MINUTES OF THE meeting
of the
ASSEMBLY Committee on Natural Resources, Agriculture, and Mining
Seventy-First Session
February 26, 2001
The Committee on Natural Resources, Agriculture, and Miningwas called to order at 1:30 p.m., on Monday, February 26, 2001. Chairman Marcia de Braga 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:
Mrs. Marcia de Braga, Chairman
Mr. Tom Collins, Vice Chairman
Mr. Douglas Bache
Mr. David Brown
Mr. John Carpenter
Mr. Jerry Claborn
Mr. David Humke
Mr. John J. Lee
Mr. John Marvel
Mr. Harry Mortenson
Mr. Roy Neighbors
COMMITTEE MEMBERS ABSENT:
Ms. Genie Ohrenschall (Excused)
GUEST LEGISLATORS PRESENT:
Assemblyman Joseph Dini, Jr., District 38
STAFF MEMBERS PRESENT:
Linda Eissmann, Committee Policy Analyst
June Rigsby, Committee Secretary
OTHERS PRESENT:
Robert Carrington, Carrington Consultants
Frank Lewis, Citizen
Larry Gorell, Nevada Contact, Inc.
Scott Jolcover, Plum Mining Company, LLC.
Allan Biaggi, Nevada Department of Environmental Protection
David Gaskin, Nevada Department of Environmental Protection
Joe Johnson, Toiyabe Chapter, Sierra Club
Russ Fields, Nevada Mining Association
Stacy Jennings, Nevada Dairy Commission
Robert Gronowski, Nevada Department of Agriculture
Doug Busselman, Nevada Farm Bureau
Stephanie Licht, Elko County
Joe Guild, President, Nevada Cattlemen’s Association
Alan Di Stefano, Nevada Commission on Economic Development
Chairman de Braga called the Assembly Committee on Natural Resources, Agriculture, and Mining to order. Roll was called. All members were present, except for Assemblywoman Ohrenschall who was noted as an excused absence.
Chairman de Braga opened the meeting with a call for discussion on A.B. 79.
Assembly Bill 79: Revises provisions governing issuance of permits for exploration projects and mining operations. (BDR 46-1108)
Assemblyman Dini, District 38, commenced testimony with an introduction of one of his constituents, Robert Carrington of the Plum Mining Company in the Comstock area. Assemblyman Dini explained that Mr. Carrington, a small mining operator, was unhappy with the time it took to receive a reclamation permit. Taking almost 11 months to complete, Mr. Carrington lost an entire mining season. This bill would attempt to correct that delay in permitting by streamlining the process and would require specific time limits for each phase of the permitting.
Assemblyman Collins requested an opinion as to whether the backlog of unfilled state positions was to blame, in any way, for the delay in permitting. Assemblyman Dini spoke in defense of small mining operations and highlighted their great historical prominence in Nevada. Assemblyman Dini speculated that additional state personnel might be of help, however he did not state with certainty that this was the problem.
Robert Carrington, a consulting geologist for the Plum Mining Company, elaborated on Assemblyman Dini’s testimony. He emphasized that his experience was not an isolated case, and, in his judgment, delays in the permitting process were recurring in the Department of Reclamation. The loss of time for a small mining operator equated to loss of money, resulting in bankruptcy for some companies. A second issue, according to Mr. Carrington, was the penalty leveled against those private operators who chose to go ahead with mining without the permit.
Mr. Carrington clarified that the bill did not attempt to circumvent the public comment period nor the bonding process or the permitting process. When a mining operator had reached the point of submitting a plan for mining and reclamation, there had already been engineering estimates of the bond needed for reclamation of the land. There should not be any reason why a mining operator could not be able to go forward with construction while the permitting process ensued.
Chairman de Braga requested if the witness knew the reasons for the delay in permitting. Mr. Carrington stated that reallocation of resources to handle bankrupt mining companies was the suspected reason.
Assemblyman Humke commented on the impact of the fluctuation of gold prices. He inquired whether the delay in permitting had also adversely affected the inventory of permitted mining claims. Mr. Carrington stated emphatically that it had. A peak in the price of gold coincided in time with the delay in the permitting process. The missed opportunity caused a very negative financial impact on the company.
Assemblyman Marvel asked for clarification on whether the delays were in just the state agencies, the federal, or both. In his judgment, Mr. Carrington viewed the state agencies to be at fault, with one area of the Nevada Department of Environmental Protection (NDEP) being of particular concern.
In response to Assemblyman Neighbors’ inquiry about the nature of delays, Mr. Carrington explained that water permitting was not delayed. The reclamation bond process was cited as the center of the significant delay. The Department of Reclamation had not responded to their application, presumably because it had slipped through the cracks. Verbal permission from other areas of the NDEP to proceed with nondisruptive site preparation had not been communicated throughout the department.
Assemblyman Neighbors offered insight into the time investment required for permitting of a gold mine, estimated at more than two years. He judged this to be unreasonable.
The next witness to testify on behalf of the bill was Frank Lewis, a Reno resident and owner of mining property in several counties in Nevada. Mr. Lewis stated that he understood the bill would impact privately owned property and not mining operations on federal lands. He judged the proposed legislation to be progressive and helpful by stimulating mining activity for both the small and larger mining concerns.
Chairman de Braga asked for clarification of Mr. Lewis’s point. Mr. Carrington explained that the state actually did get involved in the permitting process on public land as well. As such, the streamlining of the permitting would affect both private and public land operations.
Larry Gorell, Environmental Manager for Nevada Contact, a small mining operation in central Nevada, resumed testimony on behalf of the bill. It had been his observation that, during the last one to two years, the permitting process had been delayed significantly. Mr. Gorell pinpointed the source of the logjam to be NDEP. He judged that requirements for deadlines were already in the state regulations, but were not being followed by NDEP. Small operators needed protection, and Mr. Gorell felt that enforcement of existing regulations would be a good start.
Assemblyman Carpenter requested clarification on where the Nevada Contact Mine was in the permitting process. Mr. Gorell stated that the current delay was with the Bureau of Land Management (BLM), however they had experienced a seven-month delay with NDEP on their reclamation permit. Mr. Gorell elaborated on problems with the district BLM office.
Scott Jolcover, General Manager of Plum Mining Company, commenced testimony in support of the bill. Mr. Jolcover reviewed the history of permitting problems and highlighted an incident in which an NDEP employee threatened to shut down the operation for noncompliance. The statutes called for review of the reclamation plan within 15 days, with a response from the state to the mining company. Clearly, the deadlines had not been met by the state. Since 1981 Mr. Jolcover had experienced a generally cooperative working relationship with NDEP; however, in the case of Plum Mining, the process failed. Mr. Jolcover urged the committees to determine the cause. Without a permit, Plum Mining missed the window of opportunity when the price of gold peaked.
In response to Assemblyman Marvel, Mr. Jolcover explained that the cost of the water pollution control permit was $4000 per year for a small miner (i.e., less than 100,000 tons/year). The reclamation permit itself was not judged to be very high, however the actual cost to get that permit (e.g. engineering and environmental studies) was from $60,000 to $500,000.
Assemblyman Marvel requested clarification on the amount of upfront money required. Mr. Jolcover did not recall the amount of upfront money on the reclamation application. His point of contention was that, after Plum Mining paid the fee and submitted the application, there had been no communication back from the state.
In regard to a question regarding a written record of a threat of noncompliance, Mr. Jolcover explained that four individuals had witnessed the conversation, including representatives of NDEP. The statement was made and judged not to be an arbitrary statement, according to Mr. Jolcover.
Assemblyman Brown requested if the water permit and the reclamation permit were the only two required. Mr. Jolcover explained that there were notices with the BLM, air quality permits, and special use permits from the county. In response to Assemblyman Brown, Mr. Jolcover stated that he did not believe that all of these permits were part of NRS 519 A. In terms of the permits that would be impacted by the proposed A.B. 79, Mr. Jolcover stated that it would primarily address the reclamation permitting process.
Assemblyman Brown posed a question about the feasibility of a scenario in which a mining company received an interim permit, moved forward with the mining operation, and then was subsequently denied the permit. Mr. Jolcover responded that he would be surprised that state permits would be denied if all requirements had been met. Within the reclamation process, however, there was a public comment period in the process that could interfere. The company would have to weigh the risk of moving forward under an interim permit.
Assemblyman Brown asked for clarification about the frequency of requests for additional information during the permitting process. Mr. Jolcover judged it to be a frequent occurrence of minor information requests.
In response to Assemblyman Carpenter, Mr. Jolcover explained that the Plum Mining sites were located in American Flats and north of Silver City.
Allan Biaggi, Administrator, Nevada Department of Environmental Protection (NDEP) commenced testimony for witnesses opposed to A.B. 79. Mr. Biaggi read a prepared statement (Exhibit C). In way of review, he explained that more than a decade ago, the state of Nevada implemented very stringent mining and reclamation regulations. These requirements, according to Mr. Biaggi, had served the state well in their efforts to protect surface and ground waters and to restore lands to productive use across 154 mining sites.
Mr. Biaggi cited the decline in metal prices in recent years which precipitated a dramatic increase in bankruptcy filings by mining operations. He acknowledged that NDEP resources had been shifted to address 34 bankruptcies in recent years. Mr. Biaggi further acknowledged the problems associated with Plum Mining and the missteps that occurred by both sides with regard to the issuance of a mining reclamation bond. After the problem was brought to the attention of NDEP last year, every effort was made to expedite the issuance of an interim permit. Final permitting was granted in September 2000. Due to a decline in gold prices, mining operations ceased in February 2001.
Mr. Biaggi explained that few mining sites occupied private property exclusively, with most described as a mix of federal and private lands. Permitting and bonding were, therefore, a coordinated effort between federal and state agencies. In his judgment, this cooperative system had worked well for the 154 permitted mining operations. Due to the issues with Plum Mining, Mr. Biaggi did establish a streamlined tracking process for applications not involving federal approval.
In summary, Mr. Biaggi emphasized that A.B. 79 would complicate the permitting process, would invite duplication of effort, would contradict the wording of existing law, and would have significant fiscal impact to the state. He urged the committees to give careful consideration to any bill that modified the existing regulations.
In terms of recent remedial measures implemented by NDEP, Chairman de Braga asked if those changes resulted from consumer complaints or from problems with A.B. 79. Mr. Biaggi explained that the streamlining effort was in reaction to complaints, principally from Plum Mining. He acknowledged that there was some legitimacy to the Plum Mining claims, and as a result, mining applications that involved private land only had been targeted for expeditious handling in the future.
Assemblyman Marvel requested clarification on several issues: the minimum time needed to act on an application, the amount of the bond required, activities covered by the bond, and manpower requirements. Mr. Biaggi stated that the time needed to process an application started with the quality of the information on the application. In regard to the calculation of bond amount, Mr. Gaskin, Nevada Department of Environmental Protection, interjected that the nature of mining activities dictated the amount. The dollar value was described as equal to the amount needed to reclaim that project.
On the subject of manpower requirements, Mr. Gaskin explained that NDEP permitting processes were funded by the permitting fees. In terms of an increase of fees, Mr. Biaggi interjected that a fiscal analysis had not been completed, but a conservative estimate indicated an increase of two or three additional staff to meet the requirements of A.B. 79. In response to Assemblyman Marvel, Mr. Biaggi stated a fiscal note could be prepared to address the requirements of A.B. 79.
Assemblyman Marvel asked if the mining companies had displayed any appetite for an increase in fees. Mr. Biaggi explained that the subject had not been broached and, further, his agency was sensitive to the precarious financial condition of the mining operators.
In response to Assemblyman Marvel’s question on the backlog of bankruptcies, Mr. Gaskin explained that the number of bankruptcies peaked approximately one year ago. Prioritization of resources, not a lack of resources, was described as the challenge. NDEP attention had been redirected toward bond acquisition activities and permitting processes. Mr. Gaskin estimated the bond fund at over $540 million. Reclamation of a site was funded by the particular bond for that project.
Assemblyman Neighbors requested clarification on the minimum number of acres required for a reclamation permit. Mr. Biaggi stated that, currently, reclamation was required for all mining operations, however, sites with over five acres required a permit and a bond. For purposes of being in compliance with the federal regulations (3809), Mr. Biaggi predicted that sites under five acres would be impacted in the future. Mr. Gaskin responded in the affirmative and stated that the notice level coverage had changed.
Assemblyman Neighbors shared his personal experiences as a small mining operator. He cited breakdowns in communication and time delays and asked if something could be done to expedite the permitting process. Mr. Gaskin acknowledged the problem and stated that his office had been vociferous in commenting on the 3809 federal regulations.
Assemblyman Collins expressed his concern about the causal relationship between delayed permitting and lost revenue for a business operation. He asked for clarification on the specifics of the Plum Mining delay and why this was described as an exception. Mr. Gaskin explained that one of the longest timeframes in the permitting process was the 30-day public comment period. Additionally, the accuracy and thoroughness of information on the application was often the critical success factor in expeditious processing. He estimated the total processing time as being 90 to 120 days if the site was exclusively private land.
In response to Assemblyman Collins’ inquiry regarding the quality of the Plum application, Mr. Gaskin elaborated that Plum had been notified in writing several years ago to contact the state. They failed to follow through, and Mr. Gaskin explained that his agency reacted to Plum’s commencement of mining without a permit. When the application was finally received, it was not accurate (i.e., 12 acre site not the stated five acre) or complete. Plum was deemed out of compliance at that point. The blame was described as being on both sides.
Assemblyman Mortenson requested clarification on the requirements for the reclamation bonding process and whether a mine could be assessed retroactively. Mr. Gaskin stated that the timeframes were clearly outlined in the regulations. If there was an existing site disturbance prior to the regulations, the site would be notified. In response to the question on bankruptcy actions, Mr. Gaskin described a wide variety of actions that were implemented. The most extreme would be the emergency hiring of a contractor to perform interim fluid management. The bond would be pulled for that site in order to hire additional personnel to perform reclamation work. Dealing with the attorney for the mining company was described as being very time-consuming for NDEP.
Assemblyman Brown inquired about the improved computerized tracking of pending applications. Mr. Gaskin described the system as a FoxPro database designed to track all steps. There was recognition of the state’s duty to maintain awareness. In response to the question regarding interim permitting, Mr. Gaskin described it as originally intended for sites of 5 to 20 acres of disturbance. In regard to timeliness, Mr. Gaskin clarified that an interim permit could be issued in 60 days if federal land was not involved.
Assemblyman Brown made reference to the impact of A.B. 79 on existing permits, and requested clarification on the distinction between the various permits (e.g., reclamation, exploration). Mr. Gaskin explained that all were essentially related to reclamation activity. In response to the possibility of all sites seeking interim permits, Mr. Gaskin acknowledged that this could be a potential problem. It would be negligent on the part of NDEP not to apply proper scrutiny to the bond adequacy and application. If passed, the new legislation would not necessarily result in automatic blanket approval of interim permits.
The next witness to speak in opposition to A.B. 79 was Joe Johnson of the Toiyabe Chapter of the Sierra Club. Mr. Johnson explained that his concern centered on the erosion of confidence in the permitting process, specifically the public review and comment period as well as in NDEP’s ability to have adequate funding through bonds. He cited the current 34 bankrupt sites and testified that, in some case, the bonding had not been adequate to complete reclamation.
In response to Assemblyman Collins question about adequate NDEP manpower, Mr. Johnson clarified that staffing had been adequate for the existing regulations, however manpower requirements would increase if the proposed bill were passed.
Russ Fields, President of the Nevada Mining Association, distributed a handout (Exhibit D) and resumed testimony against the passage of A.B. 79. Historically, Nevada mining regulations had reflected a fair and balanced consideration for mining operators, the environment, and the public safety. He emphasized the need for timeliness in the permitting process, however Mr. Fields stated that complaints were most often directed at the federal agencies and not at NDEP. In his judgment, Plum Mining was treated with fairness.
Assemblyman Marvel asked if there was adequate time and protection in place for the mining operation applicants. Mr. Fields judged the timelines to be reasonable and that the NDEP staff seemed sufficient to meet the demand. In response to Assemblyman Marvel, Mr. Fields clarified the distinction in bonding requirements between the exploration and the mining processes. The differences were described as huge, with some mines having had bond requirements as high as $100 million. In contrast, the cost of exploration activities (e.g., drilling, road construction) was comparatively smaller.
A request was made of Chairman de Braga to allow rebuttal comments to the NDEP testimony. The Chairman, with reluctance, stated that two minutes would be allowed to the witness.
Scott Jolcover acknowledged that the case of Plum Mining was, in all likelihood, an aberration, however he appealed for fair treatment and accountability on the part of NDEP. Mr. Jolcover restated that their complaint centered on NDEP’s failure to notify Plum of a problem with their application. The first communication from NDEP, according to Mr. Jolcover, took the form of the threat to shut down the mining operation for noncompliance.
In rebuttal, Mr. Gaskin of NDEP clarified that the Plum application for the reclamation permit was received in January 2000, but their bond was not in place until June 2000. The proposed legislation would not have made a difference with the Plum situation. He admitted that Plum was an unusual case.
No action was taken by the committee, and Chairman de Braga closed the hearing on A.B. 79.
The hearing on A.C.R. 4 was opened with a request for a representative from the Dairy Commission to initiate background discussion.
Assembly Concurrent Resolution 4: Encourages the purchase of local agricultural products. (BDR R-1060)
Stacy Jennings, Nevada State Dairy Commission, testified in defense of the proposed resolution. She read and distributed handouts which included statements from Desert Hills Dairy in Yerington (Exhibit E), L-S Dairy in Yerington (Exhibit F), and from the Anderson Dairy (Exhibit G). She stated that A.C.R. 4 would be used as a tool in the dairy licensing process and would encourage the purchase of Nevada dairy products. In the year 2000, 47 percent of raw milk produced in Nevada was exported out of the state because the in-state milk processing plants were at maximum capacity.
Chairman de Braga asked if the Nevada Dairy Commission supported A.C.R. 4 because it was needed to update their presentations. Ms. Jennings replied in the affirmative.
In response to Assemblyman Collins observations regarding the availability of local milk in Nevada supermarkets, Ms. Jennings stated the price of milk and accessibility of local milk were always the concerns of the Dairy Commission.
Robert Gronowski, Nevada Department of Agriculture, spoke in favor of A.C.R. 4. He distributed copies of an e-mail (Exhibit H) that described Missouri legislation that allowed a 10 percent bid preference for in-state agricultural products. Mr. Gronowski next presented an update of Department of Agriculture marketing activities (Exhibit I). Efforts included exhibits at large events, newsletters, foreign buyer tours, brochures, radio spots, sales lead promotions, and publications. Application for agricultural grants were submitted with the funds slotted for the development of an agriculture producers’ Web site. Inspection programs, certification of organic producers, and dissemination of information were given as examples of department activities.
Chairman de Braga acknowledged the feedback on their efforts to enhance the out-of-state and international markets.
Doug Busselman, Executive Vice President, Nevada Farm Bureau, testified on behalf of the farmer and rancher families and encouraged passage of A.C.R. 4.
Mr. Joe Johnson requested that, for the record, the Sierra Club supported the passage of A.C.R. 4.
Stephanie Licht, Nevada Woolgrower’s Association, made a statement in support of A.C.R. 4. In response to Assemblyman Mortenson, Ms. Licht explained that the sheep industry in Nevada was a range outfit, principally producing lamb wool.
Joe Guild, President of the Nevada Cattlemen’s Association, stated for the record their endorsement of the bill and their encouragement for passage.
The final witness to testify on behalf of A.C.R. 4 was Alan Di Stefano, Nevada Commission on Economic Development (CED). Nevada was described as being only one of two states that did not fund promotion and export of agricultural products. In 1997, CED began to access federal funds for agricultural promotion. Mr. Di Stefano stated that grants for the current year were $125,000 and were projected at $200,000 in 2002.
Chairman de Braga requested clarification on whether products and markets were matched for optimization of promotion dollars. Mr. Di Stefano stated that requests were received, almost on a daily basis, from all over the world for agricultural products. An example cited was Winnemucca Farms that was described as not being able to grow enough potatoes to meet the demand.
In response to Assemblyman Neighbors’ question regarding a Tonopah potato farm, Mr. Di Stefano stated that he was not familiar with that operation. Mr. Gronowski interjected that the Tonopah potato crop did not meet the minimum standards for moisture content as established by Lay’s Potato Company. In response to Assemblyman Neighbors' inquiry about irrigation, Mr. Gronowski explained that the potatoes had actually absorbed too much water.
Chairman de Braga called for a motion.
ASSEMBLYMAN MARVEL MOVED TO ADOPT A.C.R. 4.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
THE MOTION CARRIED.
The next order of business introduced by Chairman de Braga was the need to call for a BDR request from the Natural Resources Committee. Chairman de Braga presented an overview of the recommendations for testing with relation to Fallon leukemia cluster investigation. Chairman de Braga reported that she had submitted a request for an emergency $1 million appropriation. Committee approval was required in order to ask for the BDR (BDR 40-1456 later introduced as A.B. 630).
ASSEMBLYMAN COLLINS MOVED FOR INTRODUCTION.
ASSEMBLYMAN NEIGHBORS SECONDED THE MOTION.
THE MOTION CARRIED.
Chairman de Braga called for testimony on A.B. 29.
Assembly Bill 29: Requires director of state department of conservation and natural resources to conduct independent investigation before making certain determinations concerning control of water pollution under certain circumstances. (BDR 40-21)
Chairman de Braga was advised that Assemblyman Dini would not be available for discussion. It had been held over pending determination on the need to go to Ways and Means as a concurrent referral. It was determined that it did not require referral, and with no further discussion, Chairman de Braga called for a motion.
ASSEMBLYMAN MARVEL MOVED FOR A DO PASS A.B. 29.
ASSEMBLYMAN COLLINS SECONDED THE MOTION.
THE MOTION CARRIED.
With no additional business, the meeting was adjourned at 3:24 p.m.
RESPECTFULLY SUBMITTED:
June Rigsby
Committee Secretary
APPROVED BY:
Assemblywoman Marcia de Braga, Chairman
DATE: