[Congressional Record Volume 140, Number 135 (Friday, September 23, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 23, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                   PUBLIC OUTRAGED OVER GOLD GIVEAWAY

                                 ______


                           HON. GEORGE MILLER

                             of california

                    in the house of representatives

                       Friday, September 23, 1994

  Mr. MILLER of California. Mr. Speaker, last May, the American public 
was outraged--and rightly so--when the Federal Government signed away 
public land containing gold worth an estimated $10 billion to a 
foreign-owned mining company--and received less than $10,000 for the 
taxpayers.
  This indefensible giveaway was the result of one of the most outdated 
and outrageous laws still on the books, the 1872 mining law.
  This law was designed to help settle the West, a largely unpopulated 
region in the 19th century. What it has turned into is one of the worst 
examples of fleecing the taxpayer that anyone can imagine.
  No one in Congress would dare propose such a law today. But the 1872 
law endures, defended by the mining companies--who get something-for-
nothing--and their powerful friends in Congress.
  I am inserting into the Record an editorial from the St. Louis Post-
Dispatch from August 31 which provides still more details about this 
continuing ripoff.

           [From the St. Louis Post-Dispatch, Aug. 31, 1994]

                           The New Gold Rush

       If Interior Secretary Bruce Babbitt could make but one 
     reform in the management of the West's natural resources, he 
     would need only a nanosecond to decide: Repeal the 1872 
     mining law, an open-ended invitation to fleece the taxpayer.
       Mr. Babbitt said as much in May, when under court order, he 
     reluctantly gave Canadian-owned American Barrick Resources 
     Corp. title to 1,949 acres of public land in Nevada to mine 
     $10 billion worth of gold for the shamefully low price of 
     $9,765. He called it ``the biggest gold heist since the days 
     of Butch Cassidy.''
       Change is on the horizon--but how much? Republican senators 
     from the West have blocked a bill, which the House passed, to 
     protect taxpayers and the environment. In its place, they've 
     offered one that amounts to an industry-protection bill.
       The 1872 Mining Law, a relic from the days of the 
     homesteading act and giveaways to the railroads, governs 
     hard-rock mining--the extraction of metals such as gold, 
     copper, silver and zinc on public lands. It has three 
     features that have cost the taxpayer and the environment 
     dearly.
       This relic allows mining companies to ``patent,'' or 
     purchase, public lands with mineral deposits for the paltry 
     sum of, at most, $5 an acre. That may have been the market 
     value in 1872; today it's a government-subsidized bonanza to 
     private enterprise. Once patented, the land is private 
     property.
       Sometimes, patented land isn't even mined. Here is one 
     example from the congressional report. ``Taking From the 
     Taxpayer: Public Subsidies for Natural Resource 
     Development'': In 1970, a developer from Arizona patented 61 
     acres of land. Then he sold the land to a hotel developer for 
     $400,000 and an 11 percent share of future profits. The cagey 
     businessman from Arizona has made about $6 million in profit 
     so far; the American taxpayer earned a whopping $153.50 from 
     the patent.
       As a 1994 report from the Mineral Policy Center points out, 
     the Bureau of Land Management, which handles patents, has 
     closed off the process to public input and participation, 
     although it is public land that's being sold off. That's 
     unconscionable.
       Right now, fearing even the most minimal reform, mining 
     companies are rushing to patent land. Unless the government 
     imposes a moratorium taxpayers stand to lose $34 billion 
     worth of minerals, according to the Mineral Policy Center. 
     Ideally, patenting should be abolished, as recommended in 
     a House reform bill. The Senate version would retain 
     patenting, although it would increase the price.
       Under the 1872 law, mining companies do not pay a penny in 
     royalties to the American taxpayer. Hard-rock mining 
     companies argue that they invest millions in selecting and 
     preparing sites and then, of course, extracting the minerals. 
     And that is true. But oil, gas and coal companies also invest 
     millions--and pay royalties as well.
       Oil, gas and coal companies were originally covered by the 
     1872 law. But because the federal government wanted to 
     maintain some control over resources crucial to national 
     defense and economic development, the Mineral Leasing Act of 
     1920 was passed. It abolished patenting and substituted long-
     term leases of the land and imposed a 12.5 percent royalty on 
     oil and gas; a 12.5 percent royalty on above-ground coal; and 
     8 percent on below-ground coal. Why should mining for gold, 
     copper or silver be any different?
       The House bill would impose an 8 percent gross royalty on 
     hard-rock minerals. The Mineral Policy Center estimates that 
     would produce $30 for an average ounce of gold. In April, 
     gold sold for $375 an ounce. The Senate version would apply a 
     2 percent net royalty to yield about 22 cents an ounce.
       The worst travesty of the 1872 mining law is that it makes 
     no provision for land reclamation from the environmental 
     damage caused by mining. That means that taxpayers, who get a 
     pittance for a patent and zilch for a royalty, get stuck with 
     the tab for environmental cleanup. Right now, the government 
     will spend between $32.7 billion and $71.5 million to clean 
     up 557,650 abandoned mines.
       The environmental damage alone is reason enough to repeal 
     the 1872 law. A system of leasing, instead of ``patenting,'' 
     would allow the government to set environmental standards as 
     a condition of the lease; a system of royalties would provide 
     money for reclamation. Without substantial reform, American 
     taxpayers stand to lose the West--and their shirts.

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