my point of view…

House Bill May Boost Royalties and Reclamation Requirements

Some producers may face increased costs and more stringent reclamation standards if a proposed House measure, HR 4078 — the Abandoned Hardrock Mines Reclamation Act of 2002 — is passed. The bill would require mining companies to pay royalties on minerals extracted from public lands and strengthen environmental cleanup standards.
Royalty rates would be based on each company’s net revenues (see Figure 1). Other industries, such as oil and gas companies, already pay a royalty (in their case, 12.5 percent) to extract resources from public lands. Proceeds collected through the measure would be put toward a reclamation fund to restore abandoned mines. While the Office of Surface Mining and Reclamation and Enforcement has an abandoned mine reclamation fund for coal mines, no such fund currently exists for hardrock mining.

Figure 1. Proposed Reclamation Fees

Net proceeds as %
of gross proceeds Rate of fee as %
of net proceeds

10 or more, but less than 18 2.50

18 or more, but less than 26 3.00

26 or more, but less than 34 3.50

34 or more, but less than 42 4.00

42 or more, but less than 50 4.50

50 or more 5.00

Source: HR 4078

In addition to increased royalty fees, HR 4078 would provide for stricter environmental standards. It goes beyond recent Section 3809 regulations, which require posting of bonds for cleanup costs, and sets specific environmental standards for reclaimed mines.
The office of Nick Rahall (D-W.Va.), one of the bill’s sponsors, touted the environmental aspects of the bill, saying it “provides a mechanism for declaring federal lands unsuitable for mineral activities if they would result in significant, permanent, and irreparable damage to certain natural resource values.”
The bill would prohibit mining on wilderness study areas, roadless areas, or other protected areas, unless they were already permitted before the bill is passed. It also contains a “bad actor” provision that would deny mining permits to companies with poor environmental track records.
Similar bills have been introduced and failed during the last decade, but this bill’s sponsors are optimistic about its odds and are engaging in some tough language to stir up controversy. For example, co-sponsor Rep. Chris Shays (R-Conn.) said, “The mining industry has the biggest sweetheart deal in the country… We want to stop the rape of public lands and the theft of our Treasury dollars.”
HR 4078’s proponents have also feigned shock and disbelief that the industry is still operating under the 1872 Mining Law, which HR 4078 is intended to reform. Despite their attempts to fool the public, it’s implausible to argue that the mining industry is operating under the same guidelines it did when Ulysses S. Grant was president — prior to the Clean Air Act, the Clean Water Act and the creation of the Environmental Protection Agency. It’s time the politicans learned that, despite their rhetoric, we are members of the stone industry, not the stone age.