Pew Campaign for Responsible Mining: About Us

Reforming the U.S. Hardrock Mining Law of 1872: The Price of Inaction

A Report from the Pew Campaign for Responsible Mining

Since 1872, when President Ulysses S. Grant signed the law that governs the mining of gold, copper, uranium and other hardrock minerals, mining companies have extracted billions of dollars worth of precious metals from federal public lands, paid no royalties for the minerals taken and frequently left the liability for environmental damage to U.S. taxpayers.

The generous give-aways of the pioneer-era law, along with more recent tax subsidies, have become entrenched in federal policy and continue in spite of today’s economic crisis. Overall, the old mining law and other outdated mining policies cost federal taxpayers an estimated $160 million annually in lost revenues and many millions more in the cleanup costs for abandoned mines.

In preparing this report, the Pew Campaign for Responsible Mining reviewed government data and identified three major reasons for lost federal revenue:

Hardrock minerals from federal public lands are not leased or sold like coal, oil and gas. The 1872 Mining Law gives away minerals on public land, including gold, silver, copper and uranium. Based on an analysis by the Congressional Budget Office, the Campaign estimates that failure to enact the modest 4% royalty on existing mines in H.R. 699¹ could cost taxpayers $400 million over the next decade.
Under the Surface Mining Control and Reclamation Act (SMCRA), coal mining operations on public and private lands pay a small fee on each ton of coal mined, and those help to clean up mines abandoned prior to the passage of SMCRA. No similar fee exists to clean up the nearly half a million abandoned hardrock mines in the U.S. Based on a Senate proposal to collect reclamation fees from the hardrock mining industry, Pew estimates the potential for collecting $290 million by 2019.
Under federal tax policies, mine operations, even those that obtain their minerals without payment of a royalty, are subsidized with the generous “percentage depletion allowance.” This policy allows mining companies to deduct a set percentage of the value of minerals produced, regardless of the amount of investment. Based on information from the Congressional Joint Committee on Taxation, elimination of this subsidy for hardrock mines on public lands could save taxpayers $1 billion over 10 years.

Read the full report (PDF)

Read the press release or contact Velma Smith, 202.887.8859, for more information.

¹The royalty rate in H.R. 699, the Hardrock Mining and Reclamation Act of 2009, is identical to that passed by the House in 2007. The 2007 legislation called for a 4% royalty on new production from existing mines and an 8% royalty on new mines. The CBO estimate conservatively presumed that no new mines would begin production until 2017 and did not include an estimate of those royalties in its analysis.