Order Code IB89130
CRS Issue Brief for Congress
Received through the CRS Web
Mining on Federal Lands
Updated April 3, 2002
Marc Humphries
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Background
The Claim-Patent System
Major Mining Legislation After the 1872 Mining Law
Analysis
Claim-Patent System: Pros and Cons
Past Amendment Proposals
The Clinton Administration’s Call to Eliminate Subsidies
Fair Market Value
Environmental Protection
Federal Land Withdrawals
Legislative Activity
The Mill Site Debate
Surface Impacts of Hardrock Mining on Federal Lands
Patent Moratorium
Claim Maintenance and Location Fees
Reform Proposals

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Mining on Federal Lands
SUMMARY
The General Mining Law of 1872 is one
ministration’s revisions to the regulations
of the major statutes that direct the federal
governing hardrock mining operations on
government’s land management policy. The
federal lands (43 CFR 3809), which took
law grants free access to individuals and cor-
effect January 20, 2001. The new regulations
porations to prospect for minerals in public
authorize BLM to deny mining operations if
domain lands, and allows them, upon making
they would result in “substantial irreparable
a discovery, to stake (or “locate”) a claim on
harm” to significant resources that cannot be
that deposit. A claim gives the holder the right
mitigated, and make mining operators more
to develop the minerals and may be “patented”
responsible for reclaiming mined land. On
to convey full title to the claimant. A continu-
March 23, 2001, the Bush Administration
ing issue is whether this law should be re-
proposed suspending the new regulations and
formed, and if so, how to balance mineral
reinstating the previous ones, until a review of
development with competing land uses.
the new rules is completed and a decision is
made regarding them. On October 30, 2001
The right to enter the public domain and
(66 Fed. Reg. 54833), BLM issued a final rule
freely prospect for and develop minerals is the
that removed many of the controversial as-
feature of the claim-patent system that draws
pects of the Clinton regulations. On the same
the most vigorous support from the mining
day (66 Fed.Reg. 54863), BLM proposed
industry. Critics consider the claim-patent
making the same changes. Proposing the
system a giveaway of publicly owned re-
changes that were already finalized was in-
sources because of the small amounts paid to
tended to allow BLM to receive additional
maintain a claim and to obtain a patent.
comments on legal and policy concerns that
have been raised before implementing a new
In addition to the general issue of wheth-
regulatory program.
er to reform the General Mining Law, two
recent issues also have been controversial and
The 106th Congress prohibited the Secre-
might be addressed by the 107th Congress.
tary of the Interior from using funds to revise
One involves mining millsites. At issue is
hardrock mining regulations except to make
whether the General Mining Law limits
changes “not inconsistent with” law and a
claimants to one millsite of no more than five
report of the National Research Council (P.L.
acres per mining claim, or whether multiple
106-113, P.L. 106-291).
millsites are allowed. In 1997, the Solicitor of
the Department of the Interior ruled that only
The 107th Congress also includes lan-
one millsite of no more than five acres is
guage in its Interior appropriations bill to
allowed per claim. The 106th Congress pro-
extend the moratorium on the issuance of
vided a two-year exemption from the Solici-
mining patents, whereby new mining patents
tor’s opinion for mines with approved plans of
generally will not be issued, but grandfathered
operation, operations with plans submitted
applications will be processed. Most recently,
prior to the Solicitor’s opinion, and patent
Congress retained the mining patent morato-
applications grandfathered as part of the 1995
rium for one year (P.L. 107-63) and extended
mining patent moratorium (P.L. 106-113).
the $100 per claim annual maintenance fee for
2 years .
A second issue involves the Clinton Ad-
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
On March 23, 2001, the Bush Administration proposed suspending the regulations
governing hardrock mining operations on federal lands (43 CFR 3809) that took effect on
January 20, 2001, and reinstating the old rule. The suspension was intended to allow BLM
to address legal and policy concerns that have been raised before implementing a new
regulatory program. However, the House agreed to a floor amendment to the Interior and
Related Agencies Appropriations Bill (H.R. 2217) that would bar the use of funds in the bill
from being used to suspend or revise the hardrock mining regulations that took effect on
January20, 2001. The Senate-passed version did not have language on this subject. The
Interior Conference Committee did not include the House language in its report and the full
House and Senate supported the conference report language. The Bush Administration
published its final rule governing hardrock mining regulations on federal lands (43 CFR
3809) 10/30/01 which takes effect December 31, 2001. Near the end of the first session of
the 107th Congress, some Members of Congress and Administration officials expressed
interest in moving a mining law reform bill during the second session.
The FY02 Interior bill (P.L. 107-63) also included continuing the patent moratorium
extending for 2 years the $100 per claim annual maintenance fee. Under current law the
maintenance fees expired in FY2001.

On March 15, 2001, a bill was introduced (H.R. 1085) to make permanent provisions
of law requiring an annual maintenance fee of $100, and a one-time location fee of $25, for
each unpatented mining claim, mill or tunnel site located under the general mining laws.
The measure also makes permanent provisions of law establishing a moratorium on mining
patents (to take title to public lands) for mining or mill site claims except those filed by
September 30, 1994, and meeting certain requirements. On January 22, 2001, a bill was
reintroduced (S. 115) to disallow the percentage depletion allowance for hardrock mines
located on lands covered by the general mining laws or patented under these laws.
Another issue that remains controversial stems from the 1997 ruling by the Department
of the Interior’s Solicitor limiting each mining claim to one 5-acre millsite. Congress
enacted language (P.L. 106-113) to provide a two-year exemption for mines with approved
plans of operation, operations with plans submitted prior to the Solicitor’s opinion, and
patent applications grandfathered as part of the 1995 mining patent moratorium. On
September 28, 2001 the Department of the Interior instructed the BLM not to apply the 1997
millsite opinion to certain plans and approved operations as well as the grandfatherd
patent applications.
BACKGROUND AND ANALYSIS
Background
The purposes of the 1872 Mining Law were to promote mineral exploration and
development on federal lands in the western United States, offer an opportunity to obtain a
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clear title to mines already being worked, and help settle the West. The Mining Law granted
free access to individuals and corporations to prospect for minerals on open public domain
lands, and allowed them, upon making a discovery, to stake (or “locate”) a claim on the
deposit. A valid claim entitles the holder to develop the minerals. The 1872 Mining Law
originally applied to all valuable mineral deposits except coal.
Public domain lands are those retained under federal ownership since their original
acquisition by treaty, cession, or purchase as part of the general territory of the United States,
including lands that passed out of but reverted back to federal ownership. “Acquired” lands
— those obtained from a state or a private owner through purchase, gift, or condemnation
for particular federal purposes rather than as general territory of the United States — are
subject to easing only and are not covered by the 1872 Law. Some public lands may be
withdrawn or closed to mineral entry.
The 1872 Mining Law was one of the primary forces behind the development of mineral
resources in the West, along with the industries and services that supported mineral
production. Major hardrock minerals developed in the West include copper, silver, gold,
lead, zinc, molybdenum, and uranium. During the 19th century, major mining districts for
silver and gold were developed under the Mining Law in Colorado, California, Idaho and
Nevada. Early in the 20th century, there were major developments of porphyry copper in
Arizona. Large molybdenum and tungsten deposits in Colorado were also developed. The
Mining Law continues to provide the structure for much of the Western mineral development
on public domain lands. Western mining, although not as extensive as it once was, is still a
major economic activity, and a high percentage of hardrock mining is on public lands.
The Claim-Patent System
After a prospector has conducted exploration work on public domain land, he or she may
locate a claim to an area believed to contain a valuable mineral. Under legislation initially
enacted by the 102nd Congress (P.L. 102-381), claimants must pay an annual maintenance fee
of $100 per claim to hold a claim on public land. This superseded a previous requirement that
$100 of annual development work be conducted per claim. Most recently, the Omnibus
Consolidated Appropriations Act for FY1999 (P.L. 105-277) extended the maintenance fee
through FY2001 at $100 per claim or site. There is also a $25 location fee for first-time
locators to locate and record a claim, as initially required by P.L. 103-66 and subsequently
extended through FY2001.
For FY2000, the maintenance and location fees generated an estimated $23.9 million in
revenue, according to the Bureau of Land Management (BLM). This reflects a significant
decrease from $30.7 million for FY1995, the first year that both fees were collected. It is a
more sizeable drop from the peak of $35.9 million for FY1997, largely due to a decline in
gold and copper prices since that time.
Once a claimed mineral deposit is determined to be economically recoverable, and at
least $500 of development work has been performed, the claim holder may file a patent
application to obtain title to surface and mineral rights. A patent is not necessary to develop
the minerals within a claim. Beginning January 3, 1989, a fee of $250 per application plus
$50 per claim within each application has been required. If the application is approved, the
claimant may purchase surface and mineral rights at a rate of $2.50 per acre for placer claims
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and $5 per acre for lode claims. A placer deposit is an alluvial deposit of valuable minerals
usually in sand or gravel; a lode or vein deposit is of a valuable mineral consisting of quartz
or other rock in place with definite boundaries. (Source: Dictionary of Mining, Mineral and
Related Terms, Bureau of Mines, 1968.) A placer claim is usually limited to 20 acres but a
lode claim may be slightly greater than 20 acres. While these per-acre fees were substantial
when the Mining Law was enacted, claimed land and minerals now far exceeds these amounts
in value.
The following provisions currently apply to claims:
! There is no limit on the number of claims a person can locate.
! There is no requirement that mineral production ever commence.1
! Mineral production can take place without a patent or revenue payments to
the federal government.
! Claims can be held indefinitely with or without mineral production, subject
to challenge if not developed.
Most of the current mining activity and mineral claims under the Mining Law are in
Nevada, Arizona, California, Montana, and Wyoming. Of a total of 235,948 mining claims
as of the end of FY2000, approximately 45% were in Nevada alone and another nearly 35%
are in those other four states. According to the Bureau of Land Management (BLM), the
number of claims declined from about 1.2 million claims in FY1989 to 294,678 for FY1993.
Many claims were dropped as a result of provisions of law charging a $100 per-claim annual
maintenance fee to hold a claim. The number of claims subsequently rose to 324,651 in
FY1997, reflecting the relative strength of the gold and copper industries. The number of
claims has fallen to a low of 235,948 for FY2000, reflecting a decline in the gold and copper
industries and, according to a BLM representative, changes in public land policy that
significantly lengthened the time it takes in practice to get permission to mine.
Only a small percentage of claims are ever patented, totaling about 3.3 million acres from
1867 through 2000. This represents approximately 1.5% of all public lands patented; most
public lands have been patented under homestead entries, statehood grants, railroad grants,
and other non-mineral public land laws. It is not required to patent a claim to mine a deposit,
and a great deal of mining activity is currently taking place on unpatented claims. However,
patenting a claim gives the holder legal title to both the surface and the minerals.

Major Mining Legislation After the 1872 Mining Law
In 1920, the Mineral Leasing Act removed oil, gas, oil shale, phosphates, sodium, and
certain other minerals on federal public domain lands from the claim-patent system of the
1872 Mining Law and set up a system of leasing in which the federal government retains
ownership of the leased lands. Coal, which previously had its own claim-patent law (the 1873
Coal Act), was also included in the 1920 Leasing Act. After 1955, common variety minerals
such as sand, stone, gravel, cinders, and pumice were sold under the Materials Act of 1947,
1 However, before the enactment of P.L. 102-381, claimants were required to conduct at least $100
of development work per year.
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as amended. A strong push for an all-leasing system developed during the 1930s and 1940s,
but no such legislation was enacted.
As mentioned, acquired federal lands were never subject to the General Mining Law.
The Mineral Leasing Act for Acquired Lands of 1947 authorized the leasing of leasable
minerals in some acquired federal lands. The Reorganization Plan of 1946 (no.3) and earlier
acts authorized the leasing of hardrock minerals on acquired forest lands.
During the 1960s and 1970s, the Multiple Use Sustained Yield Act, Wilderness Act,
National Forest Management Act, National Environmental Policy Act (NEPA), and Federal
Land Policy Management Act (FLPMA) addressed environmental protection, multiple use,
and management of federal land generally. By imposing new requirements on agency actions,
and by withdrawing some federal lands from development, these acts have affected mineral
development under both the leasing system and the Mining Law claim-patent system. The
Mining Law contains no direct environmental controls but mining claims are subject to all
environmental law as a precondition for development.
The evolving leasing system and later withdrawals of available lands from hardrock
exploration and development diminished the amount of lands under the Mining Law authority.
For those hardrock minerals that remain under the Mining Law, however, the claim-patent
system is essentially the same as it was when the law was enacted.
Critics argue that the West is now developed and that the 1872 Mining Law is obsolete
and inconsistent with other federal natural resource policies. Supporters maintain that the
combination of leasing for some resources and a claim-patent system for others works well
and should be maintained. The National Mining Association (NMA) states that the “existing
law more than adequately meets the four criteria essential to any mineral tenure law”: free and
open access to explore for minerals on unappropriated public lands, exclusive exploration
rights, the right to develop the valuable minerals discovered, and security of tenure.
When oil shale was transferred from the 1872 claim-patent system to the leasing system
in the 1920 Mineral Leasing Act, a large number of existing unpatented oil shale claims were
continued under the terms of the 1872 Mining Law. In a 1986 court case, the district court
of Colorado reached a controversial finding that these claims were valid and could be
patented if claimants had made $500 worth of improvements on the land, even if the statutory
$100 annual work requirement had not always been fulfilled.
Legislation to resolve oil shale issues was enacted as part of the Energy Policy Act of
1992 (P.L. 102-486). This law offers general and limited patents based on the status of the
application at the time of enactment. Limited patent holders will receive title to the oil shale
only and are required to post a reclamation bond or financial guarantee. Patent fees remain
$2.50 per acre.
Beginning in FY1995, Congress has enacted (in the Interior appropriations laws) a series
of one-year moratoriums on the issuance of mineral patents. For FY2000, the Consolidated
Appropriations Act (P.L. 106-113, §312) essentially retained the mineral patent moratorium
contained in previous appropriations laws. The FY2001 Interior and Related Agencies
Appropriations Act for FY2001 (P.L. 106-291, §311) also contained a one-year extension
of the moratorium on mining patents.
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Analysis
Claim-Patent System: Pros and Cons
The right to enter the public domain lands and prospect for and develop minerals is the
feature of the claim-patent system that draws the most vigorous support from the mining
industry. Modern hardrock mineral exploration requires a continuous effort using vast tracts
of land and sophisticated and expensive technology. Industry officials argue that being able
to obtain full and clear title to the land enhances a company’s ability to bring an economic
deposit into production; financing the project, for example, may be more feasible. They
contend that restrictions on free access and security of tenure would curtail exploration efforts
among large and small mining firms. In their view, the incentive to develop would be lost,
long-run costs would increase, and the industry and the country would suffer.
Mining Law critics consider the claim-patent system a giveaway of publicly owned
resources because of the absence of royalties and the small charges associated with keeping
a claim active and obtaining a patent. They maintain that although such generous terms may
have been effective ways to help settle the West and develop minerals, there is no solid
evidence that under a different system minerals would not be developed today. They also
believe the current system, by conveying title and allowing other uses of patented lands,
creates difficult land management problems through the creation of inholdings, and that
current law does not provide for adequate protection of the environment.
In the claim-patent system, mineral claims may be held indefinitely without any mineral
production. In some instances, claimed or patented land has been used for purposes other
than mineral development. Once lands are patented to convey full title to the claimant, the
owner can use the lands for a variety of purposes, including non-mineral ones. However,
using land under an unpatented mining claim for anything but mineral and associated purposes
violates the Mining Law. Critics believe that many claims are held for speculative purposes.
However, industry officials argue that a claim may lie idle until market conditions make it
profitable to develop the mineral deposit.
Another issue surrounds “discovery” and “prediscovery protection.” The law requires
that “no location of a mining claim shall be made until the discovery of the mineral within the
limits of the claim.” If a discovery is made and a valid location established, the claimant has
a valid possessory right against all other parties. One purpose of the discovery requirement
was to help reduce speculation. However, demonstrating discovery of a valuable mineral
deposit may require considerable time and effort on the part of a prospector. The prospector
may find indications of a deposit, but demonstrating its value may involve exploration over
a large area and drilling and analyses of core samples to define the quality and extent of the
mineral. The Supreme Court has ruled that all claims located are deemed valid until proven
otherwise. Typically, in practice, the federal government has allowed claims based on general
indications that a mineral deposit exists, and required proof of discovery only upon
application for a patent unless circumstances warrant full proof sooner, e.g., mineral claims
in sensitive areas.
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The industry has indicated it wishes to avoid major challenges to the principle of free
access and the right to obtain a patent. The industry generally opposes placing hardrock
minerals under a leasing system because this would give the federal government discretionary
control over development, impose royalty payments, and retain government ownership of
surface and/or mineral rights.
Past Amendment Proposals
Proposals to amend the 1872 Mining Law have fallen under the following broad
categories:
! Modify the claim-patent system to retain the patent feature, but require
payment of fair market value for all or part of the value of the land. The
Government also would collect some percent of the value of mineral
production as royalties.
! Convert the claim-patent system to a permitting system, and prohibit further
patenting. Advocates of this proposal argue that a permitting system would
be effective in achieving a fair market value return to the federal Treasury for
public lands. This system would collect royalties and add new environmental
standards to mining operations. Mineral industry supporters, on the other
hand, contend that the Department of the Interior is already overburdened
with the current leasing system and that comprehensive hardrock mining
reform would only add to its inefficiency and ultimately increase costs
through royalty and rents.
! Continue the current claim-patent system, but with some amendments.
Proposed changes have included eliminating the distinction between lode and
placer claims, imposing a time limit within which claims must be developed,
expanding the size of a claim, providing better prediscovery protection, and
opening more public lands to mineral exploration.
The Clinton Administration’s Call to Eliminate Subsidies
The Mining Law currently allows a claimant to produce minerals without a patent and
without paying royalties or rents to the federal Treasury. This can be considered a subsidy
because the miner does not pay for a factor of production — i.e., land and mineral resources.
By contrast, royalties are paid to the federal government for oil and gas leasing on federal
lands, and non-federal land owners (e.g. private and state owners) typically receive a royalty
from those who produce minerals on their lands. Also, if the claimant patents the surface and
mineral estate for the $2.50 or $5.00 per acre, this too can be considered a subsidy because
the claimant is paying less than fair market value for the surface and mineral estates. Various
tax incentives, such as the percentage depletion allowance (a tax deduction for the depletion
of a mineral resource) and “expensing” (writing off in the year of expenditure) the costs of
exploration and development, have been characterized as subsidies to the industry as well.
Eliminating some of the natural resource subsidies, in the Clinton Administration’s view,
would have been one way to increase revenues to the Treasury and help ensure a fair return
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to the taxpayer for the development of public lands. In its FY2001 budget request, the
Clinton Administration proposed charging mining companies a 5% fee on net smelter
production from hardrock mining on federal lands. The Bush Administration has not made
a similar proposal in its FY2002 budget request.
As has been previously noted, the original intention of the Mining Law was to develop
the nation’s minerals and to develop the West. Proponents of retaining the current system
contend that an incentive still is necessary for those who take substantial financial risk to
develop a mineral deposit. Mining is a capital-intensive process that often takes years of
development before minerals are produced.
Imposing royalties, increasing holding fees, and repealing the percentage depletion
allowance would have some impact on domestic hardrock mineral production, but the level
of any production decline attributable solely to new fees is difficult to estimate. The mining
industry generally has opposed legislation to repeal the percentage depletion allowance. The
elimination of some incentives to the industry would come at a time when the West is already
developed (an original goal of the law) and mineral/metal demand is relatively good.
However, prices are fluctuating, and the mining industry is looking outside the United States
for lower-cost deposits. Also, several mineral-producing nations are rewriting their mining
laws to attract more U.S. and western investment. Some U.S. deposits are becoming much
less competitive with foreign deposits. Any new cost increases in one area, without cost
reductions in others, may make U.S. mineral deposits less competitive or uneconomic.
Of the many issues surrounding the Mining Law, at least three are of perennial concern.
One is whether the government should receive a fair market return from public domain
hardrock mineral dispositions. The others are about environmental protection, and the third
involves withdrawals of federal land from mineral exploration and development.
Fair Market Value
Many believe that the federal government does not receive fair market value for land
transfers under the Mining Law. It receives no royalties or rents from mining activities
conducted under the law. In addition, the $2.50 and $5.00 per-acre price for clear title to the
surface and mineral rights has not changed since the law was enacted. The per-acre price
appears to be based on the value of Western farmland and grazing land before the enactment
of the law in 1872.
Determination of fair market value of mineral bearing lands is complex because many
geologic, engineering, and economic factors must be considered, and fair market value
determinations typically are controversial. According to a 1989 report by the General
Accounting Office (GAO), the fair market value of mineral-bearing lands is substantially more
than the $2.50 and $5.00 per acre that a claimant pays for patenting a claim. GAO estimated
that, for 20 patents it reviewed, the federal government had received less than $4,500 since
1970 for lands valued between $13.8 and $47.9 million.
The GAO appraisal method, however, was criticized by the Bureau of Land
Management (BLM) in a May 1989 Report to the Secretary of the Interior. The GAO report
obtained information on land values from BLM, Forest Service officials, and local real estate
brokers. GAO’s estimates were based on recent sales of comparable land, not the value of
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the land at the time claims were patented; much of the land may have had very little value at
the time it was claimed or patented. BLM argues that sales of adjacent tracts that either have
no mineral development potential or are sold for mineral rights alone cannot be used to
establish fair market value of the surface of patented mining claims and that data on
comparable sales are rare.
The Department of the Interior (DOI) estimates the value of hardrock mineral
production on federal land at $.99 billion for FY2000, a decrease from an estimated $1.8
billion in FY1993. The decline can be attributed in part to a reduction in the value of mineral
production from the federal lands because of acreage conveyed out of federal ownership
through patenting, according to a BLM representative.
Environmental Protection
The lack of direct statutory authority for environmental protection under the Mining Law
of 1872 is a second major issue that has spurred reform proposals. Many Mining Law
supporters contend that other current laws provide adequate environmental protection. They
note that the mining industry must comply with applicable requirements of the Clean Water
and Clean Air Acts, NEPA, state reclamation standards where they exist, and federal and state
statutes relating to the handling and disposal of certain toxic wastes, among other laws.
Critics, however, argue that these general environmental requirements are not adequate to
assure reclamation of mined areas and that the only effective approach to protecting lands
from the adverse impacts of mining under the current system is to withdraw them from
development under the Mining Law. Further, critics charge that federal land managers lack
regulatory authority over patented mining claims and that clear legal authority to assure
adequate reclamation of mining sites is needed.
Federal Land Withdrawals
BLM is responsible for approximately 700 million acres of federal subsurface minerals,
and supervises the mineral operations on about 56 million acres of Indian trust lands. Some
of these lands have been withdrawn from mineral development; a withdrawal is an action that
restricts the use or disposition of public land. In some cases land is reserved for a specific use
that may preclude locating mining claims and granting leases.
A BLM study determined that of the approximately 700 million acres of federal
subsurface minerals under the agency’s jurisdiction in 2000, approximately 165 million acres
have been withdrawn from mineral entry, leasing, and sale, subject to valid existing rights.
Lands in the National Park System (except National Recreation Areas), Wilderness
Preservation System, and the Arctic National Wildlife Refuge (ANWR) are among those that
are statutorily withdrawn. Also of the 700 million acres, mineral development on another 182
million acres is subject to the approval of the surface management agency, and must not be
in conflict with land designations and plans, according to a BLM representative. Wildlife
refuges (except ANWR), wilderness study areas, and roadless areas, among others, are in this
category.
FLPMA mandated review of public land withdrawals in 11 Western states to determine
whether, and for how long, existing withdrawals should be continued. BLM continues to
review approximately 70 million withdrawn acres, giving priority to about 26 million acres
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that are expected to be returned by another agency to BLM, or, in the case of BLM
withdrawals, made available for one or more uses. As of November 2000, BLM had
completed reviewing approximately 7 million withdrawn acres, mostly BLM and Bureau of
Reclamation land; the withdrawals on more than 6 million of these acres have been revoked.
According to the BLM Manual, retention of a withdrawal requires a compelling show of
need, and an agency manager “recommending that lands not be opened to multiple use,
particularly mining and mineral leasing, must convince the BLM Director, Secretary, and
watchful segments of the public, that there is no reasonable alternative to continued
withdrawal or classification.” The review process is likely to continue over the next several
years, in part because the withdrawals must be considered in BLM’s planning process and be
supported by documentation under the National Environmental Policy Act (NEPA).
Mineral industry representatives maintain that federal withdrawals inhibit mineral
exploration and limit the reserve base even when conditions are favorable for production.
Mineral reserves are not renewable. Thus, they argue that whether minerals are in the public
or private sector, without new reserves or technological advancements, mineral production
costs may rise. As a result, according to the industry, exploration on foreign soil may
increase, raising the risk to investors and boosting import dependence. In this view,
governmental policies that increase costs to the mineral industry may result in increased costs
to society. Mining industry supporters also assert that too much land has been unnecessarily
withdrawn from mining, through administrative actions, to pursue preservation goals.
Critics of the Mining Law believe that in many cases there is no way to protect other
land values and uses short of withdrawal of lands from development under the law. They
point to unreclaimed areas that have been mined for hardrock minerals in the past, and
instances where development of resources could spoil scenic, historic, cultural, and other
resources on public land.
Legislative Activity
In addition to the General Mining Law, two recent issues also have been controversial
and the subject of oversight or legislation in the 107th Congress. One relates to mining
millsites, while the other relates to hardrock mining on federal lands. These issues are
addressed below. The 107th Congress also is considering extending the moratorium on the
issuance of mining patents, and the claim maintenance and location fees also discussed below.
The Mill Site Debate
One of the most controversial issues in the 106th Congress related to a November 7,
1997, legal opinion of the Solicitor of the Department of the Interior that each mining claim
can use no more than 5 acres for activities associated with mining (“millsites”). The decision
affected modern mining operations, such as heap-leach mines for gold and other hardrock
minerals, which typically require large tracts of land beyond that of the mining claim for
mining-related purposes, including disposal of waste rock. Critics of the decision charged
that it constituted a new interpretation of the relevant provisions of the 1872 Mining Law (30
U.S.C. 42), was inconsistent with the practice of the Department of the Interior in granting
operating plans for mining without regard to acreage limitations or the ratio of millsite
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locations to mining claims, and was an indirect way of reforming the 1872 Mining Law. The
Department of the Interior has rebutted these criticisms, asserting that its opinion was based
both in law and practice.
Based on the Solicitor’s 1997 opinion, on March 26, 1999, the Solicitor ruled against
the Battle Mountain Gold Company’s plan of operation for a gold mine (Crown Jewel Mine
in Washington state) based on noncompliance with the General Mining Law of 1872.
However, the denial of the plan of operations for the Crown Jewel Mine was overturned in
the 1999 Emergency Supplemental Appropriations Act (P.L. 106-31). This law directed that
the number or acreage of millsites for the Crown Jewel mining operation not be limited, and
that its plan of operation be approved. It further directed that other patent applications and
plans of operation submitted prior to the law be given permits.
The issue again became contentious during consideration of the FY2000 Interior
appropriations bill, with the House and Senate passing opposing language on the subject. The
House agreed to support, and the Senate to overturn, the 1997 opinion of the Solicitor.
During initial floor consideration, the House had agreed to language barring funds
“appropriated by this act” from being used to process applications for approvals of patents,
plans of operations, or amendments to plans that conflict with the opinion of the Solicitor.
By contrast, the Senate-passed language would have prohibited the Departments of the
Interior and Agriculture, “in any fiscal year,” from limiting the number or acreage of millsites
based on the ratio between the number or acreage of millsites and the number or acreage of
mining claims. The Senate millsite language sought a permanent prohibition on limiting
acreage or millsites based on the number of mining claims, using the BLM Handbook for
Mineral Examiners (H-3890-1, 1989) and the BLM Manual (Section 3864.1.B, 1991) as its
basis. It apparently would have reversed the Solicitor’s opinion permanently and
comprehensively as well as prospectively. On the floor, the Senate rejected an amendment to
remove the millsite language from the bill, so as to allow the Solicitor’s opinion to stand. A
related amendment, essentially designed to protect ongoing mining operations from the
Solicitor’s opinion, was withdrawn.
The 106th Congress ultimately enacted (P.L. 106-113, §337) a two-year exemption from
the Solicitor’s millsite opinion for: (1) patent applications grandfathered as part of the 1995
mining patent moratorium; (2) any mining operation with an approved plan of operation; and
(3) any operation with a plan of operation submitted to the BLM or the Forest Service before
November 7, 1997 – the date of the Solicitor’s opinion. (An earlier conference report had
excluded plans of operation submitted prior to May 21, 1999, but this was opposed by the
Clinton Administration). The explanatory language accompanying the conference agreement
expressed the view that it would be “inequitable” to apply the opinion “retrospectively” in
these instances. Specifically, the exemption is for FY2000 and FY2001. (For further
information, see CRS Report RL30310, The Mining Law Millsite Debate.) As the 2-year
exemption was set to expire, the Interior Department reached a decision on September 28,
2001, not to apply the Millsite Opinion to those plans of operations submitted before
November 7, 1997, or plans approved before November 29, 1999, as well as the
grandfathered patent applications. Further, the Millsite Opinion is under review by the
Interior Department’s Solicitor.
Both industry and the Department of the Interior acknowledged that a 5-acre per claim
millsite limit is outdated and cannot accommodate the modern mining industry. Rather than
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increase the number or acreage of millsites, the Clinton Administration favored other options
such as the use of land exchanges (Section 206) or permits and leases (Section 302(b)) under
the Federal Land Policy and Management Act. Recent practice has included the use of more
than 5 acres per mining claim and the use of land exchanges. One of the major policy
questions is whether the millsite debate will open the door for broader Mining Law reform.
Surface Impacts of Hardrock Mining on Federal Lands
A second issue involves the Department of the Interior’s revisions to the regulations
governing the surface impacts of hardrock mining operations on federal lands (43 CFR 3809).
The Clinton Administration published a final rule on November 21, 2000, with an effective
date of January 20, 2001. On March 23, 2001, the Bush Administration proposed suspending
the new 3809 regulations and reinstating the ones that existed on January 19, 2001, until a
review of the new regulations is completed and a decision is made regarding them. The
Clinton Administration regulations were in effect until the Bush Administration published its
final rule October 30, 2001. The Clinton Administration regulations authorized the Bureau
of Land Management (BLM) to disapprove a plan of operations for mining if the mining
would result in “substantial irreparable harm” to significant resources that cannot be
effectively mitigated. However, this provision was removed from the Bush Administration’s
new final rule revisions. The authority to deny mining operations was the most controversial
aspect of the regulations, referred to by some in the mining industry as an unnecessary “mine
veto” power. Other changes in the regulations make mining operators more responsible for
reclaiming mined lands. New bonding requirements (retained in the Bush final new rule
revision) provide for miners to post bonds to ensure that they will clean up sites when the
mines close, and a reclamation bond must be equal to 100% of the estimated cleanup cost.
In June, the BLM announced that it expected to retain the provisions on bonding
requirements with a modification to extend the deadline for mining operators to meet them.
For mining operations which already have provided a financial guarantee, the deadline for
complying with the requirements would be extended by 4 months (from July 19, 2001 to
November 20, 2001). Operators who have not provided a financial guarantee would receive
an additional 2 months (until September 13, 2001). Under the old rules, mines disturbing 5
acres or less per year did not require a cleanup bond and companies could pledge assets in lieu
of cleanup bonds.
Proponents of the earlier Clinton version asserted they enhance the BLM’s authority
under law to prevent “unnecessary or undue degradation” of public land resources from
mining operations (43 U.S.C. 1732). However, the mining industry asserted that the
regulations were unlawful, impede mining operations, and in some ways duplicate existing
federal and state laws.
On October 30, 2001 (66 Fed. Reg. 54833), BLM issued a final rule that removed many
of the more controversial aspects of the Clinton regulations. On the same day (66 Fed. Reg.
54863), BLM proposed making the same changes. Proposing the changes that were already
finalized was intended to allow BLM to receive additional comments on legal, economic, and
environmental issues that were raised concerning the new regulations. Some of the concerns
were expressed in lawsuits challenging the Clinton Administration’s rules. In some suits,
industry plaintiffs and the state of Nevada assert that BLM improperly issued the rules and
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violated numerous statutes. In one such suit, the National Mining Association sought a
preliminary injunction on the grounds that the regulations were unlawful in several respects,
but this injunction was denied. By contrast, environmental plaintiffs charged that the new
rules were weak, improperly allowing mining operations on lands without valid mining claims
or mill sites.
During debate on the FY2002 Interior and Related Agencies Appropriations Bill (H.R.
2217), the House agreed to a floor amendment (216-194) that would bar the use of funds in
the bill from being used to suspend or revise the hard rock mining regulations that took effect
on January 20, 2001. The amendment was advocated as maintaining necessary environmental
protections, but opposed as precluding the Administration from reviewing regulations that
were amended too extensively by the Clinton Administration. The bill as reported by the
Senate Committee on Appropriations did not contain language on this subject. The House
language was not included in the conference report (H.Rept. 107-258).
Another significant difference with the Clinton rules was on civil penalties. Instead of
BLM discretionary penalties of $5,000 per day and suspensions of operations for
noncompliance, the final rule sticks with language in the 1980 rule that allows for operators
to be subject to enforcement if they do not comply with specified reclamation standards.
The regulations that took effect on January 20, 2001, were the culmination of a decade-
long review of hardrock mining regulations. They replaced earlier regulations that, for the
most part, were issued in 1980. Congress had directed BLM as to what provisions could be
included in the revised rules. In particular, the 106th Congress enacted provisions in the
FY2000 and FY2001 appropriations laws to prohibit the Secretary of the Interior during the
Clinton Administration from using funds to revise the hardrock mining regulations except to
make changes “not inconsistent” with law and the recommendations contained in a National
Research Council (NRC) report entitled “Hardrock Mining on Federal Lands” (P.L. 106-113,
§357; and P.L. 106-291, §156). In issuing the revised regulations, the Department of the
Interior, under the Clinton Administration, interpreted this as allowing the regulations to
address subjects other than those included in the specific recommendations of the NRC
report, provided these recommendations were not directly contradicted. This interpretation
has been controversial in Congress.
Comments on the newest BLM proposal were due by December 31, 2001. BLM also
seeks comments on other topics such as the federal /state roles in regulating mining activity.
Patent Moratorium
The FY2002 Interior appropriations bill in the 107th Congress continues the moratorium
on the issuance of mining patents. The House and Senate-passed versions of H.R. 2217
(included in the conference report) contained identical language continuing the moratorium
on accepting and processing applications for patents for mining and mill site claims on federal
lands. However, applications meeting certain requirements that were filed on or before
September 30, 1994, would be allowed to proceed, and third-party contractors would be
authorized to process the mineral examinations on those applications. In the 106th Congress,
the moratorium on the issuance of mining patents was continued through provisions of the
Interior appropriations laws (P.L. 106-113, §312 for FY2000, and P.L. 106-291, §311 for
FY2001).
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A one-year moratorium on patenting continues the uncertainty over whether the federal
government will reform the 1872 Mining Law. The mining industry would like to end the
uncertainty to facilitate its long-term business planning. Environmentalists, who were hoping
for new environmental protection language in a major mining law reform bill, argue that the
patent moratorium does not protect the environment from current mining practices.
As of January 2001, there are 425 mineral patent applications pending, of which 237 are
grandfathered and proceeding forward and 191 are subject to the moratorium and thus will
not be processed. The patent moratorium will not stop the production of valuable mineral
resources from the public lands, but will prevent the further transfer of ownership of public
lands to the private sector (with the exception of the 237 patent applications already in the
pipeline).
Claim Maintenance and Location Fees
To hold a claim on public land, claimants must pay an annual maintenance fee of $100
per claim. There also is a $25 location fee for first-time locators to locate and record a claim.
These provisions of law, effective through FY2001, would be extended by the FY2002
Interior and Related Agencies Appropriations bill (H.R. 2217) being considered by the 107th
Congress. The House passed version would extend the fees through FY2002. As reported
by the Senate Committee on Appropriations, the fees would be extended through FY2006.
Reform Proposals
In the 107th Congress, a bill has been introduced (H.R. 1085) to establish, with certain
exceptions, a yearly claim maintenance fee of $100, and a one-time location fee of $25, for
each unpatented mining claim, mill or tunnel site located under the general mining laws. The
maintenance fee would apply to claims, mill or tunnel sites whether located before or after
enactment of the bill, while the location fee would apply to claims and sites located after the
date of enactment. Failure to pay either fee nullifies the claim. The Secretary of the Interior
is to adjust the fees at least every 5 years to reflect changes in the consumer price index. The
existing $100 claim maintenance and $25 location fees are due to expire on September 30,
2001. The measure also establishes a permanent moratorium on patents under the general
mining laws for mining or mill site claims except those filed by September 30, 1994, and
meeting certain requirements. The existing moratorium would expire on September 30, 2001.
The bill was introduced on March 15, 2001, and referred to the House Committee on
Resources.
A 107th Congress bill has been reintroduced (S. 115) to disallow the percentage
depletion allowance for hardrock mines located on lands covered by the general mining laws
or patented under these laws. The measure also would establish an Abandoned Mine
Reclamation Trust Fund in the Treasury for reclamation and restoration of land and water
adversely affected by mining. The bill was introduced on January 22, 2001, and referred to
the Senate Committee on Finance. A similar bill was introduced in the 106th Congress (S.
590), but no further action was taken.
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Two broad bills ( H.R. 1888 and H.R. 1270) in the 107th Congress that address reducing
government spending include provisions aimed at reforming the 1872 Mining Law. H.R.
1888 would require an 8% royalty on gross income from production, an annual claim
maintenance fee of $100. The bill would prohibit new patents from application after January
1995, establish an Abandoned Locatable Minerals Mine Reclamation Fund, and repeal the
percentage depletion allowance and the expensing of mining exploration and development
costs. H.R. 1270 would impose an 8% royalty on net smelter returns and a $200 claim
maintenance fee on located claims.
In the 106th Congress, several other measures to amend the Mining Law were
introduced and referred to committee, but no further action was taken. H.R. 410 was a
starting point for comprehensive Mining Law reform and was supported by most
environmental groups. H.R. 394 sought to establish a 5% “net smelter return” royalty and
an abandoned mine reclamation fund. The “net smelter return” royalty and the “net proceeds”
or net income royalty are very different, with the “net smelter return” royalty expected to cost
the most to the mining industry.
H.R. 397 sought to repeal the percentage depletion allowance for the mining industry.
This allowance is viewed in the mining industry as an essential tax provision to help recapture
its capital investment. According to the industry, the tax allowance lowers costs and is an
incentive for the industry to invest in high risk and high cost mining projects. Those who
supported ending the depletion allowance argued that it is an unnecessary incentive as well
as excessive in that percentage depletion typically provides deductions that exceed a firm’s
capital investment. Cost depletion, by contrast, allows for the recovery of the actual
investment. Further, they argued that the tax allowance is particularly unnecessary for lands
located and developed under the General Mining Law of 1872, wherein the claimant could
acquire title to surface and mineral rights for $2.50 or $5 per acre.
Another 106th Congress measure (H.R.395) would have established an Abandoned
Minerals Mine Reclamation Fund for the restoration of land and water resources from past
mining activity. It set a reclamation fee, for certain mining operations, equal to a percentage
of the net proceeds of the mine operation.
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