A gold mine
A law that sends Nevada riches to other nations is facing changing times, but its supporters have a key ally
A new effort is underway to change the old General Mining Law of 1872, a section of federal law that has been an ongoing bonanza for foreign mining corporations.
House Resolution 2262 was introduced by U.S. Rep. Nick Rahall, a West Virginia Democrat, on May 10, exactly 135 years after the measure was signed into law by President Ulysses Grant. A Rahall news release emphasized the archaic nature of the law by pointing out that, when it was written, “Union troops still occupied the South. The invention of the telephone and Custer’s stand at the Little Bighorn were still four years away.”
In addition, the law was enacted during the Gilded Age, the post-Civil War period when there was widespread corruption, and bills were enacted for cash on the barrelhead.
The law allows the industry to claim and mine minerals on the public’s land at rock-bottom rates. A patenting provision transfers the land itself for the 1872 price—$2.50 to $5 an acre (this provision is presently under a moratorium). No royalties are required on the ore mined, which can include (in Nevada) copper, silver, and gold and (in other states) platinum.
Rahall estimates that $245 billion of the public’s mineral resources have been given away since 1872—more than half the cost of the Iraq war.
In their 1996 book Take the Rich Off Welfare, Mark Zepezauer and Arthur Naiman wrote, “A Canadian mining company called American Barrick is in the process of extracting more than $10 billion in gold—$8.75 billion so far—from land in Nevada it paid $5,190 for. The Chevron and Manville corporations hope to lay their hands on about $4 billion worth of platinum and palladium; to patent the Montana acre where the minerals are found, they’ll pay about $10,000.”
In 1995, mineral deposits valued at nearly $3 billion located on 347 acres in the Coronado National Forest cost ASARCO Inc. $1,745 to obtain with no royalties to the public.
Some mining executives have made it plain that their intent is to get all public land into private hands. “The debate in our mind isn’t that we’re stealing this from the public,” a Canadian mining executive told the Seattle Post Intelligencer. “It’s, ‘Why is there all this public land?’”
Moreover, the law fosters a laissez faire regulatory culture in mining in which companies have often not been held accountable for the environmental damage they cause. Some of them have gone bankrupt about the time that regulators started moving in.
In addition, the law has been used by businesses with little relationship to mining, such as a company in Nye County that used the law to obtain land for a brothel. As a member of the U.S. House, Gov. Jim Gibbons proposed loosening the law further to make more land available in this fashion but he was hit by a wall of Western opposition, and the proposal died.
The law’s benefits are restricted to U.S. citizens, but for years, most major Nevada operations have been foreign corporations, mainly Canadian. In 1898, the U.S. Supreme Court ruled, in effect, that corporations are people. So foreign corporations establish U.S.-based fronts, becoming eligible under the law. The Nevada secretary of state’s office has three Placer Dome corporations registered. Placer Dome is based in Vancouver. More than a dozen Barrick corporations are registered in Nevada. They are all creatures of Barrick Gold Corporation of Toronto.
The Clinton administration made a half-hearted effort at changing regulations under the law, but delayed implementing them until just hours before George Bush took office, making it easy for Bush to roll them back, which he did.
Defenders of the law say it serves a function by providing the incentive for companies to undertake the expensive capital outlay to mount mining operations—even while using the symbol of a miner with a burro and a pick to beat off attempts at amending the law.
“The General Mining Law of 1872 has served the nation well as a means for miners to gain access to public lands for the purpose of developing minerals,” said Nevada Mining Association President Russ Fields in 2004. “It has been amended many times over the years as new requirements for developing minerals were identified by Congress.”
The industry’s efforts to beat back repeated attempts to change the law have often dealt less with the provisions of the law than with a combination of threats and emotion-laden arguments.
“Destroying the mining law will risk the lives of our sons and daughters, for many will surely die in battle on some foreign shore because of it,” said former National Mining Association president Richard Lawson in 2001. “Without the protection of the mining law, America cannot get the minerals it must have to remain free and secure, and we will go to war to get those precious metals.”
“Clinton’s going to wipe out the mining industry in Nevada,” said Lovelock mine manager Bob Martinez in 1996.
However, other segments of the mining industry such as oil, natural gas, and coal manage to pay royalties on their yields without the industry being destroyed or the U.S. becoming endangered or less competitive. Only hard rock mining makes the argument that their tax breaks are essential to economic and national security.
At one point the industry threatened to move its operations out of Nevada, prompting Reno Gazette-Journal columnist Cory Farley to write, “How do you move a mine?”
In the late 1980s and early ’90s, when mining was under increasing criticism for environmental damage done in Nevada and for its tax break that is written into the Nevada Constitution, the industry started running an advertising campaign around the slogan, “Mining. It works for Nevada.” Gov. Robert Miller responded, “It’s not working hard enough” and proposed a state tax on mining. But even Miller supported the 1872 law.
The law reportedly was patterned after early informal Western mining rules that developed when Nevada and other Western states came into the union but before law and regulation was established. However, those informal rules often required that some of the riches mined be used in the local community. That is not a feature of the 1872 law and its provisions have served as a pipeline for capital to flow out of the country. The main economic benefits Nevada communities have gotten as their riches were carted away were jobs, local purchases, and some token charitable donations made by the corporations—donations that accelerated in 1989 when Nevada was considering increasing taxation of the industry.
The mining industry has argued that environmental damage under the law is, except for some rogue companies, a thing of the past. However, some of the worst despoliations were done by new technology that was not even available in the distant past—chemical processes that make it possible to re-mine old sites to get more ore.
But one Colorado mine that was being re-mined in the San Juan Mountains of Colorado began leaking cyanide six days after operations began in the early 1990s. The substance then began mixing with groundwater. The company declared bankruptcy.
In Nevada in the 1980s, the state applied for Superfund assistance when a 1970s re-mining operation in Rio Tinto shut down, and the owners left a massive dump of toxic tailings behind. The tailings were located in a ravine through which a stream flowed to the Owyhee River, the only river that flows out of Nevada. The Owyhee ultimately reaches the Columbia. State regulators were unable to locate the owners. “We don’t know where they went,” said state environmental regulator Lew Dodgion in 1987. “We can’t find them.”
Another Nevada operation, Newmont’s Twin Peaks Mine in Golconda, is adjudged by some environmentalists to be one of the most polluted sites in the nation.
The Superfund applications list is dotted with mining operations.
Changes in the 1872 law have not usually been beaten back in Congress by debate on the merits or up-and-down votes, but by parliamentary machinations, and that appears likely to continue. U.S. Sen. Harry Reid of Nevada, who was first elected as an opponent of the mining industry but made his peace with it after taking office, now controls the agenda of the Senate as majority leader. He says he will not permit a vote on changes in the mining law during 2007.
At one point during work on the 1998 federal budget, Reid offered an amendment that would have required a consensus among governors in 12 western states before the 1872 law could be changed.