Unknown Amount of Wealth Extracted from Public Land

By Nick Cunningham

The following was cross-posted with the Public Education Center's D.C. Bureau, which you can find by clicking here.

Uncle Sam gets Nothing

The U.S. government controls an enormous amount of land, particularly in the western half of the country. The Department of Interior’s Bureau of Land Management (BLM) manages an estimated 700 million acres of public lands, with much of it open for development by oil, gas, mining, and renewable energy development. When these various industries come into conflict, hardrock mining interests – gold, silver, copper, and other minerals – have traditionally won out due to laws favoring them, which date back to the 19th century.

Mining on public lands is principally governed by the General Mining Law of 1872. Back then, the U.S. government actively supported the settlement and development of public lands in the largely unpopulated western United States. The General Mining Law allowed for private citizens to lay claim to public lands for mining prospects, with the intent of protecting an individual’s gold or silver prospects from being taken by others. It essentially allowed a free-for-all: once someone staked a claim on a parcel of land, they could gain ownership. The law would protect that claim from being taken by anyone else.

While that may have made sense in the 19th century, the General Mining Law has not been substantially updated since President Ulysses S. Grant signed it into law. There have been legislative tweaks since then, but mining companies still enjoy essentially free access to the nation’s public lands.

On two fronts, however, mining interests may begin to lose that advantage: royalty payments and the preferential treatment given to mining on claiming public lands.

One relic of outdated mining laws is the lack of royalties. Mining companies do not pay federal royalties for extracting hardrock minerals on public lands. In contrast, oil and gas companies pay a 12.5% royalty rate.  Giving away public assets to mining companies for free is a significant corporate subsidy.

Senator Tom Udall (D-NM) has supported implementing royalties on hardrock mining. “It’s astounding in this time of trillion-dollar deficits that we aren’t looking more closely at revenue off of public lands,” Sen. Udall stated in January, as reported by Bloomberg. He went on to say, “It’s a lot of money that’s on the table, and it’s money that we should have been getting a long time ago.”

Along with Congressman Raul Grijalva (D-AZ), Sen. Udall sent a letter to the Government Accountability Office (GAO) in 2011, requesting a review of the amount of minerals extracted from public lands. GAO issued a report in November 2012, but could not determine how much mining companies are taking from public lands because the data are not collected –in part because the government does not assess royalties on mining. At the same time, GAO stated that royalties paid by oil, gas, and coal operations amounted to $11.3 billion in 2010.

Senate Majority Leader Harry Reid (D-NV) has been a roadblock to mining reform because his state is home to large mining operations. A spokesperson said that he remains open to reform, but only if revenues collected from royalties are shared with the states.

Senator Tom Udall (D-NM)

Congressman Raul Grijalva (D-AZ)

Senator Harry Reid (D-NV)

While the lack of royalties on hardrock mining is an anachronism – and evokes a kind of robber baron-era way of managing resources – another major problem with mining governance is how companies gain access to public lands.

BLM recently finalized an interim rule already in place that attempts to level the playing field for renewable energy on public lands. The rule, called the “Segregation of Lands-Renewable Energy,” blocks mining claims to public lands if renewable energy applications are under review.

Prior to this rule, if a specific tract of land was in the review process for a renewable energy project, a mining company going after hardrock minerals could still stake a claim on that land, and wouldn’t need BLM approval. The renewable energy projects would not get priority, even if their applications were filed before the mining claim.

This special treatment for mining interferes with renewable energy development. BLM stated in the Federal Register that mining companies often file claims on land under review for renewable energy not because they wish to mine the land, but only with the intent to “compel payment” from the renewable energy company in exchange for relinquishing the claim.

The new “Segregation” rule attempts to prevent resource conflicts by blocking mining claims if a “right-of-way” application is under review. The need to implement such a rule is illustrative of the outdated nature of U.S. mining laws.

There is no indication that Congress is willing to bring mining law into the 21st century. While levying royalties on the extraction of minerals from public lands faces an uphill battle in the Congress, hopefully BLM’s recently issued rule can begin to roll back the long established preferential treatment for hardrock mining on public lands.