DeFazio introduces bill to reform mining laws

The News Review
By Carisa Cegavske
July 10, 2014

Legislation to collect royalties from companies mining on federal lands and to ensure they won’t leave a mess behind was introduced Thursday by 20 House Democrats, including Peter DeFazio.

The Hardrock Mining and Reclamation Act would charge owners of existing mines a 4 percent royalty and levy an 8 percent royalty on new mines.

It would also set some wilderness areas off-limits to mining and allow communities to petition against new mines.

Some of the royalties would be set aside to repair environmental damage at abandoned mines, such as Formosa Mine near Riddle.

The Environmental Protection Agency declared the Formosa Mine a Superfund cleanup site in 2007 and estimates the cleanup cost at $14 million.

“Formosa is an excellent example of why we need reform, and it’s right in our backyard,” DeFazio said.

DeFazio, D-Springfield, said the public is too often left footing the bill when mines are abandoned, a problem he said has cost taxpayers $72 billion.

A report by Democrats on the House Natural Resources Committee, of which DeFazio is the ranking member, estimates the bill would have generated $380 million in royalties from the 46 top-producing hard rock mines if it had been in effect in 2012 and 2013.

DeFazio toured the Formosa Mine in April. The mine yielded copper and zinc from 1910 to 1937. The Canadian company Formosa Resources reopened the mine from 1989 to 1993. Four years later, the drainage-control system failed and toxic water began draining into the South Fork of Middle Creek. The company went defunct, has no assets and the government has been unable to locate the operators.

Like the Formosa Mine, DeFazio said many of the mines on federal land are owned by foreign companies.

“The fact that this was a foreign entity is just something that really irks me,” he said.

Nancy Gravatt, spokeswoman for the National Mining Association in Washington, D.C., said DeFazio’s bill would harm the economy.

She said mining provides 439,150 jobs, paying on average $85,000 a year, and adds $74.3 billion to the country’s gross domestic product.

She also said the effects would be widely felt in other sectors because manufacturers that make defense equipment, computers and electric car batteries rely on metals such as gold and lithium.

“It is actually a very foundational, building-block industry to the economy,” she said.

Gravatt said regulations already in place will prevent companies from leaving behind the kind of environmental damage seen at the Formosa Mine.

She said mining companies are required to create plans to return lands to their previous conditions.

“Part of that (is) there is a financial assurance requirement, which is like a surety bond, that the company puts up to guarantee the funds are there for carrying out the closure plan,” she said.

DeFazio said he does not believe paying royalties to the federal government will cost jobs or hurt the economy.

He said the mining companies objecting to federal royalties are already paying royalties to mine on state, tribal and private lands.

He said the bonds they are now putting up are inadequate to carry out reclamation projects and too often, as with Formosa, foreign-owned companies dissolve leaving “no one to chase and collect from.”

He acknowledged that his proposal may not be headed for passage, since many Republicans oppose it. However, he said it is important to start talking about whether current mining law makes good fiscal sense.

“Name one business that gives away its precious assets for nothing,” he said. “This is just something that cries out for reform.”

• You can reach reporter Carisa Cegavske at 541-957-4213 or ccegavske@nrtoday.com.