Most Recent Action   106th Congress Action   Background   Hearing Summary 

Mining Law of 1872 Reform Update (11-27-00)

Mining law reform is one of the eternal issues before Congress, and one that exemplifies the political distance between the Clinton Administration and Republicans in Congress, particularly western Republicans who control the key committees overseeing public lands. Although both mining industry representatives and environmentalists agree that some provisions of the law are outdated, their agreement ends there on how the "miner's law" should be revised. With comprehensive mining law reform seemingly unreachable, efforts have focused on annual moratoria on mining patents and on mining regulations promulgated by the Bureau of Land Management (BLM). The latter was the subject of a recent study by the National Research Council entitled Hardrock Mining on Federal Lands. A Congressional Research Service (CRS) issue brief The 1872 Mining Law: Time for Reform? is available on the National Library for the Environment website.  The majority staff of the House Subcommittee on Energy and Mineral Resources have posted a General Mining Law Brief on their website, expressing the subcommittee majority's view of mining law reform. The environmentalist perspective on mining law reform can be found on the Mineral Policy Center website.

Most Recent Action
BLM published the final version of the Section 3809 mining regulations on November 21, 2000.  According to the press release, these new regulations "will enable the agency to fulfill its duty under Federal law to prevent 'unnecessary or undue degradation' of BLM lands from hardrock mining."  The updated rules will go into effect January 20, 2001.  When BLM released the final environmental impact states (EIS) in October it outlined five alternatives for the agency, including the agency's preferred plan.  The final regulations are a slightly amended version of the preferred alternative that would:  "require operators to submit a notice for all exploration activities disturbing five acres or less; require a plan of operations for all hardrock mining on BLM-managed lands; allow the BLM to withhold approval of a plan of operation if that operation would result in 'substantial irreparable harm' to significant scientific, cultural, or environmental resources that cannot be effectively mitigated; allow the BLM to defer to a State government in administering a mining regulatory program that meets Federal standards; require mining operators to meet certain outcome-based performance standards relating to all aspects of operations, including exploration, mining, processing, and reclamation; require operators to provide a financial guarantee for all notice- and plan-level operations; require all mining operators to provide a financial guarantee that covers the estimated cost of reclamation (rather than a minimum per-acre amount); provide for public notice and an opportunity for public comment on proposed plans of operations and final plan of operation bond releases; clarify certain issues that have arisen since the BLM wrote the 1980 regulations, including whether parent entities of operators can be liable for an operation (the answer being yes, in some circumstances); incorporate in the regulations, for the first time, provisions dealing specifically with cyanide leaching and acid mine drainage; and strengthen the BLM's administrative mechanisms and penalties for enforcing its surface mining regulations."

After several delays and legislative riders in appropriation bills, the Bureau of Land Management (BLM) is releasing the final version of the Section 3809 mining regulations that apply to hardrock mining for such minerals as gold, silver, zinc, copper, lead, uranium, and molybdenum on public lands.  According to a BLM press release, the agency released the final environmental impact statement (EIS) on October 16th and expects to enact the new regulations "no earlier than 30 days after a notice of the EIS's availability appears in the October 20 Federal Register."  The release continues by saying that the final EIS "addresses five alternatives: (1) 'No Action,' which would retain the 1980 surface mining regulations; (2) State Management, under which the BLM would generally defer the regulation of exploration and mining on BLM lands to the States; (3) the Preferred Alternative; (4) Maximum Protection, under which the BLM would exercise broad discretion in determining the acceptability of proposed mining operations and would prescribe specific performance standards for mineral operations; and (5) the NRC [National Research Council] Recommendations, which would revise the existing regulations only where specifically recommended by the 1999 NRC report."  A major sticking point in the debate over the introduction of new Section 3809 regulations surrounds the 1999 NRC report Hardrock Mining on Federal Lands, which several members of Congress and mining constituents have used as the measuring stick for any new regulations. (10-31-00)


Previous Action in the 106th Congress
During the first session of the 106th Congress, several bills were introduced to reform the General Mining Law of 1872. On January 18, 1999, Rep. Nick Rahall (D-WV) introduced H.R. 410, a bill nearly identical to those he had introduced in past Congresses.  H.R. 410, the Mineral Exploration and Development Act of 1999, sets forth new guidelines for mineral exploration on public lands.  According to the bill summary, it "declares that holders of mining claims executed under this Act have the exclusive right of possession and use of the claimed land for mineral activities."  The bill would also require mining to "be conducted in a manner that minimizes adverse impacts to the environment" and establishes a reclamation fund for "land and water resources adversely affected" by past mining.  H.R. 410 was referred to the House Committee on Resources.  The Committee requested an executive comment from the Department of the Interior on February 10th, at which time the bill was referred to the Subcommittee on Energy and Mineral Resources.

Rep. George Miller (D-CA) was one of nine representatives to cosponsor Rahall's mining reform bill.  He also introduced three bills of his own.  Rahall was among the thirteen to fourteen representatives to cosponsor each of Miller's bills, all of which were introduced and referred to the Subcommittee on Energy and Mineral Resources on the same day as Rahall's bill.  Executive comment was also requested from the Department of the Interior on each bill.

Sen. Russell Feingold (D-WI) introduced a Senate Mining Law reform measure as S. 590. Feingold's bill contains the same wording regarding the Internal Revenue Code percentage depletion allowance as H.R. 397.  It would also establish an Abandoned Mine Reclamation Trust fund and specifies that 25% of additional revenue collected because of change in the Internal Revenue Code be put into this fund.  The proposed bill also directs how the fund may be used.  S. 590 was cosponsored by three other senators. It was referred to the Committee on Finance on March 11.

All of the proposals for comprehensive mining reform in the 106th Congress have been authored and co-sponsored by Democrats from across the country.  Sen. Feingold's bill is the only one to be co-sponsored by Republicans -- Sen. Susan Collins (R-ME) and Sen. James Jeffords (R-VT) have both signed on to the proposal.

The House Subcommittee on Energy and Mineral Resources held several oversight hearings on mining law reform.  At the February 23, 1999 hearing on "Mining, Maintaining a National Asset" Dr. Donald Brobst, a representative of the Society of Economic Geologists, an AGI member society, gave testimony. A hearing on the "Effect of Federal Mining Fees and Proposed Federal Royalties on State and Local Revenues and the Mining Industry" was held May 15, 1999. Committee briefs, opening statements and testimony are available on the Resource Committee's website.

The House Subcommittee on Energy and Power held an oversight hearing on mining law reform on August 3, 1999. The hearing focused on two major issues both relating to legal opinions written by Department of the Interior Solicitor John Leshy. It continued several months of debate on Capitol Hill about the Crown Jewel Mine decision and the solicitor's mill site opinion, and brought attention to another controversial decision regarding mineral exploration in the Mark Twain National Forest in Missouri, 15 miles from the Ozark National Scenic Riverway. Fiscal and environmental mining law reforms were also discussed.  A summary of that hearing is available below. Full testimony is available from the subcommittee's website.

During the last-minute debate over the fiscal year 2000 appropriations bills, President Clinton and Majority Leadership included language on five-acre mill site limitations and on Sec. 3809 surface regulations on hardrock mining.  These two topics have been heatedly debated in Congress for the last few years.  In 1997, Department of the Interior Solicitor John Leshy released an opinion on the five-acre mill site provision -- for more information see the Crown Jewel Mine summary.  The final appropriations bill mill site language will apply the opinion only to mining operations that began after the November 1997 opinion was released.  The agreement allows the Bureau of Land Management to release revised Sec. 3809 regulations on hardrock mining in early 2000 provided that the new regulations "are not inconsistent with the recommendations contained in the National Research Council report entitled Hardrock Mining on Federal Lands" or existing statutes.  The comment period for the revised Sec. 3809 regulations ended February 23, 2000.

On January 3, 2000, Secretary of the Interior Bruce Babbitt signed a legal opinion issued by Solicitor John Leshy saying that the BLM could reject a mine proposal because of potential environmental and/or cultural impact.  The opinion, a response to the Glamis Imperial Mine permit request in southern California, will give BLM authority to protect environmental and cultural resources on federal lands under their jurisdiction.  Glamis Imperial Mine is an open-pit cyanide heap leach gold project that is proposed to extract close to 150 million tons of ore and nearly 300 million tons of waste rock.  According to the Environment and Energy Newsline, "the opinion came at the request of BLM's California office when developing the final [environmental impact statement] on the gold mine.  Public concern over how the nearby Quechan Indian Tribe's cultural and religious resources would be affected, along with environmental impacts, prompting the agency to request the interpretation of how to weigh the cultural and environmental values under existing laws when considering the proposed mine's plan of operation."

On May 11, 2000, the Environmental Protection Agency (EPA) released the 1998 Toxics Release Inventory (TRI).  The TRI is an annual report of toxic waste released by various industries.  For the first time, this year's report will  include a section on waste from metal mining (as well as several other resource extraction industries). TRI was developed in response to Congress passing the Emergency Planning and Community Right-To-Know Act (EPCRA) of 1986, which mandated that a Toxics Release Inventory be made public.  Industries must report on all toxic chemicals (as listed by the EPA) released into the air, water, and land to both the EPA and states.  According to the EPA press release, "Of the eight categories now reporting -- the seven new industrial sectors and the original manufacturing sector -- metal mining accounted for the largest amount of total emissions with 48 percent. Second was manufacturing, which accounts for 33 percent of total emissions; electric utilities account for 15 percent, solvent recovery and hazardous waste disposal facilities combined account for 4 percent; and the others amounted to less than 1 percent each."  Both the National Mining Association and the anti-mining Mineral Policy Center have posted further information on their web sites about this issue.

During a Senate Appropriations Committee markup in May of S. 2536, the Fiscal Year 2001 Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations bill, Sens. Frank Murkowski (R-AK) and Larry Craig (R-ID) added a provision to the bill regarding hardrock mining regulations.  Section 3105 of the bill states: "None of the funds made available under this Act or any other Act shall be used by the Secretary of the Interior, in this or the succeeding fiscal year, to promulgate final rules to revise or amend 43 C.F.R. Subpart 3809, except that the Secretary may finalize amendments to that Subpart that are limited to only the specific regulatory gaps identified at pages 7 through 9 of the National Research Council report entitled Hardrock Mining on Federal Lands and that are consistent with existing statutory authorities. Nothing in this section shall be construed to expand the existing statutory authority of the Secretary."

On July 20, 2000, the House Resources Subcommittee on Energy and Mineral Resources held a hearing on H.R. 4297, the Powder River Basin Resource Development Act of 2000.  This bill attempts to address a relatively new aspect of mining laws: how to solve conflicts arising from the Bureau of Land Management's (BLM) practice of handing out development leases for two different resources on the same piece of land.  Coal and coalbed methane (CBM) lessees are disputing their joint rights to produce an area where the development of one resource could lead to the physical or economic loss of the other.  The hearing allowed for coal and CBM operators to register their opposition to government regulations interfering with "first in time, first in right" precedents.  Witnesses from Wyoming state government supported the bill, although BLM felt that H.R. 4297 would usurp its authority over resource development leases. (7/26/00)


Background
The General Mining Law, or Hard Rock Mining Act, of 1872 was passed by Congress and signed by President Ulysses S. Grant to protect and encourage mining and settlement in the Western territories.  The act is one of the major statutes of federal land management policy.  According to law professor Charles Wilkinson, "From its inception, hardrock mining has been the highest and most preferred use of the public lands, and the old law extends to mining companies a 'right to mine.'"  In his book, Crossing the Next Meridian, he also states that the hardrock mining system is "still a miner's law -- built on open access, free minerals, unlimited tenure, and rights to land as well as minerals."

In the past 127 years, the law itself has been subjected to minimal change, but its scope has been greatly limited.  The most significant change to the 1872 Mining Act was the removal of some federal lands and mineral resources from its jurisdiction.  The creation of the National Park system and National Historic Sites established federal lands that are protected from mining.  Indian reservations, military reservations, wilderness areas, and water and power projects have also removed land from the purview of the Hardrock Mining Act.  The Act originally applied to all minerals except coal.  In 1920 the Mineral Leasing Act set new policies for the mining of oil and gas, oil shale, phosphate, and sodium on public lands, removing them from control of the Hardrock Mining Act.  Other mineral resources were later added to this list.

According to the CRS, "The law grants free access to individuals and corporations to prospect for minerals in public domain lands, and allows them, upon making a discovery, to stake a claim on that deposit."  Miners can freely prospect on public land.  They pay a $100 annual holding fee per claim (under legislation enacted by the 102nd Congress) and then complete $500 worth of assessment work in labor or improvements.  Finally, individual miners or corporations pay $2.50 to $5 per acre for the claim.  The 1999 CRS report states that as the law currently applies to claims, "There is no limit on the number of claims a person can locate.  There is no requirement that mineral production ever commence.  Timing or pattern of development is not regulated.  Mineral production can take place without a patent or revenue payments to the federal government.  Claims can be held indefinitely with or without mineral production."

Both mining industry representatives and environmentalists agree that some provisions of the law are outdated.  The House Subcommittee on Energy and Mineral Resources General Mining Law brief supports the original law but nevertheless states "Certainly, the federal government should receive fair market value for a mining claim, and everyone agrees that the current price for a patent has long been below this value."

According the CRS, "The industry has indicated it has been willing to accept ambiguities in the Act, however, to avoid major challenges to the principle of free access and the right to obtain a patent and to mine."  Further, "the National Mining Association states that the 'existing law more than adequately meets the four criteria essential to any mineral tenure law': free and open access to explore for minerals on unappropriated public lands, exclusive exploration rights, the right to develop the valuable minerals discovered and security of tenure.'" Comprehensive reform advocates seem unwilling to support legislation that does not address royalty and environmental issues.

Proponents say reform is necessary because the act "gives away billions of dollars worth of taxpayer-owned minerals every year."  While $2.50 to $5 per acre may seem very inexpensive, the  Energy and Mineral Resources Subcommittee brief contends that "the surface value of most lands presently being patented under the mining law is relatively low, generally in the $100-$150 an acre range-- not the millions or billions of dollars often implied by the opponents of the mining law."

Mining interests oppose reform measures that would require them to pay royalties of 5-8% to the federal government, saying this would put them out of business or force them to move operations overseas.  They also point out the difficulty of assessing mineral value and determining royalty amounts.

A key consideration is whether a gross (or net smelter), or a net proceeds royalty should be imposed.  The industry argues that mineral resources are valuable only after considerable processing and therefore, any royalty should be a percentage of the company's profit after processing expenses are subtracted from the sale price.  A net proceeds royalty would subtract smelting, refining and ore transportation costs before figuring the royalty.  According to the House Subcommittee, these costs may account for less than ten percent of the metal's selling price at some mines, and more than sixty-five percent at others.

The Subcommittee brief makes clear the industry's objections to a gross (or net smelter) royalty saying,  "A recent economic analysis of the effects of an 8% gross royalty shows that State and local governments would lose $106 million per year in tax revenues!"  It also points out that when British Columbia imposed a five percent gross royalty in the early 1970's: "Grassroots exploration ceased, mines closed and new mines were not developed. More than 5,000 jobs were lost. This ill-conceived gross royalty was quickly repealed."  While clearly not supporting any royalty, the brief states that: "A high [gross] royalty makes mining uneconomic in ... [some] areas....  [while] a net proceeds royalty compensates for the higher costs by allowing them to be deducted from the base on which the royalty is charged."

Several of the proposals set before the 106th Congress contain language creating a royalty on hard rock mining.  H.R. 410 would create an eight percent net smelter (or gross) royalty.  H.R. 394 also proposes a net smelter royalty, but does not specify a percentage.  H.R. 395 would impose a net proceeds "fee" instead, but again, it does not indicate a percentage.

According to the CRS, industry representatives vigorously support "the right to enter the public domain and freely prospect for minerals....  They contend that restrictions on free access and security of tenure would curtail exploration efforts among large and small mining firms.  In their view, the incentive to develop would be lost, long run costs would increase, and the industry and the country would suffer."  On the other hand, the CRS reports mining law critics say "although the principle of free access may have been effective in the past, there is no solid evidence that without free access or under a different system, minerals would not be developed."  The CRS report also states that critics "believe the current system, by allowing other uses of patented lands, creates difficult land management problems... and does not provide for adequate protection of the environment."

Environmentalists are quick to point out that the 1872 law contains no environmental protections and according to Wilkinson, until the early 1870's "most hardrock mining was entirely unregulated."  Today, hardrock mining is subjected to environmental regulation both at the state and federal level such as the Clean Water Act, but environmentalists want to reform the General Mining Act and implement further environmental protection measures.  The mining industry is concerned that reform may bring with it a heavy load of environmental regulations, which they see as an unnecessary burden on the industry.



Sources: Library of Congress, Mining Engineering, Congressional Research Service, House Committee on Resources, Charles Wilkinson's Crossing the Next Meridian (1992), Mineral Policy Center, National Mining Association.

Submitted by AGI/AIPG Geoscience Policy Intern Althea Cawley-Murphree and Margaret Baker, AGI Government Affairs

Please send any comments or requests for information to the AGI Government Affairs Program.

Last updated November 27, 2000


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