TO: Members, Senate Select Committee on Mining
FROM: James Buchen, Senior Vice President
Scott Manley, Director of Environmental & Energy Policy
DATE: September 20, 2012
RE: Mining Reform
Wisconsin Manufacturers & Commerce (WMC) appreciates the opportunity to testify on the importance of reforming Wisconsin’s mining laws, and the positive economic impact that iron mining would have on our state’s economy.
WMC is Wisconsin’s largest general business trade association, with roughly one-fourth of the state’s private sector workforce employed by a WMC member company. We represent businesses in the manufacturing, banking, energy, health care, retail, insurance, agricultural and service sectors of our economy. Last year WMC celebrated its one-hundredth anniversary of advocacy dedicated to making Wisconsin the most competitive state in the nation to do business.
Reforming Wisconsin’s Mining Laws Will Create Jobs and Economic Opportunity
Wisconsin is home to one of the largest remaining iron ore deposits in North America. Roughly two billion tons of iron ore are located on privately-owned property in Ashland and Iron Counties – enough to sustain more than one-hundred years of mining. If mining is allowed to occur, Northern Wisconsin could transform into an economic engine for generations to come, and provide thousands of jobs in an area of the state that desperately needs them.
The project would involve an enormous investment of capital to construct the mine. At roughly $1.5 billion, it would be one of the largest private development projects in state history. An economic impact study by NorthStar Economics found that construction of the mine would result in more than 2,200 construction jobs each year to build the mine. By comparison, the most recent U.S. Census Bureau data shows total employment inIronCountyof 1,543 workers. This project would literally change the economic landscape of the region.
Once it is operational, there would be approximately 700 workers employed full-time at the mine. After the mine ramps up to full production capacity, total on-site employment could increase to 1,400 workers. These jobs will be high-paying family-supporting jobs. Total compensation (including benefits) is projected to exceed $82,000 per year for mine workers. To place that level of income into perspective, the Census Bureau’s data shows median household income in Iron and Ashland Counties of $34,201 and $37,555 respectively. The income from high-paying mining jobs would literally change the standard of living for this area.
Although the epicenter for job creation would be the Northwoods, the job creation benefits of this project would ripple throughout our entire state. In addition to the mining jobs at the project site, the NorthStar study projects an additional 2,100 jobs during the first phase of mining, and an additional 4,200 jobs created when the mine reaches peak capacity. These jobs will be created throughout the state, and will include mining equipment manufacturing, machinery suppliers, construction materials, transportation, hospitality, and other “Main Street” businesses. A fully operational iron ore mine is expected to generate $1.2 billion of economic activity each year.
Wisconsin’s Current Mining Laws Discourage Investment in Mining jobs
Despite having significant metallic ore deposits located in our state, only one mine has ever been permitted throughout the history of Wisconsin’s metallic mining law (the Flambeau Mine in Ladysmith). Because of the mining moratorium enacted in 1998, it is unlikely that the Flambeau Mine could be permitted today. The inability to get mining permits in Wisconsin sends the message that Wisconsin is not interested in creating mining jobs.
A recent survey by the Frazier Institute found alarming perceptions about Wisconsin’s hostility toward mining. Conducted in December of 2010, the survey responses of nearly 500 mining companies through the world found overwhelming evidence that Wisconsin’s environmental regulations and regulatory framework discourage investment in mining jobs.
For example, of the 79 states and countries analyzed in the survey, Wisconsin’s environmental regulations ranked the worst in the world for mining investment. Eighty-five percent of the respondents characterized Wisconsin’s environmental laws as either a “strong deterrent to investment” or “would not invest due to this factor.”
The administration and enforcement of our mining laws present a similar problem. The survey found Wisconsin to be the second-worst place in the world for uncertainty in the administration, interpretation and enforcement of existing regulations. Of the 79 jurisdictions analyzed in the survey, only Hugo Chavez’s Venezuela ranked worse that Wisconsin in terms of the uncertainty of administration of its laws being a strong deterrent or outright barrier to investment.
The Frazier Institute survey diagnoses a significant problem with Wisconsin’s mining laws. We cannot expect to attract investment in family-supporting mining jobs if mining companies continue to view our state as having some of the most hostile mining regulations in the world. Bold, sweeping reforms to our mining laws are needed to change this dynamic, and thereby attract mining investment to our state. Tinkering on the periphery of our mining law with cosmetic changes or half-measures of reform will simply not be enough to change Wisconsin’s reputation as an anti-mining state.
Current Law Fails to Recognize the Smaller Environmental Footprint of Iron Mining
Not all mining is created equal. The environmental footprint of a mining operation is determined largely by the type of ore body that is being mined. For example, base metal mining in sulfide ore bodies (copper, zinc, gold, etc.) present unique environmental challenges because sulfide ore generates acid runoff when crushed rock becomes exposed to air and water. This “acid rock drainage” must be managed to ensure water quality is protected. In addition, sulfide ore mining typically requires the extensive use of chemicals to separate the metal from the host rock, presenting additional wastewater treatment issues.
By contrast, iron mining has neither of those environmental challenges because iron is found in oxide ore bodies, which do not create acid rock drainage issues like sulfide ores. Although it is possible that trace amounts of sulfide minerals may be found in the overburden or waste rock at the site of an iron ore deposit, existing, proven technologies allow for the safe disposal of those materials while ensuring that water quality is protected.
In addition, iron mining does not require chemicals to separate the iron from the rock. Instead, magnets are used to separate the metal from the ore. In this regard, iron mining has more in common with rock quarrying than traditional metallic mining operations. Unfortunately, our current mining laws fail to recognize these differences. Wisconsin should enact a separate iron mining regulation with streamlined permitting requirements in recognition of the fact that iron mining is less environmentally intensive than sulfide or base metal mining.
Wisconsin Has Already Proved that Iron Mining Can Be Done Safely and Responsibly
The question of whether iron mining can be safely done in Wisconsin has already been answered in the affirmative. Last year, the Wisconsin DNR issued the Certificate of Completion for a fully reclaimed iron mine in Jackson County near Black River Falls. The mine began operation in 1963, more than a decade prior to enactment ofWisconsin’s modern metallic mining law in 1974. Although the mine operated without a permit prior to its closure in 1982, the reclamation of the mining site was conducted under our existing reclamation law.
The reclaimed iron mine near Black RiverFalls is now Lake Wazee, which is the deepest inland lake inWisconsin. In addition to a popular swimming beach, the former mining site also offers wildlife habitat and outdoor recreational opportunities as a county park. Because of its depth and clarity, Lake Wazee has become renown throughout the Midwest for its scuba diving opportunities. The Jackson County mine is real-world proof that iron mines can be safely reclaimed, and can positively impact tourism as a recreational destination.
Reforms Are Needed to Create a Clear and Predictable Permitting Process for Iron Mining
As noted above, Wisconsin’s current metallic mining laws discourage investment in mining with an overly complicated and uncertain permitting process. The fact that a world-class iron ore deposit has sat untouched for decades in Northern Wisconsin, while significant iron mining has continued in our neighboring states, is a testament to the unfavorable nature of our current regulatory framework.
As stated earlier, WMC believes bold and comprehensive mining reforms are necessary if we hope to create thousands of jobs and billions of dollars in annual economic impacts from mining. With that in mind, any successful mining reform must include, at a minimum, the following guiding principles:
- Establish clear and achievable standards for permit issuance. A successful iron mining law must include objective standards and criteria that define regulatory requirements with specificity for the mining permit itself, as well as each of the underlying environmental permits (air, water, wetland, etc.). An applicant should not have to guess what the standards are, or have permit approvals hinge upon the whim of subjective interpretations by DNR staff.
- Establish a predictable permit process. The permit process must be well-defined, including milestones that precisely describe when information is required from the applicant, what information is required, and when an application is considered to be complete.
- Specify a defined timeframe for DNR’s permit review. Any reform must set a deadline for DNR’s review of the permit application to avoid a repeat of the open-ended permitting debacle associated with the Crandon mine. Other environmental reviews establish permitting deadlines, as does the presumptive 360-day approval process for power plant reviews under Chapter 196. Applicants must have a clear understanding of when they can expect a decision on their permit to promote predictability in the process.
- Recognize that iron mining is different. Current mining laws in Chapter 293 are more geared toward sulfide-based mining operations. Because iron mining is vastly different, the Legislature should not attempt to shoehorn an iron mining law into Wisconsin’s existing metallic mining framework. Mining reform should recognize the smaller environmental footprint of iron mining, and correspondingly, establish a smaller regulatory footprint.
- Limit opportunities for costly and time-consuming litigation. Everyone deserves their day in court, and iron mining should be no different. However, Wisconsin’s current mining permit process involves two mandatory contested case lawsuits during the permit process itself. Contested case hearings have become a weapon used against businesses to add cost and delay to permitting – a very expensive step on the way to circuit court. It is difficult to understand how any effort to streamline permitting and add certainty to the process can be accomplished by allowing harassment lawsuits to persist. Iron mining reform should allow aggrieved parties to air their concerns directly in circuit court, without the need to slow the process down with a contested case.
Finally, it is important for lawmakers to remember that enacting mining reforms merely creates a permitting framework – it does not amount to issuing a mining permit approval. Passage of a new iron mining law will simply create a regulatory process that enables the Wisconsin DNR to make a judgment about whether a proposed iron mine can be operated in a responsible manner. Any applicant would still be required to demonstrate compliance with all state requirements, as well as considerable federal permitting requirements from the US EPA and US Army Corps of Engineers.
WMC believes enactment of comprehensive iron mining reforms will result in the creation of family-supporting mining jobs in our state. We believe these reforms can be done in a manner that balances the need for regulatory clarity and predictability with appropriate environmental protections. We urge members of this committee and the Legislature as a whole to remain open-minded about mining reform, and resist the temptation to blindly accept the hyperbole and distortions from the anti-mining special interests as the debate moves forward.
Thank you again for the opportunity to present testimony on the need for mining reform. Please feel free to contact either of us at (608) 258-3400 if you have any questions, or if we can provide you with additional information.