Pombo's Fools Gold Budget

Representative Pombo (R-Calif.) is at it again.  The champion of the $10 billion road known as “Pombo’s Folly” (see previous Chopping Block), is now trying to balance the budget by practically giving land away to the mining industry.  Rep. Pombo’s bill, being considered as part of the budget process, manages to worsen the already antiquated 1872 Mining Law, the granddaddy of all giveaways.

“If Pombo is so desperate to raise money from our public lands, why not take on the 1872 Mining Law? Under that obsolete law, mining companies can extract minerals from publicly owned lands without paying royalties to the federal government.”

From the October 12, 2005 editorial in the Sacramento Bee entitled “Pombo: The sequel -- Look what else lies within the document.”

Signed into law by President Ulysses S. Grant, the 1872 Mining Law governs metal mining on federal public lands.  The law allows private companies to buy or patent lands containing valuable minerals, including gold, silver, and uranium, for $2.50 - $5 per acre, (1872 prices) without paying a royalty. According to Earthworks, since 1872, more than $245 billion worth of mineral-bearing public lands have been “sold” at these below-market, 130 year old rates – a land area equivalent in size to the state of Connecticut.

Mining has left a legacy of more than 500,000 abandoned mines in the United States that will cost taxpayers between $32 and $72 billion to clean-up.  The mining process itself scars the land through open pit mining, and uses chemicals such as cyanide or sulfuric acid to extract scarce minerals from rock.  In 1994, Congress placed a moratorium on the patenting of federal lands to halt this environmental damage, mitigate increasing clean-up costs, and put an end to the divesting of taxpayers' resources at wasteful prices.   

If Rep. Pombo has his way America’s public lands will be back on the auction block at bargain basement prices.  Pombo’s plan would sell off public lands to mining companies for  $1,000 an acre or fair market value, which ever is greater.  This is quite a bargain, since many of these lands, if they contain minerals, are worth billions.  In addition, the proposal erodes already weak requirements that must be met before the federal government gives away the public land, enshrining an absurd “right to mine” on public lands.

Rep. Pombo's bill also contains a back door provision to legalize land fraud.  The bill allows anyone to stake a claim and purchase land—without having to prove that it contains minerals.  This would enable developers to buy land on the cheap and sell it for ski chalets or high-rise condos the next day. 

Rep. Pombo's bill also does an end run around regulatory process by specifically giving away two mineral leases: a 7,000 acre claim in Pershing County, Nevada to Coeur Rochester, Inc., and 520 acres in Custer County, Idaho to TDS LLC, an affiliated company of L&W Stone Corporation. Coeur Rochester, Inc. claims to be the world's largest primary silver mining company with more than $322 million cash on hand at the end of 2004.  The L&W Stone Corporation is a self proclaimed industry leader in producing natural stones.  The larger mining companies that could benefit from the changes in law include Newmont, AngloGold, Barrick, Gold Fields, and Placer Dome.  These companies had net earnings of $443 million, $100 million, $248 million, $111.3 million and $284 million, during 2004 respectively.

If Rep. Pombo is serious about deficit reduction, he should impose a royalty on mineral producers, like those paid by the oil, gas and coal producers, of 8 to 10 percent.  This royalty could raise more than $350 million over the next five years, surpassing the $155 million that Rep. Pombo’s provisions raise. Congress should also repeal or modify two tax breaks for mining companies that will cost taxpayers more than $1.2 billion over the next five years.  If mining companies are paying little or nothing for their land and not paying royalties, why are they getting tax breaks?

The Chopping Block is a production of the Green Scissors Campaign.  Led by Friends of the Earth, Taxpayers for Common Sense and U.S. Public Interest Research Group, the Green Scissors Campaign is dedicated to protecting taxpayers and the environment.  To unsubscribe from the Chopping Block, please reply to this email with the word unsubscribe in the body of the email. To sign up to receive the Chopping Block and other Green Scissors Campaign updates click here.

Issue 10, Volume 1  October 28, 2005