National Mining Association

Mining and the Dawn of a New Millennium: Keeping Public Consent in a Time of Transition
Park City, Utah August 16, 2001

Keynote Remarks by Jack N. Gerard President & Chief Executive Officer National Mining Association
The 86th Annual Convention of the Utah Mining Association

Thank you David Bird, and thank you ladies and gentlemen of the Utah Mining Association.

When I was elected president and chief executive officer of the National Mining Association, I was secure in my understanding of Congress and the ways federal policy is made; and I had a good grasp of mining; but I hadn't done as much public speaking as I do today.

In the few months since I've had more seasoning in all three.

Now I've come to appreciate that keynote addresses, federal policy and new mines have some things in common:

You want each one to be productive as soon as possible;
But overburden and site preparation are always considerations.

I'll keep the overburden to a minimum.

There are about half a dozen factors that go to determine the feasibility of a new mine.

The standard references say that no less important than the considerations of geology, engineering and economics are the social and political factors.

What is true for a mine is truer for the mining industry: Social and political factors are of increasing importance in the United States.

Today - in line with your theme of Mining: The Dawn of a New Millennium - I invite you to join me in prospecting our shared future.

Our industry is in transition, society is in transition and the political system is in transition.

Oh what a difference one vote can make! One vote in House or Senate can make all the difference.

Our Washington representation and state activities have had to be pared to the lowest levels in contemporary times. The list of challenges and challengers is longer than ever.

There are movements waging campaigns of opinion against mining. Their purpose is to incite and rally opposition, not reform the law.
Their objective is to revoke society's political consent for mining to exist.

Revocation is more easily attempted in the United States than most countries. Our federal system responds more quickly to the incited and the excited than to those who simply trust that the right thing will happen and go on with the business of earning a living.

And the federal government controls most of our material resources - a hidden subcontinent that claims one square mile of every two square miles in the primary mining states of the West, almost two of three in Utah.

Thus a few political pressure points can be used to revoke political consent and, thereby, choke off the flow of basic resources. This federal empire of minerals and energy exceeds most major nations in size; and in variety and volume of resources it probably exceeds them all, now that the Soviet Union is no more.

In modern public affairs, the right thing does not often just happen: It most often must be brought about.

Settlement of all problems will require a revival of public consent in competition with the movements' campaigns to poison opinion.
One historian puts it this way: Winning public opinion is almost as difficult as winning a war.

The reawakening of consent will require change in the way the industry and its component industries have tended to think and to act in public affairs. It will mean change in that which some call culture and image.

The shift in culture has begun. Where once the industry tended to demand that all political issues and every new question be treated as of equal importance, the industry now has resolved to concentrate its resources and focus its effort.

At the National Mining Association we have two priorities:

Passage of energy legislation;
And constructive reform of the mining law under the heading of National Minerals Policy - that is, resolution of political questions that overshadow the long-term future of mining in America.

As we move forward on these priorities, we have to resist each company's and each components' fierce desire for independence - the instinct to go it alone. This is valuable in the market, but it is a handicap in contemporary politics.

In the opinion-driven politics of today the Ben Franklin rule applies: Hang together or be hanged separately.

As we move forward, I'll touch on current events relating to the two priorities, and I'll offer examples to illustrate how I view our challenges in culture and image.

We'll look at the energy bill the House passed this month and at related developments in regulation and climate that affect coal in electric power.

I'll also report on the general mining priority:

On the captive patents;
On the millsites opinion;
On the roadless initiative;
And, of course, on the all-encompassing Section 3809 Regulations, which propose a new secretarial power to kill otherwise permissible mines on arbitrary grounds.

We will seek short-term resolution of these matters through any avenue available whether legislative, administrative or judicial.
And we'll seek long-term resolution in advocating a National Minerals Policy that rests on constructive reform of the General Mining Law.
The best place to begin tying everything together may be with an example from passage of the House energy bill. Energy is a priority, it impacts all of mining, and events have brought it to the fore.

The House passed a version of the President's energy policy - H.R. 4, entitled the SAFE Act of 2001. The acronym SAFE stands for the title Securing America's Energy Future.

It was a big, important fight; and when it was over House Majority Whip Tom DeLay's office sent this e-mail to just three people:

"…great victory….grassroots program…a true success… members…on the floor discussing all the calls they received.

"You were the guys who came through…"

One was to Jgerard@NMA.

But the credit goes to you in this room, and to the others, who made the calls that made the members take notice; and to the people who mobilized the grassroots effort.

A representative share of those calls had to come from Utah. On behalf of the rest of the industry, I thank you for that. We'll need you again, and soon.

It's appropriate to note here that Congressmen Cannon and Matheson voted for the bill; and that, as chairman of the House Resources Committee, Jim Hansen led both in writing it and in securing passage.

The Whip's observation goes to culture and image. We cooperated and coalesced at a critical time. And our reputation - our image - is that we are active, energetic and can be counted on.

Energy was first out of the chute because the spot price of natural gas almost hit $10 per million Btu's; because California had power failures; and because President Bush saw a national crisis of price and supply in the making.

H.R. 4's basic coal provisions come from another bill that NMA mid-wifed and shepherded: S.R. 60, the National Electricity and Environmental Technology Act, called the NEET bill.

NEET came to life in a first-of-a-kind effort to blend cultures.

On the coal side, Senator Robert Byrd, of West Virginia, a leading coal state, introduced it. He chairs the Appropriations Committee.

Across the aisle, the earliest co-sponsor was Senator Mitch McConnell, of Kentucky, another foremost coal producer.

Thanks to support on the hardrock side, NEET also is co-sponsored by Senator Harry Reid, of Nevada, the Whip and second-ranking Democrat in the Senate; and by Senator Jeff Bingaman, of New Mexico, chairman of the Energy and Natural Resources Committee.

Thus far, the bill Chairman Bingaman is preparing in response to the House action includes some principal NEET provisions.

In March the cultures coalesced in another way around NEET and the mining priority.

Our directors canvassed Capitol Hill for the bill in more than 20 teams of chief executive officers, each team containing three CEOs - one from a coal company, one from a hardrock company and one from a manufacturer member.

These teams made close to 100 calls on Senators and House members who sit at important points.

The point of the teaming is to concentrate the association's strengths and to capitalize on them.

The political dynamics for mining are as follows:

In the East, many members from coal states sit at junctions of responsibility and influence, House and Senate. But they're outvoted by the many with no stake in coal.

In the West, many members from the hardrock and coal states sit at junctions of responsibility and influence, House and Senate. They're often outvoted too, and on the same grounds.

Joining the coal-field East and the hardrock-and-coal West are the industrial and urban centers. Members from these regions often see no connection at all between the fate of coal or hardrock mining and the fortunes of the country. Here our manufacturing members complete the picture.

A timely illustration might be useful.

Word came recently that a prominent legislator from an industrial state intended to intervene in a mining question on the side of the prohibitionists. It didn't happen.

Instead, a manufacturing executive explained to this legislator the direct connection between the welfare of mining and the welfare of his voters who make mining equipment. He had not seen it before. He may not forget it again.

I promised not to reveal any names. But I can say the manufacturer makes big machines and paints them yellow…biiig yellow machines.
I can also say that you'll hear about one of them later today…a very big one…a very big one identified by a three-digit number that begins with a 7.

To the point: We have strength in the West and in the East, and a bridge to carry the message: The manufacturers. We span the country in both fact and figure of speech.

We have the strength and the standing to win the attention of most of Congress when and where it matters. But to be effective we must:

Identify and emphasize that which we have in common;
Coordinate and harmonize across the range of concerns;
Introduce our friends in office to one another and to our shared concerns;
Make new friends - friends in elective office, friends in appointive office, friends among the public at large;
And, above all, we must be able to mobilize it all.

We'll launch another CEO assault on the Hill next month - teams of three chief executive officers. It will coincide with our board meeting and the resumption of energy activity in the Senate.

Pending before the Senate is a House bill that includes these provisions on coal:

Tax incentives valued at from $3-to-$3.5 billion to induce early commercial use of the best of the Clean Coal Technology Program;
Authorization of $537 million to support ongoing research in coal-generation technology;
And, in addition, authorization of $2 billion more for the President's new Clean Power Initiative to develop a next generation of advanced technology.

The total is something over $6 billion.

Our objective is to see the Senate track the House provisions; and, then, to see the package safely through a conference committee and to the President.

The incentives are investment tax credits and production tax credits:

To retrofit and upgrade present coal-fired capacity - that is, to raise output while improving air quality;
To repower existing plants;
And to build new plants.

The credits are limited to a few thousand megawatts. The commercial use they will foster is meant to prove to investors that the technologies are sound and, thereby, encourage the market to rely on them.

In related developments, time and circumstance are putting new forces in play.

They tie in with the Vice President's report on energy and the President's subsequent directive that federal agencies do two things:

First, to find regulatory impediments to increased power supply;
And, then, to resolve them without environmental harm.

We expect the administration to recommend next month a comprehensive approach to resolving impediments - recommendations that will include programs of the Environmental Protection Agency, such as the New Source Review provisions, which are aimed at existing coal-fired plants.

Last spring it was found that new power equal to 40,000 megawatts of additional capacity is available from these plants; but only if their operators are freed to upgrade them without risk of federal intervention.

The promise of certain intervention was raised when the Clinton-era EPA rewrote its regulations to say, in essence: Change anything and you've got to replace everything: The New Source Review provisions.

The upgrade megawatts were recommended to the Secretary of Energy by his advisory board the National Coal Council - and by the Secretary to the Vice President's task force.

If an energy bill bases; if the new recommendations come out close to right; then some of the 40,000 megawatts and some of the incentive-backed technologies could well be matches for retrofits and repowerings. Some matches may be in the mountain states. Some may be in Utah.

Increased output from the upgrade megawatts will mean increased demand for coal. Increased generation with coal will mean stabilized prices for heavy power users like mining and processing.

In climate, the President has rejected the Kyoto Protocol. In preparation is an alternative policy said to rely on technology and incentives in lieu of taxes and rationing schemes for energy allocation.

The Clean Power Initiative of the House fits here. U.S. coal research seeks 60 percent efficiency in generation and zero net emissions of carbon dioxide, or near zero.

If carbon turns out to be the agent of climate change, no one can complain about power from coal that puts no additional CO2 into the atmosphere: No carbon dioxide or anything else.

At the same time, even harsh critics of climate policy have disavowed the Kyoto approach. Most admit it will achieve only economic contractions, personal restrictions and general misery.

Influential Senators on both sides of the aisle are sponsoring new legislation that link U.S. policy to other action. The bills feature technology, efficiency and incentives.

These are the dynamics in energy.

Time and circumstance and a lot of hard work have put the pieces in place for provisional settlement of debates that have stalemated energy for at least a decade.

Now the prospect is for the construction of increments of capacity to carry the nation well forward into this century - especially coal-based capacity.

I don't want to give the impression everything is settled. It isn't.

There are traps to spring, snares to trip and fights to be fought before the promise can be made reality.

But opinion has begun to turn: Now there is consent where consent once was doubtful; and opportunity where none existed.

We can see enactment of an energy policy; but only if we're diligent.

Mining policy is not as far along.

Both Congress and the administration put energy ahead of most else. And the Department of the Interior has been unable to secure key confirmations until recently.

The Section 3809 Regulations are in litigation and have been almost since former Secretary Babbitt caused their issuance at the close of his 11th hour in office.

The new administration has them under review and a decision is pending on whether to suspend them. The litigation will not move forward until there is a decision.

In the House, a rider to Interior's appropriations forbids revision of the regulations. But the Senate did not attempt the same, thanks largely to that maker of big, yellow machines.

And so a conference committee will have to reconcile the differences after the recess. NMA will seek a conference bill that does not restrict the department.

Let's highlight the related questions:

The monument designations: Both houses have prohibited administrative reform during the coming fiscal year; but the department may find some latitude in the way it manages.

The millsites restriction: This relic of the Babbitt era makes it impossible to operate a modern mine. It's based on a solicitor's creative reinterpretation of departmental practice, authority and policy. We are urging a second review and a return to long-established precedent.

The roadless initiative: These lockups are in litigation and have been stayed by the trial judge. The stay is on appeal. The Forest Service is operating on a case-by-case basis on prior management plans.

The captive patents: The appropriations moratorium on new patents remains in place. There's a statutory deadline on most of the grandfathered patents: Either approve them or deny them by this September 30th, the close of the fiscal year. The review deadline may be missed; but work is proceeding steadily.

These are the short-term prospects for mining.

Earlier this year many state associations participated in a de facto summit of associations sponsored by NMA that centered on a strategic plan for mining that would address the long-term prospects.

In the weeks and months to come we'll be fleshing out the moves and tactics associated with the plan. I'd like for the Utah Mining Association and all state associations to be full parties in this effort to move forward on the long-term prospects.

The long-term prospects will be determined by our handling of the social and political factors.

We've led the world in devising and deploying the leading-edge technologies of mining, but we've lagged the transitions in politics and society.

Getting ahead here will require the industry to change the way it thinks and acts in public affairs: The change of culture and image.

It requires involvement and engagement at every level in the continuing struggle to establish and maintain public consent.

We have to recognize that the struggle is unending. The struggle is about reputation, or image, not reform.

It means going to the trouble to speak out when and where you'd rather not.

It means initiating relationships with persons in authority who are quick to respond to the movements that seem to mean the most harm; or that seem most careless of the truth. If these parties cannot be won over, they may nevertheless become more reasoned in their opposition; or less determined to persuade others against you.

It means challenging the movement's messages with better messages rather than with explanations.

Not long ago I went on the Cable News Network's Sunday morning broadcast with a representative of the Natural Resources Defense Council, a fomenter of anti-coal sentiment. I don't know how I did.

I do know it's the only time I've ever heard the NRDC admit in public…or in private…that technology in coal-fired power can do something useful about carbon dioxide.

Change means:

Seeking a place in the venues of public debate rather than waiting to be asked;
Almost stalking opportunities in the print and broadcast news;
Almost hunting down editorial writers to be sure they understand.
And challenging every false assertion that comes within sight or hearing.

It means coordinating these efforts and timing them to support legislative activities at critical times and places. Repetition is the real medium of persuasion and public opinion.

It means hanging together - reconciling the desire for independence with the requirement for unity.

No one can do this acting alone - no one company or group of companies, no single component of the industry, no state association, no national association.

But we can do it if we come together and become both active and proactive in all our incarnations - the several ways in which we span the country.

And above all, change means learning to cooperate and compromise across what once were industry boundaries when you're not used to it and may not be comfortable with it.

In this we are well begun, witness the energy effort.

With time and diligence, we can bring about changed circumstance and new opportunities:

To settle the political issues that have been used to stalemate the future of mining for a decade;
To forefend and deter the movements' intentions to bring on new stalemates;
And to give working Americans the full use and benefit of the world's largest reserves of metals, minerals and energy.

This is how things stand for mining at the dawn of a new millennium, in the 86th year of the Utah Mining Association, whose concerns include significant metals, minerals and a coal reserve that would be ranked 10th in the world if it stood alone, the energy equivalent of all the oil held by Iran.

The prospects are good but the overburden is a challenge.

The historian says it's almost as difficult as winning a war.

I'm confident that American mining is up to the challenge and that it will take up the challenge with confidence.

As Tom DeLay's office said: Miners are among the few who come through and cause things to happen.

Thank you for your attention.