Since Ulysses S. Grant was in the White House, any company that mines gold or other metals from public land has been able to haul it away without paying a dime in royalties to the federal government.As demand is spiking for copper, nickel, cobalt and other metals and minerals that are essential for electric vehicles and other clean energy technologies, the Biden administration says Congress needs to fix the Gold Rush-era General Mining Law so it can better manage the mineral resources buried under millions of acres of public land.
A top priority: require companies to pay something in exchange for what they take. Unlike companies that extract oil, gas and coal from federal lands, hardrock miners pay no royalties to the federal government.
The call to impose a fee of 4 to 8 percent of the net value of what is mined could translate into as much as $97 million annually and drew sharp opposition from mining operators.
On Tuesday, the Biden administration said the law needed to be updated to ensure the United States developed a supply of critical minerals that are “responsibly sourced” to achieve Mr. Biden’s clean energy goals.
“The biggest takeaway from our report is that our 150-year-old-law, the 1872 mining law, needs to be reformed and brought into the 21st century,” Tommy Beaudreau, the deputy secretary of the Interior Department, said Tuesday.
Developing reliable and responsible domestic sources for critical minerals is “central to the clean energy and technology revolution that are shaping our future for the better,” he said.
Mr. Beaudreau led a working group of officials across federal agencies who reviewed policies and regulations for hardrock mining.
The group found the law did not do enough to steer mineral exploration away from sensitive resources or to promote “early and meaningful” engagement with tribes or other affected communities. The law also lacks incentives for companies to mine land when they acquire a stake. “It’s common for speculators to sit on claims for decades,” Mr. Beaudreau said.
And the law should require mining companies that take resources from public lands to pay something for that privilege, the group said in a report.
“It fails to provide the American taxpayer with any direct financial compensation for the value of hardrock minerals extracted from most publicly owned lands,” the report stated.
The working group recommended money raised by royalties on net proceeds and maintenance fees be used to fund the cleanup of abandoned mines or aid communities that are most affected by mining activities.
Mining companies do pay state royalties and taxes. But operators mining on federal land only pay the U.S. government one-time claim processing fees totaling $60. Many companies also pay an annual $165 maintenance fee per site, according to the report.
A senior administration official noted that it is difficult to estimate the amount that could be raised through royalties, as companies mining on public lands are not required to report the amounts that are extracted. The recommendations do not explicitly call for companies to report how much they are extracting because such transparency would be automatically required if a royalty process was instituted, an administration official said.
The recommendations come as the Biden administration struggles to balance environmental concerns about mining with the booming demand for lithium, cobalt, copper and other metals used in electric vehicles, solar panels and wind turbine magnets.
This year, the administration imposed a 20-year moratorium on mining in Minnesota near the Boundary Waters wilderness area, dealing a potentially fatal blow to a proposed nickel and copper mine in the area. Days later, the Environmental Protection Agency blocked a gold and copper mine near one of the world’s most valuable wild salmon fisheries, at Bristol Bay in Alaska.
Mining industry leaders criticized the effort to change the law.
“Unfortunately, if the Biden-Harris administration’s stated objective is to secure our nation’s domestic mineral supply chains while supporting responsible mining, the recommendations contained in this report don’t do anything to advance the ball,” Rich Nolan, chief executive of the National Mining Association, said in a statement.
Royalties and the other recommended changes would “throw additional obstacles in the way of responsible domestic projects and would-be investment, forcing the U.S. to double-down on our already outsized import reliance from countries with questionable labor, safety and environmental practices,” Mr. Nolan said.
Environmental groups said the reforms were past due.
“It’s the only commodity that is produced off of our public lands where there is not a tax or a royalty,” said Chris Wood, the president of Trout Unlimited, a conservation group. “It is amazing.”
Money raised from federal royalties could help to clean up an estimated half a million abandoned mines scattered across the American West, Mr. Wood said.Representative Raúl Grijalva, Democrat of Arizona, said mining companies had been given “carte blanche to pollute waterways, bypass tribal sovereignty, and leave American taxpayers with billions in cleanup and reclamation costs.”
Congress must approve the collection of royalties, something that is unlikely this year. But Mr. Beaudreau said the administration would make other changes through executive action, like notifying tribes and local communities about potential mining operations, allowing for their input early in a permit process.