Democrats tout bill to reform energy and mineral extraction

E & E News | Manuel Quinones

November 18, 2011
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Several House Natural Resources Committee Democrats have introduced legislation they say will raise $19 billion by reforming the rules for energy and mineral extraction on public lands.

While unlikely to gain much traction in the Republican-controlled House, environmental advocates are welcoming the bill, describing it as a way for companies to pay their fair share for public resources. The main sponsors -- Rep. Ed Markey (D-Mass.), the Natural Resources ranking member, and Rep. Rush Holt (D-N.J.) -- see it as a push against GOP pressure to increase mining and drilling.

Efforts to reform the 1872 mining law are among the legislation's most notable elements. It institutes a first-ever 12.5 percent royalty on hardrock mining for materials like gold, silver and uranium. In his budget blueprint, President Obama proposed a royalty rate of not less than 5 percent of gross proceeds. The industry prefers a net proceeds calculation.

"Rep. Markey and his colleagues have taken an important first step to modernize the 1872 Mining Law, one of the most outmoded statutes on the books today," Jane Danowitz, Pew Environment Group public lands director, said in a statement.

Mining industry leaders have said they are not against reform, but they want to make sure to protect the industry's health. They also want lawmakers to understand the difficulties inherent in mineral exploration and extraction.

"We are concerned about having policies that promote domestic mining, and the mining law has been one of those policies," said National Mining Association general counsel Katie Sweeney at a hearing yesterday. "But there are a lot of barriers and hurdles to mining. Obviously there are many contributions that mining does beyond the royalties."

The Markey-Holt bill, which is also backed by public lands advocate Rep. Raúl Grijalva (D-Ariz.), would make it easier to block mining on public lands and would impose a 7-cent-per-ton fee for all materials displaced during hardrock mining. The money would pay for reclamation of hardrock mines. The mining industry and many backers on Capitol Hill have balked at the proposal.

"This new tax threatens thousands of high-paying American mining jobs and has the potential to seriously harm the economic competitiveness of American mining by driving investments -- and much needed to jobs -- to other mineral producing countries," the NMA said on a web site urging people to oppose the measure, calling it a "dirt tax."

"Our initial reading is it would be highly detrimental to U.S. minerals mining," the group said in a statement about the bill, "making the U.S. even more unattractive to investments needed to create jobs and ensure a reliable supply of minerals needed by U.S. manufacturers."

Lauren Pagel, policy director for Earthworks, said, the measure is necessary.

"Reform of America's antiquated mining laws to protect water resources, fund cleanup of abandoned mines, put special places off-limits to mining and make the industry pay taxpayers what we are owed is long overdue," she said.

Another controversial aspect of the bill, also touted by Obama, stops money collected from coal companies from going to states that have finished cleaning up abandoned coal mines. Many states and tribes say the dollars belong to them and are a means of cleaning up abandoned mine sites where materials other than coal were extracted.

Apart from mining, the legislation would increase inspection fees for offshore drilling, repeal revenue sharing with Gulf states and punish energy companies from keeping oil and gas leases idle, a proposal industry has called overly punitive and impractical.

The lawmakers have called on the deficit-slashing supercommittee to implement their proposals (E&E Daily, Nov. 1). In a statement Markey said, "At a time when American families are having a tough time putting food on the table, there is no excuse to continue the free lunch policies for oil, gas and mining companies."

Click here to read the legislation.

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Tagged with: subsidies, royalty, rep. ed markey, abandoned mine fee, 1872 mining law

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