Reform of 1872 law would make Barrick, Newmont pay federal mineral royalties

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Ulysses Grant was president when the 1872 mining law was enacted; Nevada Sen. William Stewart was the bill's author; Nevada Sen. Harry Reid is attributed with thwarting modern reform.

The federal law designed to promote gold mining in the West was enacted by President Ulysses S. Grant in 1872, and it has remained mostly unchanged ever since.

The General Mining Act of 1872 allows miners to obtain the rights to mine billions of dollars worth of gold, silver, copper and other minerals found in “hard rock” from federal lands without paying federal royalties.

Now there’s a bill for that.

Chairman of the House Natural Resources Committee, Raúl Grijalva (D-Ariz.), and Sen. Tom Udall (D-N.M.), announced the introduction of their companion House and Senate mining reform bills that would establish a 12.5 percent royalty on production from new hard rock mining operations – the same amount as the federal government collects from oil & gas and coal production on federal lands – and an 8 percent royalty on existing operations, except for miners with less than $50,000 in mining income.

The federal government collects more than $6 billion in oil, gas and coal revenues, and disburses almost half of that money to the states where the mineral is produced. The Grijalva-Udall mining bill, however, would only return 25 percent of revenues to state, putting the rest into a reclamation fund.

Legislation to establish federal mineral royalties on hard rock mining has been introduced repeatedly for decades, but never successfully. Twelve years ago, the Hardrock Mining and Reclamation Act of 2007 did manage to pass the House of Representatives. That measure proposed mining companies pay a 4 percent gross royalty on production on existing mines, and 8 percent on new mining operations.

The 2007 measure passed the House handily but died in the Senate, where former Nevada Sen. Harry Reid, a staunch supporter of the mining industry, consistently helped stifle attempts to establish federal royalties on hard rock minerals.

Reid’s role in thwarting modern reform of the 1872 law was not lost on environmentalists Thursday.

 

“Now that Harry Reid is gone from Congress, we might finally make some headway on reforming the 1872 Mining Law, which allows mining companies to pollute our waters & destroy important habitat without paying royalties. Thanks to [Rep. Raul Grijalva and Sen. Tom Udall],” wrote Patrick Donnelly, the Nevada state director of the Center for Biological Diversity, on Twitter.

Most of the current members of Nevada’s congressional delegation were either unavailable or declined to respond to requests for comment on the new bill Thursday.

Sen. Catherine Cortez Masto’s office was the one exception — though the senator was non-committal on the establishment of royalties.

Cortez Masto ”does support efforts to ensure mining companies continue to support the local communities where they operate, through good-paying jobs, social and community programs, and environmental conservation,” read a statement issued by her office

Cortez Masto serves on the Senate Environment and Public Works Committee, where a hearing on Udall’s bill would be heard. The statement issued by her office said she “looks forward to these discussions, hearing from all of the relevant stakeholders, and giving voice to the concerns of Nevadans.”

Mining reform has also played a role in Nevada’s presidential caucuses in the past. When the House bill passed in 2007, then-candidate Barack Obama panned it.

“What’s clear to me is that the legislation that’s been proposed places a significant burden on the mining industry and could have a significant impact on jobs, given the difficulty the industry is already having in maintaining its operations,” Obama told Nevada reporters in November 2007.

In contrast, the Senate version of the new measure sponsored by Udall is cosponsored by Democratic presidential candidates Kamala Harris, Cory Booker, and Michael Bennett. 

Meanwhile, the National Mining Association, an industry lobbying group, called the bill “punitive” in a press release.

“Instead of focusing on how we can encourage U.S. mining and make use of our own domestic resources, some in Congress are looking for ways to block it. It’s the wrong path at the wrong time for our country,” said NMA President and CEO Hal Quinn.

Cleaning up after “deadbeat” companies

Beyond establishing the first ever hard rock mining royalties, the bill would “establish strong reclamation standards” and would create a fund to cleanup hundreds of thousands of abandoned hard rock mines and other areas impacted by mining activities. The bill would also make certain special lands off-limits to hard rock mining.

Grijalva called the current mining laws “sweetheart deals for the mining industry” that “come at a heavy cost for communities and taxpayers across the country.”

“There’s no good reason to keep giving away our public resources like this, and there’s certainly no reason to make taxpayers pay for deadbeat companies’ cleanups,” said Grijalva. “Time to put people over polluters and bring our natural resources economy into the twenty-first century.”

Udall, the Senate sponsor, said mining corporations “need to pay their fair share and clean up the mess they leave behind.”

“Hard rock mining conglomerates – many of them foreign-owned with billionaire investors – are looting our public lands, and our gold, silver and copper, without paying the American people a dime for the privilege. And meanwhile, their abandoned mines are polluting our environment with 50 million gallons of toxic wastewater a day and leaving American taxpayers with a cleanup bill to the tune of $50 billion,” said Udall.

More than 75 percent of Nevada’s $7.4 billion gold mining industry is controlled under a joint agreement between two corporations, Barrick Gold, and Canada-headquartered Newmont Mining.

In Nevada some of the worst consequences of pollution from mining has fallen on indigenous communities. The abandoned Anaconda mine, once owned by Quaterra Resources and Anaconda Copper, predates regulation and has contaminated the groundwater near Yerington, Nevada. The Yerington Paiute Tribe has fought for cleanup of the mine for almost 18 years, said Chairman Laurie Thom.

British Petroleum pays to have water delivered to the residents of the reservation while the Yerington Paiute Tribe pays to operate a water processing facility to clean their tap water.

“We have no idea how long we can continue to clean the water,” Thom said, citing the costs. “But it’s a necessary component to live and we have to provide that to our people”

Nevada’s not unique. According to the Environmental Protection Agency, 40 percent of the watersheds in the West have been polluted by mining.

Nevada currently allows new mines to open with full disclosure that they will pollute the water indefinitely, requiring treatment of water that can go on for decades — “in perpetuity” in some cases. The proposed mining bill would prohibit mines that would pollute water in perpetuity.

The EPA also reports that metal mining is the nation’s largest toxic polluter. Nevada ranked first nationally in the release of toxic chemicals per square mile in 2017, the most recent year for which data is available. All five of the top manufacturing facilities generating the most toxic releases that could pose a threat to human health and the environment were mines, according to the report. Newmont Mining Corp led the state by releasing a combined 230 million pounds of releases from three facilities, more than three times the next biggest polluter in Nevada in 2017. Barrick mines was second statewide, with 75 million pounds released that year.

The industry and state environmental regulators say the EPA’s report misleadingly characterizes harmless dirt as toxic material, presenting a distorted report of toxic releases in the state.

“The outdated 1872 Mining Law allows foreign companies to use and abuse American public lands for free,” said Lauren Pagel, policy director Earthworks, a group that has long advocated for reforming the 1872 law.

“The need for reform grows more pressing with each passing year,” according to the organization. “Some of the most abundant deposits remain harder-to-reach and more wasteful, posing a greater risk to local communities and the water they depend upon.

Ed. note: This story was updated to clarify the disbursement of mineral royalties under the proposed legislation.

Jeniffer Solis
Reporter | Jeniffer was born and raised in Las Vegas, Nevada where she attended the University of Nevada, Las Vegas before graduating in 2017 with a B.A in Journalism and Media Studies. While at UNLV she was a senior staff writer for the student newspaper, the UNLV Scarlet and Gray Free Press, and a news reporter for KUNV 91.5 FM, covering everything from the Route 91 shooting to UNLV housing. She has also contributed to the UNLV News Center and worked as a production engineer for several KUNV broadcasts before joining the Nevada Current. She’s an Aries.

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