White House Seeks Mining Fees, Royalties For Remediation Work, Deficit Reduction

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The White House has sent to Congress the details of President Obama's plans for significant royalties and fees on hardrock mining to help with abandoned mine cleanups and federal deficit reduction.

The president is proposing a new fee on hardrock mining to finance cleanups and closures of abandoned hardrock mining sites. The fee would be set at 7.8 cents per ton of material displaced. It would apply to all U.S. mining—not just on federal land—for copper, zinc, lead, molybdenum, gold, silver, and uranium.

Beginning in fiscal year 2016, the interior secretary would be free to promulgate regulations to revise the hardrock fee rate. The proposal puts no limit on the secretary's discretion, requiring only that it be subject to public comment, as in federal rulemaking procedures.

The president also is proposing a royalty on hardrock mining on federal land to be set at 5 percent of the gross value of output, the same as proposed early this year in an Interior Department budget request (31 DER B-29, 2/15/11).

In addition, the proposal specifies a $1 per acre per year fee to maintain a lease on federal land.

Question of How Much.

The legislative language for the president's proposals was sent to the Joint Select Committee on Deficit Reduction Sept. 23. It includes a restriction on the use of a coal mining fee for reclamations. That would be restricted to remediating coal sites, leaving all hardrock sites to be financed by the hardrock mining fee.

The mining industry is not strictly opposed to the idea of a fee to remediate sites of abandoned hardrock mines. But the nationwide fee of 7.8 cents per ton of material removed may run into opposition.

“We don't reject it in its entirety,” Luke Popovich, spokesman for the National Mining Association, said Sept. 29. He stressed that it is largely a question of how much.

“Some of our members have estimated this fee alone would add between $20 million to $30 million annually to their costs,” Popovich said.

The proposals went nowhere in Congress earlier this year. Royalty proposals from members of Congress also have stalled, and the National Mining Association does not hesitate to oppose the White House plan.

“The royalty makes no sense at all,” Popovich said, arguing that it would discourage U.S. investment and job creation. “We definitely quarrel with that.”

By Alan Kovski

The legislative language of the White House proposals on economic growth and deficit reduction is available at http://op.bna.com/env.nsf/r?Open=jsun-8m6rgp.