Congress Considers Reform of Outdated, Costly Mining Law

ONE of the last remnants of federal policy designed to promote westward United States expansion - the Mining Law of 1872 - seems headed for the history books.

Under the 120-year-old law, billions of dollars in gold, silver, copper, and other hard-rock minerals were extracted from 12 Western states when a landmass about the size of Connecticut was turned over to private ownership. The law helped populate the West by encouraging an industry that meant many thousands of jobs, and it also brought a steady stream of income to federal and state treasuries through business and personal income taxes.

But an increasing number of critics say this law has cost billions of dollars in lost public revenue since, unlike minerals such as coal, no royalties are paid on Western hard-rock minerals and title to federal land can be acquired for $2.50 an acre. Also, they say, the law has left a legacy of poison from mine tailings and chemicals, including many "Superfund" sites.

"This law no longer serves the public interest," Interior Secretary Bruce Babbitt told a House committee hearing last week. "Reform is long overdue."

A stream of other witnesses at the hearing, which will be matched by a Senate hearing today, pointed out that the economic and environmental costs continue to exist with giant mining operations under way or proposed.

"The Mining Law as it stands today threatens fisheries, threatens sportsmen's interests, threatens water quality and natural ecosystems," said Philip Hocker, Mineral Policy Center president. Mr. Hocker and other critics of current law and practice cite a Summitville, Colo., mine, which used a cyanide solution to extract gold. The mine was abandoned last year by a bankrupt Canadian company. The Environmental Protection Agency is spending $33,000 a day to limit the leakage of acid and heavy metals into the

Alamosa River. Total cleanup is estimated to cost between $20 million and $70 million.

Using federal-government audits and reports, the National Taxpayers Union says "it will cost the Treasury $11 billion to reclaim the known universe of abandoned noncoal mines with health, safety, and environmental problems." The group says the government "has lost $91.3 billion in public lands from only 13 land-patent requests applied for and pending since 1987," and another "$3 billion in the past five years alone by not charging royalties on the mining of taxpayer-owned hard-rock minerals."

In his testimony, Mr. Babbitt cited a proposed 1,800-acre Nevada gold mine with an estimated gross value of $10 billion that could be sold by the federal government for $9,000. "To say this is not good public policy is putting it mildly," Babbitt said.

In defense of current law, the industry says repealing the patent (title) provision, charging a royalty, and imposing strict environmental regulations on an economically risky business would cost thousands of jobs and millions in lost tax revenue.

"The majority of minerals and metals are priced on a globally competitive basis," said Douglas Yearly, vice chairman of the American Mining Congress and chairman/chief executive officer of Phelps Dodge Corporation. "Increasing costs in the US or eliminating access to federal lands will lead to less US production, more imports, fewer jobs, and an increased trade deficit. Metals produced in the US under this system would simply be unable to compete in the international market."

Reformers in Congress have been trying to change the law for years, but without success. Given the historically high federal budget deficit, increased public concerns about protecting natural resources, and a "greener" White House, however, advocates of change are more hopeful. Legislation pending in the House and Senate (and favored by the administration) would impose royalties of up to 12.5 percent, end easy acquisition of title to federal lands, and require that miners do more to clean up their sites.

Even industry spokesmen acknowledge that change may be inevitable. "We know there have been abuses," Mr. Yearly said. "We do not insist that the law be left totally unchanged."