Hearing of the Senate Energy and Natural Resources Committee - H.R. 1904, the Southeast Arizona Land Exchange and Conservation Act

Statement

U.S. Senator Jon Kyl (R-Ariz.) testified before the Senate Committee on Energy and Natural Resources today in support of H.R. 1904, the Southeast Arizona Land Exchange and Conservation Act, which has been approved by the U.S. House of Representatives. The following statement was submitted for the hearing record:

"Chairman Bingaman, Ranking Member Murkowski, and members of the committee, thank you for the opportunity to appear before you today to discuss the Southeast Arizona Land Exchange and Conservation Act with you.

"As many of you know, I am disappointed that the chairman noticed this hearing to consider not just the recently House-passed H.R. 1904, but also a bill before this committee two years ago. That old text was a committee amendment in the nature of a substitute adopted by this committee in March 2010.

"The Senate did not act on S. 409, as amended, and when the 111th Congress ended, the bill died. The committee text has not been introduced as a bill in this Congress and, therefore, is not even before the Senate.

"That said, however, I plan to cover both the House-passed H.R. 1904 and the committee-reported text of S. 409 in my testimony.

"I support H.R. 1904 as passed by the House of Representatives. The bill's sponsor, Representative Paul Gosar, has crafted a bill that enjoys strong support in our home state of Arizona. H.R. 1904 directs a land exchange in southeastern Arizona between Resolution Copper Mining, LLC (Resolution Copper), the secretary of agriculture, and the secretary of the interior. Specifically, the bill directs the secretary of agriculture to convey a 2,422-acre parcel of land located on the Tonto National Forest, in a known mining district called the "Copper Triangle" to Resolution Copper. The federal parcel, commonly called "Oak Flat" after the primitive camping site located there, will be traded to Resolution Copper to facilitate future exploration and development of what has been characterized as the largest copper-ore deposit ever discovered in North America, which is located some 7,000 feet below the surface.

"Oak Flat is intermingled with, or abuts, private lands already owned by Resolution Copper Company. Resolution Copper's unpatented mining claims blanket the parcel except for the 760-acre area that includes the Oak Flat Campground. Oak Flat Campground was withdrawn from mining in 1955 by Public Land Order (PLO) 1229 along with 24 other campgrounds, lookouts, roadside zones, and administrative sites on National Forest lands. Oak Flat and these other sites were withdrawn to protect the federal capital investment in those sites -- not because of any unique resource values. It is common practice to lift a PLO in a legislated land exchange.

"Given the ownership patterns, the public safety issues that may be associated with the mining activities, and the significant investment Resolution Copper must make to develop this mine (more than $6 billion), it is important for Resolution Copper to own, in fee, the entire mining area.

"In return for conveying the federal parcel to Resolution Copper, the Forest Service and Bureau of Land Management will receive eight parcels of private land totaling 5,344 acres. These parcels have been identified by -- and are strongly endorsed for acquisition by -- numerous conservation organizations, as well as these very two agencies themselves. They include lands along the San Pedro River -- an important, internationally recognized migratory bird corridor, riparian, and wetland habitat for threatened and endangered animal and plant species, including the southwestern willow flycatcher and the hedgehog cactus. These lands also include important recreational areas, cultural resources, and magnificent canyons and forests that are home to big game species. Most of the parcels are inholdings that will allow more effective management of the federal land. I would be remiss if I did not point out that this bill actually adds 110 acres of private land to the federally controlled Apache Leap, a cliff formation above the Town of Superior that is considered culturally and historically significant to several Indian tribes. There is no doubt that it is in the public interest to bring these lands into federal ownership for the enjoyment of future generations.

"Although the bill focuses primarily on the land exchange I just mentioned, H.R. 1904 also includes provisions that would permit the conveyance of federal lands to the Town of Superior. These lands include the town cemetery, lands around the town airport, and a federal reversionary interest that exists at the airport site. These lands are included in the proposed exchange to assist Superior in providing for its municipal needs, as well as in expanding and diversifying its economic development.

"The mine project this bill seeks to facilitate would open up the third-largest undeveloped copper resource in the world, making a major contribution to our nation's mineral production. According to a January 2011 U.S. Geological Survey (USGS) report, the United States currently imports more than 30 percent of our national copper demand. Not only is it estimated that the mine project could produce enough copper to equal as much as 25 percent of current U.S. demand, but our demand is only expected to increase in coming years. This is so because of copper's status as a critical metal in alternative energy infrastructure and vehicles; so the need for this mine project is clear.

"The project would also have a tremendous economic impact in Arizona and our nation at large in the form of both jobs and revenue. The mine is expected to create 3,700 mining-related jobs alone, not to mention the hundreds more it will create in related sectors. I do not need to remind this committee of the need for more jobs in our country; moreover, many of the mining-related jobs would be created in an area of the state with some of Arizona's highest unemployment rates. Over the life of the mine, the project is expected to contribute more than $61 billion to the economy, including $19 billion in tax revenues to federal, State and local government coffers.

"Despite the fact that this bill is overwhelmingly supported in Arizona, there is a vocal minority that is now resorting to scare tactics in an effort to kill this bill. They say that allowing this project to go forward would circumvent environmental review, destroy cultural resources, and give away a valuable mineral resource. I want to assure everyone here today that none of this is true.

"Environmental compliance is a critical element of this project. In 2008, Resolution Copper submitted to the Forest Service a pre-feasibility activities plan of operations. Those activities included exploration drill sites on the federal parcel that would be conveyed to Resolution Copper as part of the exchange. In 2010, after a full NEPA review that concluded with a Finding of No Significant Impact, not to mention an appeal by many of the vocal minority I mentioned earlier, the Forest Service approved the plan. Under House-passed H.R. 1904, Resolution Copper would be required to take the next step and submit a mining plan of operations to the Forest Service that would be the basis for an Environmental Impact Statement (EIS). That EIS would have to be completed prior to commencing production in commercial quantities of any valuable minerals. Resolution Copper has already started the development of the mining plan of operations and expects to submit it later this year, beginning this process. Additional environmental compliance requirements in federal and state law would also have to be addressed in order for the necessary permits to be obtained that would allow development of the mine. Resolution Copper is also active in sustainable development efforts that include voluntarily reclaiming and remediating impacts of historic mining in the area.

"Tribal consultation, protection of cultural resources, and respect for Native American customs and traditions in the land exchange area are a priority. The bill contains an entire section that would permanently protect Apache Leap; it also requires, as a condition precedent to the land exchange, that Resolution Copper surrender to the United States, without compensation, the rights it holds under law to commercially extract minerals under Apache Leap.

"It is important to note that there appear to be some inconsistencies in the Forest Service's testimony and the realities on the ground in terms of tribal consultation. It is my understanding, based on past testimony by the Forest Service before this committee, that consultation with the tribes began on a formal and informal basis as early as 2004. In addition, the Forest Service consulted with the tribes more than two years before approving the pre-feasibility plan of operations in the land exchange area in 2010. On appeal, the reviewing officer found that a good faith government-to-government consultation with the tribes had occurred and should continue. Nothing in this legislation will short-circuit required tribal consultation under applicable law.

"Ensuring this is a fair value exchange for the American taxpayer is an obvious prerequisite. For this reason, the bill requires that appraisals be conducted in accordance with the Uniform Appraisal Standards for Federal Land Acquisitions issued by the Department of Justice, as well as the Uniform Standards of Professional Appraisal Practice issued by the U.S. Appraisal Foundation. To ensure that Resolution Copper does not receive any minerals that were not anticipated in the appraisal, Section 6(b) of H.R. 1904 requires Resolution Copper to pay the United States an annual cash payment called a "value adjustment payment" on any production from the mine that exceeds the production assumed in the appraisal.

"Now I will turn to the text of S. 409, the bill the committee worked on in the last session. I have two primary concerns: (1) the delegation of the public interest determination from Congress to the Department of Agriculture and (2) the pre-exchange NEPA requirement.

"In Section 3 of the committee amendment to S. 409, there is a provision that would delegate to the secretary of agriculture the determination as to whether this land exchange is in the public interest. Only if the secretary determines that the public interest will be well served by making the exchange can it go forward. Importantly, this provision is not in H.R. 1904 -- and with good reason. It, in effect, cedes Congress' constitutional authority to make decisions about whether a land exchange is in the public interest to an unelected political appointee -- giving this one person final say over the exchange.

"A public interest determination is a requirement applicable to administrative land exchanges processed by the secretaries of the interior and agriculture under the limited authority they were granted by Congress in the Federal Land Policy and Management Act (FLPMA). It does not, and should not, apply in congressionally legislated land exchanges. Supporters of this provision claim that the provision is necessary in this land exchange because, in their judgment, Congress does not have the information or the expertise to determine whether the public interest would be well served by making this exchange.

"This is a shocking assertion. Congress is and always has been the ultimate arbiter of what is in the public interest. Congress, as representatives of the people, renders its final judgment on what is in the public interest through its passage or rejection of legislation. This is the very job we were elected to do, after all. Congress is and has always legislated land exchanges and, as elected officials, we use our best judgment to decide which land exchanges are in the public interest. We can delegate our plenary power to an administrative official, but need not do so. If the parties believed an administrative exchange was suitable, they could have gone that route. It is their right to ask Congress to exercise its superior authority to affect the exchange.

"In a legislative land exchange, Congress uses the legislative process to determine whether the exchange is in the public interest. That process, as you know, begins even before a bill is introduced. Legislated land exchanges are considered in hearings, markups, and other proceedings in both the House and Senate. In most cases, testimony from the administration, public, and other stakeholders is provided, along with CBO analysis. Town halls and fact-finding field visits are often conducted as well. Moreover, the public has opportunities to communicate with Congress throughout the entire legislative process via meetings, email, telephone calls, and letters. I would assert that this process is more transparent and thorough than anything the secretary would do on his own, without the public scrutiny inherent in Congressional action.

"According to the Government Accountability Office, the agencies' land exchange programs are plagued with problems. In 2000, GAO characterized the administrative land exchange process as a game of insider trading, and called on Congress to consider halting all administrative land exchange programs . In a subsequent review in 2009, GAO noted some improvements in the agencies' administrative land exchange programs, but still found that significant problems existed. One of those problem areas remained in the public interest determination. In GAO's sample of 31 land exchanges, it found that a third of the exchanges had a documented problem in the agency's public interest determination.

"Over the last seven years, Congress has reviewed every aspect of this land exchange proposal. Legislation has been introduced and considered in both the Senate and House. There have been multiple public hearings (six including this one, four in which the chairman has participated) and numerous town halls, including one in the last Congress with Secretary Salazar that also included field visits to the mine and land exchange area. We have also heard input from all concerned stakeholders: state and local officials, tribes, federal agencies, conservation groups, and the public at large, both those for this exchange and those against it. In my judgment, this land exchange is quite clearly in the public interest.

"The fact is, the U.S. Constitution gives Congress plenary authority "to dispose of and make all needful rules and regulations" concerning federal lands. Pursuant to this authority Congress has routinely legislated land exchanges including some that do not necessarily adhere to all of the specific requirements that bind the land management agencies. House-passed H.R. 1904 is the norm in legislative land exchanges, as it is grounded in Congress' plenary authority.

"Both House-passed H.R. 1904 and the old committee text include provisions that impose National Environmental Policy Act (NEPA) compliance requirements. While the old committee text applies the NEPA to the land exchange itself, H.R. 1904 instead requires the company to submit to the secretary of agriculture a proposed mine plan of operations, and requires it to conduct an environmental analysis for any federal actions or authorizations related to the proposed mine and mine plan of operations.

"This difference is rooted in the amount of discretion afforded to the agency regarding the land exchange. Since the old text would essentially legislate an administrative exchange, the land exchange decision is completely discretionary. Discretionary decisions of a federal agency are subject to a full review under the NEPA. In the case of House-passed H.R. 1904 and most other legislated land exchanges, Congress directs the land exchange, thereby limiting the agency's discretion and the NEPA review on the exchange itself. This makes sense. Why would Congress have the agency go through the NEPA process of developing a range of alternatives to the land exchange when it has already made the decision to consummate the exchange? Besides, the exchanging of lands does not have a significant environmental impact. This provision's only real purpose is to significantly delay the exchange. After all, the NEPA itself imposes no substantive environmental obligations -- it is simply a procedural statute.

"The NEPA compliance requirements in H.R. 1904 focus on the federal actions and authorizations related to the proposed mine and mine plan of operations that would be made after the land exchange. The Forest Service, in its testimony on H.R. 1904, has acknowledged that these provisions are consistent with existing NEPA requirements.

"It is important to note that there are numerous other substantive federal, state, and local environmental laws that the mine project would have to comply with before it could be permitted to operate. H.R. 1904 does not waive the application of any of these environmental laws.

"In conclusion, Mr. chairman, I think the rationale for this land exchange is clear.

"By transferring the land it currently holds to the federal government, Resolution Copper will help to conserve some of Arizona's most vulnerable natural wonders and enable future generations of Americans to experience their immense beauty for years to come. In effect, the transfer of the land Resolution currently holds constitutes an investment in the environment and in our future.

"Likewise, by transferring the land it holds to Resolution, the federal government is making an investment in our country's most immediate economic development. The significant jobs and revenue impact of this mine project will help Americans who are desperately seeking employment today. Moreover, it will help cash-strapped state and local governments provide those public services that have never been more in demand. I think it also goes without saying, Mr. chairman, that the federal government could use a few extra dollars these days too.

"So, now we face a choice. This land exchange has been vetted and debated, it has been reviewed and revised. Every feasible stakeholder has had his say. I think it's time to wrap up the debate and simply state the obvious: this proposed exchange is quite firmly in the public interest. Indeed, if this one is not, then what exchange could ever hope to be? I doubt there is a more thorough process we could design if we tried, Mr. chairman.

"Punting this exchange proposal to an unelected official for yet another review process and unilateral decision is not the answer. We were elected by our constituents to determine, on their behalf, what constitutes the public interest. We do it every day--on a myriad of issues, many more difficult and even more important than this land exchange. If we cannot even perform that most basic a function, then what exactly are we all doing here in Washington anyway? Let's do our duty. I urge your support for House-passed H.R. 1904."

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