U.S. Congress fails to reform 1872 Mining Law

Intense lobbying from mining companies and the impending end of the congressional session in the U.S. have sunk efforts to rewrite that country’s 122-year-old Mining Law.

In late September, frustrated lawmakers abandoned congressional efforts to work out a compromise bill to overhaul the 1872 Mining Act. They blamed the failure on “stonewalling” by mining companies and their political allies in the Senate, Associated Press reports from Washington, D.C.

The House and Senate each passed widely different mining reform legislation months ago, but efforts to mesh the two bills have failed.

And with Congress nearing adjournment (in early October), western senators from mining states were able to block any compromise the industry opposed. The industry was out “to kill this bill . . . they have succeeded,” said Sen. Bennett Johnston, a Democrat who led weeks of discussions as he tried to devise legislation acceptable to both environmentalists and mining companies. Mining law reform has been a top priority of the Clinton administration. Interior Secretary Bruce Babbitt vowed to reopen the effort next year and end the practice that, under the 1872 law, allows the purchase of federal mining claims for as little as US$2.50 an acre, with no royalty being paid to the government on minerals recovered.

Under the law, some mining companies have paid a few hundred dollars for claims worth billions of dollars. The compromise legislation would have required market value payment for land and royalties of 4% on the minerals recovered.

Canadian mining companies such as American Barrick Resources (TSE) and Rayrock Yellowknife Resources (TSE), with gold-producing properties in the U.S., have been keen observers of the debate.

The mining industry has argued that it supports ending the clear abuses of the 1872 law. But it considers the proposed royalty too high and is fearful that the proposed environmental enforcement provisions would give too much authority to the secretary of the interior.

The industry wants “a reasonable balance” that will not lead to lost mining jobs and force companies overseas, says an industry spokesman. Environmentalists are also lukewarm about the latest mining compromise. Kathryn Hohmann of the Sierra Club called Johnston’s decision “a mercy killing” because, she said, the bill already “had been watered down so badly that it couldn’t be called reform.”