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New Report Raises Questions: Should American Taxpayers Be Giving Their Minerals Away To Mining Companies?

By Public Lands Team on December 12, 2012 at 12:00 pm

"New Report Raises Questions: Should American Taxpayers Be Giving Their Minerals Away To Mining Companies?"

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by Jessica Goad

As Washington struggles to address the country’s growing deficit, a new report released today finds that the federal government has lost its grip on finances in a different way.

An analysis from the Government Accountability Office reveals that the government does not keep track of the amount and value of hardrock minerals – gold, silver, copper, etc. – mined on public lands that are being given away to private companies.

Because the government does not collect royalties on these minerals, it claims there is no reason to keep track of this information:

We found that federal agencies generally do not collect data from hardrock mine operators on the amount and value of hardrock minerals extracted from federal lands because there is no federal royalty that would necessitate doing so.

The reason that companies mining hardrock minerals on public lands are exempt from paying royalties is a law passed almost 150 years ago, called the General Mining Act of 1872.  To this day, it is the law of the land when it comes to extracting hardrock minerals from the federal estate.  This means that mining companies are able to extract taxpayer-owned copper, gold, silver, and other minerals for nearly nothing in exchange.

Other resources extracted from public lands, like oil, coal, and natural gas, are subject to royalties of some sort, generally in the realm of 8-12.5 percent.  And while the federal government receives payments for drilling and mining in other ways like bonus bids and rents, royalties provide a significant amount of money to taxpayers:  GAO found that the total royalties received on coal, oil, and natural gas totaled $11.4 billion in 2011.

Although data on how many hardrock minerals are being extracted from public lands isn’t tracked, there have been some attempts at estimating what this loss to taxpayers looks like.  Using data from 1993, the Department of the Interior approximated that more than $6 billion worth of hardrock minerals was extracted from federal lands in fiscal year 2011.

Today’s report underscores the need  for greater disclosure of what is extracted from public lands, while also reforming the 1872 mining law and requiring companies to pay a royalty on the minerals that they extract.  Democratic members of the House Committee on Natural Resources pointed out that reforming the law could raise $300 million every year.

Reforming outdated policies like the 1872 mining law and subsidies for oil companies in order to help address the deficit are also important in the context of other extreme policies that have been proposed.  For example, Rep. Rob Bishop (R-UT) and Rep. Steve Pearce (R-NM) recently called for selling off or trading public lands in order to reduce the deficit.

As Rep. Raul Grijalva, who requested the report along with Sen. Tom Udall (D-NM), put it:  “Everybody’s penny-pinching, and here’s a penny we haven’t pinched.”

Jessica is the Manager of Research and Outreach for the Public Lands Project at the Center for American Progress Action Fund.

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4 Responses to New Report Raises Questions: Should American Taxpayers Be Giving Their Minerals Away To Mining Companies?

  1. Clearly ongoing royalties from the use of public lands would help the treasury more than would the proceeds from a one-time sale.

  2. NJP1 says:

    this is called ‘stealing your children’s future’
    Its like spending an inheritance, when it’s gone. it’s gone
    back in 1872, mining was relatively small scale and minerals seemed limitless, nobody could foresee to colossal mining operations we have today

  3. Lex says:

    If the government (read: the American public) is going to let these assets go at ALL — a separately debatable proposition — it should do so at nothing less than fair market value, whether structured as ongoing royalties or a one-time asset sale.

    I’m tired of this free-markets-for-you-socialism-for-us-rich-folks-and-corporations crap. We gave away almost literally invaluable broadcast spectrum in 1996 via the telcom deregulation law, and I’m *still* pissed about that.

  4. John Steinsvold says:

    An Alternative to Capitalism (since we cannot legislate morality)

    Several decades ago, Margaret Thatcher claimed: “There is no alternative”. She was referring to capitalism. Today, this negative attitude still persists.

    I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:

    http://evans-experientialism.freewebspace.com/steinsvold.htm

    John Steinsvold

    “Insanity is doing the same thing over and over and expecting a different result.”
    ~ Albert Einstein