For only the second time in 136 years, Congress is
nearly unanimous in its call to update the 19th century law that
still governs the country’s metal ore mining.
“There’s a pretty broad sentiment in both parties and
both houses that the mining law of 1872 needs to be
reformed,” says Luke Popovich of the National Mining
Association.
In November, the House of Representatives
passed the Hardrock Mining Reform and Reclamation Act of 2007 with
a vote of 244-166.
The legislation would impose gross
revenue royalties of 8 percent on new hardrock mining operations
and 4 percent on existing operations. Those revenues would total
$441 million over the next four years, estimates the Congressional
Budget Office. Two-thirds of that amount would be earmarked for
abandoned mine cleanup, which might cost as much as $50 billion,
according to a 2004 estimate by the Environmental Protection
Agency. The other third of generated royalties would fund public
projects for communities adversely affected by mining.
The bill, now under discussion in the Senate, would also eliminate
the patenting—or purchasing—of public land for mining,
and replace it with a 20-year renewable operating permit.
Additionally, the House reform would give federal land managers
more say over mining projects. Under the 1872 law, the Bureau of
Land Management and the Forest Service are bound to grant mining
requests as long as federal laws, such as the Clean Water Act and
Endangered Species Act, are not violated. But the revisions would
allow the agencies to deny permit applications if they found that
mining proposals would cause “undue degradation” to
local lands or economies. The proposed legislation would also allow
agencies to weigh mining against other land uses.
“The House bill levels the playing field for mining and other
uses of public lands, like hunting and fishing,” says Roger
Flynn, director of the nonprofit Western Mining Action Project.
“With the 1872 law, mining gets preference, but with the
House bill, mining is no longer king of the hill.”
The bill would also allow local and tribal governments to petition
the secretary of Interior to protect environmentally and culturally
important areas, such as watersheds and sacred sites, from mining.
From the House to the Senate and from environmentalists
to industry, some reform issues are, surprisingly, not contested.
“There’s wide agreement that it’s not
okay to sell public land at $5 an acre,” says Lauren Pagel,
policy director of mining watchdog Earthworks.
This
“patenting” provision of the 1872 law has allowed
mining companies, many of them foreign-owned, to acquire trophy
real estate — or essential wildlife habitat — for
little more than the price of lunch. Congress placed a moratorium
on patenting in 1994. However, mines have used a grandfather clause
to continue buying public land. Four years ago, the Red Lady
Molybdenum Mine in Crested Butte, Colo., got title to 155 acres
because it had applied for a patent before 1994.
Most
parties involved also agree it’s high time mineral mining
companies reimbursed the public for minerals extracted from public
lands. Other extractive industries, including oil, gas and coal,
pay royalties of 8 to 17 percent. But under the 1872 law, hardrock
miners enjoy immunity from royalties. Over the years, Earthworks
estimates that $245 billion worth of minerals have been taken from
public lands.
In the Senate, however, the proposed
legislation has met resistance. Many feel the House’s royalty
plan and environmental protections would reduce the
industry’s international competitiveness and increase
reliance on foreign minerals. Senators are expected to propose
their own reform plan.
Sen. Pete Domenici, R-N.M., the
ranking member of the Senate Committee on Energy and Natural
Resources and a longtime supporter of the mining industry, said in
a committee hearing that because existing environmental laws
already apply to mining, “efforts to expand reform beyond
patenting, royalty, and abandoned mine issues are merely solutions
in search of a problem.”
The amount and calculation
of royalties are points of contention. Opponents of the House bill
say imposing a royalty on existing operations is an unfair rule
change. “If you’ve told your investors,
‘Here’s what our business plan looks like,’ then
someone essentially confiscates X percent of that wealth, that plan
might not be economic,” says Popovich. Some existing mines,
he says, wouldn’t have gone forward if they’d known
they would be charged 4 percent royalties.
Industry
experts are also concerned that the House bill’s royalties
will inspire investors to put their money into foreign mining
operations. Jim Otto, advisor to World Bank on international mining
law, says the 8 percent gross revenue royalty would be the highest
hardrock mining royalty in the world, and would devastate U.S.
operations if mineral prices fall. In his testimony to the Senate
Committee on Energy and Natural Resources, Otto recommended a gross
royalty of no more than 5 percent.
If the House bill
becomes law, mining operations would lack the long-term security
that investors want, says Carol Raulston, president of the National
Mining Association. Opening a mine requires multi-year analyses and
permitting processes, she says, and the 20-year operating permits
the House proposes could leave prospective miners high and dry as
they attempt to round up funds.
While no one is
strenuously arguing for a return to patenting, the specifics of
alternatives to the 20-year permit are “open to
negotiations,” says Popovich.
If the Senate passes
its own bill, the two houses of Congress will try to reconcile the
differences between the two versions. The last time mining reform
made it that far was in 1993, but the bill died when the houses
failed to compromise.
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