conform to EPA guidelines. At the bottom of page 1, on line 17, “diesel fuel” replaced “special fuel,” which was stricken, and this section would pertain only to vehicles powered by motor and diesel fuels; references to special fuels were deleted to address concerns about propane as a special fuel.
[The main changes were noted in the text boxes to the right of the amended bill text (Exhibit T).]
In Section 2, the definition of heavy-duty vehicle was altered for Section 2 only, to exclude passenger vehicles and vehicles under 10,000 pounds.
In Section 3, lines 33-34, page 2, an amendment proposed by the Nevada Motor Transport Association and revised by the Nevada Division of Motor Vehicles (DMV) was added. The original language in subsection 2 was in the previous section in the original mock-up. It was moved to Section 3 dealing with compulsory testing to ensure that proper standards for those vehicles were adopted before testing began. References to subsection 1(c) and vehicles with a gross vehicle rating of 8,500 to 10,000 pounds were removed so that the testing procedures adopted by the Commission must apply to all vehicles listed in Section 3, subsection 1. This was the primary change from the second mock-up.
Section 4 and Section 5 were the same as in the second mock-up.
Section 6 was added, at the request of the Department of Defense, to make sure that the provisions would not apply to military tactical vehicles. There were some exemptions in federal and state law for military tactical vehicles, but those only applied to federal installations. Ms. Eissmann said she heard from the Department of Defense that they sometimes held maneuvers on other federal lands, or sometimes needed to traverse over other properties to reach their destination. Section 6 would exempt military tactical vehicles from the provisions of this bill.
Assemblyman Geddes wanted to confirm that the bill applied to diesel fuel in Section 2 and to special fuels in all other sections. Chairman Collins answered in the affirmative.
Ms. Eissmann had promised Ms. Neena Laxalt, Government Relations Consultant, Nevada Propane Dealers Association, that she would call the Committee’s attention to her second handout (Exhibit U), an e-mail from DMV that assured Ms. Laxalt that her concerns would be addressed. Ms. Laxalt had testified before the Committee regarding A.B. 36 on February 26, 2003, and on March 12, 2003.
ASSEMBLYWOMAN OHRENSCHALL MOVED TO AMEND AND DO PASS A.B. 36.
ASSEMBLYMAN CLABORN SECONDED THE MOTION.
THE MOTION CARRIED. (Mr. McCleary and Mr. Carpenter were absent for the vote.)
Technical information entitled, “Bureau of Land Management Nevada Reclamation Bond Summary” was submitted by Pam Robinson, to be made part of the written record of the hearing on A.B. 321 (Exhibit V).
Chairman Collins adjourned the meeting at 3:40 pm.
RESPECTFULLY SUBMITTED:
Erin K. Channell
Committee Secretary
APPROVED BY:
Assemblyman Tom Collins, Chairman
DATE: