Order Code IB89130
Issue Brief for Congress
Received through the CRS Web
Mining on Federal Lands
Updated January 10, 2003
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
governing hardrock mining operations on
of the major statutes that direct the federal
federal lands (43 CFR 3809), which took
government’s land management policy. The
effect January 20, 2001. The revised regula-
law grants free access to individuals and
tions authorized BLM to deny mining opera-
corporations to prospect for minerals in public
tions if they would result in “substantial irrep-
domain lands, and allows them, upon making
arable harm” to significant resources that
a discovery, to stake (or “locate”) a claim on
cannot be mitigated, and made mining opera-
that deposit. A claim gives the holder the
tors more responsible for reclaiming mined
right to develop the minerals and may be
land. On March 23, 2001, the Bush Adminis-
“patented” to convey full title to the claimant.
tration proposed suspending the new regula-
A continuing issue is whether this law should
tions and reinstating the previous ones, until a
be reformed, and if so, how to balance mineral
review of the new rules is completed and a
development with competing land uses.
decision is made regarding them. On October
30, 2001 (66 Fed. Reg. 54833), BLM issued a
The right to enter the public domain and
final rule that removed many of the
freely prospect for and develop minerals is the
controversial aspects of the Clinton
feature of the claim-patent system that draws
regulations. On the same day (66 Fed. Reg.
the most vigorous support from the mining
54863), BLM proposed making the same
industry. Critics consider the claim-patent
changes. Proposing the changes that were
system a giveaway of publicly owned re-
already finalized was intended to allow BLM
sources because of the small amounts paid to
to receive additional comments on legal and
maintain a claim and to obtain a patent.
policy concerns that had been raised before
implementing a new regulatory program.
In addition to the general issue of wheth-
er to reform the General Mining Law, two
Most recently, Congress retained the
recent issues also have been controversial.
mining patent moratorium for one year (P.L.
One involves mining millsites. At issue is
107-63) and extended the $100 per claim
whether the General Mining Law limits
annual maintenance fee for 2 years. Also, the
claimants to one millsite of no more than five
Abandoned Hardrock Mines Reclamation Act
acres per mining claim, or whether multiple
of 2002 was introduced in the House (H.R.
millsites are allowed. In 1997, the Solicitor of
4078) on March 20, 2002. The bill would
the Department of the Interior ruled that only
establish a Reclamation Fund financed by
one millsite of no more than five acres is
reclamation fees imposed on hardrock mineral
allowed per claim. The 106th Congress pro-
producers. A more comprehensive bill to
vided a two-year exemption from the Solici-
reform the Mining Law of 1872 (H.R. 4748)
tor’s opinion for mines with approved plans of
was introduced May 16, 2002. The bill pro-
operation, operations with plans submitted
poses an 8% “net smelter return” royalty, a
prior to the Solicitor’s opinion, and patent
reclamation plan, financial guarantees for
applications grandfathered as part of the 1995
cleanup, and an unsuitability review. The
mining patent moratorium (P.L. 106-113).
proposals died in Congress.
A second issue involves the Clinton
Proposals to reform the Mining Law will
Administration’s revisions to the regulations
likely be reintroduced in the 108th Congress.
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MOST RECENT DEVELOPMENTS
Proposals to reform the General Mining Law of 1872 will likely be reintroduced during
the 108th Congress. The Bush Administration, in the 107th Congress, expressed an interest
in reform legislation, but no proposal emerged from the House or Senate committees. It is
uncertain whether there will be sufficient momentum to reform the Law.
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
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 leasing 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. The
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Omnibus Consolidated Appropriations Act for FY1999 (P.L.105-277) extended the
maintenance fee through FY2001 at $100 per claim or site. In FY 2002 the maintenance fee
was extended for an additional two years (P.L. 107-63). There is also a $25 location fee for
first-time claimants to locate and record a claim, as initially required by P.L. 103-66 and
subsequently extended through FY2002.
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 reflecting 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 patent application is
approved, the claimant may purchase surface and mineral rights at a rate of $2.50 per acre
for placer claims 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. These per-acre
fees were substantial when the Mining Law was enacted - claimed land and minerals now
far exceed 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. As of the end of FY2001,
approximately 45% of mining claims were in Nevada alone and another nearly 35% were in
the 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 207,757 for FY2001, reflecting a decline in the gold and copper
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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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, 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 general environmental laws as a precondition for development.
The evolving leasing system and later withdrawals of 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.
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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 U.S. 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 moratoria 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 Interior and Related
Agencies Appropriations Act for FY2002 (P.L. 107-63) also contained a one-year extension
of the moratorium on mining patents. Another one-year patent moratorium is pending in the
FY2003 Interior bill.
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
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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.
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
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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 is considered a subsidy by
many 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 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 FY2003 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
withdrawals of federal land from mineral exploration and development.
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Fair Market Value
Many believe that the federal government does not receive fair market value for land
and resources 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 million and $47.9 million.2
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
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 $1.0 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 official.
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
2 The Mining Law of 1872 Needs Revision, United States General Accounting Office, GAO/RCED-
89-72, March 1989, p. 24.
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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), the 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 official. Wildlife
refuges (except ANWR), wilderness study areas, and roadless areas, among others, are in this
category.3
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
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 2001, 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
3 Public Lands, On-Shore Federal and Indian Minerals in Lands of the U.S., Bureau of Land
Management, U.S. Department of the Interior, December 1, 2000.
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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, Superfund
sites related to past mining and smelting, 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 mining 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. The 107th
Congress also is considering extending the moratorium on the issuance of mining patents,
and extending the claim maintenance and location fees. These issues are addressed 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
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 (the 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.
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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 was 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 under the Bush
Administration decided 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
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 could be 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
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significant resources that cannot be effectively mitigated. However, this provision was
removed from the Bush Administration’s new final rule revisions.4 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 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, 2001, 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 had 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
instead.
The ability to obtain bonding has been problematic for some mining firms. Among the
many reasons presented at an oversight hearing (Subcommittee On Energy and Mineral
Resources, July 23, 2002), the major cause for concern, according to the Alaska Mining
Association, is the high risk the surety bonding companies face when complying with the
current or proposed 3809 surface management rule. The major risk factors cited were the
“uncertainty of amount, uncertainty of duration and uncertainty regarding bond release
criteria.” On the other hand, testimony from the Center for Science in Public Participation
describes the high risk facing surety bonding firms as that normally associated with the
capital intensive mining industry, and not necessarily linked directly to the surface
management regulations.
Proponents of the earlier Clinton version (43 U.S.C. 1732) 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, impeded mining operations, and in some ways duplicated
existing federal and state laws.
On October 30, 2001 (66 Fed. Reg. 54834), 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
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
4 Federal Register, 66 FR 54834, October 30, 2001.
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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 Clinton Administration 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 Bush
Administration from reviewing regulations that were amended perhaps 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 between the Bush and 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 Clinton Administration 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”5 (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 but were
reopened twice from February 1, 2002, to February 15 and from April 12, 2002, to May 13,
2002.
Patent Moratorium
The FY2002 Interior appropriations Act (P.L. 107-63) 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
5 Hardrock Mining on Federal Lands, Committee on Hardrock Mining on Federal Lands, National
Research Council.
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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).
A one-year moratorium on patenting continues the uncertainty over whether the federal
government will continue to try to 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 were 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, were extended for two years by the
FY2002 Interior and Related Agencies Appropriations bill (P.L.107-63).
Reform Proposals
Reform bills similar to the bills introduced in the 107th Congress below will likely be
reintroduced in the 108th Congress. Legislation did not move forward last Congress even
though the Administration acknowledged interest in resolving the longstanding debate on
how to best reform the General Mining Law of 1872.
On May 16, 2002, the Mineral Exploration and Development Act of 2002 (H.R. 4748)
was introduced in the House to reform the General Mining Law of 1872. The bill would
require permanently an annual claim maintenance fee of $100 and a location fee of $25 for
each claim. There would be exceptions for claimants with ten or fewer mining claims. New
patents would be limited to claimants whose patent application were filed with the Secretary
of the Interior on or before September 30, 1994, and met appropriate statutory requirements
by that date. A reclamation plan and a financial guarantee for the cleanup is required by the
proposal. Other major provisions include an 8% “net smelter return” royalty, an abandoned
locatable minerals mine reclamation fund, an unsuitability review conducted by the Secretary
of the Interior or Agriculture and the allowance for civil suits should an individual feel
adversely affected by agency decisions. The bill was referred to the Committee on
Resources.
On March 20, 2002, the Abandoned Hardrock Mines Reclamation Act of 2002 (H.R.
4078) was introduced in the House as a measure to help finance the cleanup of inactive and
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abandoned mine sites in certain eligible states. The proposal would establish an interest-
bearing Abandoned Minerals Mine Reclamation Fund. Its revenues would come from a
reclamation fee imposed on producers of hardrock minerals that received a claim or patent
under the General Mining Law of 1872. The fee would be a percentage of the net proceeds
from the mine. The bill would amend the Federal Water Pollution Control Act (33 U.S.C.
1342) by adding a section on abandoned or inactive mined land waste remediation permits.
This section describes the permit process that a “remediating party” must follow to be
issued a permit. The permit must include a detailed remediation plan. The federal
administrator of the program shall issue a report to Congress not later than 1 year before the
termination date of its permitting authority, 10 years from the date of enactment.
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 and mill or tunnel site located under the general mining laws.
The maintenance fee would apply to claims and 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 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 bill was introduced on March 15, 2001, and referred to
the House Committee on Resources.
Another mining law reform bill introduced in the 107th Congress (S. 115) would
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.
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 and, 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.
FOR ADDITIONAL READING
Gerard, David. 1872 Mining Law: Digging A Little Deeper, PERC Policy Series, PS-11
Bozeman, MT. December 1997.
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Gordon, Richard , VanDorn, Peter. Two Cheers for The 1872 Mining Law, CATO Institute,
Washington D.C. April 1998.
Leshy, John D. The Mining Law: A Study in Perpetual Motion, Resources For The Future,
Washington D.C. 1987.
National Research Council. Hardrock Mining on Federal Lands, Committee on Hardrock
Mining on Federal Lands, National Academy Press, Washington D.C. 1999.
U.S. General Accounting Office. The Mining Law of 1872 Needs Revision, RCED-89-72,
Washington D.C., March 1989.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
U.S. Congress. Majority Staff Report of the Subcommittee on Oversight and Investigations
of the Committee on Natural Resources of the U.S. House of Representatives, Taking
From the Taxpayer: Public Subsidies For Natural Resource Development, 103rd
Congress, Committee Print No. 8, August 1994.
U.S. Congress. Testimony to the Subcommittee on Mineral Resources, Committee on
Resources, U.S. House of Representatives, 107th Congress, July 23, 2002. Hearing on
Availability of Bonds to Meet Federal Requirements for Mining, Oil, and Gas Projects.
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