For generations, everyone from individual miners to multinational corporations has been able to dig up natural resources on federal land without having to pay a royalty to the federal government.
The Obama administration wants to change that. The agency in charge of the federal government’s vast land holdings, the U.S. Bureau of Land Management, has proposed a host of new fees for mining on public land as part of President Barack Obama’s 2016 budget.
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First, the proposal would force mining companies to help clean up their abandoned underground and pit mines. These kinds of mines, where metals like gold, silver and iron ore are extracted, are known as hardrock mines.
There are an estimated 500,000 abandoned mines in the United States, mostly concentrated in the West. Many create acid mine drainage, which contaminates water and can poison wildlife and humans.
The budget proposes that companies mining on both public and private land should pay into the cleanup fund.
From the budget:
It’s the royalty proposal, however, that’s likely to get the most pushback from the industry. The budget proposes a 5 percent gross royalty on minerals pulled from public lands. Currently, mining companies pay no royalties on public lands, under an 1872 law that was designed to get rugged Americans to head out West and make a go of mining.
For comparison, oil and gas pay up to 12.5 percent royalties.
I asked a National Mining Association spokesman what the group thinks of the new proposals.
“We think very little of them,” Luke Popovich said in an email. “This will further discourage mining investment [and] high-wage jobs that the administration says it wants more of.
The association opposes both the fee to clean up abandoned mines (they call it a “dirt tax” since it would be levied on the amount of earth displaced in the mining process) and the royalty plan.
I’ve been following this issue for a couple of months as I dig into what’s known as the lords of yesterday. That’s the term for antiquated laws that remain in existence despite being out of touch with modern economics, science or conservation concerns.
Here’s why the lack of fees on mining land is a big deal:
We have only the vaguest idea of how much money the federal government is missing out on by not collecting royalties from hardrock mines. The feds don’t even collect data on how many tons of minerals are extracted from mines on public lands.
It nonetheless roughly estimated $6.4 billion in hardrock-mining profits from public lands. If the industry paid royalties comparable to oil and gas, hardrock royalty payments would be as high as $800 million.
That annual estimate is based on a 12.5 percent royalty.
This isn’t the first time a measure like this has been proposed. Over the past two decades, lawmakers have tried to add royalties as high as 12 percent on new mines. And Obama has put it forward in every single budget during his time in office.
They’ve all failed.
Reveal from The Center for Investigative Reporting is a nonprofit news organization based in the San Francisco Bay Area. Subscribe to the Reveal podcast and visit our website to learn more. Contact the reporter at [email protected].