Democrats Warned Against Fast-Tracking Update to US Mining Law - Bloomberg Law
House Democrats’ fast-tracking of fees on minerals and other hard-rock mining royalties in the $3.5 trillion reconciliation package would poison any hope of a bipartisan compromise, the top Republican on the Senate energy committee said Tuesday.
The warning from Sen. John Barrasso (R-Wyo.) came during a Senate Energy and Natural Resources panel hearing on an 1872 hard-rock mining law amid complaints that the antiquated statute shortchanges taxpayers, particularly for mining of minerals on public lands.
The reconciliation provisions voted through the House Natural Resources Committee in September include a hard-rock mineral royalty fee that would raise about about $2 billion in 10 years. A new reclamation fee would raise roughly $200 million, and boost an annual hard-rock mining claim maintenance fee another $800 million, both over 10 years.
But Barrasso, the committee’s ranking Republican, said the provisions are a blunt instrument for an industry that provides high-paying jobs and said the fees wouldn’t differentiate between dozens of minerals with different markets. Some committee Democrats also expressed concern with the House approach.
Permitting Overhaul
Revamping U.S. mining law must include “meaningful permitting reform” to end the time-consuming and litigious permitting process, Barrasso said. All changes must go through the committee process, which would include hearings and bill markup, not through “the partisan budget process.”
Committee Chairman Joe Manchin (D-W.Va.), who wants an update of the 1872 law, said it’s time to impose royalty and reclamation fees on the industry.
“These are resources owned by every single American. The fact that over $5 billion in minerals can be mined each year, taken off the federal land, and sold without a single penny and royalties,” he said, “just makes no sense at all.”
“Modern mining works at an enormous scale” inconceivable back in 1872 “and the public is often stuck with the bill.”
‘Figure Out a Compromise’
Some committee Democrats—including Sen. Catherine Cortez Masto (Nev.)—worried a revamping of mining fees could hurt their Western states. Democrats can’t afford defections in passing the reconciliation package in a 50-50 Senate.
Cortez Masto said the House approach “would have an unfair, out-sized impact” on Nevada, the bulk of which is land owned by the federal government.
“I oppose the reform” in the House package, she said, favoring a more transparent and public process to “figure out a compromise.”
Sen. Martin Heinrich (D-N.M.) also worried that the House approach was too “zealous.”
Congress needs “to find a fair and transparent way for taxpayers to be compensated for these minerals” and new revenue to “start cleaning up the tens of thousands of abandoned mines that litter, I think, every western state,” he said.
Others on the energy panel, including independent Sen. Angus King (Maine), who caucuses with Democrats, said the industry has left the U.S. with thousands of abandoned mines, posing a threat to drinking water in tribal lands and other vulnerable communities.
Fee Requirements
The increased mining fees in the House reconciliation measure would set a new 8% tax on gross income of new hard rock operations and a 4% gross tax on existing ones, plus other federal fees to address complaints that companies mining critical and rare earth minerals—key to U.S. clean energy and electric vehicle production—aren’t held responsible for site reclamation.
The broad reconciliation package remains a top priority for President Joe Biden and many congressional Democrats, bu they’re struggling to overcome Democratic infighting among House moderates and progressives over whether to move it or a bipartisan infrastructure measure first.
Mining industry representatives told the committee they could accept some increased fees. But taxing gross receipts would hurt U.S. competitiveness and drive away investment. The industry already pays royalty fees to certain states, including Nevada, Rich Haddock, general counsel of Barrick Gold Corp., told the committee. The company operates Nevada Gold Mines.
Environmental and public interest groups say the antiquated law has meant a massive giveaway of royalty payments and let the industry off the hook on cleanups.
A gross income royalty approach would be “the most transparent, the easiest to administer, and the least likely to be gamed or avoided” by the industry, said Autumn Hanna, vice president of Taxpayers for Common Sense.
To contact the reporter on this story: Dean Scott in Washington at [email protected]
To contact the editor responsible for this story: Rebecca Baker at [email protected]
source: https://news.bloomberglaw.com/environment-and-energy/democrats-warned-against-fast-tracking-update-to-u-s-mining-law
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