Wednesday, April 29, 1998 | 10:18 a.m.
WASHINGTON, D.C. -- Nevada Gov. Bob Miller Tuesday tried to jumpstart stalled legislation to reform the nation's 126-year-old mining laws, warning that without reform a cloud of "uncertainty" will continue to cripple Nevada's second largest industry.
But Interior Secretary Bruce Babbitt, testifying before the same Senate committee, flatly rejected the industry-backed bill supported by Miller, Nevada Sens. Harry Reid and Richard Bryan, both Democrats, and other Republican leaders.
"This proposal, in our judgment, falls far short of the mark," Babbitt told the Senate Energy and Natural Resources Committee. "We would prefer no legislation at all."
With the two sides still far apart on critical issues, chances for passing comprehensive mining reform appear bleak for this congressional year, which has been shortened due to midterm elections in the fall.
Combined with the plummeting price of gold, Miller said congressional inaction would further cripple an industry that has already slashed 680 jobs in Nevada the past four months.
Worse yet, he said, are the reform proposals supported by environmentalists. "These bills threaten the survival of one of Nevada's mainstay industries, an industry which is critical to the economic health of many rural communities," Miller said.
Mining supports 13,000 Nevada jobs at an average annual salary of $45,000.
The industry-supported bill would force mining companies to pay fair-market value for the federal land used in mining, not the $5 an acre they are currently charged under the 1872 law. It would also impose a 5 percent royalty on net proceeds, allowing companies to deduct expenses incurred during production. All funds from the royalty would go into a fund for cleaning up abandoned mines -- the one area where environmentalists and the industry see eye-to-eye.
Supporters of the bill include influential Sens. Frank Murkowski, R-Alaska, chairman of the committee, and Larry Craig, R-Idaho, chairman of the public lands subcommittee, who claimed to have enough support to pass the bill.
But Babbitt vowed a presidential veto of the legislation, saying the Murkowski bill still gives away too much land value to miners. To illustrate his point, Babbitt signed three deeds to mining claims on 62 acres of federal land in Alaska before the committee, saying the company will only have to pay $155 for the rights to mine the land.
Even under the Murkowski bill, which charges a "fair-market price" on the value of the surface of the land and nothing for the value of the minerals, the mining company would pay about $62,000, Babbitt said. A shockingly low price, the secretary said, for land valued at $80 million when the minerals were included.
Another big sticking point is Murkowski's royalty fee, which charges mining companies 5 percent of all "net" proceeds from the sale of minerals, allowing companies to deduct expenses in extracting the gold, silver and other hard-rock minerals. But Babbitt argued that Murkowski bill allows for too many deductions.
"The department cannot support this bill, and I would recommend to the president that he veto this bill," said Babbitt, who may try to implement some of his wishes through administrative action in November.
But Reid contended that the bill supported by Babbitt, which would impose a 5 percent fee on gross revenue, ignores the economic realities of mining. The price of gold is below $300 an ounce now, and the cost of producing it is close to $300 an ounce, leaving miners little if any profit and unable to afford an additional 5 percent fee, he said.
And Bryan accused environmentalists of blocking any legislation until they get everything they want. "The perfect is the enemy of the good," he said afterward.
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