Mining and the Law: Federal mine claim holders to face new challenges

I want you to tear this article out of the paper and save it. I'll explain why in a minute, but the point is that you will want to refer to it often over the next several months if you have any interest in federal mining claims; and, more to the point, if you have any friends or family who have an interest in federal mining claims and have not seen this article, you will want to show it to them.

The reason? Pending in Congress as we speak is legislation that, if it becomes law, will make exploration and mining on (BLM) public domain and U.S. Forest Service lands so difficult that it will be impossible for anyone to mine on them in the future. The legislation I speak of is H.R. 2262, now pending before the U.S. House Committee on Natural Resources. This bill was introduced by Rep. Nick Rahall, D-W.Va. Rahall has been seeking to "reform" the mining law of 1872 for decades, and now he has the votes to do it.

Alaska's Congressman Don Young has been quoted as saying that he lacks the votes to amend or block this bill in the House; Sen. Larry Craig, R-Idaho, is alleged to have said that he doesn't have 41 votes to stop it in the Senate; and it is not at all clear that the White House would veto such a bill, especially if the votes to override are there.

Before detailing exactly what is wrong with H.R. 2262, let me say that I usually am optimistic about the future. If one hangs around with miners long enough, it becomes an occupational hazard. No one I have spoken with, however, has yet to identify even a faint glimmer of hope with regard to this legislation.

Six problems with Rahall bill

So what is wrong with the Rahall bill? Six things: First, it will do away forever with the possibility of getting a patent. This probably is not a big deal, because it hasn't been possible to get a patent for the past 13 years anyway due to the moratorium that has been attached to every Interior appropriation bill that has passed since 1994.

Next, it will impose a royalty on mining operations. Some people could argue that a royalty is appropriate; however this one is 8 percent of the gross value of the metal produced, without credits or deductions for any costs whatsoever. It is analogous to taxing a bank on deposits.

Third, the bill has a provision that would make "Special Places" off limits to mining. This wouldn't be a bad thing, except for the fact that anyone can nominate just about anywhere as a special place, which means that when you apply for a permit and disclose where you want to explore, anyone - everyone - who wants to can claim that place is "special" too. If the environmentalists don't find a given place special, competitors just might.

Fourth, there is a civil litigation provision in the bill that make it possible for anyone - citizenship not required - to initiate litigation against anyone for allegedly violating the permit requirements. Fifth, there are criminal provisions - up to $50,000 and two years in jail - for engaging in "mineral activities" without a permit. Mineral activities include, by definition, "any activity ... incidental ... to mineral exploration."

The biggest section, however, relates to the requirement for a permit. Under the Rahall bill, "no person may engage in mineral activities (on federal lands) unless ... a permit was issued to such person under this (act)." In order to apply for a permit, even for exploration, it is necessary that all other permits required by law have been issued. The application must contain site characterization data, an operations plan, a reclamation plan, monitoring plans, long-term maintenance plans, and unspecified documentation as necessary to ensure compliance with environmental requirements.

Minimum for application is information in 21 categories

The application must, "at a minimum," contain information in 21 specific categories including (but not limited to): whether any agent of any sister company has violated any environmental laws anywhere in the United States in the past five years; "accurate" maps clearly showing watersheds, surface and mineral ownership, soils and vegetation, etc., etc., etc.; a description of the biological resources associated with the area; a description of the plan to keep all facilities in a condition that is not harmful to fish and wildlife; an analysis of the potential hydrologic consequences of the proposed mineral activities with respect to surface and ground water systems using non-proprietary models approved by the secretary; accident contingency plans; environmental baseline data; evidence of financial surety; a description of site security provisions; a "full characterization" of soils and geology; a copy of the applicant's public notice that it is applying for a permit; and much more.

After considering all comments from the public on the application, the secretary must make 10 detailed findings of fact. It is then within his discretion as to whether to issue a permit and, if he does, the permit is good for 10 years (renewable).

There is much, much more in H.R. 2262, but the cost of compliance with these provisions alone will be overwhelming. Even existing operations must satisfy these requirements within three years following enactment of the law.

A hearing was held in Washington on the bill on July 26 and, speaking for the National Mining Association, William Champion, president and CEO of Kennecott Utah Copper Corp., in response to questions by the committee, indicated that if this bill were to pass as drafted, his company would have to consider relocating offshore.

After another hearing in Elko, Nevada, on Aug. 21 the bill is expected to pass out of the committee and onto the House floor. Proponents of this so-called "reform" are hoping for it to be passed by the House before the end of the year.

I fear this draft legislation is unlikely to get widespread coverage in the major newspapers across the country and undoubtedly it will come as a surprise to many federal claimholders. Accordingly, once again, I recommend that you tear this article out of the paper and share it with everyone who needs to know. Enactment of this bill, as drafted, will be the end of mining on public lands in the United States.