Every Mine a Gold Mine : Overly generous 1872 law needs updating

Interior Secretary Bruce Babbitt calls it “the biggest gold heist since the days of Butch Cassidy,” but the deal was all legal.

And what a deal it was: For a pittance, a Canadian company was able to secure title to one of the world’s richest veins of gold--a federally owned Nevada lode valued in the billions of dollars. Imagine gaining 1,800 gold-rich acres by paying only $9,000 to the U.S. Treasury.

Ridiculous, yes? And yet more evidence that reform in the law governing mining on federal lands is long overdue.

Attempts in Congress to revise the 19th-Century law failed for years. Then, last November, the House passed a decent reform; unfortunately, a reform cleared recently by the Senate was merely a milquetoast measure.

REAL RELIC: The mining law, virtually unchanged since signed by President Ulysses S. Grant in 1872, was conceived to promote settlement and economic development in 12 Western states and Alaska.

Under it, mining companies, speculators and independent prospectors may mine hard-rock minerals ranging from gold to uranium on American federal lands in exchange for a onetime patent fee of between $2.50 and $5 an acre. A patent holder owns the land in perpetuity whether the property is mined or not. And a patent holder need not pay the government any royalties--charges based on a percentage of the value of the minerals extracted.

Clearly the law is archaic. The West is well-settled. What once benefited the nation now costs it dearly. The technology of mining has changed vastly, with immense environmental and public health implications. Where mining once was confined to small surface and subsurface areas, today’s process allows retrieval of microscopic mineral particles from vast pits: A ton of ore yields a third of an ounce of microscopic gold fragments.

Secretary Babbitt had sought legal support for a moratorium on awarding of mining patents until the law was changed. He was ordered by a federal court to grant the patent to the Canadian firm, American Barrick Resources Corp. The company had applied under the Bush Administration’s fast-track patent process, which has since been spiked by Babbitt. The Department of the Interior has about 612 patent requests pending--102 from California (most of these for gold mining).

NEW ROYALTY: The mining industry endorses the need for reform--but not the House’s version. That legislation would drop the patent system, replace it with an 8% royalty, establish national reclamation standards and a much-needed fund for cleanup of closed mines and provide for national ownership to resume after the lands are mined out. The industry prefers the much weaker Senate bill, which would keep the patent system but raise the fee and impose a 2% royalty. The two versions are headed to conference.

The world of 1994 is enormously different from the world of 1872. That difference should be reflected in a modern mining law. The current law is the absolute pits.