Getting Blood from a Turnip: US EITI’s Attempts at Transparency in Hardrock Mining
June 20, 2013
Last month, I blogged about the impending scoping discussions at the US Extractive Industries Transparency Initiative (US EITI). US EITI belongs to an international movement that provides credibility to companies and governments where the flows of money between them gets reported and reconciled. Members of a Multi-Stakeholder Group (MSG) comprised of representatives from industry, government, and civil society met last week to begin discussions about which revenue streams belong in the mix.
Oil and gas revenues are a no-brainer. Companies that extract oil and gas from public lands pay royalties to the Federal Government. The Department of Interior’s Office of Natural Resources Revenue (ONRR) carefully tracks these payments and conducts regular audits to ensure accuracy. The tricky part is what to do about hardrock minerals (gold, silver, copper, uranium etc.)
Hardrock is tricky because the federal government receives no royalties for these minerals. This is unique among EITI compliant nations. Every other nation I know of receives money from mining companies in exchange for the right to extract that nation’s minerals. But no other country governs mining under a law passed in 1872. Since the United States Government receives no royalty, the feds have no idea how much of these materials miners extract from public lands. And since there’s no royalty, there’s no money to track.
So what to do with the hardrock mining sector? Either we exempt them entirely from the process or we include payments to sub-national jurisdictions. This predicament just feels awkward. By some measure, EITI was designed to shine the light of transparency on corrupt governments- particularly in developing nations dominated by regimes where a nation’s riches went to foreign multinational corporations bribing government officials and exploiting indigenous populations. For the most part, the resources sought in some of these countries include hardrock minerals- especially precious metals.
If the United States wants a credible EITI process, we must involve hardrock minerals. If the Federal Government collects no payments or receipts, we have to look to states like Alaska, Arizona, Montana, Nevada, New Mexico and Utah to name a few. Many of these states collect royalties, rents, taxes, fines, penalties and so on. They hold bonds or other financial assurances for mine reclamation. They also enter in to contracts and memoranda of understanding (MOUs) that describe payments for water treatment, water access, water rights, and easements.
The reason the United States joined EITI is that we consider our nation a beacon to the world. Other nations with less mature democratic institutions look to us for the gold standard (so to speak) for transparency and accountability. Excluding hardrock minerals from EITI reporting simply because an antiquated 1872 law still governs domestic mining defeats the purpose. Our MSG should decide. Are we a beacon or a laughing stock?
For more information:
- 1872 Reform Requirements
- The Rubber Hits the Road on US EITI
- EITI Home
- GAO report "Management of Federal Oil and Gas Resources"
- EITI 2.0 by Michael Ross
- Should the US Join the Extractive Industries Transparency Initiative? by Betsy Taylor
- Transparency on Oil, Gas, Coal Revenues Moving Forward by Mia Steinle