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Robert Krulwich surveys the mining industry's practice of extracting millions of dollars in minerals and precious metals from public lands at no cost to them.

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00:00The wetlands clauses, the timberlands, the wilderness, the endangered species laws, all
00:12of these, if interpreted the wrong way, could just shut this country down.
00:16And unfortunately, many people feel that Bruce Babbitt has been on the wrong side of all
00:19those issues, or should I say on the extreme side of those issues.
00:23That was Senator Orrin Hatch's reaction to the possibility that Secretary of the Interior
00:28Bruce Babbitt would be named to the Supreme Court.
00:31The president, facing a scorching battle with Western senators, left Babbitt at Interior,
00:37where he continues to rankle powerful Western interests.
00:41What's the source of the resistance?
00:42Well, people who are getting something for free don't like to support laws which say it's
00:49no longer free.
00:50I mean, that's the bottom line.
00:51But there aren't two sides to it.
00:52It's an outrage.
00:53Tonight on Frontline, Bruce Babbitt versus the mining industry.
01:00Correspondent Robert Crulwich reports on miners who dig up gold on public lands and pay you
01:06practically nothing.
01:07So they'll pay the people of America $9,000 to get the right to dig up $10 billion worth
01:14of gold ore.
01:15It's an awesome result, isn't it?
01:18Here, you have a scamble, a real scamble, because nobody really cares about this.
01:24Tonight, public lands, private profits.
01:28Funding for Frontline is provided by the Corporation for Public Broadcasting and by annual financial
01:41support from viewers like you.
01:45This is Frontline.
01:52Additional funding is provided by these funders.
01:55Frontline and Customs Lebens fascinatingе.
02:03Trust me.
02:07I love you.
02:08I love you.
02:19I love you.
02:21I love you.
02:23I love you.
02:24This land is our land, a treasure of national parks, forests, deserts, rich in grass and timber and minerals, over 500 million acres, America's public domain.
02:46There's a war here, a war over who should profit from this land.
02:51The latest battlefront is mining.
02:55Hard rock mining, mining for gold and other metals, is a powerful industry in the West.
03:19But it is still regulated by a law first passed by Congress 122 years ago, a law designed to attract Americans West.
03:28Here's how the law works.
03:33Suppose that I am one day wandering around on federal land, or you could be wandering around on federal land, and you come to a place and you think, hmm, maybe there's gold right here, right underneath my feet.
03:45Now, I'm not a geologist, I don't know anything about gold, you probably don't either, but simply believing that the possibility that there might be gold here allows you to go to the federal government and stake a claim.
03:57You could put stakes in the ground covering acres of this land and then go to the government and say, I want to be the only person who can mine right here.
04:05Secretary of the Interior, Bruce Babbitt.
04:08And the 1872 law said, once you have developed some minerals from that land, you can go back to the government and buy it for $2.50 an acre.
04:19For how much?
04:19$2.50 an acre.
04:22No, but there's like, there's $10 billion worth of gold under my feet.
04:27$2.50 an acre.
04:30Still?
04:31Still.
04:31And I have one application in my office where I may well be required to give away $10 billion worth of gold reserves, which have been staked out under this system.
04:49For how much money?
04:51Well, it's a big claim, and there's a modest amount of acreage and fees.
04:56I'd say the total check under the law will be, they'll owe us about $9,000.
05:05So they'll pay the people of America $9,000 to get the right to dig up $10 billion worth of gold ore.
05:14It's an awesome result, isn't it?
05:18Here you have a scandal, a real scandal, right out in the open for every newspaper and every television company, network and station in the country,
05:32to examine in microscopic detail and tell the American people.
05:37I've seen three red lights on cameras since I started the issue because nobody really cares about this.
05:43No one has worked longer to reform the 1872 mining law than Arkansas Senator Dale Bumpers.
05:51Now Bumpers has a Secretary of the Interior on his side.
05:55But the mining companies and their supporters say the reforms will kill mining in the West.
06:01Idaho Senator Larry Crane.
06:02What the government and the environmentalists want to say is, no, we're going to decide whether you have the right to mine it or not.
06:10And that is a totally new and foreign concept to mining law in this country, ever in the history of our country.
06:15One of the reasons the 1872 mining law is getting attention these days is because there's a new gold rush in America.
06:31This dry patch of desert in northeastern Nevada is called the Carlin Trend.
06:41And this is the location of the single largest deposit of gold in the United States.
06:46One quarter of all known gold reserves in America are located right here.
06:50And if you look over my shoulder at those artificial hills there, you're looking at the biggest company in the area, Newmont Mining.
07:01There is more gold being mined today than at any time in our nation's history.
07:18And it's happening on a scale never dreamed of.
07:21This pit is over a mile wide.
07:24And just listen to how long the explosion that you're about to see takes to reach your ears.
07:29Here it goes.
07:31This gold rush has been going on for more than a decade now, but not many people noticed.
07:45Maybe that's because you can't even see the gold.
07:54The golden nuggets we all fantasize about are now very rare.
07:58But geologists have discovered another kind of gold.
08:01It's microscopic, literally invisible gold.
08:08At first, no company believed it was worth mining.
08:11But then two things happened.
08:14The price of gold went up.
08:17And a new technology was introduced called heap leach mining.
08:22Here's how it works.
08:23First, a company like Newmont digs a giant hole.
08:33This one is over 400 feet deep and will get three times deeper.
08:42Then they use these trucks to haul off the rock.
08:45They are so huge, they seem to be another species of vehicle altogether.
08:50The rock is then taken to a giant mill where it is spun and twirled and crushed into tiny pieces.
09:00Then the crushed rock is spread out over a plastic liner and little sprinklers drip cyanide solution onto the rocks.
09:09In order to produce, let's say, my wedding rings worth of gold, roughly how much earth would you have to move out of here to begin looking?
09:29Out of this plant, we'd probably have to move about 200 tons of rock.
09:37200 tons just to get the gold in my ring.
09:40Doesn't that ever strike you as ridiculous a little bit?
09:43Or is that just how it goes?
09:44I guess you get used to it.
09:46But yeah, in those terms, or if you think about it in that way, it is quite astounding.
09:51When you see a big truck going by, how much gold is in that truck?
09:58About a tenth of an ounce, two tenths of an ounce.
10:02In that huge truck?
10:03Yeah.
10:05Involves just the longer tube-type mills.
10:08Trent Temple supervises one of the mills of Newmont's Gold Quarry Mine.
10:12He concedes that people who want to change the mining law find the scale of this operation grotesque, almost offensive.
10:20Even his relatives are bothered.
10:22I can remember an incident with my brother-in-law bringing him out here, and he was just aghast at the large hole in the ground.
10:30And, oh my God, how could you do this to the countryside?
10:33You know, this is absolutely not right.
10:37And yet, you know, my feeling is, well, where do you think the metal came from to make your car?
10:44You know, you hate to use that argument because it seems to lead nowhere.
10:49Seventy-five percent of the gold mine in this country goes into jewelry.
10:52It is not a precious metal from the standpoint of our national security or our future because it goes into jewelry.
11:00Well, what's wrong with jewelry?
11:01Joan Rivers sells a lot of jewelry.
11:03I'm not trying to stop the jewelry manufacturers from using gold in their jewelry.
11:07I'm just simply saying that in the scheme of things, it is not critical to our future.
11:16But mining executives are lobbying hard in Washington to convince lawmakers that gold mining is vital to the country.
11:25How you doing?
11:25Everything good with it?
11:26Doug, I'm Frank Vice.
11:28This Washington luncheon is hosted by the American Mining Congress, the industry's main lobbying group.
11:34The room today is full, but the mood, defensive.
11:38They are honoring one of their best friends, Wyoming Senator Malcolm Wallet.
11:43And at this front table, that's Gordon Parker on the left, chairman of Newmont Mining.
11:48He's chatting with John Kniebel, president of the American Mining Congress.
11:52The topic of the day, how to stall mining reform legislation now working its way through Congress.
12:00With the damage being done to the mining industry on the Hill, we need all the rational, intelligent, and right-minded senators we can possibly get.
12:11Malcolm Wallet, of course, is such a senator.
12:13If Secretary Babbitt has his way, ranching, timbering, oil and gas development, and mining will all be the victims of endless, mindless appeals from the environmental community to, use his phrase, live more lightly on the land.
12:30And for more than two centuries, our public lands have been the center of economic activity.
12:37But if this administration continues to refuse to put our natural resources to use, the West will begin to look like the urbanized East.
12:47And working ranches will be brought up to build cappuccino bars with a view.
12:51Where urban swells come sip European coffee and nibble their biscotti, watching the last cattle roundups with paid performers.
13:04As they prepare to do battle, the American Mining Congress unveiled a jumpy new commercial, targeted at audiences inside the Beltway.
13:12When you hear about legislation that closes mines in the West, think a little closer to home.
13:25Those mines could mean jobs in states like yours, where sales of mining services and equipment support local economies.
13:33Mining makes America work.
13:36But the miners start with a disadvantage, a private industry poll which Frontline has obtained.
13:43Shows that Americans overwhelmingly favor mining reform.
13:47This is a study that you commissioned and you discovered yourself.
13:52That when you ask a random sample of American people, well, what do you think?
13:56You think the mining industry should restore federal land and pay royalties to the government just like oil and just like coal?
14:03Or should we leave things more or less the way they are because the mining industry is in trouble?
14:08Eight to one, people say, ah, hurt them.
14:13And when you read this, what did you think?
14:17Well, we get a lot of media consultants and we get a lot of poll documentation which tells us that we've got some problems.
14:28In a media age, it seems to me you're in a hole.
14:30Really?
14:31You're already in a hole in your business, but this is a whole hole.
14:34It's a small industry.
14:37Relatively speaking, it employs few people.
14:41People don't make much out of the fact that these are the highest paid blue-collar labor jobs in the country.
14:46But nonetheless, it's a fact.
14:50And you're right, it's a difficult game.
14:56On the other side of America, in Spokane, Washington, miners gather for an annual convention.
15:02These are hard rock miners, the men who dig for gold and silver and copper.
15:22As we wandered about, we happened on a session run by the man in charge of the convention, Carl Mote.
15:28And he was warning his fellow miners about their biggest public relations nightmare.
15:33No doubt about it.
15:34And in every doggone hearing, it came up again.
15:37Everybody referred to Summitville, because this is probably the one bad word in mining this year.
15:44Well, Paul took on the job of this analysis.
15:50Miners are especially nervous about the so-called Summitville disaster.
15:55Environmentalists call it a national scandal.
15:57So we're going to ask Paul now to tell us what Summitville was and what it does to us.
16:05Thank you, Bill.
16:07My presentation, and I've got some slides.
16:10You can start the first slide, if you will.
16:13The news media had basically a field day.
16:16They ran a series, particularly the Denver Post, condemning the mining industry, condemning the governor, condemning the legislature.
16:26Anybody that had been on site got drug into the thing.
16:30I'm not for bailing somebody out that makes dumb decisions.
16:34But Galactic left our industry with a real mess.
16:37And we're all going to pay for it for years to come.
16:43Starting next spring, over 50 million tons of Earth will be moved from the face of South Mountain.
16:49And stacked on a super heap, covering 108 acres in southern Colorado.
16:54This video was produced nine years ago by the Galactic Mining Company to raise money from investors.
17:02Gold.
17:05120,000 ounces in the first year.
17:08And hundreds of millions of dollars' worth of gold in the course of the mine's life.
17:12Galactic story is a key study of what can go terribly wrong with a modern American gold mine resources.
17:20Okay, let's go.
17:28Let's make this painless.
17:29Okay.
17:30Camera gone.
17:33Speeding.
17:34Marker.
17:35Interview, take two.
17:37Ladies and gentlemen, I want to welcome you up here in the bright Colorado sun.
17:40This is Robert Friedland, chairman of Galactic, filming his commercial in 1985 for his gold mine called Summitville.
17:50And the reason so many people are interested in this project is because it is an important historic breakthrough.
17:56It's our ability to move a tremendously large volume of rock at a very low unit cost that will make us the lowest cost gold producer in the United States.
18:05Back then, Friedland was making lots of promises, a super promoter conjuring visions of gold, though occasionally he needed some fine-tuning.
18:14Okay.
18:15No, I want an intense one this time.
18:17The same thing I just said?
18:19Yeah.
18:19You want that all over again?
18:21How am I going to repeat that?
18:23Friedland was a relative unknown, a newcomer to the mining business, but he attracted some big-name partners.
18:29Bechtel, a giant construction company, got involved in Summitville.
18:33Well, so did the Bank of America with a $25 million loan.
18:37If an idea excites the imagination of enough people, the money materializes and the project happens.
18:43It happens because there's a consensus of belief.
18:46It may take someone like myself to spark that belief, but it's the belief itself that makes it possible.
18:53Friedland was no ordinary salesman.
18:55Long before he was selling gold stocks, he was selling LSD.
18:59Even as a drug dealer, Friedland displayed ambition.
19:02It was a ring.
19:04He had in mind a ring that went from Maine, Portland, Maine, Florida, California.
19:13This was at age 19.
19:15He saw the big picture even then.
19:22Friedland was convicted and served a year in prison,
19:25though his criminal record was later expunged under a law designed to help young offenders get a fresh start.
19:30In search of spiritual enlightenment, Friedland later went on to India and studied with a guru, Neem Karoli Baba, who frowned on getting rich.
19:41But Friedland had other ideas.
19:43From India, he went to Zurich, where he apprenticed as an international commodities trader.
19:47And then later, he moved to Vancouver, and he told the Canadian broadcasting company why.
19:53I'd heard about this wild and woolly market in Vancouver, and I thought this would be an attractive place to come to.
19:58Was it as wild and woolly as you thought it would be when you got here?
20:01Absolutely. Absolutely. It's one of the freest and most unregulated venture capital markets in the world,
20:07and that has profoundly negative and profoundly positive implications.
20:11When Friedland purchased Galactic, it was just a corporate shell on the Vancouver exchange.
20:17Next, Friedland needed a property.
20:19Summitville was the site of previous gold booms, but the mine had been closed since World War II.
20:25Several big mining companies had considered reopening the mine, but they concluded it was too high, too wet, or too cold.
20:33But that did not stop Friedland.
20:35When the mine opened, he did not tell investors that the heap leach pad was installed in a hurry in the dead of winter
20:43against the advice of his own contractors.
20:46In the harsh winter, the pad ripped and was damaged by avalanches.
20:52And as soon as the cyanide was applied, it began to leak.
20:59Contaminated water from the site polluted the Alamosa River and killed the fish in this reservoir.
21:05In 1990, acting on an anonymous tip, the EPA began to investigate the Summitville site.
21:12Friedland resigned, and two years later, Galactic declared bankruptcy and abandoned Summitville.
21:17The EPA inherited a nightmare.
21:21It was probably the worst possible time that they could have left.
21:25I mean, we were within five feet of overtopping the dike.
21:29We were in danger of freezing out the pipes.
21:31I mean, the situation was just terrible.
21:33It was the worst of all things.
21:38Laura Williams is EPA project manager at Summitville.
21:42She supervises 60 people working full-time to clean up the site at a cost of more than $30,000 a day.
21:49The EPA is literally moving a mountain.
22:08What we're calling it is reverse mining, where we're taking the waste pile from where it came.
22:16We're putting it back in.
22:20Once filled, this pit will be capped to prevent toxic waste from draining into the river.
22:26The EPA is also sealing off this old mining tunnel, which had been leaking heavy metals for 100 years.
22:32The EPA estimates that the final tab for cleaning up Summitville will be $120 million.
22:46Freedlin is back in his Vancouver office these days.
22:59He declined to be interviewed by Frontline, but he did send us this letter saying,
23:03I deeply regret the present situation at Summitville.
23:07It needs to be understood that I resigned from Galactic in 1990.
23:12During the time I was an officer of Galactic, I was never aware of any improper activity which would compromise the environment.
23:20My primary role was attending to the financial affairs of the company.
23:24He's able to say, with a perfectly straight face, use it with those mesmerizing eyes, that this wasn't his problem.
23:35He relied on other people, and in fact, he was out of that company.
23:43It doesn't say it was the day the EPA came knocking on the door.
23:48The Summitville controversy does not appear to have harmed Freedlin's ability to raise money.
23:53I'm going to tell you the bottom line.
23:55These days, he's promoting one of the hottest gold stocks around, Venezuelan gold fields,
24:00a heap leach mine in the Amazon rainforest.
24:06When the Summitville situation was being promoted by Robert Freedlin,
24:12he was calling it, I think I have the words about right, my own personal environmental sculpture.
24:21So nothing's changed.
24:23Now he's doing, or hoping to do, a little sculpting in Venezuela.
24:36It is Bruce Babbitt's job as Secretary of the Interior to address the problems raised by Summitville.
24:41As lord of our public land, Babbitt likes to get out of Washington and survey his domain.
24:52We have time for a violet green swallow.
24:56He says he's ready to take on the mining companies and change the 1872 mining law,
25:01and he often cites Summitville as an example of what's wrong.
25:05Well, it looks like the timing of the mining...
25:07And how is it possible that something of this scale could have occurred?
25:12Well, the reason we have these extraordinary disasters,
25:17and Summitville is only one among many,
25:20is that when this mining law was passed, nobody ever bothered to ask the next question,
25:27who cleans up when the mining is done and you have these huge mountains of rock,
25:33a lot of sort of toxic drainage coming off these mining areas, who cleans it up?
25:38The Western tradition until just a very few years ago was, well, nobody cleans it up.
25:43It just sits and sits and sits.
25:47In fact, there are more than 50 contaminated mining sites on the EPA's Superfund list right now.
25:56And to clean up all those mines will be expensive, says California Congressman George Miller.
26:01We think that the cost to the taxpayers, one form or another right now for mining activities,
26:07is about $72 billion.
26:10That's what these people did with the lands in the West,
26:13and that's what they left as a legacy.
26:15And that's what we're struggling to figure out how to clean up,
26:19because a lot of those mining companies are no longer in business,
26:22and what they did is they threw waste all over the United States,
26:25and they're sending the taxpayers of this country a bill for $72 billion,
26:29saying we got the gold, you got the shaft.
26:34Babbitt would like a little more money from the mining companies to pay for the cleanup,
26:38and he wants stricter environmental controls.
26:43Nice to meet you.
26:44Thank you so much for coming.
26:46And when he tours the West these days,
26:48he still sounds very much like an environmental champion.
26:51The open spaces are beginning to fill up.
26:55There aren't any open spaces.
26:57They're all at risk.
27:00And ultimately, it brings us in this generation
27:02to the question of whether or not we can as a society learn to live more lightly on the land
27:12and to understand that we can't fulfill our obligation to ecosystems and biodiversity
27:17just with a few parks way out there,
27:20that finally we have to find the balance and the equilibrium right in our own surroundings,
27:27right in our own neighborhoods and find a way to...
27:30Environmentalists love what Babbitt says, but they're less sure about what he's done.
27:35Like his boss, the president, Bruce Babbitt moves in small steps.
27:40He prefers consensus to conflict.
27:42And so for these true believers, he often disappoints.
27:46But then, Babbitt grew up in the West.
27:49He's a cowboy conservationist.
27:52And he feels a kinship with those who oppose him.
27:56We grew up outdoors.
27:59We grew up handling guns and firearms from the time you were out of the cradle.
28:04And basically, the landscape was a place where everything was a target.
28:08You shot everything that moved.
28:09You know, I was 20 years old before I ever saw a rattlesnake that I didn't kill.
28:15His epiphany came when he read this book, Aldo Leopold's Sand County Almanac.
28:21The book just, you know, struck me like a bolt of lightning the first time I read it.
28:26It is still, by a hundred miles, the most important book that has ever been written
28:30about the environment and about the landscape and about how we live on it.
28:34And there's this wonderful transforming moment in Sand County Almanac
28:38when he's standing on a rimrock in eastern Arizona up in the tall country shooting a wolf.
28:45There were still a few wolves left.
28:47And it's really a poetic encounter because he's getting rid of predators.
28:52And he recounts how he shot a couple of the cubs, then got the mother wolf,
28:57and then walked down the slope and looked into the eyes of that wolf, you know,
29:01and sort of watched the green flame kind of flicker out in that wolf's eyes.
29:05And all of a sudden he understood that, you know, that he was eradicating one of the parts
29:12that keeps the balance and the beauty in the whole system.
29:15And from his experience up in the mountains of Arizona, I started looking around me
29:21because I'd been across all of that landscape that he describes in this book.
29:24And then, you know, then and there, I could never go back.
29:30I saw a totally different landscape and still do.
29:38This is the landscape that he seeks to preserve, restore, and protect.
29:43But unlike previous secretaries, whose portraits hang in the corridor at Interior,
29:49Bruce Babbitt is no Harold Ickes, FDR's aggressive, dictatorial secretary,
29:54who believed the federal government should rule its lands.
29:57Nor, just up the hall, is he a James Watt, President Reagan's man,
30:02who thought the government should step aside for business.
30:06Bruce Babbitt chooses a middle ground, seeking business support for public goals.
30:13And I guess my plea would be that the responsible mining companies ought to break ranks
30:17with this crowd of lobbyists who are basically digging in and saying,
30:23no, never, ever, ever, there's nothing wrong.
30:26Summitville is a place you ought to take your kids to go swimming.
30:29We expect to have subsidies forever.
30:32The status quo is just fine. It ain't broke. You can't fix it.
30:35It is broke, and it is going to be fixed.
30:38Last year, to fix the environmental mess left behind by the miners,
30:43Secretary Babbitt proposed that companies pay a 12.5% royalty
30:47when they mine on public land.
30:50Right now on public land, the mining companies pay no royalty at all.
30:54It's a classic example of what's wrong with the mining law.
30:57Say I've got a cattle ranch, a million-acre cattle ranch that I own.
31:01Mining company shows up, says, I'd like to explore.
31:05You say, fine, be my guest.
31:06You sign a lease, and if they find something,
31:09they're entitled to take it, but they pay a royalty.
31:12That's the way it's done in the private sector.
31:14It's done all the time in the West.
31:15It's done by miners.
31:16The only exception is public land, where it's given away for nothing.
31:22Remember Newmont out there in Nevada on the Carlin trend?
31:25Well, this is private land, so Newmont pays a royalty to private landowners,
31:31a big royalty, up to 16%.
31:33But right next door, another company pays nothing,
31:38because they're mining on public land.
31:40That company is American Barrack,
31:42and don't be fooled by the name.
31:43They're headquartered in Canada.
31:45And thanks to the 1872 mining law,
31:47Barrack pays no royalty to the U.S. Treasury.
31:50But very recently, American Barrack took title
31:54to almost 2,000 acres of public land,
31:57in part to escape the prospect of paying a royalty.
32:01Secretary Babbitt was not pleased.
32:03This is, frankly, the biggest gold heist
32:06since the days of Butch Cassidy.
32:08And all of this is brought about
32:10because of the mining law of 1872.
32:15The 1872 mining law allowed Barrack
32:17to purchase this land for only $5 an acre.
32:20And this is land that Secretary Babbitt estimates,
32:23in very round numbers,
32:24contains $10 billion of gold.
32:28Who do I blame for this?
32:29Well, I'm trying hard
32:31not to be blamed for it.
32:33And that's why I made that federal judge
32:46order me to do it.
32:49They're ripping off the American public fair and square.
32:54It is a ripoff, and it ought to be changed.
32:58American Barrack points out
33:00it invested a billion dollars in this mine,
33:02and so it didn't exactly get this for free.
33:05And the Western senators are still campaigning
33:07to keep any new royalties low.
33:09To go from no royalty to 12.5%
33:12is far too drastic a change,
33:14says Idaho Senator Larry Craig.
33:15We either want mining in this country,
33:17we want a strong industrial base in this country,
33:20and we do it in an environmentally sound
33:22but profitable way,
33:24or we give it up to foreign interests,
33:26and I don't think we want to do that as a country,
33:28nor should this president want to do that.
33:30The administration has now backed off a bit,
33:34and Bruce Babbitt now favors an 8% royalty payment
33:37proposed by the House of Representatives.
33:40We represent the people of the United States.
33:42If you find gold on our land,
33:44how about sharing 8% of it with us?
33:48You can keep 92%.
33:49How about sharing 8% with the taxpayers
33:52that let you go out and mine on their lands?
33:55But the mining industry complains
33:58that 8% is still too high.
34:00They support a bill introduced
34:01by Senator Larry Craig of Idaho.
34:04What is the royalty that mining companies
34:06pay now on public land
34:08for these precious metals that they extract?
34:12There's no royalty being paid at the present time.
34:15And what royalty sounds reasonable to you?
34:17Senator Craig is saying 2%, that seem okay?
34:19We have said that the Craig bill represents
34:23a very reasoned position.
34:25It's a 2% net mind-mouth royalty.
34:27Would you cough bitterly at 3% or 4%?
34:31I think the question is one of how it's computed.
34:36The others are all numbers and details.
34:39It all comes down to gross versus net.
34:42If the mining companies pay just 2% of the net,
34:45the government collects about 80 cents
34:48for every ounce of gold at current prices.
34:51But if the companies have to pay 8% of gross,
34:54as Bruce Babbitt wants,
34:55then the government gets $27 an ounce.
34:59So what is the fight in the Congress about?
35:01The fight is whether or not the royalty
35:04that the mining companies,
35:05the gold mining companies,
35:07the silver mining companies,
35:08whether that royalty is real
35:10in terms of like dollars go from the miners
35:13to the public treasury,
35:15or whether it looks like it's real on paper
35:18but nothing really happens
35:19because the way that you calculate it
35:22and you take out all of the expenses,
35:25the federal government still gets nothing,
35:26just like they got in 1872.
35:29And there's a lot of people
35:30with very sharp pencils
35:31and a lot of sharp lawyers
35:32who are trying to figure out
35:34how they can look like they're paying
35:35the federal government a royalty,
35:36but when you get done taking out all the expenses,
35:39can't pay a royalty this year,
35:40maybe next year will be better.
35:41That's what the fight is over a real royalty
35:44or a phony royalty.
35:46Why can't the taxpayers just charge a little more
35:49for taking the gold off the public land
35:51without any terrible result?
35:54Well, you certainly can.
35:55It's a taking.
35:56But how would you like to wake up in the morning
35:58and get your mortgage notice
36:01and all of a sudden your bank
36:03is going to charge you 8% more?
36:06But if I had been paying a mortgage of 0%,
36:09I would have considered myself a very lucky man
36:12until the letter arrived.
36:13That's exactly right.
36:14But you had a contractual relationship here.
36:17You entered into a project
36:20knowing that you could pay
36:22whatever it was that you were going to pay.
36:24And then you wake up in the middle of the night
36:26or in the middle of the project
36:27and all of a sudden you're told
36:29that the game has changed.
36:30Or the party's over.
36:32Or the party's over.
36:36The industry complains to Babbitt
36:38that a new royalty
36:39will make mining in America more expensive.
36:42And they say theirs is a very price-sensitive industry.
36:46For example, here at Newmont,
36:48lab technicians review the gold content
36:50in every core sample.
36:53Robots do most of the work.
36:54Newmont has refined its own computer software
37:00to determine where exactly the ore body lies.
37:05As we go from pink to blue,
37:09our pink is our high-grade material.
37:10These guys like to be in the pink.
37:12We're running at 0.2 ounces per ton.
37:15The amazing thing is they actually calculate
37:18how to shape and dig the pit
37:20based on the fluctuating price of gold.
37:23So when placing this first pit,
37:25we might be a little conservative
37:27and pull it in.
37:28And it helps in both ways.
37:30You get to the best materials
37:31so it helps your cash flows.
37:33And it also gives you the opportunity
37:35to, if there's a small swing in gold price,
37:39that you can take advantage of it
37:40by changing your mining width.
37:43So they insist that a new royalty,
37:46even at the big companies,
37:47will come with a cost.
37:49If the House version becomes law,
37:52there is no doubt.
37:53I am not a great seer of future things
37:57and I don't have a crystal ball.
37:59But I know economics and I know facts.
38:01And I know there will be an awful lot fewer miners
38:03mining in the United States.
38:06As near as I can tell, we...
38:07The miners who gathered in Spokane
38:09feel quite threatened.
38:11We are faced with a,
38:12I guess you would have to say,
38:14a hostile Secretary of Interior.
38:17We're faced with a Congress
38:18where our foes clearly outnumber our friends,
38:21at least at this point.
38:23We are faced with an administration
38:25who I suspect, at best, is insensitive.
38:30Joe Danny, a lobbyist for the Placer Dome Mining Company,
38:33told some grim-faced miners
38:34that they were in for the fight of their lives.
38:37You're not going to win any overwhelming victories.
38:41You're not going to knock this thing in the head
38:42in one fell swoop.
38:44What you're going to do is find toeholds and handholds
38:47and nudge this thing ever closer
38:49to some semblance of a reasonable compromise.
38:53But others seem to have given up already.
38:55You could say that the mining industry
38:58is definitely heading south.
39:00This conference used to be very big
39:02and represent the exploration side of the mining industry.
39:05And new exploration is heading south.
39:08We, in fact, are holding a conference
39:09on Latin American mining opportunities.
39:12And mining in the United States right now
39:14is a very threatened industry.
39:18Ironically, in this industry,
39:20which prides itself on rugged individualism
39:22and male bravado,
39:23it's the women who are girding for battle.
39:26We're sending letters to congressmen and senators
39:28about the mining law,
39:30and I'm addressing them right now.
39:33A group calling itself the Women's Mining Coalition
39:36ran the most popular booth at the convention,
39:39featuring photos of their lobbying in Washington.
39:43That's them with Speaker of the House Tom Foley.
39:46Organizer Kathy Benedetto
39:47is a mining company geologist from Nevada.
39:50She admits women are still a minority
39:52in the mining business,
39:53but they make effective lobbyists.
39:56We have women who fill all kinds of different positions.
39:59They drive 190-ton trucks.
40:01In fact, some of the mines
40:03maybe like to hire women
40:05because the trucks last a little longer
40:07and there's not as many accidents.
40:09The women offered an incentive.
40:12Write a letter to Congress
40:13opposing Bruce Babbitt's mining law reform
40:15and get a free button.
40:17This is the limp pick button,
40:20and as a universal no sign,
40:22we would like to have no limp picks
40:24here at this meeting.
40:27Stiff opposition is necessary,
40:29these miners say,
40:30because they're convinced
40:30that Bruce Babbitt's real goal
40:32is not reform.
40:33If you look at the availability
40:35of the public lands for mining,
40:40more than half is no longer available.
40:44You've got 100 million acres in wilderness.
40:46You've got a lot of military restrictions.
40:47You've got a lot of land
40:48that's just been taken out
40:50by governmental edict.
40:52And this is the last great
40:54knot to make sure
40:58that they can control it all.
40:59So they want to price you
41:01out of all public land.
41:02That's your heart.
41:02Oh, this isn't pricing you out.
41:04This is just cutting you out, period.
41:08Throughout the West,
41:09cowboys, loggers, and miners
41:11have joined together
41:12to fight what they call
41:13a threat to their jobs.
41:15The two-mile-long parade
41:17ended at Boise's convention center
41:18with a rally that called for action
41:20and for legislation
41:22protecting people first.
41:24In the case of mining,
41:25it contributes one job
41:26out of a thousand
41:27in the West.
41:30And that's not exactly
41:31what the Western economy
41:32is going to be built on.
41:33There's no question.
41:34This isn't about being against mining
41:35or being against grazing
41:37or being against timber.
41:40It's recognizing that there are limits
41:41to what we will let these people do
41:43in the pursuit of gold.
41:46You could put cyanide
41:47over the top of the U.S. Capitol
41:48and get gold to come out of the bottom.
41:51But that doesn't mean
41:52you should get to turn up
41:53every acre of land in the West
41:55and cover it with cyanide
41:56so that you can get gold.
41:59This is about limits.
42:01Now comes the showdown in Washington.
42:04Sometime before the August recess,
42:06House and Senate conferees
42:08should produce a final bill.
42:10And both sides are revving up.
42:11I can't imagine an administration
42:14who comes to town touting jobs
42:17as part of its number one priority,
42:21now supporting a bill
42:22that they know, by all estimates,
42:25is going to knock a hole
42:26in the job base
42:27of the public land West.
42:28Those senators see their mandate
42:30as protecting the mining companies,
42:32not as protecting the public interest.
42:34And as long as those people
42:36are in office,
42:37this is tough sledding.
42:38This is hand-to-hand combat.
42:40You take this sort of
42:41one foxhole at a time.
42:43Unfortunately, in each foxhole,
42:44there's another senator
42:45representing another mining interest.
42:47If you come back from conference,
42:49which is something,
42:50with a measure,
42:52which is something
42:53more like the House bill
42:54than the Senate bill,
42:55then you better be ready.
43:00For?
43:01For the potential of a filibuster.
43:04It wouldn't be the first time.
43:08Last year, Bruce Babbitt
43:09tried to raise grazing fees
43:11on public land.
43:13Ranchers protested,
43:14and whenever the bill came to the floor,
43:16Western senators held up the vote
43:18by talking and talking
43:19and kept it up for two weeks.
43:21I tell you,
43:23my friends and colleagues,
43:25this is not a grazing issue.
43:27This is an issue
43:28of a war on the West.
43:30This is an issue
43:31of the assault
43:32of the Secretary of Interior
43:33to try to gain control
43:35over the West.
43:36I have to say
43:37that earlier this year,
43:38the Secretary of the Interior,
43:39Bruce Babbitt,
43:39expressed his confidence
43:41in ensuring that,
43:42quote,
43:431993 continues to be
43:44the year of reform
43:45for public lands issues,
43:46unquote.
43:47In my opinion,
43:49this year can't end soon enough
43:51for those of us in the West.
43:53There's been one continuous assault
43:55on our people.
43:57And it wasn't just Republicans.
44:00I don't know if those of us
44:01who are on both sides of the aisle
44:02can win this debate,
44:04but I can tell you
44:05that I am absolutely sure
44:06who's going to lose
44:07the eventual debate,
44:10and that's going to be
44:11the administration,
44:11the 1996 election.
44:13You cannot jeopardize families,
44:15make ghost towns
44:16out of ranching communities,
44:18kill jobs,
44:18and then go back
44:19and ask the dead
44:20and dying for their votes.
44:22The White House
44:23is very sensitive
44:24to Western senators.
44:25It needs their votes
44:26on the budget and health care.
44:28So on grazing,
44:29the administration backed off.
44:32They got torched
44:33in the Senate.
44:34And they never again
44:36want to hear the word
44:36filibuster.
44:37But the senators know that,
44:38so they keep going,
44:39filibuster, filibuster, filibuster.
44:41You say, I got an idea.
44:42Filibuster.
44:43I'd like to talk.
44:44I'll filibuster.
44:46It's season.
44:46After the filibuster,
44:48Western senators
44:49and some Western governors
44:50went after one of
44:51Babbitt's top deputies,
44:52Jim Baca,
44:53director of the Bureau
44:54of Land Management.
44:55Hi, this is Jim Baca.
44:56For environmentalists,
44:57Baca was a symbol of reform.
44:59But to these Western politicians,
45:01he was too doctrinaire.
45:03And they made that
45:03perfectly clear
45:04when they gathered
45:05last February
45:06in Washington.
45:08If I'd been
45:08Secretary of the Interior,
45:09I'd have fired him
45:10on the spot.
45:11And I would say
45:12that you've only got room
45:13for one boss
45:14in any business
45:16or department.
45:18And the way it stands
45:20right now,
45:21Jim Baca is answerable
45:23to nobody,
45:25it appears to be.
45:26And I wouldn't have him
45:27around 15 minutes
45:28if he worked for me.
45:29And that's just
45:30what Babbitt did.
45:32He fired Baca.
45:33I think we share
45:35the same reform goals,
45:36but there are two styles
45:40of how you implement reform.
45:41One is,
45:42it's been used,
45:43it's a valid approach.
45:45It's simply to throw down
45:47the gauntlet and say,
45:49you're against us,
45:50you're our enemy,
45:51you're for us,
45:52you're our friend.
45:52And it's a style
45:54which doesn't work
45:56very well in the 1990s.
45:58It didn't work for me
45:59when I was governor
46:00of Arizona.
46:01I really wish
46:02he had shown more
46:02backbone in standing up
46:05to some of these
46:07Western governors
46:08and senators
46:08because he knows
46:09what's the right thing
46:10to do.
46:10But I think he felt
46:11so much pressure
46:12that he bent.
46:13He just bent.
46:15After being roughed up
46:16on grazing,
46:17Babbitt hit the road
46:18and tried to bring
46:19ranchers and environmentalists
46:20together.
46:21Instead of promoting
46:26one land use law
46:28for the West,
46:29he invited opponents
46:30to sit down,
46:31bargain,
46:32and together
46:32write their own
46:33local laws.
46:35The emphasis,
46:36as is usual with Babbitt,
46:37was to find consensus.
46:39Anybody who is
46:41warm and breathing
46:44and who has a modicum
46:46of good manners
46:47is entitled to participate.
46:49Period.
46:50We don't care
46:50where you're from.
46:51We don't care
46:52what your ideology is.
46:53If you will promise
46:54to be nonviolent
46:55and you're able
46:57to get there,
46:58you can participate.
47:00So we just...
47:00Babbitt made some
47:01headway in Colorado,
47:02but here in Nevada,
47:03he made nobody happy.
47:05Not even his old friends
47:06in the Sierra Club.
47:07in the case of
47:09the director of the BLM
47:11with whom you had
47:12a difference,
47:14you ended that difference
47:16by firing
47:17Mr. Baca,
47:18but you are asking us
47:22to sit down
47:22with people
47:23with whom we've had
47:24differences for decades
47:25and you're saying,
47:28let's have consensus,
47:29let's have collaboration.
47:30Now, you know,
47:31you're the Secretary of the Interior,
47:33you can do anything you want,
47:34but, you know,
47:35you're putting us
47:36into an impossible situation.
47:39The Secretary of the Interior
47:41should start acting
47:42like the Secretary
47:43of the Interior,
47:44again,
47:45for the entire country,
47:46for the stewardship
47:47of all of the federal lands
47:48and quit acting
47:49like the fuller brush man.
47:51You know,
47:52you're not going to sell
47:53this policy,
47:53you're not going to get
47:54the kind of reform
47:55that the American public
47:56wants or is entitled to
47:58under the current way
48:01they're doing it.
48:02So going to Nevada
48:04and all that,
48:04you think is a waste
48:05of his time?
48:05Well, there's no evidence
48:06that he bought anything.
48:08You know,
48:08in Colorado,
48:09where they're already
48:10doing this,
48:10they said,
48:11fine,
48:11we'll agree to do that.
48:12And the Senator in Wyoming
48:13blasted him,
48:14and the Senator in Idaho
48:15blasted him,
48:16and the Senator from New Mexico
48:17says,
48:17never in my lifetime.
48:19Well,
48:20those were the same people
48:20who were blasting him
48:21before he went out
48:22on the road.
48:25My plea is
48:26that somehow or another
48:27the West not be treated
48:28as a series of
48:30colonial outposts
48:31with which you solve
48:32one problem at a time
48:33as the Lord and Master
48:35of the West
48:36and not as a part
48:38of a government
48:38which is in effect
48:39the representative
48:40of the people,
48:41not its master.
48:44Senator,
48:44I plead guilty
48:45to preferring
48:47pragmatic problem-solving
48:49over ideological
48:50disputes.
48:51I don't mean this
48:52to be ideological,
48:53Mr. Secretary.
48:54I mean that
48:55we are entitled
48:55to the same treatment
48:57from one state
48:58to the other.
49:00Is that too much
49:01to ask?
49:02That is my policy.
49:03And more recently,
49:07Western senators
49:08told the president
49:09that they'd try
49:09to kill Babbitt's
49:10appointment to the
49:11Supreme Court
49:12if the president
49:13had decided
49:13to nominate him.
49:14You sat
49:15for a whole day
49:17in front of a Senate
49:18committee
49:19and all they did
49:20was slam,
49:21slam, slam.
49:22What was going on
49:23in your mind
49:24during that?
49:25It was impressive.
49:26I mean,
49:26they were really
49:26horse whipping me
49:27from all sides
49:29about every conceivable
49:31kind of thing.
49:33I enjoyed it.
49:35You didn't.
49:37I enjoyed it
49:38for this reason
49:38because,
49:39you know,
49:40what those hearings
49:41are about
49:41is not eliciting
49:43information.
49:44It's kind of
49:45a ritual stage
49:47on which everybody
49:48gives speeches
49:49and debates
49:49each other
49:50and it's part
49:51of the process
49:52of politics.
49:54Still,
49:56do you ever spend
49:57oh, even minutes
49:58wishing you were
50:00in associate justice
50:01of the United States
50:01Supreme Court?
50:03Yes,
50:04but not many.
50:07And finally,
50:08back to President Clinton,
50:10do you worry
50:12that the things
50:15that you are working
50:15for and holding dear
50:17may not be on
50:19the president's
50:20timetable correctly
50:21so that you could
50:22be embarrassed again
50:23by a trade?
50:25I disagree 100%
50:27with that characterization.
50:28The president
50:29has given me
50:31the discretion
50:32and the room
50:33to do this job
50:34and he has supported
50:35me nonstop.
50:37And this notion
50:37that somehow
50:40I don't have a mandate
50:41to do this job,
50:42I absolutely disagree with.
50:43Well, it's bravely spoken,
50:44but I haven't heard
50:45the president talk
50:46about grazing
50:47or mining
50:48in months and months.
50:49I've had plenty
50:50of support
50:51from the White House
50:51in the clinches
50:52where it counts.
50:53Not on the front pages
50:54of the newspapers,
50:55but it's there.
50:56And notwithstanding
50:58what the critics say,
50:59they've been there
51:00at every juncture
51:01where I've picked up
51:02the phone and said,
51:03I need your intervention.
51:04They have unfailingly,
51:06100% been there.
51:11The question,
51:12though, remains,
51:13what are the president's
51:15views about mining
51:16on public land?
51:17Well, we turned up
51:18a little story
51:19that may provide a clue.
51:24It's a very popular site.
51:26It's, uh,
51:26for those of us
51:28who are a little older,
51:28it's like an adult sandbox.
51:32Crater of Diamond State Park
51:34in southern Arkansas
51:34is the only park
51:36in the country
51:36where you can dig
51:37for your own diamonds.
51:39There's some very pretty
51:40yellow diamonds.
51:41As a matter of fact,
51:42Hillary Clinton
51:43wore a yellow diamond
51:45from the Crater of Diamonds
51:46in a ring
51:47in the inaugural ball.
51:48Before the Second World War,
51:51this was a commercial
51:52diamond mine.
51:53But for more than 20 years,
51:55it's been a tourist attraction.
51:57Richard Davies is director
51:58of Arkansas State Parks.
52:00The state of Arkansas
52:01purchased it in 1972
52:03to operate as a
52:05finder's keepers
52:07state park.
52:09The park includes
52:11900 acres of woods
52:12on the Little Missouri River.
52:14But now,
52:15four mining companies
52:16want to convert
52:17this park
52:18back to a commercial
52:19diamond mine.
52:21Environmentalists
52:21are furious.
52:22Bill Clinton,
52:24in his campaign
52:25for governor
52:26in 1990,
52:27was asked by
52:28the conservations,
52:29along with all
52:29other candidates
52:30for both governor
52:31and lieutenant governor,
52:32whether or not
52:33he supported
52:34phase one test mining
52:37and the park.
52:37He was the only one that did.
52:40Out of all the Democrats
52:41and Republicans
52:42that were running for governor
52:43and lieutenant governor,
52:44everyone else
52:45was opposed to
52:47these activities
52:48at the park.
52:50And who exactly
52:51was asking
52:51Governor Clinton
52:52to explore at this park?
52:54Well, it turns out
52:55that one of the investors
52:56is a banker
52:57in Little Rock,
52:58Jackson Stevens,
52:59who has been one of
53:00Clinton's biggest
53:01campaign supporters.
53:02And Frontline
53:04discovered another investor,
53:05Diamond Field Resources,
53:08which lists as its partner
53:09none other
53:10than the man
53:11whose company
53:11was blamed
53:12for the environmental
53:12disaster
53:13at Summitville,
53:15Robert Friedland.
53:17So Friedland
53:17is back in action
53:19in Arkansas.
53:21Diamond Fields
53:22is trying to associate
53:23itself with
53:25President Clinton's
53:26hometown.
53:27Hope, Arkansas.
53:29Yes, that's right.
53:31That's right.
53:31There's no connections
53:33or no connections
53:34are too good
53:35for Robert
53:36to try and make
53:37one way or another.
53:38They'll just be neighbors,
53:39Robert and the president.
53:43Ultimately,
53:44the decision
53:44about whether
53:45to allow Friedland
53:46or anybody else
53:47to mine for diamonds
53:48in this park
53:48is up to Secretary
53:49of the Interior,
53:50Bruce Babbitt.
53:52Environmentalists hope
53:53that Babbitt
53:54will stop
53:54what Governor
53:55Bill Clinton
53:56once encouraged.
54:54Funding for Frontline
55:10is provided by
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55:12for Public Broadcasting
55:13and by annual
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55:17from viewers like you.
55:20Frontline is produced
55:21for the Documentary Consortium
55:23by WGBH Boston
55:25which is solely
55:26responsible
55:26for its content.
55:30This program
55:31is a co-production
55:32with the Center
55:32for Investigative Reporting.
55:35Additional funding
55:36is provided
55:36by these funders.
55:45This is PBS.
55:46Matt
55:48is
56:02and
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56:05as
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56:06as
56:06as
56:10as
56:11as
56:12as
56:12as
56:13as
56:13as