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Sunday, January 25, 2015 |  Madison, WI: 24.0° F  Overcast
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Wisconsin mining bill is widely misunderstood
It will create jobs while retaining environmental standards
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One of the first items of business for Wisconsin's new Legislature will be a reconsideration of Assembly Bill 426, which reforms the state's regulation of iron mining. In the previous session, the bill passed the Assembly by a 59-36 margin but fell one vote shy in the Senate, when Republican Dale Schultz defected in an otherwise straight party-line vote. With an expanded 18-to-15 majority, the GOP can pass AB 426 without Schultz's vote, but hopefully a few Democrats will also support the interests of their blue-collar union constituents by voting in favor of this widely misunderstood bill.

Iron mining is an important part of Wisconsin's past, and it can play a significant role in its future. Ashland and Iron counties contain about 2 billion tons of iron ore deposits, which is enough to support 100 years of mining. Gogebic Taconite has proposed spending $1.5 billion to develop an iron mine in the aptly named Iron County. According to Northstar Economics (headed by former UW professor David Ward), this project would create an estimated 2,200 construction jobs, 700 initial jobs at the mining site and 1,400 jobs on-site when the mine reaches full capacity. These jobs would pay an average of $82,000, which is more than double the county's household income of about $34,000. This mine would therefore be an enormous shot in the arm for a region that's been struggling economically for years.

The investment would also benefit other parts of the state. The mining investment is projected to generate another 2,100 Wisconsin jobs (4,200 when it reaches capacity) in industries such as construction materials, machinery supplies and transportation. These are exactly the types of jobs that Wisconsin has been losing and that Democrats extol when speaking to union supporters. Mined iron ore may also be sold in national and international markets, and fostering industries whose products can be marketed widely instead of only within local communities is crucial for Wisconsin's economic development.

Mining development is inhibited, however, by the state's current regulatory framework. In a survey of 500 mining companies, the Fraser Institute found Wisconsin was the second worst of 79 U.S. states and foreign countries regarding the administration of mining regulations (only Venezuela, under the autocracy of Hugo Chavez, was worse). AB 426 focuses directly on this regulatory uncertainty and creates a more streamlined and transparent permitting process while retaining all the environmental standards that currently exist under state and federal law.

It is important to recognize that AB 426 only allows iron mining companies to seek approvals from the Wisconsin Department of Natural Resources, not the power to circumvent environmental standards. However, AB 426 does create more clearly defined milestones for the review of mining permits.

The bill specifies a minimum 365-day "pre-application" period in which relevant data are collected and processed in close consultation with the DNR. The DNR has 420 days to review the application after it is submitted, with the possibility for one 60-day extension. This review period will contain a minimum of two public hearings where local residents, environmental activists, unions and other stakeholders can comment on and contest the application. If the DNR approves the mining application, its decision can still be challenged in Circuit Court.

By contrast, the current permitting process is entirely open-ended, contains no parameters for regulatory review, and each application is automatically subject to two separate judicial reviews.

The bill does not alter a single water-quality, groundwater or air-quality standard. In fact, it makes compliance with these standards a condition for operating the mine. AB 426 also prohibits the DNR from issuing permits that significantly affect stream flow, riparian rights or public health, safety or welfare. Of course, the state cannot change federal law, so federal water, groundwater or air-quality standards will also continue to apply.

Much of the opposition to AB 426 stems from a nostalgic attachment to the "mining moratorium" that was passed in 1998 after a significant grassroots effort. The mining moratorium was largely motivated by concerns with sulfide mining for minerals such as zinc, copper and gold. Since iron is an oxide ore, it presents fewer environmental challenges than sulfide ores.

For example, "acid runoff" that can flow into streams and groundwater comes from sulfide ores, not oxide ores. Sulfide metals must also be separated from the surrounding rock using chemicals, which creates wastewater concerns. Iron, on the other hand, can be separated from rock using magnets. AB 426 streamlines the regulatory framework for iron mining only, but the "moratorium" on sulfide mining remains intact.

Economic development and environmental protection are both important objectives. AB 426 facilitates investment by enhancing regulatory certainty, allows for ample public input and puts DNR professionals in charge of a permitting process where they are required to maintain current environmental standards. The bill therefore strikes an appropriate balance between economic and environmental aims. It almost certainly will be passed by the new Legislature, and it should be.

Larry Kaufmann is an economic consultant based in Madison.

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