HomeMy WebLinkAbout2008-06-10 - AGENDA REPORTS - HR 5887 SOLEDAD CYN MINE ACT (2)CONSENT CALENDAR
DATE:
SUBJECT:
DEPARTMENT:
Agenda Item: / I
CITY OF SANTA CLARITA
AGENDA REPORT
City Manager Approval
Item to be presented by:
June 10, 2008
F"KA ... ,
Michael P. Murphy J
FEDERAL LEGISLATION: H.R. 5887 - THE SOLEDAD CANYON
MINE ACT
City Manager's Office
RECOMMENDED ACTION
City Council adopt resolution in support of H.R. 5887 and transmit copies of the resolution and
statements of support to Representative Howard P. "Buck" McKeon, Senator Dianne Feinstein,
Senator Barbara Boxer, and other Members of Congress, as appropriate.
BACKGROUND
CEMEX USA currently holds two consecutive ten-year contracts with the Bureau of Land
Management (BLM), allowing the extraction of approximately 56.1 million tons of sand and
gravel in the Soledad Canyon area, immediately east of the City of Santa Clarita. CEMEX is the
successor in interest to the contracts, which were originally issued to Transit Mix Concrete
Corporation. For close to a decade the City of Santa Clarita has fought the proposed mine; citing
among other reasons its size, increased truck traffic on local arterials and the Los Angeles area
freeway system, and anticipated negative air quality resulting from the project. While mining has
historically occurred in and around Santa Clarita, the urbanization of the community has placed
the CEMEX mining proposal and the community on a collision course. In September 2002, the
City Council adopted Resolution 02-146, which established a position in support of historical
levels of mining at the site, identified at 300,000 tons per year. This is in sharp contrast to the 5
million tons per year currently authorized for mining production.
The City of Santa Clarita and CEMEX have been battling in court and through a public relations
effort for almost a decade. In early 2007, the two parties agreed to cease their hostilities and
work toward a mutually agreeable resolution to their dispute. The City of Santa Clarita and
CEMEX spent over a year working with Congressman McKeon to develop legislative language
that would bring a successful resolution to the issue. On April 24, 2008, Congressman McKeon
introduced H.R. 5887, which, when enacted into law, will bring a satisfactory conclusion for all
parties to the dispute over the mining proposal.
AaOp ft w Sg
H.R. 5887 provides the Secretary of the Interior with the mechanism to cancel the two
consecutive ten-year existing mining contracts between BLM and CEMEX USA. The bill will
withdraw from mineral entry the subject areas of those two contracts, meaning that no future
leases or contracts for mining may be issued at that site. H.R. 5887 also provides the method by
which the fair market value of the contracts will be determined and a dispute resolution process,
should that become necessary in determining the value of the contracts. Finally, once the value
of the Soledad Canyon contracts has been established, the Secretary of the Interior shall convey
to CEMEX USA designated lands in and around Victorville of equal value to the value of the
contracts. The bill further specifies that the lands received by CEMEX shall not be used for
mining.
Staff understands that the City of Victorville has developed an extensive and visionary long-term
economic development plan for their community. The properties conveyed by BLM in and
around Victorville in exchange for the Soledad Canyon contracts are an integral part of that
economic development plan. CEMEX and Victorville have entered into an agreement to
facilitate conveyance of the lands received by CEMEX to the City of Victorville. This will
enable CEMEX to ultimately realize financial compensation for the value of their contracts and
the City of Victorville to undertake their economic develop plan in a more accelerated fashion
than would occur under BLM conveyance of the lands through the standard property disposal
process.
H.R. 5887 has been assigned first to the House Committee on Natural Resources. City of Santa
Clarita and CEMEX representatives have already started meeting with Members of Congress and
congressional staff to build support for the measure. City representatives are also working with
Congressman McKeon and CEMEX to solicit support for the measure from individuals and
organizations with an interest in the bill. It is currently anticipated that the first committee action
on the bill will take place during the summer. While the timeline for enactment into law is tight
for 2008, Congressman McKeon, the City of Santa Clarita, the City of Victorville, and CEMEX
USA are actively working toward approval of the measure this year.
ALTERNATIVE ACTIONS
1. Council adopt a "neutral" position on H.R. 5887.
2. Council adopt an "oppose" position to H.R. 5887.
3. Other action as determined by the City Council.
FISCAL IMPACT
Adoption of the recommended action shall not require additional resources, as the actions
required to implement the recommendation are contained within the adopted 2007/08 City
budget.
ATTACHMENTS
Resolution
H R 5887
CITY OF SANTA CLARITA
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA CLARITA, CALIFORNIA ESTABLISHING SUPPORT FOR
H.R. 5887 — THE SOLEDAD CANYON MINE ACT
WHEREAS, H.R. 5887, the Soledad Canyon Mine Act, was introduced in the United
States House of Representatives on April 24, 2008 by Representative Howard P. "Buck
McKeon, the Representative of the California's Twenty-fifth Congressional District; and
WHEREAS, if passed by the United States Congress and signed into law by the
President of the United States, H.R. 5887 will provide for the cancellation of two (2) Federal
contracts issued under the Materials Act of 1947 in favor of Transit Mix Concrete Corporation
("TMC") for the extraction of approximately fifty-six million (56,000,000) tons of sand and
gravel from the Federal mineral estate in lands located in Soledad Canyon adjacent to the City of
Santa Clarita, California (the "Mining Contracts"); and
WHEREAS, the Mining Contracts are currently held by the successor in interest,
CEMEX USA ("CEMEX"), which has expended considerable sums of money on legal and other
services in pursuing development of the Mining Contracts; and
WHEREAS, the City of Santa Clarita has been opposed to the size of the mine allowed by the
Mining Contracts and has fought with CEMEX for nearly ten (10) years to prevent the mine from
coming to the City of Santa Clarita's borders; and
WHEREAS, if passed, H.R. 5887 will provide a mechanism for the United States Bureau of
Land Management ("BLM") to cancel the Mining Contracts; and
WHEREAS, if passed, H.R. 5887 will provide a mechanism for the United States
Secretary of the Interior to grant designated Federal lands located in and around the City of
Victorville to CEMEX in consideration for the cancellation of the Mining Contracts; and
WHEREAS, if passed, H.R. 5887 will fairly compensate CEMEX for the company's investment
in trying to bring the Mining Contracts into production; and
WHEREAS, if passed, H.R. 5887 will remove the Mining Contracts from the Bureau of
Land Management Federal mineral entry, thereby eliminating the possibility of mining on that
site in Soledad Canyon; and
WHEREAS, H.R. 5887 represents precedent for cooperation and collaboration resulting
in a creative solution to a complex problem.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA CLARITA DOES
resolve as follows:
Section 1. Findings
The Santa Clarita City Council finds that H.R. 5887, the Soledad Canyon Mine Act, is in the best
interests of the citizens of the City of Santa Clarita, the State of California and the United States
of America in that it eliminates the possibility of future mining on the specific site in the Soledad
Canyon area of the State and provides a means for CEMEX to recover as just compensation for
the cancellation of the Mining Contracts the fair market value of, and CEMEX's expenditures
and covered liabilities pursuing the development of the Mining Contracts through granting
CEMEX interests in designated surface and mineral estates located within the Victorville area.
The City of Santa Clarita further finds that H.R. 5887, the Soledad Canyon Mine Act is in the
best interest of the residents of the City of Victorville in that it augments the City of Victorville's
strong economic development plan for the community.
Section 2. Support for the Passage of H.R. 5887
Based upon the findings set forth above, the Santa Clarita City Council supports the passage of
H.R.5887, the Soledad Canyon Mine Act.
Section 3. Effective Date
This Resolution shall take effect upon its adoption.
Section 4. Certification
The City Clerk shall certify to the adoption of this resolution
PASSED, APPROVED AND ADOPTED this day of
ATTEST:
CITY CLERK
2
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
I, Sharon L. Dawson, CMC, City Clerk of the City of Santa Clarita, do hereby certify that
the foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the day of by the
following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
3
CITY CLERK
CERTIFICATION OF
CITY COUNCIL RESOLUTION
I, Sharon L. Dawson, City Clerk of the City of Santa Clarita, do hereby certify that this is a true
and correct copy of the original Resolution No. 08-' adopted by the City Council of the City
of Santa Clarita, California on ,****_**; 2008, which is now on file in my office.
Witness my hand and seal of the City of Santa Clarita, California, this day of
, 20_.
Sharon L. Dawson, CMC
City Clerk
By
Susan Caputo
Deputy City Clerk
rd
M
I
IIOTI-I Co.TGRrss
21) SH. R. 5887SESSION
To provide to the Secretary of Interior a mechanism to cancel contracts
for the sale of materials CA -20139 and CA -22901, and for, other purposes.
IN THE IIOUSE OF REPRESENTATIVES
Ai�iui, 24, 2008
Mr. MCKEON introduced the following hill; which, was referred to the Com-
mittee on Natural Resources, and in addition to the Committee on Ways
and Means, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned
A BILL
To provide to the Secretary of Interior a mechanism to
cancel contracts for the sale of materials CA -20139 and
CA -22901, and for other purposes.
1 Be at enacted by the Senate and House o f Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the "Soledad Canyon Mine
5 Act".
6 SEC. 2. FINDING AND PURPOSES.
7 (a) FINDINGS.—The Congress finds the following:
n
2
1 (1) Transit Mix Concrete Corporation holds two
2 valid Federal contracts, numbered CA -20139 and
3 CA -22901, issued under the Materials Act of 1947,
4 for the extraction of approximately 56,000,000 tons
5 of sand and gravel from the Federal mineral estate
6 in lands located in Soledad Canyon adjacent to the
7 city of Santa Clarita, California.
8 (2) It is in the best interest of the citizens of
9 California and the Federal Government to cancel the
10 Contracts and prohibit fixture mining in the Soledad
11 Canyon area of California.
12 (3) TMC should receive as just compensation
13 for such cancellation the fair market value of the
14 Contracts and all costs, fees, and covered liabilities
15 incurred by TMC in good faith in its efforts to de -
16 velop the Contracts.
17 (4) A site-specific solution that is fair to TMC
18 and that seeks to protect the environment and mini -
19 mize impacts on local transportation systems is in
20 the best interest of the Nation.
21 (5) Considerable sums of money have been ex -
22 pended by TMC and the city of Santa. Clarita on
23 legal and other services in trying to ensure their in -
24 terests are protected with respect to Contracts CA -
25 20139 and CA -22901.
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1 (b) PURPOSES.—The purposes of this Act are the fol -
2 lowing:
3 (1) To provide to the Bureau of Land Manage -
4 ment the authority to cancel contracts CA -20139
5 and CA -22901 and prohibit future mining in the
6 Soledad Canyon.
7 (2) To provide a means for TMC to recover as
8 just compensation for the cancellation of the Con -
9 tracts the fair market value of, and TMC's expendi-
10 tures and covered liabilities pursuing the develop -
11 ment of, the Contracts.
12 (3) To provide the Bureau of Land Manage -
13 meet tools to verify expenses incurred by TMC and
14 provide relief.
15 (4) To provide timelines for the verification of
16 costs incurred by TMC and the determination of just
17 compensation, and to provide a dispute resolution
18 process.
19 SEC. 3. DEFINITIONS.
20 In this Act:
21 (1) CONTRACTS.—The term "Contracts" means
22 Bureau of Land Management mineral contracts
23 numbered CA -20139 and CA -22901.
24 (2) COVERED I LUMLITIES.—The term "covered
25 liabilities" includes any court-ordered or court-ap-
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1 proved payment, settlement, or other liability on the
2 part of TMC for damages, costs, compensation, or
3 reimbursement to any third party for agreements en -
4 tered into by TMC in good faith prior to January
5 1, 2008, in order to exercise rights under the Con -
6 tracts.
7 (3) MATERIALS ACT OF 1947.—The term "Ma -
8 terials Act of 1947" means the Act of July 31,
9 1947, (chapter 406; 61 Stat. 681; 30 U.S.C. 601-
10 604).
11 (4) SECRETA11Y.—The term "Secretary" means
12 the Secretary of the Interior.
13 (5) TMC.—The term "TMC" means the Tran -
14 sit Mixed Concrete Corporation and its successors in
15 interest, including CEMEX USA.
16 SEC. 4. CANCELLATION OF THE CONTRACTS.
17 (a) CONTRACT CANCELLATIONS.—The Secretary
18 shall cancel Bureau of Land Management mineral con -
19 tracts CA -20139 and CA -22901 and withdraw those
20 areas that were subject to the Contracts from further min -
21 oral entry under all mineral leasing and sales authorities
22 available to the Secretary, effective on the date of the en -
23 actment of this Act.
24 (b) COMPENSATION. -
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1 (1) IN GENERAL.—As compensation for the
2 cancellation of the Contracts, TMC shall receive fair
3 market value of the Contracts and TMC's expendi-
4 tures and covered liabilities in trying to bring the
5 Contracts into commercial production. As such com-
6 pensation, the Secretary shall provide to TMC sur -
7 face and mineral interests and additional value in
8 accordance Nvith subsection (d) having a total value
9 equal to the amount described in paragraph (3). All
10 such expenditures must have been incurred by TMC
11 in good faith in connection with its efforts to bring
12 the Contracts into commercial production: Provided,
13 however, that compensation for covered liabilities
14 may be paid to TMC under this section for up to 15
15 years following the effective date of this Act.
16 (2) INCREASE IN ADJUSTED 13ASIS OF CON -
17 TRACT UPON CANCELLATION.—Por purposes of the
18 Internal Revenue Code of 1986, the adjusted basis
19 of any contract to which section 4(a,) applies shall be
20 increased (immediately before the cancellation of
21 such contract under such section) by the excess (if
22 any) of -
23 (A) the fair market value of such contract
24 (determined immediately before such cancella-
25 tion), over
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6
1 (B) the agjusted basis of such contract (as
2 determined immediately before the application
3 of this section).
4 (3) VALUE DESCRIBED.—The compensation
5 provided for in paragraph (1) is equal to the sum of
6 the following:
7 (A) All amounts paid to the United States
8 by TMC with respect to the Contracts as bonus
9 bids or other prepayments.
10 (B) Interest on amounts referred to in
11 subparagraph (A), from the date of payment of
12 such amounts to the United States, at a, rate
13 determined by the Secretary.
14 (C) Amounts expended by TMC in secur-
15 ing the contracts and trying to bring them into
16 production, including -
17 (i) all actual costs, including fees, as -
18 sociated with the engineering and environ -
19 mental studies, and permitting pro -
20 ceedings, that were incurred in good faith
21 in TMC's efforts to exercise the rights
22 granted under the Contract terms; and
23 (ii) all actual legal costs, including
24 fees and covered liabilities, incurred in
25 good faith in TMC's efforts to exercise the
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1 rights granted in the Contracts, including
2 all fees and costs associated with securing
3 permits and entitlements, litigation to com-
4 pel, secure, or defend permits or entitle--
5
ntitle=5 ments, and litigation in connection with
6 disputes relating to mineral and surface es -
7 tate rights to the property that is the sub -
8 ject of the Contracts.
9 (D) The fair market value of the Con -
10 tracts.
11 (4) DETERMINATION OF PAIR MARKET
12 VALUE.—The Secretary shall, within six months
13 after the date of enactment of this Act, determine by
14 mineral appraisal the fair market value of the con -
15 tracts at the time of such determination for pur-
16 poses of paragraph• (3)(D), determine by mineral ap-
17 pra,isal or other generally accepted applicable ap-
18 praisal techniques the fair market value of the sur -
19 face and mineral estate identified in the map re -
20 ferred to in subsection (d), and notify TMC of those
21 determinations. In determining the fair market value
22 of the Contracts, the Secretary shall assume that -
23 (A) TMC has obtained all permits and en -
24 titlements necessary to mine, produce, process,
25 and sell sand and gravel from the Contracts;
•HR 5887 IH
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1
(B) mining operations under the Contracts
2
have commenced at the time of the determina-
3
tion, with maximum annual production volumes
4
that -
5
(i) are based on the projected supply
6
and demand outlook at the time of deter -
7
mination; and
8
(ii) reflect depletion of the reserves of
9
the Contracts within the effective periods
10
of the Contract;
11
(C) the fair market value of the Contracts
12
includes the present value of expected future
13
net cash flows to be derived from the mining,
14
producing, processing, and sale of the sand and
15
gravel contained in the Contracts over the min -
16
imum time necessary to mine, produce, process,
17
and sell such sand and gravel, taking into con -
18
sideration -
19
(i) the material deposit contained in
20
the contract sites and its quality, volume,
21
minability, and reclamation requirements;
22
(ii) the proximity of the contract sites
23
to markets;
24
(iii) the type of market that could be
25
served from the contract sites, including
•HR 5887 IH
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1 future supply, demand, and probable price
2 increases based upon construction material
3 data developed by the State of California;
4 (iv) the cost of mining, producing,
5 processing, and selling the material re -
6 served in the contract sites;
7 (v) the types and costs of transpor-
8 tation for such production from the con -
9 tract sites to markets;
10 (vi) 'royalties, taxes, and fees to mine,
11 and sell the production from the contract
12 sites;
13 (vii) -similar market sales of materials
14 the area or region of the contract sites;
15 and
16 (viii) the net present values of ex -
17 pected future cash flows from proposed
18 mining operations of the Contract sites
19 taking into consideration, at a minimum,
20 the matters referred to in clauses (i)
21 through (viii).
22 (c) SUBMISSION OF EXPENSES INCURRED. -
23 (1) IN GENERAL.—To assist in the verification
24 of the amounts expended referred to in subsection
25 (b)(3)(C), TMC shall submit to the Secretary within
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1 60 days after the date of enactment of this Act an
2 itemized 'list of such amounts, with enough detail
3 and supporting documentation so the Secretary can
4 determine that the expenses are associated with the
5 Contracts.
6 (2) ARBITRATION.—The Secretary shall issue
7 the determination of the amounts expended referred
8 to in subsection (b)(3)(C) within 60 days after re-
g ceipt of the itemized list required under paragraph
10 (1) . If the Secretary disapproves such list, the See -
11 rotary shall, upon request of TMC, determine the
12 economic value invested for purposes of subsection
13 (b)(3) through arbitration in accordance with sub -
14 chapter IV of chapter 5 of title 5, United States
15 Code.
16 (d) RETURN OF VALUE OPPORTUNITIES FOR
17 TMC. -
18' (1) IN GENERAL.—Within six months after the
19 completion of the requirements of) subsections (b)
20 and (c), the Secretary shall provide to TMC the fol -
21 lowing:
L 22 (A) Surface and mineral estate interests
23 and additional value under subsection (b)(1)
24 using the surface and mineral estate as de -
25 scribed and delineated as Area A on the map
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1
entitled "Cemex USA and City of Victorville,
2-
California Land Disposal and Acquisition
3
Agreement" and on file with the Secretary, con -
4
sisting of approximately 5,000 acres.
5
(B) If the fair market value of the surface
6
and mineral estate used under subparagraph
7
(A) is less than the sum described in subsection
8
(b)(3), additional mineral or surface estate
9
under subsection (b)(1) using the surface and
10
mineral estate as described and delineated as
11
Area B on the map entitled "Cemex USA and
12
City of Victor -011e, California Land Disposal
13'
and Acquisition Agreement" and on file With
14
the Secretary, consisting of approximately
15
3,000 acres as is necessary so that the sum of
16
the values provided under subparagraph (A)
17
and this subparagraph does not exceed the sum
18
described in subsection (b)(3).
19
(C) If the sum of the fair market values of
20
the surface and mineral estates and additional
21
value provided under subparagraphs (A) and
22
(B) is less that the sum described in subsection
23
(b)(3), additional value as is necessary so that
24
the sum of the values provided under subpara-
25
graphs (A) and (B) and this subparagraph does
•HR 5887 IH
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1 not, exceed the sum described in subsection
2 (b)(3), in the form of one or more of the fol -
3 lowing that are mutually agreed to by the Sec -
4 retary and TMC:
5 (i) Credits that may be applied
6 against future royalties, bonus bids, or
7 rental fees for Federal lands administered
8 by the Secretary and located within the
9 State of California, including leases for all
10 submerged lands of the outer Continental
11 Shelf.
12 (ii) Interest in the mineral estate in
13 Federal lands in the State of California
14 that are available for sale under the Min -
15 eral Leasing Act (30 U.S.C. 181 et seq.)
16 or other law administered by the Secretary.
17 (iii) Interests in the surface estate in
18 Federal lands in the State of California
19 that are under the administrative jurisdic-
20 tion of the Secretary and that are available
21 for disposal.
22 (e) TREATMENT OF CREDITS. -
23 (1) TERM.—Credits provided under subsection
24 '(d) shall expire at the end of the 10 -year period be-
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1 ginning on the date the credits are issued by the
2 Secretary.
3 (2) ASSIGNMENT.—TMC may assign credits
4 provided to TMC under subsection (d) to any person
5 who satisfies the same requirements to hold the Con -
6 tracts as those that applied to TMC under the Mate -
7 rials Act of 1947.
F
8 (f) REFERRAL TO COURT OF CLAIMS. -
9 (1) REFERRAL.—If Nvithin 12 months after the
10 date of enactment of this Act, the Secretary and
11 TMC do not reach agreement under subsections (b),
12 (c), and (d) regarding the financial and mineral pro -
13 duction opportunities to be provided by the See -
14 rotary to TMC under subsection (b)(1), or, if within
15 3 months after TMC receives notice in accordance
16 -vvith subsection (b)(4) of the fair market value de -
17 termined by the Secretary of the surface and min -
18 era] estate identified in the maps referred to in sub -
19 section (d) TMC or the city of Vietorville, California,
20 notifies the Secretary that it disagrees with the Sec -
21 retary's determination, the Secretary shall refer the
22 issues upon which TMC, or the city of Victorville,
23 California, and the Secretary are not in agreement
24 A ith respect to such an agreement or fair market
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1 value to the United States Court of Federal Claims
2 for resolution
3 (2) RESOLUTION BY COURT. -In any- referral
4 under this subsection, the court shall -
5 (A) determine de novo the values described
6 in subsection (b) and (d), including the fair
7 market values of ,the surface and mineral es -
8 tates as described and delineated on the maps
9 referred to in subsection (d)(1); and
10 (B) determine and order the Sedretary to
11 provide financial and mineral production oppor-
12 tunities consistent With subparagraph (A), for
13 purposes of subsections (b)(1) and (d).
14 SEC. 5. LIMITATIONS ON FUTURE LEASING FOR LAND OR
15 MINERAL ESTATE IN THE VICTOR VALLEY
16 AREA OF CALIFORNIA.
17 Notwithstanding anything in this Act to the contrary,
18 prior to any lease, transfer, or other disposition of laud
19 or any mineral or surface estate for any area, that is lo -
20 Bated in the city of Victorville, California, the city of
21 Victorville's sphere of influence, or the city of Victorville's
22 proposed sphere of influence, all as delineated on the map
23 entitled "Cemex USA and City of Vietorville, California.
24 Land Disposal and Acquisition Agreement" and on file
25 «rith the Secretary, the Secretary shall—
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1 (1) consult with the city of Victorville, Cali-
fornia, and surface owners in that area; and
3 (2) prohibit mining in that area.
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