[Congressional Record Volume 140, Number 60 (Monday, May 16, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                             MINING PATENTS

  Mr. BUMPERS. Madam President, if anybody heard that giant sucking 
sound this afternoon at 1 p.m., it was the sound of $11 billion worth 
of gold and 1,800 acres of land being transferred from all the people 
of America--the taxpayers of America--to a Canadian gold mining company 
for the princely sum of $9,000.
  Secretary Babbitt, at 1 o'clock this afternoon, issued seven 
certificates of patent--which is the same thing as a deed--to a gold 
mining company called Barrick Gold Strike Mines, Inc., a subsidiary of 
American Barrick Resources Corp, a Canadian Corporation.
  Madam President, the Secretary hated to do that as much as I hated 
for him to do it, but he had no choice, because under the existing law, 
which is now 122 years old, signed by Ulysses S. Grant, the Secretary 
was required to issue the patents. Barrick Gold Strike Mines applied 
for these patents, for the deeds and under the law proved that it had 
commercial quantities of gold under it, and the Secretary refused, to 
his eternal credit, to cough up $11 billion in gold that belongs to 
every person in America because this is Federal land that belong to all 
of them.

  The Secretary refused to do anything so gargantuan, so monumentally 
preposterous, but a U.S. district court made him because the law 
required it.
  For 5 long, suffering, interminable years, I have stood behind this 
desk and talked about the enormity of the crime of continuing to give 
away tens of billions of dollars in minerals that belong to the people 
of this country to major companies.
  In 1990, I tried to impose a moratorium on the issuance of patents. I 
lost by two votes.
  In 1991, I tried again and lost by one vote. Less than 1 year after 
that vote, Barrick Gold Strike Mines applied for the patents.
  Today is, indeed, a sad day for the American people. Congress stands 
indicted for its refusal, time after time, to address this problem.
  When the Secretary handed these seven patent certificates to this 
gold mining company today, the land was taken out of ownership from all 
the taxpayers of America forever. And even if we impose a royalty on 
gold this year as part of mining law reform legislation, we will never 
receive a dime of this $11 billion worth of gold because it no longer 
will be located on Federal land. It is in private hands, and the 
legislation which will emerge from a conference with the House will not 
apply to private land.
  That means, for example, if the conference committee, sometime before 
the end of this year, adopted an 8 percent royalty on hard rock 
minerals mined off Federal lands, we will have just given up $900 
million today.
  Would Barrick not want this land if they had to pay a royalty? Would 
a royalty force them to go broke?
  They pay, in fact, a 4 percent gross royalty and a 5 percent net 
profits royalty to another mining company that has an interest in the 
Gold Strike mine.
  They say they just cannot afford to pay Uncle Sam a royalty. All 
mining companies say that. And yet they pay the States a royalty if 
they mine State lands.
  They say, ``We will go offshore if you treat us so shabbily.'' 
Virtually every nation on Earth charges a royalty. Newmont Mining Co., 
in Nevada, is a gold mining company. Do you know what they pay to the 
private owner of the lands of one of their mines? Eighteen percent. If 
you were to suggest to them that maybe they ought to pay the United 
States a 4, 5, or 8 percent royalty, the howls go up in the West and in 
this Chamber about how many jobs are going to be lost, and how 
everybody is going to go broke.
  According to the Denver Post, Peter Munk, CEO of Barrick, in 1991 
cashed in $32 million worth of stock options. That was on top of his 
$700,000 annual salary.
  Madam President, if American Barrick mined $400 million worth of gold 
next year and had to pay the United States an 8 percent royalty, which 
they say would cause them to go broke, it would amount to precisely the 
amount of money they paid their CEO in 1991.
  Do you know what Barrick's net income for the first quarter of this 
year was? Sixty million dollars, a 31-percent increase over the first 
quarter of 1993. Gold is somewhere between $50 and $60 higher than it 
was a year ago, and yet they purport to still be going broke operating 
the same mines they were making a profit on a year ago.
  The Minerals Policy Center, Madam President, says that there are now 
patent applications pending over at the Department of Interior on lands 
containing $85 billion worth of minerals. In all probability, Bruce 
Babbitt will have to do this over and over again --giving away the 
public domain and all the minerals thereunder for $2.50 to $5 an acre. 
I cannot believe that this goes on in this day and time.
  ``Prime Time Live'' and ``20/20'' and other news shows will 
occasionally do a little segment on this subject and everybody gets all 
upset, and we come back here year after year and the same thing 
continues to go on.
  After I appealed, with all of the strength of my body, to this group 
in 1990 to stop this insanity, to put a moratorium on the issuance of 
these patents, I lost by two votes. Madam President, 4 days later--4 
days after I lost by two votes--Stillwater Mining Co. of Montana 
applied for several patents on about 2,000 acres of land, and what do 
you think Stillwater Mining Co. will get for $10,000? Thirty-eight 
billion dollars' worth of palladium and platinum--those are their 
figures, not mine. It is such a mammoth tragedy, I cannot help getting 
emotional about it. I have been emotional about it for 5 years now. I 
am absolutely heartsick.

  Recently, we debated a gift ban in the U.S. Senate. We passed it 
overwhelmingly because nobody wants to be seen as protecting some kind 
of graft around here. We pat ourselves on the back, give ourselves the 
``good government award'' and go home and tell our voters what purists 
we are.
  I thought the Senator from Texas spoke pretty well the other night 
during the debate. He said, ``People are not concerned about what we 
are doing to each other.'' He said, ``What they are concerned about is 
what we are doing to them.'' Here is a classic case in point. We are 
worried about whether somebody is going to get a gift around here that 
exceeds $20 in value, and this very day, we have sat idle while the 
Secretary of the Interior was required to give away 11 billion dollars' 
worth of gold that belonged to the people of this country.
  (Mr. DeCONCINI assumed the chair.)
  Mr. BUMPERS. Mr. President, I do not know whether we will be able to 
stop this insanity this year or not. We have a bill that has passed 
this Senate, and the House has passed a bill. We are hopefully going to 
go to conference and work something out. If we do not, that 85 billion 
dollars' worth of minerals, for which patent applications are now 
pending, will also be given away, to go with the $11 billion we gave 
away today.
  I yield the floor, and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, I do not want to engage in a long debate on 
the merits of mining law reform, but I feel it incumbent upon me to 
make a statement in response to the distinguished Senator from Arkansas 
regarding mining law reform.
  Mr. President, there were a number of statements made by my friend 
from Arkansas that he, for 5 years, has attempted to change the law. 
The fact of the matter is that that is true and we have had extended 
debates on this floor. And in each of those years, my friend from 
Arkansas failed to get enough votes to carry his position.
  Now, Mr. President, last year a number of reforms were offered by the 
Senator from Nevada and others, and they were passed by this body. For 
example, the law regarding patents would have been changed 
significantly had the Senate's position been upheld. But there are 
those who feel that they want all or nothing, and as a result of that, 
last year they got nothing.
  Mr. President, we all know, and we have debated on the Senate floor 
here over a period of years, that there should be changes in the law as 
it relates to mining. We, in good faith, have agreed to make 
significant changes, and we still stand ready to do that.
  There is a bill that has now passed the Senate, and a bill that has 
passed the House, and there is a conference committee going to meet. 
The honest broker in that matter is Bennett Johnston, the chairman of 
the Energy and Natural Resources Committee. They are going to come up, 
hopefully, with something that is fair and that will change the way 
that mining companies do business in America. The mining companies are 
willing to accept reasonable change.
  But for the Interior Department and others to say that the patent 
that was issued, according to law, is the greatest bank robbery since 
Butch Cassidy left the country, is absurd, ridiculous, and without 
foundation.

  We, in Nevada, know something about Butch Cassidy's bank robberies, 
because the last bank robbery Butch Cassidy performed in the United 
States was in Nevada--Winnemucca, NV. We know about bankruptcies and we 
know about robberies.
  What has taken place in mining in recent years has been good for the 
economy and has been good for the American people.
  Now, it is very clear that the mining industry produces tens of 
thousands of jobs in America. In the State of Arizona, as an example, 
Mr. President, the copper industry there is just barely making it. We 
know that just a few years ago the copper industry moved away from the 
United States. Why? Because the costs were so high, they could not make 
it. A gross royalty on copper would cause the copper industry to go 
offshore. There is no question about that.
  The mining industry, gold mining in Nevada, has had some claims that 
have been worked satisfactorily, and they have made money. There are 
other claims that have not been worked satisfactorily. There are mines 
that have opened, and they have closed in recent years.
  The mining industry is a very capital-intensive industry. Large 
investments are required to find, extract, refine, and ship minerals to 
markets.
  According to the U.S. Bureau of Census, the highest average profit 
margin in the past 6 years in the mining industry was 5.76 percent. 
Last year--that is the year 1993--Mr. President, it was 1.58 percent. 
That is, as indicated by my friend from Arkansas, the price of gold was 
real low last year, and as a result of that the profit margin was less 
than 2 percent.
  The price of gold at one time was $446 an ounce. Last year at this 
time, it was around $325 an ounce. Today, it has increased where it is 
around $370 an ounce. So it is a figure that is not always stable. In 
fact it rarely is stable.
  Mr. President, the mining company that had the patent issued to it 
could have mined the gold without the patent. The fact is, the patents 
will give Barrick a more secure title to its claim.
  One of the things we suggested, and passed the Senate last year, is 
if a company uses the land for anything other than mining, it would 
revert back to the Federal Government. So, it is not as if we can use, 
with any degree of certainty anymore, the claims that have been used by 
my friend from Arkansas, so much that we are all kind of used to them. 
For example, is it fair to issue a patent and then establish a ski 
resort on it? Of course not. Anyone who thinks a patent should be 
issued carte blanche for any purpose really does not understand what 
has happened in recent years. The mining industry does not want that.
  When the Barrick bought these claims, the ore was yet to be 
discovered. When the company did identify the ore through extensive 
exploration, it had little value. And the exploration, when I say 
extensive, was literally extensive, hundreds of millions of dollars 
worth. It was microscopic refractory ore that was not suitable for 
conventional treatment to extract the gold at a profit.
  Mr. President, Barrick was one of the companies that pioneered the 
large-scale use of autoclaving, the technology that changes the 
chemical composition of the ore, allowing the gold to be profitably 
extracted from the rock. Barrick then invested hundreds of millions of 
dollars in design and construction in the one-of-a-kind plant to 
extract the gold from the rock at mines from these claims.
  This processing is expensive, but Barrick does make a profit on the 
gold it extracts. I do not think that is asking too much, that a 
company makes money. If they did not make money, they would not do it, 
and they would not be employing the thousands of people they do.
  Although the ore in the claims is clearly valuable today, it is 
impossible to predict profitability over the next decade. Profitability 
in the gold mining industry is subject to a number of factors, 
including the price of gold, the company's ability to control the cost 
of mining, and processing the Government's positions in the form of 
royalty fees and taxes.
  Mr. President, the claims that there are hundreds of billions of 
dollars or tens of billions of dollars of gold in the land where this 
mining was located is without foundation.
  Mr. President, there could be value in that ground. And certainly 
Barrick would not be wanting to go forward with this mine if there were 
not provable assets in that ground. But to indicate how much and 
whether it can be taken out of that land, is another question.
  Now, Mr. President, I refer back to last year. Those of us who were 
present during that debate recognized that the senior Senator from 
Arkansas had a beautiful picture on the wall back here. The picture 
showed a beautiful, mountainous area with an abandoned mine, and showed 
the dirty water running out of that mine.
  The fact of the matter is, as we learned last year, that was a mine 
that was developed during the 1880's, last century. In the mining 
industry, because of the reclamation laws that they have in many 
States--and none are stronger than those of Nevada--that does not 
happen anymore. There is a tremendous amount of reclaiming, reclamation 
that must take place similar to what goes on in modern-day coal mining 
operations that are above ground.

  So, Mr. President, before we get lost in hyperbole, the fact of the 
matter is that mining is a good industry. The profits are marginal. And 
the fact of the matter is that in places like Nevada and Arizona and 
Utah, there is some mining that takes place on public lands. Why? 
Because that is all we have. The State of Nevada is 87 percent Federal 
lands. So a lot of mining has taken place over the years on public 
lands.
  There is a much smaller amount that takes place on Federal lands 
anymore because the Federal controls have been burdensome in some 
instances. So let me close by saying that this matter should be handled 
in the conference committee where there was an agreement made that is 
where it should be handled. If somehow the negotiations fall apart at 
that time we can come back here and have another debate as we have in 
years gone by. But what I see happening at the Department of the 
Interior is the failings of the Department of the Interior, in grazing 
and logging and water that have taken place in the West, they are going 
to try to make up for that in mining. That would be a tremendous 
disaster and it would be significantly unfair to the mining industry 
and the Western United States.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mr. BUMPERS. Mr. President, the distinguished Senator from Nevada, 
Mr. Reid, and I, are very good friends. We have fought many battles 
over this issue on the floor of the Senate. I have the utmost respect 
for him. But the Senator from Nevada started off talking about how he 
had tried to reform this law and had in fact gotten an amendment passed 
here that said the mining companies in the future would have to pay for 
the surface value of this land.
  The people in this body who know nothing about the issue all 
applauded: ``Isn't that wonderful? We are going to make them pay for 
the surface value of the land.'' The surface value of the land in most 
instances is probably $100 an acre. We are not talking about the 
surface value. We are talking about highly valuable minerals. In 
Nevada, Barrack is getting, for the princely sum of $10,000, 11 billion 
dollars' worth of gold, and they are pretending that they are doing us 
a great favor by taking it off our hands.
  It is a tragedy by any measurement. They act as though because they 
invested hundreds of millions of dollars in finding and setting up the 
mine that they should be able to do anything they want with the 
taxpayers land. Why have they made the investment? They did it for the 
best American traditional reason: To make money.
  The other day somebody said: ``Well, the mining companies at least 
should be able to recover their capital costs before paying any 
royalties.'' Or, ``They at least ought to be offered this, that, and 
the other thing.'' It seems to me a gift of $11 billion, for which the 
taxpayers get nothing, should be enough.
  A little personal note. My son is a lawyer. When I was Governor he 
got hooked on the chocolate chip cookies the chef at the mansion made, 
the tollhouse cookies. Later on, he decided he wanted to make the 
perfect chocolate chip cookie. He, and a friend he graduated high 
school with spent 2 or 3 years developing what they think is the 
perfect chocolate chip cookie. They rent a restaurant that closes at 9 
o'clock, and bake cookies until midnight, take them out and sell them. 
For the first 5 years they lost money every year.
  And, the U.S. Government has never come in and thanked them for all 
the jobs they have created. Nobody has come in and said: We are going 
to give you the money back that you have invested in this operation. 
Rather, they paid their fair share of the rent and continued to 
operate.
  The arguments made by the mining industry have to be the most 
palpable and gallish I have ever heard in my life. Whatever happened to 
the good old American free enterprise spirit that applies to everybody 
except mining companies? And it applies to them when they mine on 
private lands. Newmont Mining Co., in the home State of the 
distinguished Senator, has no problem whatever paying an 18-percent 
royalty to the private owner of the land. But right next door, several 
miles away, Barrick mines on Federal lands and they say if you put a 
royalty on us we will have to shut down and all these people will be 
out of work.
  The Senator from Nevada says: By giving Barrick those seven 
certificates of patent today, for $9,000, we have given them more 
security. It sure will. They will never have to pay a royalty to the 
Federal Government. I do not know why in the world somebody did not 
offer me those seven patents. I promise you, I could go out and raise 
the money to mine that gold, and I would be tickled to death to pay the 
Federal Government a 10-percent royalty. It is a travesty. Of course 
they spent a lot of money looking for it. Do you know why they did? To 
make money. There is nothing wrong with that. But there is something 
wrong with not compensating the American taxpayer.
  You think, of all 100 Senators in the U.S. Senate, how many speeches 
have we made to the local chamber of commerce saying: ``If you just 
elect me I will handle your money as though it were my own.''
  I want everybody in the U.S. Senate who, if they had $11 billion of 
gold, would be willing to give it away for $10,000 to stand up. And go 
home and tell the chamber of commerce that if it were your land you 
would certainly be glad to give it away. That just puts it in 
perspective, Mr. President, how idiotic this whole thing is. And yet it 
goes on and on and on.
  Mr. REID. Will the Senator from Arkansas yield?
  Mr. BUMPERS. I will be happy to yield.
  Mr. REID. As I told the Senator, I have a Cabinet officer in my 
office. May I have a couple of minutes and then I will leave and you 
can say whatever you care to?
  Mr. BUMPERS. I will be happy to yield.
  Mr. REID. I will be very quick.
  Mr. President, it is easy to get on this floor and talk about 
travesty and ridiculousness and all those kinds of things. The fact of 
the matter is that my good friend from Arkansas could not go out and 
get a bunch of people together to raise money and go in and do this. We 
are talking about investments of hundreds of millions of dollars.
  For example, near my hometown of Searchlight, NV, people tried to 
develop the Viceroy Gold property for almost 20 years. They went all 
over, trying to find an investor. They finally found somebody in 
Vancouver who was willing to come in and before there was a single 
ounce of gold taken out of that property, that man spent $100 million.
  Now, there was no guarantee that they would have an ability to pay 
back the $100 million. The fact of the matter is, it is true there is 
no industry in the world more than the American mining industry that 
represents the free enterprise system. That is all we want to be able 
to go forward on, with a fixed set of rules that are meaningful and 
something that the mining industry can still proceed on.
  I would close by saying--I repeat--I hope the Interior Department 
does not try to make up for its shortcomings in grazing, in logging, 
and in water problems with what they are trying to do on mining. 
Because the fact of the matter is that mining is extremely important 
and the profit margins are very slim no matter how many times the 
distinguished Senator from Arkansas talks about ripoffs and travesties. 
The fact of the matter is that the profits are very marginal and what 
will happen, as has happened, is these companies will be forced to go 
offshore.
  There is gold in other places. It is easier to mine it here in the 
United States because there is a market for it. But, remember, this is 
one of the few industries that helps us with a favorable balance of 
trade.
  I again appreciate very much my friend from Arkansas allowing me to 
leave the floor----
  Mr. BUMPERS. Will the Senator stay and answer one question before he 
leaves? This land we are talking about, Barrick did not even file a 
claim for that land. Somebody else did.
  You know, people go out there and they put up stakes and they just 
lay claim to it.
  Do you know what Barrick did? They found this site. The claimant 
said, ``Yeah, go explore, see what you can find.'' They came back. And 
they said, ``You have a lot of gold here.'' They paid him $62 million 
for his claim. What do the American people get out of that? How many 
jobs do they get out of that $62 million they paid a guy who did 
nothing but put up four stakes?
  Mr. REID. I will be happy to respond. We have done something about 
that. We have solved that problem so people cannot go out and file 
miles and miles of claims anymore. In fact, prior to our changing the 
law with the holding fee, we had in Nevada over a million mining 
claims. That now, at last report, is down to about 300,000--something 
like that. So it is not as if we have not done anything here.
  The Senator has not responded--and I am sure he will when I leave--
but the reversionary interest we had in the legislation last year, I 
think it is important that we recognize the patent issue. I hope, 
again, in the reform we have that if a patent is issued, there will be 
a reversionary issue.
  If the Senator has a problem, as he indicated he has, that having a 
fair market value is improper for a land, that there should be some way 
of determining what the subsurface rights are, that is really hard to 
do. I am not sure we can do it. I would be happy to meet with the 
Senator. I am not in the conference. The Senator is in the conference. 
I am sure that he will do his best to make sure that this is fair.
  In responding to the Senator's question, I ask the Senator this: I 
hope that you being--you are one person from being chairman of that 
full committee. I hope that with your experience being chairman of the 
Small Business Committee and someone who has a tremendous amount of 
integrity and respect in this body and around the country, that during 
the time that conference is held, I hope you will call upon your 
experience and come up with something that is fair and reasonable to 
the people of this country and, of course, the people of the Western 
United States.
  Mr. BUMPERS. I appreciate the Senator's statement. My arguments are 
not punitive. I am not trying to punish the mining companies, and I am 
not trying to punish the people who work for the mining companies. 
Certainly the Senators who stand on the floor year after year and 
defend these practices are good friends of mine. I understand exactly 
what is going on. Maybe we will be able to come up with something to 
reform the law this year.
  Mr. REID. Let me close by saying, I said this publicly in the last 5 
years, and I say it this year. If the conference committee comes up 
with a reasonable reform, the companies that do business in Nevada have 
asked me if I will support reasonable reforms.
  So I look forward to the conference committee coming back with 
something that is fair and reasonable and is a real compromise. 
Hopefully, we do not have to have this battle year after year.
  Mr. BUMPERS. I know the Senator from Nevada does not take 
instruction, and I hope that the Senator--and I know he would--hopes 
that we come out with something that is good for the American people 
and not just the mining companies.
  Mr. REID. Absolutely.
  Mr. BUMPERS. Mr. President, the Senator mentioned reclamation a while 
ago, and I do not want to prolong this. Do my colleagues realize that 
of the 1,200 sites on the Superfund list that 59 of the sites on the 
Superfund list are directly related to hardrock mining? We are spending 
millions of dollars a year right now of the taxpayers' money to clean 
up site after site after site where they walked off and left an 
unmitigated environmental disaster, after paying no royalty. The 
American taxpayers are left to pick up the tab.
  Mr. REID. I will respond to the Senator from Arkansas that I hope one 
of the things the conference comes back with is a means of taking care 
of that.
  Mr. BUMPERS. We are going to. I promise the Senator we are going to.
  Mr. REID. I also will say, if you look at those 59 claims, 56 or 57 
of them--leaving 1 or 2 of modern mines--all the rest of mines that are 
very, very old. That does not mean the mining industry should not be 
involved in cleaning those up. I think they should be, and I think they 
want to be. I think that is appropriate.
  Mr. BUMPERS. The Mineral Policy Center says there are 557,000 
abandoned hardrock mining sites to be cleaned up in this country, and 
it is going to cost somewhere between $30 and $70 billion. Think about 
that. And today we just gave away an additional 11 billion dollars' 
worth of gold while the taxpayers are being asked to pick up the tab 
for $30 to $70 billion just to clean up the mine sites of the past.
  I yield the floor, Mr. President.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SPECTER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Bumpers). Without objection, it is so 
ordered.
  Mr. SPECTER. Mr. President, I ask unanimous consent that I may 
proceed for up to 10 minutes as if in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER. I thank the Chair.

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