Environment and Energy Daily, Eric Bontrager
Published October 2, 2008
When the House last year passed a bill that would update the federal hardrock mining law, advocates thought it would only be a matter of time before the Senate followed suit and amended a law unchanged since President Ulysses S. Grant signed it in 1872.
But as the 110th Congress draws to a close, the champions for amending the law to include environmental protections and federal royalties must once again wait for next year.
Prospects were high that the Senate Energy and Natural Resources Committee, which sought to craft its own bill, could produce legislation before the end of the year. The Pew Campaign for Responsible Mining alone spent $3 million on advertising and outreach in hope that this might be the year for reform.
It was not to be. A combination of factors including inflexibility on issues such as royalty payments, the summer-long energy debate and truncated congressional schedule combined to sink the bill's chances, lawmakers, staffers and lobbyists say.
H.R. 2262, which the House passed last year, would impose an 8 percent royalty on the gross returns on minerals from new claims and a 4 percent royalty on existing claims filed under the law. Part of the proceeds that would go toward the cleanup of thousands of abandoned mines across the country.
Sponsored by Natural Resources Chairman Nick Rahall (D-W.Va.), the bill would also grant federal authorities significantly more control over where hardrock mining can take place, especially in environmentally sensitive lands including national parks, something opponents argue is unnecessarily burdensome.
While the House bill passed with bipartisan support, the Senate committee opted for a "clean slate" approach, labeling the House bill as overreaching on industry while not addressing the fundamental flaws in the 1872 law itself. "The House version didn't accomplish what we needed to accomplish," said Sen. Larry Craig (R-Idaho).
Senate Majority Leader Harry Reid (D-Nev.), whose father was a miner and whose son-in-law is a lobbyist for gold mining giant Newmont, said at the time the House bill "won't stand over here" as written. "There was a broad consensus in the Senate that the House bill was not tenable and that the Senate would need to draft its own legislation," said Reid spokesman Stephen Krupin.
Reid and many other Western senators are pushing for a net royalty similar to the royalty structure in Nevada, and only on new operations. While a gross royalty such as the one in the House bill is based on the total revenue from the sale of minerals, a net royalty allows the operator to deduct production costs before the royalty is calculated.
The Congressional Budget Office concluded that the House bill's gross royalty would generate a total of $160 million between 2009 and 2012 on existing claims and $310 million between 2009 and 2017, but several experts warned lawmakers that a gross royalty in excess of 5 percent could cost millions for the government and local economies because mining companies would be discouraged from operating in the United States.
Sen. Pete Domenici (R-N.M.), ranking member of the Energy and Natural Resources Committee, also sought to limit the scope of the Senate bill, saying the House bill's broad mandates would be disastrous for the mining industry and the communities that depend on it. "For that reason, and in light of the fact that America increasingly relies on foreign countries for minerals, I believe that the scope of our efforts should be limited to patenting, royalty and abandoned mine issues," Domenici said at a hearing earlier this year.
Armed with this new mandate, committee staff began working on a new draft, but a bill never got to markup.
One Senate aide said that there were numerous discussions earlier in the year amongst committee staff that produced several draft proposals from both sides but that none ever got enough traction with the other to even be negotiated.
"There just hasn't been the time to get it right," said Sen. Ken Salazar (D-Colo.).
One industry source familiar with the Senate negotiations said that there was a draft from committee Republicans they hoped would gain some bipartisan support from senators like Salazar who represent Western states with a hardrock mining industry but that because the majority had their own draft, neither proposal came to fruition.
Faced with the impasse, discussions slowed after the last hearing in March, about the same time that the brewing energy debate began consuming the committee's resources and staff.
"Bingaman obviously held the pin, and despite a lot of conversations ... no bipartisan blueprint came out of the committee," the source said. Unchanged since 1872
The goal of the mining law in 1872 was to draw prospectors to the West in an effort to populate the growing frontier. In that spirit, the law permits privatization, or patenting, of public resources for $2.50-$5.00 per acre, a steal even in those times.
While Congress has renewed a temporary moratorium on such land purchases every year since 1994, hardrock mining continues to pay no federal royalties. By comparison, the oil, gas and coal industries pay the federal government gross royalties ranging between 8 and 16 percent.
Some estimates show the government has missed out on more than $245 million in royalties on mineral reserves since the 1872 law was passed. As early as 1934, different authorities and oversight committees have called for an update to the law to ensure adequate protection of natural resources and a fair return on the use of those resources.
In 1979, the arm of Congress now known as the Government Accountability Office issued several reports on abuses of the law by mining companies and land speculators. By 1989, GAO bluntly called for reform.
When Democrats took control of Congress in the 2006 midterm elections, it opened the door for Rahall to become chairman of the Natural Resources Committee and make his third attempt at reform legislation. While his previous attempts started strong in the House but collapsed in the Senate, Rahall believed that a combination of rising metal prices and better understanding of mining's environmental impact made the timing right for action in the 110th Congress.
The mining industry knows an update to the 1872 law is inevitable, and if it doesn't play a role in crafting it, it may be left out in the cold.
Hal Quinn, the new president of the National Mining Association, said the industry welcomes changes to the 1872 law, even if it means royalties. "The mining industry is fluid to pay for a return to the public for the use of those lands, but one that must be both fair and reasonable so it does not upset investments that have already been made as well as stave off new investments," Quinn said at an industry convention in Las Vegas last month.
The industry is also pushing for "security of tenure" provisions that would ensure that companies that secure permits and loans for mines would be allowed to stay there for the duration of their operations. Environmental protections
Environmentalists argue that a net royalty only on new operations would mean it could take years before any royalties come from hardrock mining and be a fraction of what a gross royalty on existing operations would generate, indefinitely delaying priorities such as abandoned mine cleanups.
The Forest Service and Bureau of Land Management estimate there are approximately 38,500 abandoned mine sites on national forests and 65,000 on BLM lands.
An audit of abandoned mine sites on Interior lands released in July concluded that the department's poor management and funding for abandoned mines poses a serious public health and safety risk, creating a situation where "the potential for more deaths or injuries is ominous." The Interior inspector general stated that nationwide cleanup of abandoned mines could cost tens of billions of dollars, but BLM's program receives less than $10 million in annual funding and the National Park Service's program receives less than $1 million.
Mining advocates have asserted that the cleanup of abandoned mines would be expedited with the inclusion of a Good Samaritan provision, which would allow outside parties to clean up abandoned mine sites without fear of legal liability.
An estimated 30,000 of the more than 160,000 abandoned mines on federal lands are believed to pose environmental risks, according to the Government Accountability Office, releasing toxic heavy metals, acidity and radioactivity into various waterways.
As water sources continue to dry up in the West, environmentalists warn that it will become more likely that mine waste could contaminate a vital water supply. "If Congress doesn't address this issue soon, Western water supplies could be in serious jeopardy," said Dusty Horwitt, an analyst with the Environmental Working Group.
The industry argues that existing environmental protections, including the Clean Air Act, the Clean Water Act and the National Environmental Policy Act, are more than enough. But proponents say the 1872 law provides an open-door policy for new mine construction, and with prices for metals like uranium and gold at record highs, it could only get worse unless there are more environmental controls. Next year
With the rewrite of the full 1872 law up in the air, lawmakers have crafted bills focusing on specific areas or issues.
In July, the House Natural Resources Committee voted to have Interior Secretary Dirk Kempthorne withdraw the last pockets of public land around the Grand Canyon from new uranium mining claims. Supporters argue the measure was the only way to protect the canyon and the surrounding region from the potentially devastating effects uranium mining could have on the local water supplies and population. More than 1,100 uranium mining claims have been filed for sites within five miles of the park.
The department rejected the committee's motion on a technicality, arguing that because Republicans walked out on the vote for the resolution, the committee did not have the majority of committee members it needed to reach a quorum. Three environmental groups filed a lawsuit against the department earlier this week to force Kempthorne to withdrawal the lands (E&ENews PM, Sept. 29).
In the Senate, Sen. Dianne Feinstein (D-Calif.) introduced legislation to create a federal abandoned mine cleanup fund while Sen. Maria Cantwell (D-Wash.) indicated she will push her own reform bill, although it would not address abandoned mines.
Looking ahead to 2009, White House hopefuls Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.) have spoken in favor of reform but say any bill should take into account the effect it has on the industry.
Rahall did not rule out developing another House bill, depending on the political landscape next year, but said the Senate ENR Committee could simply pick up where it left off. "They've certainly laid a solid foundation for the next Congress," he said.
Jane Danowitz, director of the Pew Campaign for Responsible Mining, said Bingaman "should show some good faith" by publicly announcing that hardrock reform will be priority for his committee in the 111th Congress, complete with a draft that can be examined and debated in the meantime.
"It's important to have something that continues to keep this discussion going," Danowitz said. "It's hard to have a conversation on whether you disagree or agree if you don't have something to look at."
Bingaman said there was no agreeable draft to release but the committee would continue to work on its own legislation. "It'll definitely be a priority for me in the next Congress," he said.
