Column: Strict rules on resource development raise prices

The current increases in the price of gas, natural gas and electric power, together with widespread electric power shortages, have brought attention once again to the essential need for a steady reliable energy supply.

What has received less attention are the fundamental causes that lead us every few decades to energy supply problems. Why do we once again depend on a small number of overseas suppliers for a major need?

Through rule makings and solicitors' opinions, the Department of the Interior seems determined to impose additional regulations that will make domestic hard rock mining and energy production ever more difficult. The department clearly intends to make mining on public lands so expensive and so encumbered with regulatory requirements that it will go away.

The ultimate purpose of these policies is less clear. Undoubtedly, it makes some people feel good if they can proclaim to have saved nature from the savage attacks of humankind. If it also means that people will have a difficult time paying their transportation and heating bills, so be it. It is the privilege of environmentalists to double their own energy costs by looking for alternate energy sources. It is not their privilege, at least not yet, to impose such requirements on others.

Rarely mentioned in the stories about high gas prices are the Department of the Interior policies aimed at eliminating domestic energy and mineral production. Vast land tracts have been put off limits for energy and mineral production. At the same time one sees the peculiar spectacle of a U.S. president begging Saudi princes to please, please pump us a bit more oil. Saddam Hussein already has shown that he fully understands that he controls sufficient oil production to be a major player in setting world energy prices. There is a price to pay for interfering relentlessly with energy and mineral production.

With regard to hard rock mining, a major issue on the table right now is the 3809 rules. These rules govern hard rock mining on federal land. Congress asked the National Academy of Sciences to determine the effectiveness of current federal mining regulations. A panel of distinguished authorities held public hearings in several cities around the West, visited mining operations and reviewed many studies.

The panel report concluded that, "The overall structure of the federal and state laws and regulations that provide mining-related environmental protection is complicated but generally effective." The panel report recommended some changes, but saw no need for a wholesale revision of the regulations.

The Department of the Interior is ignoring the National Academy recommendations as blithely as it ignores the will of Congress. Through rule makings, agency guidelines, solicitors' opinions and executive orders, the department is attempting to rewrite the law. The framers of the Constitution gave the power to write laws to Congress. Congress is accountable to the people, and Congress writes law - not the solicitor general of the Department of the Interior.

The proposed 3809 revisions will produce very minor, if any, further environmental benefits. They will complicate the regulatory structure, in direct contradiction with the recommendation from the National Academy for "improved efficiency" in the regulatory process. Once again we are on the verge of spending tens, possibly hundreds of millions of dollars to comply with additional regulations of trivial, if any, environmental benefit.

It is essential that Congress rein in the Department of the Interior's attempts at making law, in order to allow the continued existence of a productive hard rock mining industry, an industry in full compliance with the extensive environmental protection requirements already in place, and with its economic benefits for many rural western communities.

The trade deficit is surging, and may be a major threat to the global economy. The main reason for worldwide deficits is oil imports. Domestically, one export that pays for some of that oil is gold exports. Nevada makes the major contributions in the nation to these exports or oil payments. Gold mining also produces a significant fraction of the state's income.

The so-called giveaway of public lands, as described by the Secretary of the Interior, provides some compensation for the loss of domestic energy and mineral production that result from his never ending imposition of additional rules and regulations. Society is starting to pay and will continue to pay a steep price for the economic damage Interior is causing.

Unless Congress retakes its lawful duty of writing law, we all will pay. It is too simplistic for the administration to round up the habitual villains, oil companies and OPEC, while refusing to admit the serious if not disastrous consequences of its own policies. It would be helpful if the press were to clearly explain the connection between Interior policies and the energy supply; e.g., in its stories on high gas prices. Blaming others, while ignoring self-inflicted problems, is not likely to prevent a further deterioration of the energy situation.

While the picture is clear with regard to energy, it may be less obvious for metals. Seven years ago, the U.S. became a net importer of hard rock minerals for the first time in modern memory. The growing dependency on imported copper and other metals and minerals will lead to control of these essential materials by foreign producers to the same extent as we now see for petroleum. Some of these overseas producers are at high risk of political instability and unrest. Some of them may form cartels, following the OPEC lead, with unpredictable results for costs and especially reliability of supplies.

Aside from international consequences, the Department of the Interior policies have direct domestic impacts. Sometimes they are obvious; e.g., when mining projects in progress are canceled because regulatory costs have become too onerous. The most serious consequences, however, are more insidious; the projects that were never initiated were never considered, because vast land areas are no longer open to exploration, or because the regulatory burdens have become so excessive and uncertain. American companies now spend 76 percent of their exploration budgets overseas, up from 40 percent in 1960. Ore being mined is not being replaced. The new mines that should replace the ones that have exhausted their ore are not being developed. Such are the sad consequences for the economies of many parts of the rural West that once thrived on the basis of federal policies that encouraged mineral development. Congress needs to set law and needs to determine how far it will let Interior go with its anti-mining crusade.

Jack Daemen is professor and chairman of mining engineering, Mackay School of Mines, University of Nevada, Reno.