Technology, Outdated Law and the New Goldrush

From the April 1995 issue of the Environmental Review.

Introduction:

In 1872, the U.S Congress passed the law governing gold and silver mining to encourage mining and development of the West. The law provided generous incentives for hardrock miners to assume the financial and physical risks of prospecting and mining precious metals. For five dollars an acre a miner could obtain permanent title to any public land containing valuable mineral deposits. In 1994, mining concerns, many of them foreign, used this law to apply for title to 250,000 acres of land at five dollars per acre. An additional incentive in the law stipulates that gold, silver, platinum and copper are not subject to royalties paid to the government. When other natural resources are extracted from public lands - timber, oil, natural gas - the company pays the government a royalty, - 12.5% in the case of oil and natural gas. The current federal mining law has no provisions for mitigating the environmental damage of mining or for rehabilitation of played out mines.

Improvements in technology have instituted a modern-day gold rush in the U.S. In the 1980s, the U.S. was the sixth largest producer of gold in the world; by 1993 the U.S. moved up to number two. Legislation was introduced introduced to reform the 1872 mining law, stimulating a modern day gold rush. 613 patent applications are pending on a quarter million acres of public lands in the West. These lands contain approximately $34 billion in precious metals for which the government will receive a one-time payment of five dollars per acre or about $800,000.

As an example, American Barrick, a Canadian mining company, has a land patent pending on 1800 acres in Nevada containing $10 billion in gold. When approved, it will pay the U.S. government $5,197.;that is, less than three dollars per acre. Another Canadian company, Noranda Minerals, had a patent pending in 1994 on seventy acres in in Montana containing 3.7 billion dollars worth of copper and silver. Noranda will pay the U.S. $185 for this land.

Mining companies are taking advantage of the law to extract as many resources from the public lands of the United States as fast as possible. By stopping reform of mining law in the 103rd Congress, the mining industry saved 800 million dollars in royalties for 1994 alone. A small number of senators from western states were successful in blocking reform of the mining law in the 103rd session of Congress. In the debate over the federal budget deficit, Congress has overlooked a substantial source of revenue to the federal treasury.

We spoke with Will Patric of the Mineral Policy Center about their efforts to reform mining laws. The Mineral Policy Center is a non-profit environmental organization based in Washington, D.C. Their primary purpose is to strengthen laws and regulations for hard rock mining concerns and to educate the public about some of the environmental concerns related to those operations. Mr. Patric is based in Montana and works with communities, activists, tribes, organizations in the six northwestern states on mining issues. He also monitors specific mining proposals. The main office of the Mineral Policy Center is at 1612 K St. NW Suite 808, Washington D.C. 20006.

ER: Mr. Patric, what is the purpose of the Mineral Policy Center?

WP: Our biggest agenda item is reform of the 1872 mining law. That is the law under which hard rock mining of public lands is currently regulated. The law was enacted 122 years ago to encourage western exploration and development. The law is 122 years old and outdated in 1994.

ER: What is wrong with the law?

WP: Under the current mining law which was written in 187, hardrock minerals are extracted from America's public lands with no royalty returned to the federal treasury. That is different from grazing, timber, oil and gas and coal. Hard rock mining is the only extractive use of our public lands for which there is no return given for the resources taken. We think that is wrong. In addition, the law allows patenting of public lands; that is, mining companies can purchase federal lands for as little as $2.50 an acre, remove those from the public domain forever and use that land for whatever they want. It does not have to be mining. Once the land has been patented, it is gone from the public domain. In the last 122 years, we have lost more than three and a half million acres of public land through patenting. There is quite a rush on patenting now because there is a sense that this privilege may soon be removed. Third: The federal mining law does not have any reclamation standards; that is wrong. Finally: The mining law gives primacy to mining over all other potential uses of our public lands. It does not give any discretion to the Bureau of Land Management or the U.S. Forest Service to say no to mining in some cases. Under the present law as they interpret it, the federal government has to allow mining to take place.

ER: But the companies have to comply with the environmental laws don't they?

WP: You always have to comply with environmental laws. But agencies feel they cannot say no to mining. They can mitigate the proposal; they can make certain stipulations and requirements and they can do all the studies and analyses they want but in the end, as the federal government views it, they have to allow mining to take place. ER: How do you propose to change the law? WP: We are demanding a royalty be paid for gold and silver, like all other extractive resources on our public lands. And we are demanding an end to the practice of patenting public lands. We are calling for a minimum set of standards for reclamation, and we are calling for provisions for discretion of public land stewards so in some cases they can say no, or at least make a judgement on whether or not mining is appropriate. ER: In that case mining companies would be subject to the same concerns as oil companies on the north slope of Alaska where they have to consider native rights, endangered species and habitat destruction? WP: Correct. And oil and gas companies pay a 12.5% royalty on public lands. A gold miner pays no royalties.

ER: Patenting public lands would seem to need careful oversight to prevent abuses.

WP: Yes. There are numerous examples of abuses of patenting where; for example, lands in Colorado have been patented and then used for a ski resort development or condominiums. Once public land is privatized in the patenting process, it is private land. There are no stipulations whatsoever; it can be used for anything.

ER: There is no recourse even if a speculator obtains the land under false pretenses?

WP: That is correct. In patenting, the mining company has to prove to the satisfaction of the Bureau of Land Management that a viable mineral resource does exist at that site. So mining companies will often say, "It costs us more than $2.50 an acre to patent this land because we have to do testing to show that the minerals are there." But once they have satisfied that test, they only pay either two-fifty or five dollars an acre, depending on the type of mineral they are after.

ER: What changes is Congress likely to make to the 1872 mining law?

WP: Right now in Congress (1994) Congressman Rayhall from West Virginia is sponsering HR 322. He has been a long-time proponent of mining law reform. HR 322 embodies the changes that we are calling for in the Mining law. It was overwhelmingly voted favorably last year. The bad news is the Senate has a counter bill - Senate Bill 775 - which Senator Craig from Idaho put forth. Our analysis of that bill is that it would have no impact on mining on public lands. The Rayhall bill calls for an 8% gross royalty. The Craig bill calls for a 2% net royalty. The Craig bill allows patenting and it does not have reclamation standards, and it does not give discretion to say no to mining on public lands. It does not do much.

ER: Does the Rayhall bill eliminate patenting?

WP: Yes. So the situation is that we have a pretty good bill in the House and we have a horrible bill in the Senate. The signals that we are getting is that mining law reform is on hold as long as the grazing bill is up in the air and we have had mixed signals from the Clinton administration.

ER: Do you have any insight why the grazing land reform is holding up mining law reform?

WP: When the Clinton administration first started they were talking about a 12.5% royalty on hardrock mining, which would make it comparable to oil and gas and coal. They were thinking about ways to help balance the budget. That is out the door now. The mining industry has a lot of money and they are fighting tooth and nail to hold on to a great deal.

ER: It appears a small number of senators can bring reforms to a halt.

WP: That is exactly the problem. And that frankly is a problem with a lot of public lands issues. The United States is experiencing a mining boom and it is primarily gold that is fueling that mining boom. The U.S. is now the world's number two producer of gold.

Footnote: As of February 2007 the 1872 Mining Act has not been amended.

Click here for a 2001 article in the Seattle PI exposing many abuses.