You are here

U.S. House committee would impose royalties on hard-rock mining

Section: Daily Dispatches

By Erica Werner
Associated Press
via Caspar (Wyoming) Star-Tribune
Sunday, October 21, 2007

WASHINGTON -- A House committee agreed Thursday to impose the first-ever federal royalties on gold, silver, and other hard-rock mining on public lands.

During debate on legislation rewriting the antiquated General Mining Law of 1872, lawmakers agreed to an amendment to impose royalties of 4 percent of gross revenue on existing hard-rock mining operations.

New mining operations would pay royalties of 8 percent of gross revenue under the bill, which is expected to pass the House Committee on Natural Resources on Tuesday.

The bill also would add new environmental controls, create a fund for abandoned mine cleanup and create provisions allowing local governments to petition to withdraw federal lands from mining.

"What we're talking about here is a very small amount of money," said Rep. Maurice Hinchey, D-N.Y., who proposed the 4 percent fee. "It just insures that some of this cleanup will occur."

Democrats have been trying unsuccessfully for years to rewrite the mining law, and now that they're back in control of Congress they hope to get it done.

A full House vote could come before Thanksgiving, but House Democrats would then have to contend with Senate Majority Leader Harry Reid, D-Nev., whose home state has the biggest gold-mining industry in the nation.

Reid, a gold miner's son who has defeated past mining law rewrites, hasn't taken a position on the House bill. Spokesman Jon Summers said Reid is working with other senators on legislation "that provides greater certainty for those families and communities that depend on mining and that provides improved environmental safeguards."

Unlike with coal, oil, or gas, the hard-rock mining industry doesn't pay federal royalties on minerals it extracts. There are few environmental protections or reviews, and the law allows public lands to be sold off cheaply for mining, though Congress has annually imposed a moratorium on that.

The rewrite legislation introduced by Committee Chairman Nick Rahall, D-W.Va., in May would have imposed 8 percent gross royalties on existing and new operations. The full House approved that level of payment in 1994 but couldn't reach agreement with the Senate, so the law remained unchanged.

Rahall exempted existing operations in a substitute bill he brought before the committee Thursday.

The mining industry and many Republicans are strenuously opposed to royalties at the 8 percent gross level, and even some Democrats are concerned about the legal implications of trying to extract royalties from mining operations that already have permits.

"We would like to have a bill at the end of the day that can be signed into law that isn't going to be subject to the cloud of litigation," said Rep. Jim Costa, D-Calif., as he announced his opposition to Hinchey's amendment. The amendment passed by voice vote.

Environmentalists and others say existing operations should not be exempted and welcomed passage of Hinchey's amendment even though it doesn't go as far as they want.

"We're pleased it passed but disappointed it's not 8 percent," said Jill Lancelot of Taxpayers for Common Sense.

Mining industry officials said the royalty requirements would be unacceptable.

"Existing operations were obviously not based on business plans that factored in a royalty, and as for new operations, facing the highest royalty in the world would stifle any growth. So in this form I'd have to say it's a dog that won't bark," said Luke Popovich, a spokesman for the National Mining Association.

* * *

Join GATA here:

Vancouver Resource Investment Conference
Sunday-Monday, January 20-21,2008
Vancouver, British Columbia, Canada

* * *

Help Keep GATA Going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at

GATA is grateful for financial contributions, which are federally tax-deductible in the United States.