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Senator Tom Udall And Congressman Grijalva Call For Government Investigation Into Corporate Versus Public Profits From Mineral Extraction

By Public Lands Team on September 27, 2011 at 1:36 pm

"Senator Tom Udall And Congressman Grijalva Call For Government Investigation Into Corporate Versus Public Profits From Mineral Extraction"

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By Jessica Goad, Manager of Research and Outreach, Center for American Progress Action Fund.

Last week, Senator Tom Udall (D-NM) and Congressman Raul Grijalva (D-AZ) sent a letter to the Government Accountability Office (GAO) asking for a formal investigation into the corporate profits and public financial gain from oil, gas, and hardrock mineral extraction (gold, silver, copper, and others) on public lands. The members requested this investigation due to their suspicions that taxpayers are not reaping proper benefits from extractive activities on public lands. As Grijalva said at a press conference last week:

We also feel that there is a taxpayer responsibility that we have as elected officials. Especially in these fiscal times where we are talking so much about fiscal policy, taxpayers, and revenue for government, etc., that we are getting a fair return on our public lands. That there is indeed a net benefit and a cost benefit for the American taxpayer.

From the information that we get, we hope that this debate continues forward. We’ve asked GAO to give us a financial perspective—how much has the taxpayer lost, how much is this land really worth, and what should be the parameters in the future in order to collect a fair return for the American taxpayer.

Watch it:

The request to GAO is simple. The lawmakers asked GAO analysts to study two questions in particular:

- What was the amount of minerals extracted from federal land and the Outer Continental Shelf and what was the estimated dollar value of these minerals?
- How much did the federal government collect for these minerals, including royalties, rents, and bonuses, and how was this amount determined?

Hardrock mining companies are protected from paying any royalties to the federal government and taxpayers under the 1872 Mining Law, which was enacted during the years of manifest destiny to encourage mineral prospecting in the West.

This 139-year-old law is still in place, and one study estimates that taxpayers will lose $160 million every year without reforms to it. This is of particular importance because many foreign companies are mining uranium, gold, and copper, and, as one advocate put it, “are taking advantage of that loophole and literally taking the United States citizens’ minerals for free.”

Additionally, oil and gas companies have also historically paid less than what the public lands that they drill are worth. A 2007 GAO report found that one offshore drilling royalty relief bill passed in 1995 will “likely cost the government billions, but the final costs have yet to be determined.”

The “objective analysis of the business of mining and mineral leasing on federal lands,” as Udall put it, is anticipated to be completed next summer.

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