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Thousands of Jobs at Stake in Mining Reforms

REFORM of our country's 121-year-old mining law is way overdue.

Two proposals, House Bill 322 and Senate Bill 775, are dueling for reform. The difference between them will be taken up by a conference committee this spring.

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Congress must tread lightly as it debates the issues; the ramifications of reform will be far-reaching with as many as 44,000 jobs at stake. After 121 years, we have a responsibility to do it right.

Key issues in this debate include:

* Royalties. Most agree that taxpayers deserve fair compensation for the minerals extracted from federal lands. After all, those areas belong to us all.

HR 322 calls for an 8 percent royalty applied to the gross income from mining, which means the ``value added'' processing conducted by mining companies is also taxed. This is considered a gross royalty and could have a substantial impact on mining jobs because it provides little consideration for mining economics. Simply put, it is not a fair measure of the value of minerals.

A more equitable system is a net royalty, which factors out additional value-added processing costs. When oil and gas companies develop projects on federal lands, the public receives a royalty based on the value of the crude at the wellhead before any refining occurs. Mining companies should receive similar treatment whereby a royalty is based on the value of the minerals at mine mouth, before any processing occurs.

* Reclamation. HR 322 is a one-size-fits-all approach that does not reflect the realities of mining. Mining for gold in Nevada or silver in Idaho is far different from mining for copper in Arizona. Reclamation standards should allow flexibility in determining the best reclamation practices and techniques on a site-specific basis.

HR 322's reclamation standards are more stringent than the federal statute serving as its blueprint - the Surface Mining Control and Reclamation Act (SMCRA), which governs coal mining. Also, by adopting a SMCRA-like approach to reclamation, HR 322 fails to take into account differences among minerals or regional climatic and physiographic makeup.

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HR 322 preempts existing state reclamation regulations, leaving no meaningful role for state mining regulation. State government representatives, including the Western Governors Association, want existing state laws recognized if they are equal to or more stringent than federal standards. That seems reasonable.

* Suitability. HR 322 creates a review process that requires an inventory of all federal lands to determine their suitability for mining. Under this system, tens of millions of acres could be arbitrarily ruled off-limits to mining. This enormous undertaking would be prohibitively expensive and nearly impossible to achieve because the appropriate data does not exist.

As we rebuild the nation's mining law, success hinges on the resolution of these three key issues - royalties, reclamation, and suitability. A balanced approach that paves the way for a strong mining industry, while protecting our public lands, is indispensable and attainable. The Opinion/Essay Page welcomes manuscripts. Authors of articles we accept will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts by mail to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.

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