Where Cortez Masto could end up to the right of Manchin: Mining

September 5, 2021 8:30 am

Nevada Sen. William Stewart, upper right, crafted the mining bill signed into law by Pres. Ulysses S. Grant that coddles Nevada’s gold mines to this very day.

Unlike producers of coal, oil and natural gas on public lands, corporations that mine gold and other so-called hardrock minerals in Nevada and elsewhere in the U.S. have never had to pay federal royalties.

Now there’s a bill for that.

Actually there have been several bills for that, over several decades, but none have succeeded, their failure often attributed to the preference and clout of former Nevada Democratic Sen. Harry Reid.

A bill heard by the House Natural Resources Committee Thursday would establish an 8% royalty on gross revenue at new mines, and 4% on mines already in operation. The royalty, along with increases in the obscenely small fees and an additional reclamation fee,  is projected to raise $3 billion over ten years, according to a memo issued by the Democrats on the committee.

As has always been the case with federal mineral royalties levied on coal and oil & gas, a substantial portion of the royalty levied on gold mines would be returned to the state where the mineral was mined.

The mineral royalty provision is included in legislation the House panel began marking up Thursday. That legislation in turn is part of the $3.5 trillion reconciliation package congressional Democrats hope to send to President Joe Biden’s desk by the end of the month, in tandem with the $1.2 trillion infrastructure bill already passed by the Senate.

As the committee Democrats note in the memo, the framework for authorizing, regulating, and raising (or not raising, as it were) public revenue on hardrock minerals remains a piece of legislation passed during the administration of Ulysses S. Grant in 1872 (btw, that bill was crafted by Sen. William Stewart, of Nevada).

“The law is so old that huge, multinational mining companies that dominate this industry aren’t required to pay federal public royalties or pay to clean up abandoned mine lands. Not even the oil, gas, or coal industries have this kind of arrangement,” the committee Democrats wrote. 

The most recent effort to establish a federal mineral royalty on hardrock minerals was during the last Congress. In 2019, Reid and Stewart’s successor, Nevada Democratic Sen. Catherine Cortez Masto, was painstakingly non-committal on the measure, which ended up going nowhere in the then-Republican controlled Senate in any case.

Somewhat more opinionated on the subject at the time however was Sen. Joe Manchin, who said for corporations to be able to mine gold and other hardrock minerals without paying any federal royalties “makes no sense to me at all.”

The Senate Energy and Natural Resources Committee, which Manchin chairs and on which Cortez Masto serves, has yet to release reconciliation package details so it’s not known if a federal mineral royalty will be included in the Senate’s version of the $3.5 trillion budget resolution.

Given that Cortez Masto is one of a handful of Democratic senators in competitive contests next year, Manchin and the rest of the Democrats may choose to spare her the hassle of explaining to Elko voters why she didn’t stop a federal mineral royalty.

Or maybe Manchin and Senate Democrats will move it along in the process — a little — for the singular purpose of removing it from the final package at Cortez Masto’s encouragement, thus letting Cortez Masto tell rural Nevada how important it is to have a powerful senator who can keep her Democratic colleagues in check and protect the mining industry (just like Reid did for all those years).

Manchin was scheduled to join Cortez Masto in rural Nevada a couple weeks ago. On the agenda: Touring one of the gold mines near Elko. Alas, Manchin was forced to cancel his visit due to smoke from wildfires that have been intensified by a climate crisis that he doesn’t take nearly as seriously as most of his colleagues.

Its inclusion in the House bill (for now) far from guarantees the mineral royalty’s full passage in the House. The bill to create a royalty in the last Congress did make it out of the House Natural Resources Committee last year — despite a no vote from Nevada Democratic Rep. Steven Horsford, who served on the committee at the time. But it was never brought to the floor for a full House vote.

Maybe House Speaker Nancy Pelosi was remembering that Cortez Masto isn’t the only Nevada Democrat in Congress clinging to the Stewart-Reid approach to the mining industry.

It’s not really about a mineral royalty

The state’s share of a federal hardrock mineral royalty would be north of $80 million a year — how far north depends on the price of gold. That’s nothing to sneeze at in a state that still refuses to fund, as one example, an adequate system of mental health care. 

Yet it’s a pittance compared to the billions that would come to Nevada under other measures and provisions expected to be in the sweeping reconciliation bill. A single component — making the expanded child tax credit permanent – would directly provide Nevada families with more than $100 million a month.

With Manchin, his customary Manchinesque stylings on full display, threatening to derail the entire reconciliation process, the fate of a federal mineral royalty is small potatoes. If reconciliation is scuttled, it won’t be by such a picayune issue. 

But it’s also not the only reconciliation provision that could put Democrats in Nevada’s congressional delegation in an awkward spot. For example, the resort industry will have some very heartfelt opinions about raising corporate tax rates.

Myriad issues big and small promise to put Democratic members of Congress in awkward spots with powerful interests and constituencies in other states as well.  

On a policy level, a federal mineral royalty should be low-hanging fruit for Democrats. It’s inexcusable that gold mines haven’t been paying one. Changing that is long, long overdue – 149 years, to be precise.

Uncertainty over what should be easy pickings for a Democratic president and Congress purportedly pursuing a transformational agenda reflects just how vulnerable and precarious the reconciliation process could be.

The reconciliation package, in addition to being the best and maybe only chance for Democrats to win in 2022, also presents the best and probably only chance to remove multiple barriers, established by policy decisions over many years, that make life harder for people than it needs to be. 

Some of the provisions envisioned in the reconciliation package include:

  • Allowing Medicare to negotiate prices with drug companies;
  • Expanding Medicare to cover dental, hearing, and vision;
  • Reforming immigration and providing a path to citizenship for millions of undocumented people;
  • Improving wages and job conditions in the nation’s crucial and largest-growing employment sector, home care workers;
  • Correcting corporate tax rates, which have been declining as a share of GDP for decades and forcing smaller taxpayers to pick up the slack.
  • Confronting the spiraling cost of building/fixing/reinforcing structures, systems and services so cities and towns and emergency services and infrastructure systems can better withstand the unpredictable assaults and suffering increasingly inflicted by the the climate crisis;
  • The aforementioned child tax credit, which is projected to lift millions of children out of poverty.

If Democrats don’t find a way to do these things now, there may not be another chance for a long time. Maybe never. 

And if passing long overdue, productive, transformative policies and programs for the public good means getting crosswise with some powerful interests back home, well, that’s the job. Especially now.

This column originally overstated additional estimated yearly tax revenue from the mining tax bill passed by the 2021 Legislature.

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