Congress Pushing Mining Law Update

November 7, 2007

It's back.

Another effort to revamp the US General Mining Act of 1872 is under way. The House on Nov. 1, 2007, passed by a 244-166 margin a bill that for the first time would collect for the U.S. Treasury royalties for mining "hard rock" minerals on federally owned lands.

The House-passed bill was amended only slightly from the version reported Oct. 23 by the Committee on Natural Resources. For bill, amendments, report, and transcript of floor action, search Thomas for HR 2262.

The real question now is what will happen in the Senate - where Majority Leader Harry Reid, with deep ties to the mining industry, largely controls the bill's fate. The Senate is still formulating its version of any reform legislation, with a bill unlikely before 2008.

For several decades, there have been efforts to update the law, which was originally designed to encourage mining in the remote and wild West. As incentives, mine claims were cheap, tax breaks were many, and royalty payments and environmental regulations were nonexistent.

Critics say that approach has led to shortchanging the federal treasury - and extensive environmental damage. Now that the context has shifted from few people, a small national budget, and relatively low-impact mining equipment, to higher population density, trillion-dollar budgets, and mines that are a mile wide and a thousand feet deep, they say it's time to reform the old law.

In the last major go-round, when the Committee was chaired by Richard Pombo (R-CA), the mining industry was largely supportive of the suggested revisions (see TipSheet of Nov. 9, 2005).

This time, with Nick Rahall (D-WV) the chair, the industry and the Bush administration are giving the House bill a thumbs down, saying it would impose costs that are far too high, and would add unnecessary additional environmental protections.

The House bill, as summarized by the Committee in an Oct. 23, 2007, press release, would:

  • impose an 8 percent gross income royalty on new mineral production, and a 4 percent gross income royalty on existing mining operations
  • end the sale of mining claims on federal lands at the bargain price of $2.50 to $5.00 an acre
  • create an abandoned mine reclamation program
  • give Native American tribes the same tools as states and counties to protect their lands from mining activities
  • create buffer zones to minimize the impact of mining activities on National Parks
  • balance mining interests with other concerns, such as human health, habitat conservation, hunting, fishing, and recreation

After the full House passed the bill, the Committee emphasized these and other points in a Nov. 1, 2007, press release.

Some environmental groups are generally supportive of the House approach.

Another supporter of the House version of reform is the Jewelers ofAmerica.

One of the concerns environmentalists hope to address is the pollution caused by ongoing mining operations. The Environmental Working Group's Dusty Horwitt notes in Congressional testimony that metal mining sites have consistently been the country's biggest polluters, ever since that category was added to the Toxics Release Inventory in 1998 (Natural Resources: Mining; under "Research," see testimony of 10/1/2007). He also says that about 40% of Western watersheds are contaminated by mining pollution, and that it'll cost an estimated $32 billion to clean up just the West's mining contamination (with others estimating that up to $70 billion is needed for the whole country).

As far as lost revenue, he notes that, amid uncertainty over potential Mining Act reform, and skyrocketing demand worldwide for many mined products, the number of cheap, no-royalty mining claims on public lands in the West has jumped 80% since 2003, and now totals about 375,000 just in 12 states.

A final Senate bill is likely to be strongly influenced by Senate Majority Leader Harry Reid (D-NV), who represents a major mining state and has strong family ties to the mining industry. He has said that the House version is flawed, particularly in its approach to royalties, but has suggested a compromise may be possible (release).

Some of the other players aired views at a Sept. 27, 2007, Senate Committee on Energy & Natural Resources hearing. In addition to the testimony of the four witnesses, see the introductory statements of:

Their sharply divergent views on the approved House bill were apparent in a Nov. 1, 2007, press release from their Committee.

For basic nitty-gritty on mining, see the US Geological Survey's Minerals Yearbook and Mineral Commodity Summaries 2006.

A copy of the General Mining Act of 1872, which has been slightly modified in the intervening years by a series of other legislation, is here.