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U.S. Senate Debates Mining Law Reform

(February 2008) If the initial hearing on reforming the 1872 mining law is an indicator, reform faces tough sledding in the U.S. Senate.  On January 24th, 2008, the Senate Energy and Natural Resources Committee held a general hearing on the subject of 1872 reform.  There is not yet an introduced Senate bill, so members addressed the provisions of a bill passed by the House (the “Hardrock Mining and Reclamation Act of 2007” — H.R. 2262) ) late last year.  Some of the provisions that MEIC believes are essential for meaningful reform of the law were met with skepticism while others were viewed more favorably.

From MEIC’s perspective, a key component is establishing a royalty on minerals.  Every other extractive industry pays a royalty to the federal government for removing coal, oil, gas, timber, or other products from federal land.  The lone exception is metal mining.  H.R. 2262 contained a royalty of 8% for new operations and 4% for existing operations, calculated on the market value of the minerals.  Senators generally agreed that a royalty was appropriate.  They could not agree on the rate, however, or on whether the royalty should apply to existing operations.

A royalty is more than just a matter of fairness and the prudent stewardship of federal resources; the royalty’s proceeds will help fund the cleanup of abandoned mines across the country.  Montana has thousands of abandoned mine sites. 

Another important provision of the House bill is patenting reform.  Patenting is the process by which mining companies can purchase federal land for as little as $5.00 per acre.  Because the price of gold is currently around $900 per ounce (a record high), there was an increase of 92,000 mining claims filed on federal land last year.  All of these claims are potentially patentable.

The House bill also contains a provision allowing the Interior Secretary to veto new mining operations if they would cause undue degradation of adjacent lands.  This is exactly the authority that was needed to deal with the New World mine proposed for the border of Yellowstone National Park.  Because the 1872 law defines mining as the highest and best use of public land, state and federal regulators would have been forced to allow the New World mine to go forward even though it threatened contamination of the Yellowstone River.

Some senators seemed doubtful about giving the Interior Secretary this authority.  The mining industry argued that compliance with all other environmental laws was adequate protection and that veto authority would create too much uncertainty for mining companies to invest in new projects.
The House bill also contains reclamation and bonding standards.  While these provisions may not be as important in Montana, which already has good reclamation and bonding laws (enforcement of those laws is another matter), it is imperative for states like Arizona, Nevada, and Alaska, whose state laws aren’t as strong.

Sen. Pete Domenici (R–NM) and Sen. John Barrasso (R–WY) took exception to these new standards.  They believe that existing laws are protective enough and that these provisions would only lead to duplicative permitting.

Past efforts to reform the 1872 mining law have always died in the Senate.  A cabal of western senators, both Democrats and Republicans, have thwarted efforts for meaningful reform.  That is likely to happen again this year.

One key difference may be Montana’s junior senator, Jon Tester.  Sen. Tester sits on the Energy and Natural Resources Committee and has indicated support for many provisions of the House bill.  He seems inclined to support patenting reform and new environmental safeguards.  He is more guarded about a royalty; he thinks we do need one but he is not sure at what level it should be set and to which mines it should apply.

Montanans have a unique opportunity to influence the outcome of 1872 reform.  Sen. Tester needs to hear that Montana supports patenting reform, strong environmental safeguards, and a meaningful royalty on the gross proceeds of all mining operations.  We should settle for nothing less.