American Geological Institute

Government Affairs Program

Mining Law Reform Update: 8-7-96

Efforts in the 104th Congress to reform existing mining laws have fallen prey to the same prohibitive forces encountered in previous Congresses. Once again, federal agencies are pitted against state agencies, representatives from industry are in opposition to representatives from environmental groups, easterners conflict with westerners, and the revolution begun by the first Republican-led House of Representatives in over 40 years has lost the momentum necessary to produce significant and lasting change. An examination of the debate over mining law reform provides insight into the larger forces affecting the progress of the 104th Congress.

The General Mining Law of 1872 was enacted to spur interest in the lands of the West and help economic growth, allowing individuals and private companies to stake mining claims on public lands and charging a nominal fee for the property title. The Mineral Lands Leasing Act of 1920 turned over coal, oil, and natural gas rights to the federal government and developed a leasing system that required royalities from the leases be shared between the federal government and the state in which the lease existed. Hard-rock minerals such as gold, silver, copper, lead, iron ore and zinc were exempted from the 1920 law, and even today remain under jurisdiction of the Mining Law of 1872.

The most recent effort to reform the mining laws began in 1989 after a General Accounting Office (GAO) report advised repealing the law's patenting provisions, which allowed hard rock claims and the surrounding land to be converted from public to private ownership for $2.50 or $5.00 an acre, prices established by the 1872 law. The GAO claimed that the law was being abused by individuals and companies who were patenting the land for a fraction of its fair market value and then selling the land to developers at an enormous profit. Reform supporters suggested placing royalty requirements on hard-rock mines, similar to those placed on energy producers, and advised instituting tough reclamation standards.

In the Democratically controlled 103rd Congress, the House passed a bill introduced by Rep. Nick Joe Rahall (D-WV) instituting sweeping reforms to the 1872 law. The bill's provisions included the elimination of the patenting process, establishment of an 8 % royalty based on the gross value of produced minerals for existing and future claimants, and substantially increased reclamation standards that allowed the federal government to declare certain lands "unsuitable" if they were in danger of irreparable damage from mining.

The Senate passed a much more moderate, industry-supported bill, sponsored by Sen. Larry Craig (R-ID) as a "ticket to conference" (and compromise) with the House. The bill required patents to be purchased at fair market value of the surface land involved and required that all subsequent claims pay a 2% royalty on net proceeds after companies deducted production costs, such as separating the mineral from the rock, transportation, maintaining equipment, complying with environmental laws, and other expenses. After months of negotiations, the House/Senate conference failed to reach a compromise. Issues contributing to the stalemate included the relationship between the federal government and the states, water quality, and the economic impact on the mining industry.

These issues remained at the center of mining law reform in the first session of the 104th Congress with the Republicans now in charge. Sen. Craig and new House Resources Committee Chairman Don Young (R-AK) introduced bills (H.R. 1580 and S. 506) nearly identical to Craig's earlier bill, and it looked as if the 104th Congress would pass moderate, industry supported reform. A more radical reform bill, S. 504, introduced by Sen. Dale Bumpers (D-AR) was virtually ignored, as was S. 639, introduced by Senators Ben Nighthorse Campbell (R-CO) and J. Bennett Johnston (D-LA). The latter contains language from the last compromise reached in the 103rd Congress that was agreeable to western Democrats, including a 3% gross royalty on gold and a 2% gross royalty on all other minerals. Just like the Democrats in the previous Congress, however, the Republicans did not have a filibuster-proof majority and the reform effort began to lose momentum toward the end of the first session with all four bills stuck in committee. A moderate proposal was included in the Omnibus Budget Reconciliation Bill of 1995 that was vetoed by President Clinton on December 6, 1995. The reconciliation proposal called for a 5% net proceeds royalty that would be waived for net proceeds of less than $50,000 and patenting at fair market value but not including the value of the minerals below ground.

With the 104th Congress drawing to a close, a staffer from the House Resources Committee predicted that the bills will remain in committee, as both sides of the issue lack the 60 votes needed in the Senate to cut off a filibuster. Hard-rock mining law reform remains a sensitive issue, as industry and state representatives push for more autonomy, and environmentalists and federal agencies fight to retain control over ultimate regulatory power. Without progress on mining law reform, the current appropriations bill is expected to continue the moratorium on granting patents, leaving the system in limbo. Substantial change to the 1872 laws remains as far away at the end of the 104th Congress as it was when the current debate began in 1989.

Note: The Political Scene column from the September 1995 issue of Geotimes magazine provides some additional background on this issue.

Contributed by Heidi Mohlman, AGI Government Affairs Program Intern

This update is adapted from an article submitted to The Professional Geologist.

Please send any comments or requests for information to the AGI Government Affairs Program.
Last updated August 7, 1996

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