Corporations Get the Gold: Taxpayers Get the Shaft
by Senator Dale Bumpers

This is the ninth agonizing year of my effort to reform the Mining Law of 1872, signed by Ulysses S. Grant and intended to entice people to "go west" and settle.

Because I will leave the Senate at the end of the year, the conclusion of my fourth term, I have redoubled my efforts. But unless the American people are awakened to this little-known abuse, I have no reason to be optimistic.

This archaic, 125-year-old law permits mining companies to gouge billions of dollars' worth of gold, silver, platinum, palladium and other hardrock minerals from public lands, without paying one red cent to the real owners, the American people. And these same companies often leave the unsuspecting taxpayers with the bill for the billions of dollars required to clean up the environmental mess left behind.

The era of the grizzled prospector seeking a fortune with a pickax, a tin pan and a burro are long past. Today's prospectors are multinational corporations that scar and ravage the land with giant earth-moving machines and lethal acids like cyanide.

Anyone, and I mean anyone, can drive four stakes into the ground on federally owned lands in the West, delineate the four corners of a 20-acre tract, and file a hardrock mining claim on those 20 acres. There's no limit on how many claims one may own and the claims will remain in effect as long as the owner pays $100 a year per claim.

Whereas oil, gas and coal companies must pay substantial royalties to taxpayers for the right to extract resources from public land, the hardrock mining companies pay nothing for extraction rights - not a dime.

The Newmont Mining Company, for instance, is paying a private landowner an 18 percent royalty for the right to extract gold from his land in Nevada. The land is within spitting distance of a Newmont gold mine located on federal property, on which the company pays no royalties.

It is estimated that the average royalty paid by mining companies to private landowners is about 5 percent. That being the case, extending that royalty to public lands could produce more than $100 million per year for taxpayers.

The 1872 law also gives mining companies the option of buying public land forever - at rock-bottom prices.

According to the Mineral Policy Center, more than 3.2 million acres of public lands packing $243 billion worth of hardrock minerals have been patented since 1872. Yet once a claimant has been granted a patent, he is not required to mine the land he's bought. He can use it for any purpose - for vacation home developments, junkyards, tourist traps, casinos and golf courses.

Mining Our Pockets

In 1994, a House-Senate conference committee finally imposed my proposal for a moratorium on patent applications. Unfortunately, many of the most valuable claims were either already patented or were excluded by a grandfather clause.

Just four days after the Senate voted 50 to 48 to defeat my patent moratorium amendment in 1990, the Stillwater Mining Company filed applications for patents to 2,000 acres of national forest land in Montana. For just $10,000 Stillwater will gain title to land containing platinum and palladium reserves worth more than $35 billion.

In 1989, an Oregon family patented 780 acres of land containing silica in the National Dunes Recreation Area for $1,950. Shortly after the patent was issued, the Department of Interior sought to buy back the land. The new owners offered to sell the land back - for $11 million.

In 1994, Barrick Resources, a Canadian corporation that touts itself as the most profitable mining company in the world, obtained patents on more than 1,800 acres of public land in Nevada. In exchange for approximately $9,000, Barrick became the owner of more than $10 billion worth of gold - one of the largest deposits in US history.

Companies that mine public lands not only do not pay a premium for the minerals in that land, they are able to purchase the land at the below-market, laughable rate of $2.50 per acre. Yet, incredibly, these companies are still allowed to take the tax deduction on the value of the minerals they extract. The cost to the taxpayers: almost $100 million a year.

Taxpayers are often left to pick up the tab for cleaning up the mess - acid waste, polluted streams and unreclaimed open pits - that mining companies leave in their wake. The Mineral Policy Center estimates it will cost upwards of $71.5 billion to reclaim the more than 557,000 abandoned hardrock-mining sites in the US.

In 1986, Summitville, another Canadian mining company, opened a gold mine in Rio Grande County, Colorado. In June of that year, a protective liner at the site failed, allowing cyanide to seep into the ground. Summitville's parent company declared bankruptcy. The EPA had to hire 55 full-time workers to handle the mess and taxpayers are, at this moment, spending $33,000 per day to prevent cyanide from spilling into the headwaters of the Rio Grande. Final costs are predicted to reach up to $60 million.

The mining industry continues to fight efforts to improve environmental regulations. Meanwhile, the mining interests have spent millions upon millions to keep this sacred law in force.

My eight-year battle to reform the hardrock-mining laws of this country has been a lonely one. My chief co-sponsor, Sen. Judd Gregg (R-NH) has been a staunch ally and Reps. Nick Joe Rahall (D-WV) and George Miller (D-CA) have also fought valiantly for reform in the House.

It is certainly understandable that legislators from states in which the mining industry is a major force would be supportive of that industry. However, a large number of senators, most of whom have no mining in their states, continue to vote with the Western bloc.

It's only natural that each member feels a duty to protect his or her parochial interests back home. But when those interests fly in the face of the obvious national interest, it becomes the duty of the other members to tolerate it no longer. Unfortunately, such has not been the case with this unseemly law.

It seems incomprehensible that Congress would allow this abuse of taxpayers to continue. It is time to chisel the 1872 Mining Law out of the US Code and send it to the Smithsonian Institution museum where it belongs.

Hon. Dale Bumpers (D-Arkansas) serves on the Senate Appropriations and the Energy and Natural Resource committees. He may be reached at his Washington office: US Senate, 229 Dirksen Building, Washington, DC 20510, (202) 224-4843, fax: -6435].

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