Senate Drills Into Hardrock Mining

Lawmakers consider reforms to an 1872 mining law that would increase industry royalty fees

BACK when the country's law on hardrock mining was signed by President Ulysses S. Grant, most miners looked like Gabby Hayes -- grizzled and leathery, with a pickax and mule. That was 1872.

Today, that law still governs an industry now featuring humongous machines, foreign investors, and billions of dollars a year in commerce.

Critics argue that this makes it too easy for big corporations to get title to federal land for $5 or less an acre and then extract gold, silver, copper, platinum, and uranium without having to pay royalties.

Industry supporters say hardrock mining remains a high-risk business requiring huge expenses, and they assert that radically changing the 19th-century law could put tens of thousands of miners out of work and send US investments abroad.

In a committee hearing today, the Senate takes up two very different attempts to update the Mining Law of 1872.

A bill authored by Sen. Larry Craig (R) of Idaho imposes a net royalty of 3 percent on hardrock mining, and it requires miners to pay ''fair-market value'' for the surface value of mine claims before obtaining a ''patent,'' or title, to the land. State governments, which would receive two-thirds of the royalties, would have prime responsibility for land reclamation and other environmental protection.

The Craig bill exempts ''small miners'' (those grossing less than $500,000 per year) from paying the royalty, and companies that obtain patents within an 18-month period after passage of the law also would be exempt from royalties.

The mining industry likes Senator Craig's bill. National Mining Association president Richard Lawson says it ''takes care of the environmental concerns expressed by some and it protects those economic requirements necessary to keep the US mining industry viable and competitive.'' John Lutley, president of the trade association, The Gold Institute, calls it ''a balanced and responsible approach to mining law reform.''

Critics call it something else again.

''This bill would do nothing to resolve the most glaring shortcomings of the existing 1872 Mining Law,'' says Interior Secretary Bruce Babbitt. ''It continues the giveaway of valuable publicly owned hardrock minerals like gold, silver, and platinum for peanuts.'' The 3 percent royalty fee, Mr. Babbitt says, ''is likely to be a net-revenue loser to the taxpayer.''

The Mineral Policy Center, a Washington-based research and advocacy organization, warns that under the Craig measure ''the federal government would be liable for cleanup costs at failed sites, with no authority to prevent problems.''

Bill in a different vein

Another reform proposal, written by Sen. Dale Bumpers (D) of Arkansas takes a much harder line with the mining industry. It would impose an 8 percent royalty on gross income from hardrock minerals production. This is closer to the 12.5 percent royalty paid for coal, oil, and gas leases on federal lands and offshore.

Senator Bumpers's bill ends the patenting of federal mine claims (which means Uncle Sam would retain title to the land), and it spells out such environmental-protection measures as topsoil replacement, revegetation, and restoration of fish and wildlife habitat.

''This measure would stop the longest ongoing scam in American history, and save billions of dollars as a result,'' says the Arkansas Democrat, who needles his Republican opponents by adding that ''here is a chance for those who speak loudest about a balanced budget to make their voices heard.''

Turning rocks into big dough

Others applaud the money-saving potential of hardrock mining reform.

The National Taxpayers Union says the current law ''plunders taxpayers,'' and the organization estimates that ''equitable'' fees and royalties could generate hundreds of millions of dollars a year for the federal treasury. In a policy speech earlier this year, Labor Secretary Robert Reich said the lack of such fees and royalties amounts to $1.2 billion a year in ''corporate welfare.''

But in a trade publication, mining industry spokesmen warn that legislation such as that proposed by Senator Bumpers (and a similar bill in the House) could cost Western states ''as many as 47,000 jobs and as much as $6.1 billion in lost economic activity.''

Those wanting to more radically change the Mining Law of 1872 are not too hopeful. Even when Democrats were in control during the 103rd Congress, House and Senate could not agree on a reform measure.

And speaking to the National Mining Association earlier this month, Sen. Frank Murkowski (R) of Alaska said the Republican-dominated 104th Congress presents a ''unique opportunity'' for the industry to finally get a law it wants.

Urging industry representatives ''to mount an all-out grass-roots campaign,'' Senator Murkowski said, ''We can't do it without you.'' The Alaska Republican is chairman of the Senate Energy and Natural Resources Committee, which will oversee any changes to the hardrock mining law.