Mining on Federal Lands: Hardrock Minerals






Prepared for Members and Committees of Congress



Mining of hardrock minerals on federal lands is governed primarily by the General Mining Law
of 1872. The law grants free access to individuals and corporations to prospect for minerals in
public domain lands, and allows them, upon making a discovery, to stake (or “locate”) a claim on
that deposit. A claim gives the holder the right to develop the minerals and may be “patented” to
convey full title to the claimant. A continuing issue is whether this law should be reformed, and if
so, how to balance mineral development with competing land uses.
The right to enter the public domain and freely prospect for and develop minerals is the feature of
the claim-patent system that draws the most vigorous support from the mining industry. Critics
consider the claim-patent system a giveaway of publicly owned resources because of the small
amounts paid to maintain a claim and to obtain a patent. Congress, however, has imposed a
moratorium on mining claim patents through the annual Interior spending bill since FY1995.
The lack of direct statutory authority for environmental protection under the Mining Law of 1872
is another major issue that has spurred reform proposals. Many Mining Law supporters contend
that other current laws provide adequate environmental protection. Critics, however, argue that
these general environmental requirements are not adequate to assure reclamation of mined areas.
Broad-based legislation to reform the General Mining Law of 1872, the Hardrock Mining and
Reclamation Act of 2007 (H.R. 2262), was introduced on May 10, 2007. The bill, as amended in
Committee markup, would establish an Abandoned Locatable Minerals Mine Reclamation Fund,
a Locatable Minerals Community Impact Assistance Fund, and an 8% royalty on “net smelter
returns” from new mines or mine expansions and a 4% “net smelter return” royalty on existing
mines. New reclamation standards would be established, and a reclamation bond or other
financial guarantee would be required before operation permits are approved.
Hearings were held on H.R. 2262 by the Committee on Natural Resources’ Subcommittee on
Energy and Minerals on July 26, August 21, and October 2, 2007. The Senate Committee on
Energy and Natural Resources held an oversight hearing on hardrock mining on federal lands
September 27, 2007. The House Committee on Natural Resources approved H.R. 2262, as
amended, by a vote of 23-15 on October 23, 2007. On November 1, 2007, the House passed H.R.

2262 by a vote of 244-166.


A Senate bill, S. 2750, introduced March 12, 2008 (Abandoned Mine Reclamation Act of 2008),
would address cleaning up abandoned hardrock mines throughout the United States by
establishing an Abandoned Mine Cleanup Fund and imposing various fees on hardrock mining
operations on federal land. Two Oversight Hearings were held by the Senate Energy and Natural th
Resources Committee in the 110 Congress—one on hardrock mining on federal land (September
27, 2007) and a second on reform of the General Mining Law of 1872 (January 24, 2008). The
Senate Energy Committee held a third hearing to address abandoned hardrock mine lands and
uranium mining (March 12, 2008).






Backgr ound ..................................................................................................................................... 1
The Claim-Patent System..........................................................................................................1
Major Mining Legislation After the 1872 Mining Law............................................................3
Analys is ........................................................................................................................................... 4
Claim-Patent System: Pros and Cons........................................................................................4
Past Amendment Proposals.......................................................................................................5
Proposals to Eliminate Subsidies..............................................................................................6
Fair Market Value......................................................................................................................6
Environmental Protection..........................................................................................................7
Federal Land Withdrawals........................................................................................................8
Current Legislative Activity............................................................................................................8
For Additional Reading.................................................................................................................10
Author Contact Information...........................................................................................................11






Mining of hardrock minerals on federal lands is governed primarily by the General Mining Law
of 1872. The original purposes of the Mining Law were to promote mineral exploration and
development on federal lands in the western United States, offer an opportunity to obtain a clear
title to mines already being worked, and help settle the West. The Mining Law grants free access
to individuals and corporations to prospect for minerals on open public domain lands, and allows
them, upon making a discovery, to stake (or “locate”) a claim on the deposit. A valid claim
entitles the holder to develop the minerals. The 1872 Mining Law originally applied to all
valuable mineral deposits except coal (17 Stat. 91, 1872, as amended).
Public domain lands are those retained under federal ownership since their original acquisition by
treaty, cession, or purchase as part of the general territory of the United States, including lands
that passed out of but reverted back to federal ownership. “Acquired” lands—those obtained from
a state or a private owner through purchase, gift, or condemnation for particular federal purposes
rather than as general territory of the United States—are subject to leasing only and are not
covered by the 1872 Law. Some public lands may be “withdrawn” or closed to mineral entry.
The 1872 Mining Law was one of the primary forces behind the development of mineral
resources in the West, along with the industries and services that supported mineral production.
Major hardrock minerals developed in the West include copper, silver, gold, lead, zinc, th
molybdenum, and uranium. During the 19 century, major mining districts for silver and gold
were developed under the Mining Law in Colorado, California, Idaho, and Nevada. Early in the th
20 century, there were major developments of porphyry copper in Arizona. Large molybdenum
and tungsten deposits in Colorado were also developed. The Mining Law continues to provide the
structure for much of the western mineral development on public domain lands. Western mining,
although not as extensive as it once was, is still a major economic activity, and a high percentage
of hardrock mining is on public lands.
After a prospector has conducted exploration work on public domain land, he or she may locate a
claim to an area believed to contain a valuable mineral. To hold a claim on public land, claimants 1
must pay an annual maintenance fee of $125 per claim. Claimants with 10 claims or fewer are
exempt from the annual maintenance fee. There also is a $30 fee for first-time locators to locate 2
and record a claim. The fees above are to be adjusted every five years based on the Consumer
Price Index (30 U.S.C. 28 j (c)). The last adjustment was made on September 1, 2004. Prior to
2004 the fees were $100 and $25 respectively. The annual maintenance fee is in addition to the
requirement that $100 of annual development work be conducted per claim.
The maintenance and location fees generated revenue estimated at $47.5 million in FY2005 and
$32.3 million in FY2006, according to the Bureau of Land Management (BLM). Revenues from
fees have fluctuated over the years and were $35.9 million in FY1997.

1 30 U.S.C. 28f
2 30 U.S.C. 28g





Once a claimed mineral deposit is determined to be economically recoverable, and at least $500
of development work has been performed, the claim holder may file a patent application to obtain
title to surface and mineral rights. Beginning January 3, 1989, a fee of $250 per patent application
plus $50 per claim within each application has been required. If the patent application is
approved, the claimant may purchase surface and mineral rights at a rate of $2.50 per acre for
placer claims and $5 per acre for lode claims. A placer deposit is an alluvial deposit of valuable
minerals usually in sand or gravel; a lode or vein deposit is of a valuable mineral consisting of 3
quartz or other rock in place with definite boundaries. A placer claim is usually limited to 20
acres but a lode claim may be slightly greater than 20 acres. These per-acre fees were substantial
when the Mining Law was enacted—claimed land and minerals now far exceed these amounts in
value.
The following provisions currently apply to claims:
• There is no limit on the number of claims a person can locate;
• There is no requirement that mineral production ever commence;4
• Mineral production can take place without a patent or royalty payments to the
federal government; and
• Claims can be held indefinitely with or without mineral production, subject to
challenge if not developed.
Most of the current mining activity and mineral claims under the Mining Law are in Nevada,
Arizona, California, Montana, and Wyoming. As of the end of FY2005, approximately 35% of
mining claims were in Nevada alone and another nearly 35% were in the other four states.
According to the Bureau of Land Management, the number of active claims declined from about
1.2 million claims in FY1989 to 294,678 for FY1993. Many claims were dropped as a result of
provisions of law charging a $100-per-claim annual maintenance fee. The number of active
claims subsequently rose to 324,651 in FY1997, reflecting the relative strength of the gold and
copper industries. The number of active claims fell to a low of 207,757 for FY2001, reflecting a
decline in the gold and copper industries and, according to the BLM, changes in public land
policy that significantly lengthened the time necessary to get permission to mine. Active claims
stood at 207,241 in FY2005.
Only a small percentage of claims is ever patented, totaling about 3.4 million acres from 1867
through 2006. This represents approximately 1.5% of all public lands patented; most public lands
have been patented under homestead entries, statehood grants, railroad grants, and other non-
mineral public land laws. It is not required to patent a claim to mine a deposit, and a great deal of
mining activity is currently taking place on unpatented claims. However, patenting a claim gives
the holder legal title to both the surface and the minerals, and relieves the holder of having to pay
the annual fees.
Beginning in FY1995, Congress has enacted (in the Interior appropriations laws) a series of one-
year moratoria on the issuance of mineral patents. However, applications meeting certain
requirements that were filed on or before September 30, 1994, are allowed to proceed, and third-

3 Source: Dictionary of Mining, Mineral and Related Terms, Bureau of Mines, 1968.
4 However, before the enactment of P.L. 102-381, claimants were required to conduct at least $100 of development
work per year.





party contractors are authorized to process the mineral examinations on those applications. The
patent moratorium will not stop the production of valuable mineral resources from the public
lands, but will prevent the further transfer of ownership of public lands to the private sector (with 5
the exception of the 237 patent applications already in the pipeline).
The annual one-year moratorium on patenting continues the uncertainty over whether efforts will
continue to try to reform the 1872 Mining Law. The mining industry would like to end the
uncertainty to facilitate its long-term business planning. Environmentalists, who were hoping for
new environmental protection language in a major mining law reform bill, argue that the patent
moratorium does not protect the environment from current mining practices.
In 1920, the Mineral Leasing Act removed oil, gas, oil shale, phosphates, sodium, and certain
other minerals on federal public domain lands from the claim-patent system of the 1872 Mining
Law and set up a system of leasing in which the federal government retains ownership of the
leased lands. Coal, which previously had its own claim-patent law (the 1873 Coal Act), was also 6
included in the 1920 Leasing Act. After 1955, common variety minerals such as sand, stone,
gravel, cinders, and pumice were sold under the Materials Act of 1947, as amended. A strong
push for an all-leasing system developed during the 1930s and 1940s, but no such legislation was
enacted.
As mentioned, acquired federal lands were never subject to the General Mining Law. The Mineral
Leasing Act for Acquired Lands of 1947 authorized the leasing of leasable minerals in some 7
acquired federal lands. The Reorganization Plan No. 3 of 1946 and earlier acts authorized the 8
leasing of hardrock minerals on acquired forest lands.
During the 1960s and 1970s, the Multiple Use Sustained Yield Act, Wilderness Act, National
Forest Management Act, National Environmental Policy Act (NEPA), and Federal Land Policy
Management Act (FLPMA) addressed environmental protection, multiple use, and management
of federal land generally. By imposing new requirements on agency actions, and by withdrawing
some federal lands from development, these acts have affected mineral development under both
the leasing system and the Mining Law claim-patent system. The Mining Law contains no direct
environmental controls, but mining claims are subject to all general environmental laws as a
precondition for development. The mining industry must comply with applicable requirements of
the Clean Water and Clean Air Acts, state reclamation standards where they exist, and federal and
state statutes relating to the handling and disposal of certain toxic wastes, among other laws.
The evolving leasing system and later withdrawals of lands from hardrock exploration and
development diminished the amount of lands under the Mining Law authority. For those hardrock
minerals that remain under the Mining Law, however, the claim-patent system is essentially the
same as it was when the law was enacted.

5 P.L. 103-332
6 30 U.S.C. 181 et.seq.
7 30 U.S.C. 351-359
8 60 Stat. 1007





Critics argue that the West is now developed and that the 1872 Mining Law is obsolete and
inconsistent with other federal natural resource policies. Supporters maintain that the combination
of leasing for some resources and a claim-patent system for others works well and should be
maintained. The National Mining Association (NMA) states that the “existing law more than
adequately meets the four criteria essential to any mineral tenure law”: free and open access to
explore for minerals on unappropriated public lands, exclusive exploration rights, the right to
develop the valuable minerals discovered, and security of tenure.
When oil shale was transferred from the 1872 claim-patent system to the leasing system in the
1920 Mineral Leasing Act, a large number of existing unpatented oil shale claims were continued
under the terms of the 1872 Mining Law. During the 1980’s, the Department of the Interior
sought to invalidate these unpatented claims and refused to issue patents to claim owners. The
claimants challenged the Department’s actions. The U.S. Court for the district of Colorado held
that any oil shale claimant who had made $500 worth of assessment work on the land in question
had satisfied the requirements for issuance of a patent and that the Department could not 9
promulgate a new policy to the contrary.
Legislation to resolve oil shale issues was enacted as part of the Energy Policy Act of 1992 (P.L.
102-486). This law offers general and limited patents based on the status of the application at the
time of enactment. Limited patent holders receive title to the oil shale only and are required to
post a reclamation bond or financial guarantee. Patent fees remain $2.50 per acre.

The right to enter the public domain lands and prospect for and develop minerals is the feature of
the claim-patent system that draws the most vigorous support from the mining industry. Modern
hardrock mineral exploration requires a continuous effort using vast tracts of land and
sophisticated and expensive technology. Industry officials argue that being able to obtain full and
clear title to the land enhances a company’s ability to bring an economic deposit into production;
financing the project, for example, may be more feasible. They contend that restrictions on free
access and security of tenure would curtail exploration efforts among large and small mining
firms. In their view, the incentive to develop would be lost, long-run costs would increase, and the
industry and the country would suffer.
Mining Law critics consider the claim-patent system a giveaway of publicly owned resources
because of the absence of royalties and the small charges associated with keeping a claim active
and obtaining a patent. They maintain that although such generous terms may have been effective
ways to help settle the West and develop minerals, there is no solid evidence that under a different
system minerals would not be developed today. They also believe the current system, by
conveying title and allowing other uses of patented lands, creates difficult land management
problems through the creation of private inholdings on public land, and that current law does not
provide for adequate protection of the environment.

9 Tosco Corp. V. Hodel, 611 F. Supp. 1130 (. Colo. 1985).





In the claim-patent system, mineral claims may be held indefinitely without any mineral
production. Once lands are patented to convey full title to the claimant, the owner can use the
lands for a variety of purposes, including non-mineral ones. However, using land under an
unpatented mining claim for anything but mineral and associated purposes violates the Mining
Law. Critics believe that many claims are held for speculative purposes. However, industry
officials argue that a claim may lie idle until market conditions make it profitable to develop the
mineral deposit.
Another issue surrounds “discovery” and “prediscovery” protection. The law requires that “no
location of a mining claim shall be made until the discovery of the mineral within the limits of the
claim.” If a discovery is made and a valid location established, the claimant has a valid
possessory right against all other parties. One purpose of the discovery requirement was to help
reduce speculation. However, demonstrating discovery of a valuable mineral deposit often
requires considerable time, effort, and expense on the part of a prospector. The prospector may
find indications of a deposit, but demonstrating its value may involve exploration over a large
area and drilling and analyses of core samples to define the quality and extent of the mineral.
Typically, in practice, the federal government has allowed claims based on general indications
that a mineral deposit exists, and required proof of discovery only upon application for a patent
unless circumstances warrant full proof sooner, for example, mineral claims in sensitive areas.
The industry has indicated it wishes to avoid major challenges to the principle of free access and
the right to obtain a patent. The industry generally opposes placing hardrock minerals under a
leasing system because this would give the federal government discretionary control over
development, impose royalty payments, and retain government ownership of surface and/or
mineral rights.
Proposals to amend the 1872 Mining Law have fallen under the following broad categories.
• Modify the claim-patent system to retain the patent feature, but require payment
of fair market value for all or part of the value of the land. The Government also
would collect some percent of the value of mineral production as royalties.
• Convert the claim-patent system to a permitting system, and prohibit further
patenting. Advocates of this proposal argue that a permitting system would be
effective in achieving a fair market value return to the federal Treasury for public
lands. This system would collect royalties and add new environmental standards
to mining operations. Mineral industry supporters, on the other hand, contend
that the Department of the Interior is already overburdened with the current
leasing system and that comprehensive hardrock mining reform would only add
to its inefficiency and ultimately increase costs through royalty and rents.
• Continue the current claim-patent system, but with some amendments. Proposed
changes have included eliminating the distinction between lode and placer
claims, imposing a time limit within which claims must be developed, expanding
the size of a claim, providing better prediscovery protection, and opening more
public lands to mineral exploration.





The Mining Law currently allows a claimant to produce minerals without a patent and without
paying royalties or rents to the federal Treasury. This is considered a subsidy or give-away by
many because the miner does not pay for a factor of production (i.e., land and mineral resources).
By contrast, royalties are paid to the federal government for oil, gas, coal and other leasable
minerals on federal lands, and non-federal land owners (e.g., private and state owners) typically
receive a royalty from those who produce minerals on their lands. Also, if the claimant patents the
surface and mineral estate for the $2.50 or $5.00 per acre, this too can be considered a subsidy
because the claimant is paying less than fair market value for the surface and mineral estates.
Various tax incentives, such as the percentage depletion allowance (a tax deduction for the
depletion of a mineral resource) and “expensing” (writing off in the year of expenditure) the costs
of exploration and development, have been characterized as subsidies to the industry as well.
Eliminating some of the natural resource subsidies, in the Clinton Administration’s view, would
have been one way to increase revenues to the Treasury and help ensure a fair return to the
taxpayer for the development of public lands. In its FY2001 budget request, the Clinton
Administration proposed charging mining companies a 5% fee on net smelter production from
hardrock mining on federal lands. The Bush Administration has not made a similar proposal in
any of its budget requests.
As has been previously noted, the original intention of the Mining Law was to develop the
nation’s minerals and to develop the West. Proponents of retaining the current system contend
that an incentive still is necessary for those who take substantial financial risk to develop a
mineral deposit. Mining is a capital-intensive process that often takes years of development
before minerals are produced.
Imposing royalties, increasing holding fees, and repealing the percentage depletion allowance
would have some impact on domestic hardrock mineral production, but the level of any
production decline attributable solely to new fees is difficult to estimate. The mining industry
generally has opposed legislation to repeal the percentage depletion allowance. The elimination
of some incentives to the industry would come at a time when the West is already developed and
mineral/metal demand is relatively good. However, hardrock mineral prices fluctuate and often
are cyclical. Also, several mineral-producing nations are reportedly rewriting their mining laws to
attract more U.S. and western investment. Mineral investment in developing countries, however,
face a political risk. The industry argues that a new cost increases in one area, without cost
reductions in others, may make U.S. mineral deposits less competitive or uneconomic.
Critics point out that the federal government does not receive fair market value for land and
resources transfers under the Mining Law. It receives no royalties or rents from mining activities
conducted under the law. In addition, the $2.50 and $5.00 per-acre price for clear title to the
surface and mineral rights has not changed since the law was enacted. The per-acre price appears
to be based on the value of Western farmland and grazing land before the enactment of the law in

1872.


Determination of fair market value of mineral-bearing lands is complex because many geologic,
engineering, and economic factors must be considered, and fair market value determinations





typically are controversial. According to a 1989 report by the General Accounting Office (GAO),
the fair market value of mineral-bearing lands is substantially more than the $2.50 and $5.00 per
acre that a claimant pays for patenting a claim. GAO estimated that, for 20 patents it reviewed,
the federal government had received less than $4,500 since 1970 for lands valued between $13.8 10
million and $47.9 million.
The GAO appraisal method, however, was criticized by the Bureau of Land Management (BLM)
in a May 1989 Report to the Secretary of the Interior. The GAO report obtained information on
land values from BLM, Forest Service officials, and local real estate brokers. GAO’s estimates
were based on recent sales of comparable land, not the value of the land at the time claims were
patented; much of the land may have had very little value at the time it was claimed or patented.
BLM argues that sales of adjacent tracts that either have no mineral development potential or are
sold for mineral rights alone cannot be used to establish fair market value of the surface of
patented mining claims and that data on comparable sales are rare.
The Congressional Budget Office estimates the value of hardrock mineral production on federal
land at $600 million for FY2005, a decrease from an Interior Department estimate of $1.8 billion
in FY1993. The decline can be attributed in part to acreage conveyed out of federal ownership
through patenting, according to the BLM.
The lack of direct statutory authority for environmental protection under the Mining Law of 1872
is another major issue that has spurred reform proposals. Many Mining Law supporters contend
that other current laws, as noted above, provide adequate environmental protection. Critics,
however, argue that these general environmental requirements are not adequate to assure
reclamation of mined areas and that the only effective approach to protecting lands from the
adverse impacts of mining under the current system is to withdraw them from development under
the Mining Law. Further, critics charge that federal land managers lack regulatory authority over
patented mining claims and that clear legal authority to assure adequate reclamation of mining
sites is needed. In addition, cleaning up the reportedly over 500,000 abandoned hardrock mine 11
sites in the United States is an ongoing and major concern for many in Congress. The BLM’s
Abandoned Mine Lands Program has inventoried 11,000 of the estimated 70,000 abandoned mine
sites on public lands and has initiated cleanup efforts in Western states in cooperation with state 12
and local governments, mining companies, and public interest groups. In addition, the U.S.
Environmental Protection Agency lists over 40 abandoned hardrock mine or processing sites on 13
its National Priorities List for cleanup.

10 The Mining Law of 1872 Needs Revision, United States General Accounting Office, GAO/RCED-89-72, March
1989, p. 24. This report is GAO’s most recent investigative study of potential abuse of the Mining Law.
11 Earthworks, Abandoned Mine Legacy, http://www.earthworksaction.org/AbandonedMineLegacy.cfm.
12 U.S. Department of the Interior, Bureau of Land Management, The Cooperative Conservation Based Strategic Plan
for the Abandoned Mine Lands Program, March 2006.
13 U.S. Environmental Protection Agency, NPL Sites, Abandoned Mine Lands, Superfund, April 2005. See
http://www.epa.gov/aml/amlsite/npl.htm





BLM is responsible for approximately 700 million acres of federal subsurface minerals, and
supervises the mineral operations on about 56 million acres of Indian trust lands. Some of these
lands are withdrawn from mineral development; a withdrawal is an action that restricts the use or
disposition of public land. In some cases land is reserved for a specific use that may preclude
locating mining claims and granting leases.
A BLM study determined that of the approximately 700 million acres of federal subsurface
minerals under the agency’s jurisdiction, approximately 165 million acres have been withdrawn
from mineral entry, leasing, and sale, subject to valid existing rights. Lands in the National Park
System (except National Recreation Areas), the Wilderness Preservation System, and the Arctic
National Wildlife Refuge (ANWR) are among those that are statutorily withdrawn. Also, of the
700 million acres, mineral development on another 182 million acres is subject to the approval of
the surface management agency, and must not be in conflict with land designations and plans,
according to the BLM. Wildlife refuges (except ANWR), wilderness study areas, and roadless 14
areas, among others, are in this category.
The Federal Land Policy Management Act (FLPMA) mandated review of public land
withdrawals in 11 Western states to determine whether, and for how long, existing withdrawals
should be continued. According to the BLM, the retention of a withdrawal requires a compelling
show of need, and an agency manager must convince the BLM Director, Secretary and the public
that certain lands should not be opened to multiple use, including mining and mineral leasing, and 15
that there is no reasonable alternative to continued withdrawal.
Mineral industry representatives maintain that federal withdrawals inhibit mineral exploration and
limit the reserve base even when conditions are favorable for production. Mineral reserves are not
renewable. Thus, they argue that whether minerals are in the public or private sector, without new
reserves or technological advancements, mineral production costs may rise. They further contend
that higher domestic costs may lead to greater exploration on foreign soil, boosting import
dependence. Mining industry supporters also assert that too much land has been unnecessarily
withdrawn from mining, through administrative actions, to pursue preservation goals.
Critics of the Mining Law argue that mining often is an exclusive use of land in as much as it can
preclude other uses and that in many cases there is no way to protect other land values and uses,
short of withdrawal of lands from development under the law. They point to unreclaimed areas
that have been mined for hardrock minerals in the past, Superfund sites related to past mining and
smelting, and instances where development of resources could adversely affect or destroy scenic,
historic, cultural, and other resources on public land.

A broad-based bill to reform the General Mining Law of 1872, the Hardrock Mining and
Reclamation Act of 2007 (H.R. 2262), was introduced in the House on May 10, 2007. The bill

14 Public Lands, On-Shore Federal and Indian Minerals in Lands of the U.S., Bureau of Land Management, U.S.
Department of the Interior, December 1, 2000.
15 43 U.S.C. 1714





would limit the issuance of patents to claimants whose patent applications were filed with the
Secretary of the Interior on or before September 30, 1994, and met appropriate statutory
requirements by that date. The bill would establish a Locatable Minerals Fund which would
include two accounts: Hardrock Reclamation Account and a Hardrock Community Impact
Assistance Account. An 8% royalty on “net smelter returns” would be imposed on new mines and
mine expansions while a 4% “net smelter return” royalty would apply to existing mines. Two-
thirds of the royalty revenues would be deposited into the proposed reclamation account, and one-
third would be deposited into the proposed community impact assistance account. An operations
permit, which would include, among other things, a reclamation plan, would be required of any
claim holder to carry out mining or related activities on mining claims. The operations permit—
good for 20 years—may be renewed for a successive 20-year term. New reclamation standards
would be established, and a reclamation bond or other financial guarantee would be required
before exploration and operation permits are approved. States, political subdivisions and Indian
Tribes would be allowed to petition the Secretary of the Interior to have lands withdrawn from
mining. Mineral activities would not be permitted if they “impaired” (as defined in the bill) the
lands or resources of the National Park system or National Monuments. A provision in the bill
allows for civil suits to be filed in U.S. District Courts should a person feel adversely affected.
The bill was referred to the Committee on Natural Resources.
Hearings were held on H.R. 2262 by the House Committee on Natural Resource’s Subcommittee
on Energy and Minerals on July 26, August 21(field hearings) and October 2, 2007. Industry
groups testified in opposition to much of the bill, particularly opposed to the 8% “net smelter
royalty” as defined in section 613 (c)(1) of the Internal Revenue Code of 1986, and the more
stringent environmental standards. Some testified that if the government were to impose a royalty
that it be based on “net profit” or the ability to pay, which would then not distort production
decisions. Others, however, countered that an ad-valorem royalty—based on value (that is
contained in the bill)—might be a more appropriate way to collect revenues, claiming that a net
profit royalty is fraught with complexities and high administrative cost, thus minimizing the
government take. Those in favor of the bill pointed out the high number of uranium claims staked
on public land near “sensitive sites” and the need to create a dedicated revenue stream for a vast
and costly abandoned hardrock mine cleanup effort. The Senate Committee on Energy and
Natural Resources held an oversight hearing on hardrock mining on federal lands September 27,

2007.


A Committee mark-up (October 18th and 23rd) followed several Subcommittee hearings
(discussed above) on the bill. The House Committee on Natural Resources approved H.R. 2262,
as amended on October 23, 2007, by a vote of 23-15. On November 1, 2007, the House approved
H.R. 2262 by a vote of 244-166 including amendments that would consider river watershed areas
eligible for funding through the Locatable Minerals Fund and that 50% of the money deposited in
the Hardrock Reclamation Account (one of two accounts that would be established within the
Locatable Minerals Fund) be redirected to states in proportion to the royalty funds the state
generates. The House defeated amendments that sought to establish a Minerals Information
Service within the Department of the Interior, strike the definition of “undue degradation” from
the bill and keep “uncommon variety” minerals within the locatable minerals framework.
A Senate bill, S. 2750, introduced March 12, 2008 (Abandoned Mine Reclamation Act of 2008),
would address cleaning up abandoned hardrock mines throughout the United States by
establishing an Abandoned Mine Cleanup Fund and imposing various fees on hardrock mining
operations on federal land. A 4% “gross income” (defined in section 613 (c)(1) of the Internal
Revenue Code of 1986) royalty would apply to existing hardrock mineral producers on federal





land. The annual hardrock mining maintenance fee would rise to $300 per claim from the current
$125 per claim and would apply to claims other than oil shale claims and those with ten or fewer
claims. Additionally, hardrock miners on federal lands would be required to pay an annual
reclamation fee of 0.3% of their gross annual income from mining except for operators making
less than $500,000, among other specified conditions. All funds from the reclamation fee and the
royalty would be deposited into the Cleanup Fund. Funds collected from the annual maintenance
fee would be allocated to both the Department of the Interior for administration of the Mining
Law and to the Cleanup Fund.
S. 2287, Elimination of Double Subsidies for the Hardrock Mining Industry Act of 2007,
introduced November 1, 2007, would repeal the percentage depletion allowance for certain
hardrock mines. This bill would amend section 613 (a) of the Internal Revenue Code of 1986. An
Abandoned Mine Reclamation Fund would be established and funded, in part, by revenues raised
by enactment of the bill.
Three Oversight Hearings related to mining law reform were held by the Senate Energy and th
Natural Resources Committee in the 110 Congress—one on hardrock mining on federal land
(September 27, 2007) and a second on reform of the General Mining Law of 1872 (January 24,
2008). The Senate Energy Committee held a third hearing to address abandoned hardrock mine
lands and uranium mining (March 12, 2008).

CRS Report RL32813, Hardrock Mining: State Regulation, by Aaron M. Flynn.
Gerard, David. 1872 Mining Law: Digging A Little Deeper, PERC Policy Series, PS-11 Bozeman,
MT. December 1997.
Gordon, Richard , VanDorn, Peter. Two Cheers for The 1872 Mining Law, CATO Institute,
Washington, DC, April 1998.
Leshy, John D. The Mining Law: A Study in Perpetual Motion, Resources for the Future,
Washington, DC, 1987.
National Research Council. Hardrock Mining on Federal Lands, Committee on Hardrock Mining
on Federal Lands, National Academy Press, Washington, DC, 1999.
National Wildlife Federation. Hardrock Reclamation Bonding Practices in theWestern United
States, Prepared by James Kuipers and Cathy Carlson, February2000.
U.S. Congress. Majority Staff Report of the Subcommittee on Oversight and Investigations of the
Committee on Natural Resources of the U.S. House of Representatives, Taking From the rd
Taxpayer: Public Subsidies For Natural Resource Development, 103 Congress, Committee Print
No. 8, August 1994.
U.S. Congress. Testimony to the Subcommittee on Mineral Resources, Committee on Resources, th
U.S. House of Representatives, 107 Congress, July 23, 2002. Hearing on Availability of Bonds to
Meet Federal Requirements for Mining, Oil, and Gas Projects.





U.S. General Accounting Office. The Mining Law of 1872 Needs Revision, RCED-89-72,
Washington, DC, March 1989.
Marc Humphries
Analyst in Energy Policy
mhumphries@crs.loc.gov, 7-7264