Biden plan would overhaul 151-year-old mining law, make firms pay royalties

The Biden administration is recommending changes to a 151-year-old law that governs mining for copper, gold and other hardrock minerals on US-owned lands, including making companies for the first time pay royalties on what they extract.

A plan led by the Interior Department also calls for the creation of a mine leasing system and coordination of permitting efforts among a range of federal agencies. This comes as The White House has been pushing to boost domestic mining for minerals needed for electric vehicles, solar panels and other clean energy.

Under terms of an 1872 law, the US does not collect royalties on minerals extracted from federal lands, a fact Democratic lawmakers and environmental groups have long lamented.

The White House plan would impose a variable 4 per cent to 8 per cent net royalty on hardrock minerals produced on federal lands. The proposal needs approval by Congress unlikely when the House is controlled by Republicans who have long opposed such fees.

Undeterred by such political reality, an interagency working group led by Interior touted the benefits of imposing royalties on about 750 hardrock mines on federal lands, mostly in the West. The figure does not include about 70 coal mines whose owners must pay federal royalties.

A royalty would ensure that American taxpayers receive fair compensation for minerals extracted from federal lands," the working group said in a report on Tuesday.

The fee also could pay for programs to boost mining permits, clean up abandoned mine lands and help states and tribal governments that provide infrastructure and services to mining-dependent communities, the report said.

The US stands out among other countries, such as Australia, Canada and Chile, that collect royalties on minerals. At least a dozen Western states also collect royalties on hardrock mining.

Although thoughtful concerns were raised by the mining industry regarding the existing hardrock leasing system that is used on certain federal lands,'' the working group did not receive any arguments as to why a properly designed leasing system could not be equally successful in the United States", the report said.

Deputy Interior Secretary Tommy Beaudreau, who chaired the working group, called the plan released Tuesday a modernized approach that would meet the needs of the clean energy economy while respecting our obligations to tribal nations, taxpayers, the environment and future generations".

Securing a safe, sustainable supply of critical minerals will support a resilient manufacturing base for technologies at the heart of the president's investing-in-America agenda, including batteries, electric vehicles, wind turbines and solar panels, said Joelle Gamble, deputy director of the White House National Economic Council.

Tribes and environmental groups welcomed the report but urged President Joe Biden to go further to protect communities, sacred places and water resources. The White House formed the working group last year as Biden pledged to boost production of lithium, nickel and other minerals used to power electric vehicles and other clean energy.

"These modest reforms are a good first step, but they're not enough to safeguard our water and communities, said Allison Henderson, southern Rockies director at the Center for Biological Diversity, an Arizona-based nonprofit.

The Biden administration should use its full authority to update these antiquated mining laws, prevent more mining industry devastation and preserve a livable planet for future generations.

Rich Nolan, president and CEO of the National Mining Association, said the report did little to advance Biden's stated goal to secure domestic mineral supplies while supporting responsible mining.

Creation of a leasing system, imposition of a punitive "dirt tax and proposed royalties as high as 8 per cent will throw additional obstacles in the way of responsible domestic projects, forcing the US to double-down on our already outsized import reliance from countries with questionable labour, safety and environmental practices, Nolan said in a statement.

Wyoming Sen. John Barrasso, the top Republican on the Senate Energy and Natural Resources panel, said Biden was "taking a sledgehammer to affordable, reliable energy.''

If enacted, the proposed mining reforms will force us to buy more critical minerals" from China and other countries that use forced or child labour "instead of harnessing our abundant resources here at home, Barrasso said.