MINING:

Reform measures may come up during budget conference

Reforming the nation's mining laws may become a topic of debate during the upcoming budget negotiations between Democrats and Republicans in the House and Senate, as lawmakers look to find cost savings and new sources of revenue.

Not only has President Obama proposed several mining reform measures in annual budget requests to Congress, but the House Budget Committee's fiscal blueprint touted by Chairman Paul Ryan (R-Wis.) and many GOP leaders also includes a reform push, albeit more scaled back.

If mining watchdog groups like Earthworks had their way, the compromise budget would include charging a first-ever royalty on hardrock mining and, on top of that, a fee on companies to pay for the cleanup of abandoned hardrock mines. Some also want reforms in coal mine reclamation payments.

"I do expect the conferees will consider measures to raise revenues and reduce spending on abandoned mine land cleanup," said Earthworks policy advocate Aaron Mintzes, noting that the cost of remediating the many abandoned non-coal mines around the country is in the tens of billions.

Created as part of the bipartisan deal that ended the government shutdown and averted a potential debt ceiling crisis, the budget conference committee's goal is to produce a unified budget resolution by Dec. 13.

The coal industry, unlike the hardrock mining industry, already pays a fee to help clean up abandoned coal mines. The money goes into a pot of money held by the federal government, which awards grants to states.

However, because of 2006 compromise amendments to the Surface Mining Control and Reclamation Act, taxpayers often foot the bill for reclamation payments to states certified as having already finished cleaning up their priority abandoned coal mine sites.

The president and some lawmakers have called for ending payments to certified states like Wyoming and Montana, raising the industry fee for reclamation and funneling the money to top priority abandoned coal mine sites in states like Pennsylvania and West Virginia.

The latest Ryan budget, according to his panel's 235-page report on the proposal, includes a call for reforms to the coal abandoned mine land program.

"[T]his program authorizes millions of dollars paid from the Treasury for projects unrelated to abandoned coal-mine cleanup," the report says. "The budget recommends reforming this program to target expenditures to its intended purpose."

In 2011, Sen. Ed Markey (D-Mass.) -- at the time a senior House Democrat -- pressed members of the defunct "supercommittee" to include mining reform measures in a compromise. That panel was established following a similar budget fight but ultimately failed to produce any meaningful agreements.

Markey said a 7-cent-per-ton fee on hardrock mining for abandoned mine cleanups would generate $200 million per year over the next decade.

Mintzes of Earthworks predicted that "repealing the percentage depletion allowance and adopting a [hardrock] waste fee similar to the one for the coal industry may become part of the discussion."

Markey also said in 2011 that establishing a hardrock royalty rate comparable to onshore oil and gas drilling at 12.5 percent would generate at least $300 million a year. The president has proposed a smaller royalty payment.

But obstacles to reform are numerous. Mining companies, led by the National Mining Association, have long said that a royalty based on gross proceeds rather than net proceeds is a nonstarter.

"The reform needed is to the inexcusably inefficient permit process here, not changes that will add to the costs and the time it now requires to operate in this country," said NMA spokesman Luke Popovich.

Senate Majority Leader Harry Reid (D), who hails from the top mining state of Nevada, has expressed support for mining reform as long as measures are not punitive on the industry.

When it comes to AML payments to certified states, members of last year's transportation bill conference committee cut hundreds of millions of dollars in payments to Wyoming as an offset. The state's delegation has fumed ever since. This time around, Sen. Mike Enzi (R-Wyo.) is a member of the fiscal conference committee.

Interstate Mining Compact Commission lobbyist Greg Conrad is also keeping an eye on developments. Many of his members want to keep the 2006 compromise.

Watchdogs like Earthworks would rather see comprehensive reform than piecemeal victories. Not only do they want the industry to pay more for extracting resources, they also want the federal government to have a greater ability to reject mining and exploration on federal land.

"We guard against a stand-alone royalty, AML fee or [percentage depletion allowance] repeal creating the false impression that 1872 Mining Law reform is done," Mintzes said. "We are pleased to have and will continue to push the discussion about reducing taxpayer spending on mine cleanup, though I'd be a little surprised if they get much traction."