Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 02:30 PM

Mr. Bill Williams

Vice President of Health, Safety, Environment and Construction, Resolution Copper Company

Testimony of Bill Williams
Vice President, Resolution Copper Mining, LLC
before the
U.S. Senate Subcommittee on Public Lands and Forests 
S.2466,  Southeast Arizona Land Exchange and Conservation Act of 2006

May 24, 2006

Mr. Chairman and Members of the Subcommittee,

My name is Bill Williams, and I am Vice President of the Resolution Copper Company, a limited liability corporation headquartered in Superior, Arizona. I am here in support of S. 2466, and to briefly describe the activities and efforts we have engaged in over the past several years to insure that the land exchange and other provisions of S. 2466 are in the best interest of all the parties involved, and the general public.

The primary purpose of S. 2466 is to authorize, direct and expedite a land exchange between Resolution Copper and the U.S. Forest Service and Bureau of Land Management. The goal of the land exchange, from our perspective, is for us to acquire approximately 3,025 acres of National Forest land known as Oak Flat. As you can see on the map attached at the end of my testimony, Oak Flat either abuts, or is heavily intermingled with, private land which Resolution Copper already owns. That private land was the site of the Magma underground copper mine, which operated from 1912 to 1996 and produced 25 million tons of copper ore. After the Magma Mine was shut down in 1996, further exploratory drilling revealed the existence of a potentially very significant, and large, copper deposit located not just under our old mine, but also under the intermingled National Forest lands we are seeking to acquire in the exchange. As our Governor, Janet Napolitano, has indicated in endorsing our land exchange, if the copper ore body we have discovered can be developed into a mine, it will generate nearly 1,000 construction jobs; 400 permanent, high quality technical jobs; and nearly 1,500 service related provisions.

Despite the fact that we currently hold unpatented Federal mining claims on most of the National Forest land we are seeking to acquire, the fragmented and interspersed nature of our lands and the National Forest lands makes it far preferable for us to own and control all the land where we could potentially be mining in the future. Developing an underground mine - this one would be a mile and a half beneath the surface - is an extremely expensive and financially risky proposition - involving $200-400 million in exploration and feasibility work…and $1 billion, or more, before mine construction is finished, and minerals are produced in commercial quantities. We want to own the land on which we will operate, because fragmented land ownership simply does not promote efficient mine permitting and development.  In addition, as we will be intensively using the National Forest land for exploration and mine development, it will become unusable by the general public due to safety and operational concerns. In summary, Mr. Chairman, for safety and many other reasons, we would like to own and control the lands where we will be exploring, and hopefully re-opening, our mine.

Now, we realize that when we are asking to take land out of public ownership, it is our duty, both under existing law and policy, to try and return to the public lands that have even greater public values than the lands we are receiving. We think we have done that.

As S. 2466 now stands, Resolution Copper has either purchased or optioned 8 parcels of land, totaling approximately 5,539 acres, to convey to the United States in the exchange. Whereas most of the Oak Flat parcel, as its name implies, is relatively flat, and has no permanent water - the 8 parcels we have assembled for exchange are exceptionally rich in ecological, recreational and other values…and many of them have significant water resources. Their attributes include: 1) seven miles of river bottom and riparian land along both sides of the free flowing San Pedro River; 2) two miles of riparian and aquatic habitat along East Clear Creek in the Coconino National Forest; 3) one of the largest, and possibly most ancient, mesquite forests (or bosques) in Arizona; 4) almost 1000 acres of extremely diverse grassland habitat in the Appleton-Whittell Research Ranch - which is an existing preserve jointly managed by the Forest Service, BLM and Audobon Society inside the Las Cienegas National Conservation Area;  5) four inholdings in the Tonto National Forest which have very significant riparian, ecological, cultural, historic and recreational amenities, including populations of the endangered Arizona hedgehog cactus and a rare pond fed by a year-round stream; and 6) a 160 acre parcel with cliffs for rock climbing that will be added to the proposed rock climbing State Park which S. 2466 will help establish. We are still working at acquiring a ninth parcel, which will be added to our exchange package, and to the rock climbing State Park, if we are successful.

All told, therefore, this land exchange will result in very significant net gains to the United States in: 1) river bottoms and sensitive riparian lands; 2) habitat, or potential habitat, for threatened, endangered and sensitive species; 3) public recreational opportunities; 4) cultural and historic resources;
5) habitat for innumerable species of flora and fauna; and  6) year-round water resources - a rarity in many parts of Arizona.

At this point, I would like to submit letters for your record from Arizona Audubon, the Trust for Public Land, the Nature Conservancy, the Sonoran Institute, the Arizona Game and Fish Department, and the Superstition Area Land Trust further describing the ecological and other benefits of the lands we have acquired for this exchange, and strongly endorsing their acquisition by the public.

Mr. Chairman, we have also agreed to several provisions in S.2466 which are designed to insure that the taxpayers get full fair market value in this land exchange…and that any facilities or activities we displace in acquiring the Oak Flat land are adequately replaced or improved upon. I will briefly describe those provisions in the order they appear in S. 2466:

-Subsection 5(a) of S. 2466 provides that all appraisals will be conducted in accordance with U.S. appraisal standards, and in accordance with Forest Service issued appraisal instructions. Further, the appraisals must be formally reviewed and approved by the Secretary of Agriculture, meaning that the appraisal process will be under the Forest Service and Secretary's of Agriculture's complete supervision and control.

-We realize that mineral appraisals can be difficult, especially where unpatented Federal mining claims are involved. Accordingly, we have agreed in subparagraph 5(a)(4) of S. 2466 to have the Oak Flat parcel, which is 75% overlain by our mining claims, appraised as if our mining claims do not exist. We believe that is an extremely significant concession on our part. We agreed to it because we do not want any allegations that the taxpayers are not getting full, unrestricted fair market value for the land they are giving up in the exchange.

-To protect the portion of the Oak Flat parcel that comprises the famous Apache Leap - a dramatic cliff area that is the scenic backdrop to Superior, Arizona - we have agreed in Section 6 of the bill to a permanent 562 acre conservation easement that will prevent us from ever disturbing the surface area of Apache Leap. We have also agreed to have the entire 562 acre conservation easement area appraised as if the easement were not required. Once again, that guarantees that the United States will receive full, unrestricted value for its land.

-Another issue which arose in our deliberations was the replacement of the Forest Service's Oak Flat Campground, which has 16 developed campsites on the land we are seeking to acquire. To address that, subsection 8(a) of the bill provides for a replacement campground or campgrounds, with Resolution Copper paying up to $500,000 of the costs thereof.

-Lastly, Mr. Chairman, we are aware that the Oak Flat area, as well as areas of our existing private land adjacent to Oak Flat, are areas currently used for rock climbing. To accommodate the loss of rock climbing, we have agreed to three separate actions. First, subsection 8(b) of S.2466 facilitates the establishment of a new State Park in the Arizona State Parks System near Hayden and Kearny, Arizona,

The Park will be dedicated to rock climbing and other outdoor recreation. To assist in the Park's establishment, we have agreed to pay up to $500,000 for a road to access the Park…and as previously mentioned, we have already optioned a 160 acre parcel of land for inclusion in the Park, and are working on acquiring a second 160 acre parcel.

To further accommodate rock climbing, we have just signed a private license agreement with the Access Fund, which is an organization representing U.S. rock climbers. The license authorizes continued rock climbing on two parcels of our existing private land, and one parcel we will acquire from the Forest Service. In that regard, I would like to submit a letter we have just received from the Access Fund endorsing the bill

Thank you for the opportunity to testify today. I would be happy to answer any questions the Subcommittee might have.