Brian FalerFri Jun 13, 12:01 AM ET
http://news.yahoo.com/s/bloomberg/20080613/pl_bloomberg/alyaaxkyz5d0
June 13 (Bloomberg) -- It was designed to help settle the American West. The General Mining Law of 1872 gave prospectors the right to take gold and other minerals from public lands without having to pay royalties to the federal government.
Today, 136 years later, the legislation is still on the books. House Democrats, pointing to the recent surge in gold and silver prices, say the law is an anachronism that costs taxpayers millions of dollars in lost revenue. In November, the House voted to impose a 4 percent royalty on most mining operations.
The revision has stalled in the Senate, where Majority Leader Harry Reid -- the son of a gold miner -- controls the agenda and his home state of Nevada leads the nation in mining claims on public lands.
``This is embarrassingly past due,'' said Jane Danowitz, head of the Washington-based Pew Campaign for Responsible Mining. ``Congress is scratching around for money for all sorts of things, and here we have an industry'' that ``can take precious valuable minerals from public lands without paying a dime.''
Most private industries plying the government's 650 million acres for resources must give taxpayers a percentage of what they unearth. The oil, natural gas and coal industries pay royalties ranging from 8 percent to 16.7 percent.
President Grant
The 1872 mining law, signed by President Ulysses S. Grant in the wake of the Civil War, exempts ``hardrock'' minerals such as gold, silver, nickel, copper, lead, zinc and uranium from such payments. Instead, miners must pay $170 to stake a claim and $125 each year to hold on to it.
The revision would generate about $310 million during the next 10 years, money that lawmakers say is needed to clean up abandoned mines. While Reid, 68, said he agrees with plans to begin charging royalties, Senate Democrats have yet to release even a first draft of a bill and time is running out this year for Congress to act.
The delay has rankled House Natural Resources Committee Chairman Nick Rahall, 59, a West Virginia Democrat, who said his Senate colleagues are taking a ``go-slow'' approach to updating the law.
``We just cannot get the other body to put it on the top of their agenda,'' Rahall said. ``I guess there are certain senators who don't want it up there.''
Reid scoffed at accusations of foot-dragging as ``insulting,'' and said the Senate can't act as quickly as the House.
``It takes so long to get anything done,'' Reid said. Critics, he said, ``should try to deal with the Senate rules rather than the House where they can push anything through that they want.''
Copper Prices
The number of mining claims on public lands has increased by 60 percent during the past three years as mineral prices have surged. Gold, silver and copper prices have all doubled since 2005. The nonpartisan Congressional Budget Office said in February 2007 that the gross value of minerals produced on taxpayer-owned lands totals $1 billion annually.
Among the companies involved: Toronto-based Barrick Gold Corp., Denver-based Newmont Mining Corp. and Phoenix-based Freeport-McMoRan Copper & Gold Inc. The companies referred inquiries to the Washington-based National Mining Association.
The House plan would impose a 4 percent charge on existing operations, an 8 percent royalty on future ones and set new environmental restrictions.
Industry Opposition
The mining industry opposes the bill. NMA spokesman Luke Popovich said that while the industry could accept royalties, it can't live with the ``virtually confiscatory'' rates in the House bill. In addition, the environmental restrictions are ``deal killers,'' Popovich said.
Popovich said the industry has received a friendlier reception in the Senate where Reid is one of a trio of mining- state lawmakers key to the fate of any changes. Senator Jeff Bingaman, a New Mexico Democrat, is the chairman of the Energy and Natural Resources Committee charged with writing the chamber's bill. The panel's top Republican, Pete Domenici, is also from New Mexico.
The lawmakers are ``more cognizant of the economic value of mining'' in their states and ``are therefore reluctant to simply pass sweeping legislation without thinking seriously about the consequences,'' Popovich said.
Imposing Royalties
A Reid spokesman said that while he backs royalties, he doesn't support the rates stipulated by the House.
``It's all about protecting jobs -- there are people here whose livelihoods depend on that industry,'' said spokesman Jon Summers. He declined to discuss the specifics of what Reid supports, saying, ``he'll look at the bill when it comes out'' of committee.
Bingaman said he doesn't know if the panel will produce a bill this year because lawmakers remain divided over how much to charge and what new environmental restrictions to include.
``You put bills out there that you think have a chance of passing,'' he said. ``I don't want to just put a bill out to make the press feel good.''
The delay is costing taxpayers, Danowitz said.
``Every year that goes by you have yet another year where the U.S. Treasury is not capturing royalties on these enormously precious metals being taken from the land,'' she said.
To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net