CHAPTER 14 INNOVATIVE MINERAL PERMITTING APPROACHES AND TECHNIQUES FOR THE 1980s

• Jurisdiction: United States

Mineral Resources Permitting
(Mar 1981)
CHAPTER 14
INNOVATIVE MINERAL PERMITTING APPROACHES AND TECHNIQUES FOR THE 1980s
Christopher Duerksen ^*
Conservation Foundation
Washington, D.C.

Colstrip, Pactex, Hampton Roads—these are names almost everyone in the energy and mineral development business has heard at one time or another. They are epithets to those who have been charged with developing needed energy and mineral resources; cuss words that sum up all the frustrations industry faces as it tries to deal with a regulatory process that to many is a modern-day Gordian knot. Legend has it that King Gordius of Phyrgia knotted a rope in such a way that it could be united only by the future ruler of Asia. When Alexander the Great swept through Asia he tried his hand at the riddle, but could find with no clues to the unraveling. Undaunted, he drew his sword and with one fell swoop slashed through the knot to its heart and then rode off to conquer Persia and northern India.

Today the popular code word for this slashing is often "regulatory reform," and a favorite target is environmental and land-use regulations that are allegedly hobbling this country's search for new energy and mineral resources. Some politicians have been quick to climb on that bandwagon. Before he left office, President Carter proposed sweeping changes in federal administrative procedures and established a Regulatory Analysis Review Group whose acronym RARG conjures up images of a bureaucrat-devouring dragon. Carter also pushed hard for an Energy Mobilization Board to put the permitting of synfuel plants, oil refineries, and other such projects on a fast track. President Reagan and his champion swordsman David Stockman promise to go even further in cutting back on federal regulations across the board.

But before the slashing starts, it makes sense to take a close look at where the real hitches in the environmental and land-use regulatory system are, or we may find that so-called reforms are like the proverbial cure that is worse than the disease. Our search is spurred by the knowledge that one way or another this country is going to get at its energy resources. The same is true of a long list of strategic minerals. Several decades ago, the United States was self-sufficient in many of the minerals vital to our economy and national security, but by 1980 the picture had changed radically. Of thirty-six critical minerals, this country depends heavily on imports for twenty-three of them.¹ In itself, that fact is not particularly worrisome if our supplies are secure, but unfortunately key minerals such as chromium, manganese, and cobalt come from turbulent areas like

[Page 14-2]

southern Africa. While headlines about a "resource war" overlook the potential for conservation and reuse or substitution of new plastic and alloys for scarce natural materials, there is little doubt that U.S. mineral needs are a real problem.

In 1978, based on his polling work, Louis Harris said that while the public is willing to take many risks because of the energy shortage, it is also shaking a stern finger in the face of those responsible and saying: "But don't you dare relax your all-out efforts to make certain that environmental hazards are kept to a minimum."² The challenge will thus be to make wise use of our resources, developing them expeditiously with the least amount of environmental damage.

Are the institutions that will be most deeply involved in energy and mineral developments—industry and government—capable of meeting this challenge? Our research at The Conservation Foundation indicates they are. Already a host of promising initiatives are underway across the country. Some come directly from the energy and mineral fields, but others come from different areas—hazardous waste facility siting, industrial plant location, and the like. They all have much to offer as we look for more efficient and effective mineral permitting techniques in the 1980s.

The Impact of Environmental and Land-Use Regulations—Myths and Realities

There is no denying that we have more and stronger environmental and land-use regulations than a short decade ago. When President Nixon declared an Earth Day in 1970, this country had no federal controls over air or water pollution, strip mining, or hazardous waste disposal. Now we have the Clean Air Act,³ the Resource Conservation and Recovery Act,⁴ and a host of other federal environmental protection laws. In 1970 mining companies did not have to contend with the Federal Land Planning and Management Act (FLPMA),⁵ and the Surface Mining Control and Reclamation Act⁶ was only a glimmer in Congress' eyes. States have been active too. In response to the federal Coastal Zone Management Act,⁷ many have enacted controls over developments on the coast, others have adopted state-wide land-use controls and siting boards, and an increasing number of jurisdictions require state environmental impact analysis of large projects.⁸ While it is difficult to quarrel with the goals of each of these laws, be it protection of public health, preservation of wetlands, or reclamation of strip-mined land, the net result is that environmental and land-use regulation is becoming more complex and, at the same time, more compartmentalized. Each new goal or problem is addressed by setting up a new regulatory system or agency that means more standards, more rules, and more permits.

This all adds to the cost of development. While there is often much debate over how much a specific regulation or standard will cost an industry as compared to projected public benefits, there is little doubt that the absolute expense of meeting environmental and land-use requirements will increase dramatically over the next few years. In 1978, the President's Council on Environmental Quality estimated that federal environmental regulations alone

[Page 14-3]

will cost industry in excess of $100 billion in investment and operating outlays over the next ten years.⁹ Some people go so far as to claim that environmental pollution control costs are putting domestic manufacturers at a great disadvantage in competing with foreign firms and, even worse, driving our industries abroad to so-called "pollution havens" in newly-industrializing countries such as Brazil, Ireland, and Korea.¹⁰ In 1979 Representative Morris Udall, a strong supporter of environmental protection legislation, responded to fears that the domestic copper smelting industry was being undercut by foreign producers who had the benefit of lax pollution control regulations in their home countries. He introduced the Copper Environmental Equalization Act that would have added about ten cents to the price of copper imports to make up for the rise in U.S. copper production costs allegedly attributable to domestic environmental controls.¹¹ That proposal languished, but it exemplifies the increasing concern about the impact of environmental and land-use laws on domestic firms.

Gross cost estimates and speculative cost differentials are often attentiongetters, but are environmental and land-use regulations really so onerous that firms might actually leave the country to seek out pollution-havens? Will domestic industries go bust, unable to meet low-cost foreign competition? Are some states effectively blocking needed energy and mineral development by imposing strong controls? And what do gross cost estimates and cost differentials tell us about specific shortcomings in the regulatory process?

These questions prompted The Conservation Foundation to undertake a major two-year study of the impact of environmental and land-use regulations on the location of industrial and energy facilities.¹² What are the real problems in the regulatory system and what are the best ways to deal with them? Should we relax environmental laws? Is the answer an Energy Mobilization Board? Using a variety of analytical approaches including statistical analyses, interviews, and case studies, the project team tackled these issues. What we found was sometimes startling—some old myths debunked. But just as often our conclusions were less surprising—that simple, mundane problems were often the leading causes of delay, problems that could be made worse by meddlesome super agencies like an Energy Mobilization Board.

First, let us look at the myths. Are environmental regulations causing a flight of industry abroad? No. Our investigation shows that other locational factors such as labor costs, proximity to markets, political stability, and availability of good transportation are far more important to industry than environmental restrictions when they are selecting sites for new facilities.¹³ While there are a few examples of industries moving out of the United States when operation has been blocked here—asbestos production is a good example— and cases where environmental regulations have reduced the competitiveness of American companies, these are isolated instances. In fact, in a number of pollution-intensive industries like chemicals, foreign companies are actually investing more funds in the United States than domestic companies are abroad, all for reasons having nothing to do with environmental or land-use controls.¹⁴

Are southern and western states using the promise of lax environmental regulation to lure industry from the Northeast and Midwest? Our statistical

[Page 14-4]

analysis of the location of the five most pollution-intensive industries over the past decade fails to reveal any major movement to states with weak environmental regulations.¹⁵ Interestingly, states that rated low on the environmental regulation scale made clearer gains with respect to manufacturing as a whole, suggesting that they have other advantages—low labor costs, climate, few unions, and that intangible, good business climate—that are attractive to industry.

But even if industry is not seeking out jurisdictions with relatively lax environmental and land-use regulations...