Mining regulation in the USUS Senate Committee will chart its own course on Mining Law reform
As the House Energy and Minerals Subcommittee holds its third hearing on the Rahall Mining Law reform bill Tuesday, the Senate Energy and Natural Resources Committee may draft its own version of Mining Law reform.
Author: Dorothy Kosich
Posted: Monday , 01 Oct 2007
RENO, NV -
As the House Energy and Mineral Resources Subcommittee holds its third hearing Tuesday on H.R. 2262, the Mining Law reform bill introduced by House Natural Resources Chairman Nick Joe Rahall, D-West Virginia, the Senate Committee on Energy and Natural Resources is aiming for a bipartisan approach.
Sen. Pete Domenici, R-New Mexico, the ranking member of the Senate Energy and Natural Resources Committee, said he has always been reaching out to a bipartisan group of senators to revisit the Mining Law of 1872, with emphasis on royalties, environmental concerns and abandoned mines.
"Given how hard it is to find minerals in the first place, it is clear that reforming the Mining law will be complex. I will seek to provide reforms that provide a fair return to taxpayers for use of federal resources, provide miners with stable conditions to attract investment, manage our mines in a way that will protect the environment, and ensure the clean-up of abandoned mines."
He emphasized that a "clean slate would be needed in order to make progress," which could spell trouble for Rahall's HR2262 legislation.
Sen. Larry Craig, R-Idaho, declared that "we have made it so difficult, so complicated to start up a new discovery on public lands, that unless you are the big boys, the very deep-pocketed of the industry, you probably will not get that kind of operation started."
Nevertheless, Craig, Domenici and Senate Energy and Natural Resources Chairman Jeff Bingaman, D-New Mexico, all agreed that the domestic mining industry should be paying a royalty when mining on federal lands. Sen. Ken Salazar, D-Colorado--who was chief of the Colorado Department of Natural Resources during the Summitville environmental crisis-said he hoped the legislation would address "the age-old problem of abandoned mines."
Attorney Jim Butler of Parson Behle & Latimer urged the senators to support a net royalty that "is tied to profitability and does not exaggerate the inevitable price swings in the minerals market. Royalty payments increase when prices and profits are high, but fall when prices are low and times are hard, allowing operations to cut costs and maintain production and employment."
"A profit-based royalty also has a less dampening effect on mining investment," Butler asserted. "Mining investments typically seek a long-term rate of return based on alternative investments and comparative risks. A royalty payment based on a percentage of the total proceeds from mineral sales directly reduces the potential rate of return-making all mining investment less attractive."
Both Butler and Freeport-McMoRan Copper & Gold President and COO Tim Snider noted that mining operations on federal land are already subject to the full range of federal and state environmental laws and regulations. Snider urged the Congress to not duplicate or supplement existing environmental laws through additional Mining Law Reform.
Although metals prices are currently hitting record highs, Snider reminded the committee that, five years ago, the mining industry was just struggling "for our existence." The Phoenix-based copper miner, who also testified on behalf of the National Mining Association, said certainty of title to mine patents is "very critical when we seek to make investments," adding that 30-year mine projects might not see cash flow during their first decade.
In his written testimony, Snider called certainty or long-term security of tenure or title "Critical in obtaining the financing necessary for mining projects. Investors need to know that a mining project in the United States can obtain approval and proceed unimpeded as long as the operator complies with all relevant laws and regulations.
Noting that only 8% of the worldwide mineral exploration dollar is targeted for the United States, Snider asserted that "I think it is a clear indication of the uncertainty the industry feels about investing in the United States."
Snider also suggested that access to federal lands for mineral exploration and development is also critical to a strong domestic mining industry. "Federal lands account for as much as 86% of the land area in certain western states. These same states, rich in minerals, account for 75% of our nation's metals production."
Long-term Mining Law reform proponent John D. Leshy, a former Department of the Interior solicitor who is now a law professor at the Hastings College in San Francisco, told the committee that the three most important shortcomings of the current Mining Law include:
Patenting which "allows valuable public resources to be privatized at bargain basements rates, without consideration of the broader public interest." Leshy declared that "it is time for Congress to repeal, once and for all, the Mining Law policy allowing willy-nilly privatizing of the federal lands."
"The Mining Law fails to produce any direct financial turn to the public exploration of publicly owned resources." Leshy explained that "mining companies are charged no rental, pay no royalty, and make no other payment that recognizes that the people of the U.S. own the minerals being mined."
"The Mining Law results in inadequate protection of the environmental and other uses of the public lands." Leshy said the current Mining Law "is utterly silent on environmental regulations," asserting that the hardrock mining industry "has long used the silence of the Mining Law on such issues to stoutly contest the reach of government's authority over its activity."
Dusty Horwitt, Public Lands Analyst for the Environmental Working Group, asked the Senators to consider enacting tougher standards for mine permits and cleanup, to treat mining like oil and gas, and end a tax break of up to 22% for hardrock minerals mined on public land.