Dispute in Sierra : Gold Has No Glitter for Newcomers

Outwardly at least, not much has changed here in the pine-studded hills where gold was discovered more than a century ago.

Gold created the mining towns of the Sierra Nevada. Gold nurtured its pioneering citizens through a Depression, and today quaint villages with colorful names like Fiddletown and Volcano survive on gold rush lore, their streets filled with tourists instead of miners.

So it came as a big surprise to most old-timers when a group of angry landowners joined forces in a quiet revolt that threatens to cut short a mining resurgence in California’s Mother Lode.

Worried about the planned reopening of a nearby abandoned gold mine, the homeowners--drawn here by natural beauty, not the gold--pushed through a ballot initiative that, in effect, prohibits most major mining projects in the heart of the state’s gold country.

Effects Being Debated

The long-term effects of the measure still are being debated in El Dorado County, where it was narrowly approved by voters last November.

But it was a stunning defeat for the state’s mining industry, which has been eyeing the rich underground deposits of the Sierra foothills since 1980 when a surge in gold prices made it profitable to reopen dozens of mines shut down more than 40 years ago.

The paradoxical rejection of mining in this historical mining region is symptomatic, industry watchers say, of a dramatic population shift that has been sweeping through the mineral-rich foothills. Once the state’s most productive gold districts, the foothill towns also are among its fastest growing communities, attracting many affluent city dwellers looking for a simpler way of life.

Reaction No Surprise

“History has moved on and superimposed human beings on the landscape,” observed Michael Remy, an attorney who represented backers of the El Dorado initiative. “When they try to come back with those mines in the same location, I don’t think it is any surprise that we find a fairly strong reaction.”

In the aftermath, several mining companies have pulled up stakes, complaining that the region’s substantial gold and other mineral deposits are not worth the political hassles and the cost of dealing with an increasingly hostile population.

In Nevada County, near the northern end of the state’s gold country, voters in towns that exist to a large degree on Gold Rush lore, will decide next month whether to outlaw the first major mining operation proposed since World War II.

“Any company is thinking twice about coming in,” said Ralph Lloyd, a geologist and gold expert with the state Division of Mines and Geology. “The common talk is, ‘Don’t go to California.’ ”

John S. Rapp, another state geologist who has published handbooks on gold mining, said, “What is really scary” about El Dorado County’s initiative is the possibility that others will follow and that homeowner anger might be directed at well-established mining operations, such as gravel and clay, that play a larger role in rural California’s economy.

Yet some officials connected with the mining industry say there is no reason to panic. They note that California’s gold production is at its highest level in years and is expected to double again in 1985.

As further evidence of mining’s viability, they point to Homestake Mining Co.’s recent success in opening what promises to be among the nation’s most productive gold mines far to the west of the Mother Lode in Napa, Yolo and Lake counties. The firm’s McLaughlin Mine poured its first gold bar in March, having survived opposition from neighbors, 250 reviews from government agencies and start-up costs of $270 million.

“They did it in the context of what was not totally a euphoric political environment,” said James Santini, a director of Homestake Mining and a former Nevada congressman who chaired the House mining subcommittee. “I think in small measure it shows that success can be realized even when the odds are enormous.”

Even optimists like Santini, however, acknowledge that the kinds of demographic changes shaking much of rural Northern California do not bode well for the mining industry.

Wartime Shutdown

In the years since President Franklin D. Roosevelt shut down all nonessential mining for the World War II effort, many of the foothill counties encouraged land development to bolster their sagging tax base.

Answering the call by and large were retirees and refugees from urban settings such as the San Francisco Bay Area and metropolitan Los Angeles who were looking for a bucolic setting to escape the rigors of city life.

That’s exactly what they found: pine covered rolling hills, large plots of land at reasonable prices, no traffic and no smog. The romance of gold mining lore may have attracted them initially, but the reality of gold mining--noisy rock crushers, landscape-scarring bulldozers and toxic chemical processing tanks--did not.

“If I wanted to live in an area like that I’d move to central Los Angeles,” said Gregory McNew, who built his house six years ago on a 10-acre plot near the foothill community of Shingle Springs.

One of the organizers of the successful anti-mining initiative in El Dorado County, McNew typifies the new arrivals to the foothills. A high-level employee of the California Department of Transportation, McNew is relatively affluent and commutes 30 miles daily to his office near the state Capitol. He derives no income from mining and can see little benefit in a return to the gold rush days.

Not Like Old Days

“Good Lord, it’s not 1850 or 1900 or even 1940, when most of the mining stopped,” McNew said.

The problems were stirred up when the price of gold unexpectedly skyrocketed to $875 an ounce in 1980, touching off a new gold rush by big corporations that proposed modern techniques to revive mining operations once considered unprofitable.

Gold prices since have dropped to about $325 an ounce. Even at this level, state mining officials predict that California--largely the Sierra foothills--might yield up to 1 million ounces of the precious metal yearly, up from only about 3,000 ounces as recently as 1981. That would make California the producer of about 40% of all the gold mined in the United States.

For old-timers, news of the coming gold rush was greeted by a sense of nostalgia and the promise of steady jobs in a region that has been suffering chronic unemployment. The feeling was not shared by the new arrivals.

Gold Fields, a Delaware mining company, touched off the debate in El Dorado County when it quietly bought 1,200 acres in the midst of a heavily-wooded residential area 20 minutes south of Placerville. Its plan was to convert two abandoned underground mine shafts into a major open pit mine within a quarter-mile of several large home sites.

Homeowners Balk

The county Planning Commission and Board of Supervisors agreed to allow exploratory drilling. But homeowners balked, saying they feared that mining would scar the land and send property values plummeting. Unable to reach an accommodation, the homeowners turned to the initiative.

It was a close vote, with long-time residents of such historic mining towns as Placerville and Georgetown lined up against newcomers and residents of environmentally conscious communities near Lake Tahoe.

As a result of the initiative, prospective mining companies must establish a nearly two-mile buffer zone around any open pit or strip mine and guarantee that there will be no harm to the health, safety and welfare of surrounding landowners.

County planners have since found that the county’s rapid residential development left virtually no place where a major surface mine can operate without violating the initiative.

Bill Wright, assistant county counsel for El Dorado County, said he also doubts that most mining companies can live up to the stringent environmental safeguards called for in the measure.

Measure of Impact

“When (mine workers) walk out on the ground and step on a cricket you have an environmental impact,” Wright said. “The measure doesn’t distinguish between significant and insignificant impacts.”

Backers of the initiative said that it was never their intent to kill mining and charge that mining firms have exaggerated the consequences. Opponents and some state officials suggested that the entire measure might be unconstitutional.

But the chance for a quick court test evaporated when Gold Fields chose to close shop and leave town rather than fight.

Collon Kennedy, a Gold Field’s executive who helped direct the El Dorado County project, said a prolonged legal battle does not make economic sense. “I think our initial reading, given the circumstances at the time, led us to believe that there was no way mining would ever be permitted again in El Dorado County,” he said.

“It is a paradox that one of the things (the county) promoted from a tourist standpoint is its historical mining ties and at the same time, through a variety of actions, mining has pretty much been eliminated.”

It is a familiar scenario throughout California’s gold country.

Not far to the south, in historic Jamestown, where prospecting equipment is proudly displayed in storefronts and tourists can pan for gold on Main Street, Sonora Mining Co. ran into heavy public opposition over its plan to begin open-pit mining within several hundred yards of some homes.

The firm received its final permit this month and expects to begin mining next summer. But company spokeswoman Linda Garello said the cost--an estimated $1.5 million simply to obtain permits--is more than most mining firms are willing to risk.

“I don’t think a smaller producer could weather what we’ve had to go through during the last 18 months,” she said. “There’s just no way.”

Homestake, the latest company to successfully begin a major gold mining project in California, in some ways faced far more serious problems.

Its enormous mile-long open pit mine, processing plant and disposal areas span three counties, all with their own permit requirements. The 3 million ounces of gold believed buried there is found in submicroscopic particles. Getting at it requires the removal of seven tons of rock for each ounce of gold recovered.

Bitter Opposition

Despite the mine’s rather isolated location, there still was bitter opposition from some landowners.

Raymond E. Krauss, the mine’s environmental manager, attributes Homestake’s surprising success to early planning that included contacting each potentially hostile group, agreeing to many of their suggestions and promising to hire at least 60% of the mine’s work force locally.

In a further effort to overcome opposition, the company bought 10,000 acres as a buffer zone, spent millions of dollars on an extensive environmental monitoring program to answer concerns about possible discharge of toxic chemicals or other pollutants into the water system, and agreed to eventually convert the mine property into an ecological center.

“I felt they were trying to make a model project out of it,” said Herb Klarer, an official of the local Sierra Club chapter which, much to everyone’s surprise, endorsed the mining project.

Not many mining companies, however, have the financial backing and resources to follow Homestake’s lead. Residential development in the Sierra foothills has been much more extensive than in the area surrounding the McLaughlin mine, making some of the environmental controls there more difficult and costly.

For now at least, industry observers say, the future of mining in California’s gold country depends largely on the reception of local government and its residents. Having already failed in El Dorado County, gold miners will face their next crucial test in November when Nevada County voters decide in a referendum whether to allow mining at the crest of 3,899-foot Banner Mountain, a residential area roughly between Nevada City and Grass Valley.

The county, which prided itself as the hub of the Gold Rush, must make a difficult choice between jobs and economic benefits offered by mining and the preservation of a residential life style sought by the new arrivals.

In some ways, the choice already seems to have been made. Starkly modern condominiums overshadow 19th-Century-style Victorian homes in Grass Valley and Nevada City, while Gold Rush-era mining outfitting shops have long given way to tourist attractions and chic restaurants.

A few miles north, mining opponents can point to one of the nation’s most dramatic examples of mining excess--the Malakoff Diggins State Park--a ghostly monument to environmental devastation where high-pressure water cannons stripped the hillsides into a barren moonscape in a 19th-Century search for gold.

What happened at Malakoff Diggins led to the outlawing of hydraulic mining. But the past is remembered and a mining firm that spent an estimated $8 million in a recent attempt to locate nearby was driven out by angry neighbors.

‘Defending Yourself’

“When you live in a rural community like this you end up defending yourself against any number of possible encroachments,” said Michael Killigrew, an artist and former New York journalist who moved near the state park in 1970.

Nevada City bar owner Jerry Cirino, who is campaigning on behalf of the mine, countered that with the timber industry depressed and few other opportunities for nearby employment, mining is a matter of long-term economic survival.

“The irony is so blatant it just amazes me,” said Cirino, a local resident for more than 30 years. “We pride ourselves as the gold country, it’s all around here. And we’re all concerned about the quality of life. But there is no quality of life when you don’t have a job or you have to leave the area when you graduate from high school.”

State officials have expressed concern over the growing threat to mining. But Gov. George Deukmejian and lawmakers who represent the area have carefully stayed out of the fight, calling it a local issue.

As for the mining companies, many say that they will think twice before attempting to do business in California’s gold country. They acknowledge, however, that if the price of gold rebounds to the $800-an-ounce level, even homeowner resistance may not be enough to keep them out.

McNew, organizer of the El Dorado County anti-mining initiative, said he is not worried.

“Our county is more prosperous now, partly because people feel they can come here and buy a house and not have that threatened,” he said. “We think time is on our side. Most of the conditions favorable for progress and (land) development are continuing and that’s all to our advantage.”