Miners Push Back Against Plan to Impose Royalties

By STEPHANIE SIMON
White House efforts to require more mining companies to pay royalties are running into resistance from the industry, which argues that new burdens would jeopardize green energy.
If too many costs are imposed on domestic miners, the U.S. will be importing even more of the raw materials used to make such items as wind turbines, hybrid vehicles and solar panels, said Laura Skaer, executive director of the Northwest Mining Association, a trade group.

"Then we've traded our dependence on Mideast oil for a dependence on foreign minerals," Ms. Skaer said. The zinc, molybdenum and rare-earth minerals needed for wind turbines, copper for hybrid cars and titanium and cobalt for solar panels are imported from China, Peru and elsewhere.
Sen. Jeff Bingaman (D., N.M.) said imposing new fees won't crush the $70 billion-a-year mining business. "This is not intended to harm the mining industry economically," he said. "I don't see how it impacts our ability to transform to a clean-energy economy."
The Obama administration wants to raise tens of millions of dollars by changing a 137-year-old law that allows private companies to extract minerals from public lands without paying royalties.
Mr. Bingaman and others who support changing the law say there is no reason for the industry to be governed by a law that dates to 1872. Companies that take such commodities as coal and oil from public lands pay royalties.
"Given our current economic crisis and the empty state of our national treasury, it is ludicrous to be allowing this outmoded law to continue," Rep. Nick Rahall (D., W.Va.) said earlier this year. He has introduced legislation to impose an 8% royalty on production value.
Mr. Bingaman's bill would impose royalties of 2% to 5%.
Under the bills, royalties and other fees would be used to clean up thousands of abandoned mining sites. The Environmental Protection Agency last month reported that mining has polluted 3,400 miles of streams and 440,000 acres of land and continues to release enormous quantities of toxic chemicals.
The industry disputes those findings and says most pollution can be blamed on long-shuttered mines, not modern operations.
Industry officials say they are open to paying some royalties, but only on net profits, not raw production. They also plan to fight any legislation that puts significant expanses of land off-limits to mining to protect scenery, habitat or tourism potential.
As the law now stands, mining is the "highest and best use" of most public land with mineral deposits, giving the industry priority over recreation, ranching and other interests.
Proposals to revise the 1872 law have been around for years. Recently, some environmentalists have accused Senate Majority Leader Harry Reid of blocking changes. Mr. Reid represents Nevada, which is rich in gold mines.
Mr. Reid didn't respond to allegations that he is preventing changes to the law. His spokesman, Jon Summers, said the Democratic senator would support "mining law reform, done responsibly." Any overhaul, Mr. Summers said, would have to take into account the effects on mining towns and mining jobs.
Interior Secretary Ken Salazar told Congress last month that the administration was committed to overhauling the law. But Mr. Bingaman said he wasn't sure the administration would prevail.
Ms. Skaer, the industry representative, said no one should be in a rush to rewrite the law.
"The U.S. Constitution is about 100 years older than the mining law," she said. "And I don't hear anyone calling it out of date."
Write to Stephanie Simon at stephanie.simon@wsj.com