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Legislative and Regulatory Update

May 2009 by Scott Harn

• Mining reform introduced in Senate
Senator Jeff Bingaman (D-New Mexico) introduced Senate Bill 796, a companion bill to Representative Rahall’s Hardrock Mining and Reclamation Act, in the US Senate on April 3, 2009. Here are the “highlights” directly from the Senator’s website:

Eliminates Patenting—The bill eliminates patenting of Federal lands, but grandfathers patent applications filed and meeting all requirements by September 30, 1994.

Fees—The bill makes modest increases in the annual claim maintenance fee (from $125 to $150) and claim location fee (from $30 to $50). The legislation requires the mine operator to pay a fee in exchange for the use of Federal land that is included within the mine permit area. The bill provides that fees collected are to be used for the administration of hardrock mining on federal lands. Any excess funds are deposited into the Hardrock Minerals Reclamation Fund.

Royalties—The bill provides that the production of all locatable minerals is subject to a royalty to be determined by the Interior Secretary by regulation of not less than 2 percent and not more than 5 percent of the value of production, not including reasonable transportation, beneficiation and processing costs. The royalty may vary based on the particular mineral concerned. No royalty will be collected from lands under permit that are producing in commercial quantities on the date of enactment. Royalty revenues will be deposited into the Hardrock Minerals Reclamation Fund. The bill includes a provision for royalty reductions for all or part of a mining operation where the person conducting the mineral activities shows by clear and convincing evidence that without the reduction, production would not occur.

Permits and Financial Assurances—The bill states that permits are required for all mineral activities on Federal land except for “casual use” that ordinarily results in no, or negligible, disturbance. Mining permits are for a term of 30 years and so long thereafter as production occurs in commercial quantities. The operator must provide evidence of approved financial assurances sufficient to ensure completion of reclamation if performed by the Secretary concerned.

Water Reclamation—Financial assurances attributable to the cost of water treatment will not be released until the discharge has ceased for at least 5 years or the operator has met all applicable water quality standards for at least 5 years. The operator may be required to establish a trust fund or other long-term funding mechanism to provide financial assurances for long-term treatment of water or other long-term post-mining maintenance or monitoring requirements.

Operation and Reclamation—The Secretary of Agriculture must take any action necessary to prevent unnecessary or undue degradation in administering mineral activities on National Forest System land. The bill directs the Secretaries of the Interior and Agriculture to jointly issue regulations.

Land Open to Location—Requires within three years a review of certain lands to determine whether they will be available for future mining claim location. The governor of a state, chairman of an Indian tribe, or appropriate local official may petition the Interior Secretary to undertake a review of an area.

Hardrock Minerals Reclamation Program—Establishes a program for the reclamation of abandoned hardrock mines in 14 western states. Creates a Hardrock Minerals Reclamation Fund comprised of hardrock royalties, fees, and donations. Each operator of a hardrock mining operation on federal, state, tribal or private land must pay a reclamation fee established by the Secretary of not less than 0.3 percent, and not more than 1.0 percent, of the value of the production of the hardrock minerals for deposit into the Fund. The bill provides grant programs for all states for hardrock reclamation projects and for public entities and nonprofit organizations for collaborative restoration projects to improve fish and wildlife habitat affected by past hardrock mining.

• Obama signs lands bill
President Obama signed the Omnibus Public Land Management Act on March 30.

The bill designates another 2 million acres of wilderness, placing these lands off-limits to mining, energy, logging and other public uses. It also codifies the National Landscape Conservation system to “conserve, protect, and restore nationally significant landscapes…” Most of these public lands are located in the western states.

The largest wilderness additions were in California, where 450,000 additional acres were set aside in the eastern Sierra Nevada, the San Gabriel Mountains, and the desert areas of Riverside County.

• Cap-and-trade
First the good news: The US Senate approved a Republican budget amendment designed to stop Democrats from using a tactic known as reconciliation to pass climate change legislation. The tactic would have allowed passage of the legislation with a simple majority instead of 60 votes—the Democrats currently control the Senate with 58 votes.

President Obama previously expressed his support for a cap-and-trade system to regulate carbon dioxide emissions. Senator Barbara Boxer labeled the reconciliation tactic a “very important option” to prevent Republicans from stopping “progress.” A total of 26 Democrats sided with Republicans to insure the cap-and-trade issue is fully debated.

And the bad news: The EPA declared on April 17 that carbon dioxide and other greenhouse gases will be listed as pollutants under the Clean Air Act, paving the way for the Obama Administration and Congress to write regulations.

Businesses that emit carbon dioxide would have to pay for “credits” to cover the amount of carbon dioxide emitted. The Congressional Budget Office estimates the President’s cap-and-trade proposal will collect $629 billion from 2012-2019 from energy producers and others who emit greenhouse gases.

The $629 billion required by the federal government would be passed on to consumers in the form of higher prices. No analysis has been completed to date detailing the cost of compliance, program administration or the number of jobs that will be lost due to the added cost of doing business in the United States. When these taxes are included in manufactured products our ability to compete with countries like China and India will be severely hampered.

by Scott Harn

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