House votes for mining royalties

WASHINGTON — The House on Thursday voted 244-166 to assess an 8 percent royalty fee on the gross proceeds of new hard-rock mines and a 4 percent tax on mines already operating.

Nevada lawmakers lined up against the mining reform bill, saying it could devastate their state’s second leading industry.

Rep. Nick Rahall, D-W.Va., the author of the bill, accepted an amendment by Rep. Dean Heller, R-Nev., that would increase the state and local share of mining royalties from one-third to 50 percent.

“I’m pleased with that, but I’m not pleased with the overall bill,” said Heller, who joined Reps. Shelley Berkley, D-Nev., and Jon Porter, R-Nev., in voting against the measure.

Heller said the bill would hurt Nevada’s mining industry, which employs about 32,000 people.

Berkley called the royalties “exorbitant” while Porter described them as “excessive taxes on one of the largest employers in our state.”

The bill also includes new environmental guidelines which would allow the secretary of the interior to reject mines that would cause “undue degradation” of federal land.

The patent system, which allows mining companies to buy federal land for $2.50 to $5 an acre, would be abolished by the bill.

Despite the House vote, the mining reform bill still faces many obstacles before becoming law.

The White House Office of Management and Budget issued a statement Thursday announcing President Bush would veto the bill if it reaches his desk.

Among other things, the White House said the bill “imposes a royalty on claims where property rights already have been vested, could reduce the continued domestic production of hard-rock minerals, and restates and expands some environmental standards and permitting requirements that are unnecessary and redundant.”

The House vote is not enough to overcome a presidential veto.

Senate Majority Leader Harry Reid, D-Nev., also has said he will not accept an 8 percent royalty.

“If we used the Nevada formula, we could have 1 or maybe 2 percent or something like that,” Reid said this week.

Reid said he is working on an alternative bill, which has yet to be introduced in the Senate.

In 1993, the House passed legislation imposing an 8 percent royalty, but agreement could never be reached with the Senate. The next year Republicans took control of the House and attempts to change the law were largely dropped. With Democrats back in charge this year, they and their environmentalist supporters see the best chance for change in years, though they still must contend with Reid.

Sen. John Ensign, R-Nev., said House Democrats had turned the mining reform bill into “a political football”

“I don’t think the bill is going anywhere,” Ensign said. “The House of Representatives is doing an exercise where they haven’t built consensus. And you need to build consensus to pass anything in the Senate.”

Rep. Jim Costa, D-Calif., one of the bill’s leading sponsors, said no one is trying to run mines out of business and said the royalties are “not unreasonable.”

Costa cited numbers from the Congressional Budget Office showing mining is a $23 billion industry and the cost of the mining reform bill would be $200 million for five years.

Even some supporters expressed concern about the bill. Rep. Ed Perlmutter, D-Colo., was worried jobs would be lost, saying he hoped Congress would not “create a problem while solving another.”

The Associated Press contributed to this report. Contact Stephens Washington Bureau writer Tony Batt at tbatt@stephensmedia.com or (202) 783-1760.