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February 1, 2015

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Obama’s position on mining royalties has morphed with the economic times

Adviser says president believes that industry should pay its share, that proposal opens conversation about changing mining law


AP Photo/Chris Carlson

Democratic presidential candidate Sen. Barack Obama, D-Ill., speaks during a rally in Elko on Wednesday, Sept. 17, 2008.

Four years ago, Barack Obama seemed quite taken with Elko.

As a Democrat, he waded into deeply Republican territory, visiting the small mining town tucked in Nevada’s northeast corner three times during his first presidential campaign. And he often peppered his speeches with references to Elko, using it as an example of his affinity for rural America.

On the 2008 campaign trail in Elko, Obama voiced his displeasure with proposals to put royalties on hard rock mining companies, saying that charging companies 4 to 8 percent to mine public lands could hurt jobs.

“I will make sure to maintain the industry here in Elko,” he said during a stop in 2008.

But after describing the royalties as too burdensome in 2008, Obama’s administration has put forward a budget proposing both a 5 percent royalty and a 7.8 cent-per-ton “dirt tax” to help with reclamation efforts.

The shift in position has drawn the attention of his 2012 foe, Republican Mitt Romney.

Today, Texas Gov. Rick Perry will speak at the opening of Romney’s Elko headquarters, and he’s expected to put a spotlight on Obama’s mining record.

“When he was campaigning for office, he had one position. Now that he’s president, he has another,” Romney spokesman Mason Harrison said.

An Obama campaign adviser acknowledged that Obama’s views on the issue have morphed — but so have the times.

Faced with a burgeoning federal deficit, the Obama administration doesn’t believe giving mining corporations royalty-free access to minerals on public land is justifiable.

“The industry is now one which — certainly in Nevada — is dominated by large corporations, some of whom are not even U.S. corporations,” the adviser said. “It’s hard to imagine a budgetary debate about balancing the national budget without looking to those corporations to pay their share, just as the other extractive industries do.”

The mining industry’s access to federal lands is still governed by a law passed in 1872. That law was designed to encourage a fledgling industry, but Republicans and Democrats agree it’s outmoded in an industry dominated by large multinational corporations.

During his 2008 campaign, Obama never said mining companies should get off scot-free. But he clearly wasn’t a fan of the royalty structure before Congress at the time.

“What’s clear to me is that the legislation that has been proposed places a significant burden on the mining industry and could have a significant impact on jobs,” Obama told the Reno Gazette-Journal in 2007. “We are going to have to keep on working to find the kind of legislation that is going to provide fair compensation for these federal lands and also enhances environmental protection (and) cleans up abandoned mines.”

Especially with gold prices where they are now, the Obama administration doesn’t see it as a choice between jobs and compensating the public for its resources.

“Look at coal, oil, natural gas. ... There’s no one who is seriously suggesting that the royalties paid by those extractive industries are making or breaking the jobs that are available in those various sectors,” the campaign adviser said, adding that the royalty and dirt tax proposals are a place to begin the conversation with Congress over how to change the 1872 mining law.

Half of the 5 percent royalty on gross proceeds would return to the state where the mineral was mined — a potentially large windfall for Nevada given the gold mining operations here.

The mining industry opposes Obama’s proposed budget, describing the dirt tax as a “punitive fee.”

“The U.S. is already a high-cost mining country due to labor, environmental control and safety-related costs,” said Carol Raulston, a spokeswoman for the National Mining Association. “These taxes would have made the U.S. noncompetitive in world markets for mining investment, causing jobs to move off-shore and making the U.S. even more dependent on outside sources for the minerals we use.”

Obama’s supporters argue the other side.

“There are a lot of people who question the fairness of mining companies extracting nonrenewable resources from public lands and not adequately compensating the people through their government,” former state Sen. Sheila Leslie, D-Reno, said, noting that mining companies go where the minerals are. “The argument that they’ll go elsewhere rings hollow.”

While the Romney campaign is quick to pounce on Obama’s proposed budget, his position on the 1872 mining law wasn’t immediately available.

In 2007, Romney told the Reno Gazette-Journal he didn’t have any specific changes to propose.

“The last bill on mining was from, what? 1872? Signed by Ulysses Grant. There’s been some suggestion we should look at that again,” he said. “That is something you want to do in discussion with people who understand the business and are closest to it.

“I don’t have a series of changes I would make to mining laws. I do want to make sure we don’t have any individuals with a bone to pick or some kind or a radical agenda in some way hurting the mining industry.”

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  1. MINING needs to pay its fair share. If mining pays even an average of what it pays the other 49 states, Nevada would be getting MORE revenue!

    The minerals being mined are NONrenewable. They cannot grow and replace themselves, so mining is taking them for near free and sending the profits outside Nevada, and for many, outside the USA!

    Better late than never to see the light and address this situation, for any politician, regardless of party affiliation.

    Blessings and Peace,

  2. You all seem to forget that the great State of Nevada exists because of mining! The Obama Administration claims it is out to create jobs, yet it seems they have done everything possible to kill them, especially in the mining industry. Why do you want to put a royalty on the only American industry that has continuously created jobs since the 2007 recession? In 2008 alone, U.S. mining created 1.8 million direct and indirect jobs, $107 billion in labor income and contributed $45 billion dollars to federal, state and local taxes, according to a report by PricewaterhouseCoopers.

    Also the reason abandoned mine land clean up has cost taxpayers anything is because the government won't allow the experts in mine clean-up (the mining industry) to do it on a "Good Samaritan" law basis. And most of these abandoned sites occurred before the passing of NEPA in 1969. The industry has developed into a high tech environmentally responsible industry who follows strict regulations.

    If you would like more information on what the American mining industry provides for your daily life and the U.S. economy, please visit

  3. Re Izzy LaBranch. The state of Nevada exists because of gaming and tourism, not mining. This ain't the 19th century, although the taxes paid by mining date to that era. The mining companies, (none of which are U.S. companies), do not produce any ores that aren't mined world wide. The minerals cited for national defense are not mined in Nevada, or the U.S., but in China. Completely different rationale for taxes on mining in the U.S. It doesn't matter the origins of the mining industry in Nevada; what matters is revenue here and now in the 21st century. Mining should pay more. They aren't going to leave the state, because this is where the gold is....period.

  4. Comment removed by moderator. Inappropriate

  5. Re Heretic. P.S.: "highly employed workforce and "help wanted" signs everywhere"...that is a totally oxymoronic statement. Highly employed, yet "help wanted" signs everywhere? Please, continue your travels in the "outback" of Nevada; we don't need you here.

  6. Obamas hypocrisy is legion. The list of comparative sound bites and videos where he tells one thing and later reverses himself is almost bottomless. He is adept at telling folks what they want to hear, promising the sun, moon and stars with one hand and later taking away with the other.

    Beware the Flim Flam man when he comes to town. Remember the old adage; if it sounds too good to be true, well....

  7. For Heretic, your observations are partially true. These mining towns are "boom or bust" economically. The majority of people up there always seem to wait for the price of minerals to go up and these mining businesses reopen operations (usually under other names or divisions of their home corporations). Many of the old timers could care less about the scarring and decimation on the environment and habitats in the "glory days" leaving unsafe holes littering the landscapes. I have gone to enough family reunions now up there to hear personal accounts and impartially weigh in on the subject.

    Vegas Truth 7777 correctly stated, "I just returned from a project at a central Nevada gold mine. It was in fact one of the most professional run places I have been to. They are careful of the environment, employ hundreds in high paid technical jobs, provide full health care for employees and subcontract with Nevada businesses large and small." In response, while this is very true, because 1-I have family in mining, and 2-I also reside in White Pine County where there is and they have been historically dependent on mining, and 3-family has been involved in mining for over 100 years, please don't get side-tracked on the real issue of mining paying its FAIR share to Nevada.

    Nevada suffers because of antiquated laws that allow mining to take without providing a fair revenue reinbursement. Other states and other countries have mining pay MORE for extracting valuable minerals is fact. The rate here in Nevada never significantly changed over the years since Nevada Constitution was written, and with increased population and diminishing and scarcer resources, we need to REvisit laws that no longer serve us and effectively address them.

    LAWMAKERS need to fix/change the laws so that mining will fair to all states, and improve especially here, Nevada's plight.

    Also, Texexnv may be right about Senator Reid standing in the way of Nevada being treated fairly. If this continues, Reid should be voted OUT and ran out of Nevada! This state has suffered unduly as some kind of political bargaining chip, and enough is enough.

    Blessings and Peace,