Opinion: The Second Most Prevalent Form of Legalized Larceny in Nevada
There’s a heist happening right now all across our country. As I write this, mining companies are extracting valuable minerals from public lands without justly compensating the public, effectively stealing from the American people. This practice is absurd, yet it remains entirely legal. That is not how it was supposed to be, but it is not a mistake either. Nobody meant to let this happen, yet those in power willfully allow this injustice to continue. The roots of this problem lie in the mid nineteenth century, when hundreds of thousands of prospectors made their way to the western United States, seeking their fortunes in the mining industry. The California Gold Rush, Nevada Silver Rush, and other discoveries of valuable minerals were crucial to the settlement of the West, but presented the federal government with the challenge of regulating the burgeoning mining industry. The unintended consequences of Congress’ response to this challenge have allowed a powerful few to benefit from resources that belong to the public without justly compensating the state. How this came to be is a long story: it involves our country’s manifest destiny, a crooked senator, three failed bills, and larceny on an unimaginable scale.
By the 1870s, it was common for prospectors to mine on public property, a practice which was illegal but tolerated nonetheless. During the Reconstruction period following the Civil War, a group of eastern congressmen sought to change that, arguing that the miners were exploiting a public good for their own benefit, essentially stealing from the public. However, western congressmen viewed the practice differently, arguing that the miners’ work was in fact advancing the public interest by benefitting the cause of westward expansion, the fulfillment of the United States’ “manifest destiny” – a mandate for our country to span the entirety of the continent, from sea to shining sea. By 1872, the two factions had reached a compromise in the form of the Claims Act of 1872 (also known as the “General Mining Act”), which was passed on a voice vote (i.e: without controversy) in both houses of Congress, and was signed by President Ulysses S. Grant on May 10, 1872. Among other reforms including the legalization of informal claims, the Claims Act imposed a surcharge of $2.50 per acre of public land used for the purposes of mineral extraction, mandating that the government be compensated for mining on public land.
Although it aided the advance of westward expansion, formalizing the norms of a fast-evolving and lucrative industry, since it’s passage, the Claims Act has allowed for the mining industry to exploit public lands without justly compensating the government, contrary to its intended effect. The troubling clause is the surcharge on the use of public lands for mineral extraction. Upon its imposition, the $2.50 per acre surcharge represented a reasonable sum of money with which to compensate the government for the value of the goods taken from public land. However, in the nearly 150 years since it was first imposed Congress has never been adjusted the surcharge for inflation. Shall we dwell on the absurdity of that for just one moment?
Congress’ negligence to adjust the surcharge for inflation is so egregious that it is difficult to quantify, as the Bureau of Labor Statistics only began compiling the Consumer Price Index, the official indicator of inflation in the United States, in 1913 – 41 years after the Claims Act was signed. However, if we resort to less scrupulous metrics, we can calculate that $2.50 in 1851 is worth roughly $53 today – an increase of over 2,000%. Yet, mining companies still only pay the government $2.50 per acre mined, which is just 4.7% of the intended amount – which was already a favorable appraisal of the right to mine on public land, put into place upon the urging of the western congressmen who sought to incentivize mining.
Unfortunately, this is not an oversight on the part of Congress, nor is it a lapse in the bureaucratic functions of an agency operating out of a basement somewhere in suburban Maryland. It is something far more insidious, which shows the extent to which politicians are willing to compromise the public interest in favor of that of their corporate benefactors. There have been multiple efforts made in Congress, with bipartisan support, to put in place a fairer compensation system. In 1993, the House of Representatives passed a bill imposing an 8% royalty on minerals extracted from publicly owned land, but it was never taken up by the Senate. In 2007 the House took action again, resoundingly passing the Hardrock Mining and Reclamation Act – a long needed reform to the Claims Act, the details of which we shall discuss shortly. It too was not taken up by the Senate, effectively killing it. Another iteration of the Hardrock Mining Act was introduced in the Senate in the following session with the support of the Obama Administration, but was killed in committee.
The Hardrock Act would have imposed an 8% royalty and an assortment of other fees and surcharges on mining companies, allowing for the government, and by extension, the people, to be made whole when public lands are used for private benefit. The Hardrock Act would have also assessed the levy as a percentage of the value of the goods extracted, rather than a flat charge based upon the acreage of the land used, which I support for three reasons. First, it would not be vulnerable to inflation, as the absolute number constituted by a given percentage would naturally rise with inflation. Secondly, the surcharge would be tied to the value extracted – the true cost of the minerals belonging to the public which are being taken by a private person or company — rather than the acreage of the land used, a meaningless number. Third, when the surcharge is imposed based upon land used rather than value extracted, as it is now, destructive mining practices through which the miner seeks to extract the highest value from a limited amount of land are incentivized.
The necessity for claims reform is clear, and the political will is there, as demonstrated by the bipartisan reforms passed by the House. Thus, the Senate’s inaction requires an explanation. I can provide one in three words: Senator Harry Reid. Between taking office in 1987 and 2011, Senator Reid (D-NV) received $750,000 in campaign contributions from the mining industry. Coincidentally (or not), Reid was instrumental in defeating all three bills previously mentioned. Conveniently for his benefactors, Reid was also the Senate Majority Leader from 2007 to 2015. This role, the same one held by Mitch McConnel (R-KY) today, allowed Reid to wield the power to almost single handedly defeat legislation. Wield it he did, and thus the 1993 bill and both iterations of the Hardrock Act died gruesome deaths.
With Harry Reid no longer in the Senate, we now have an opportunity to make long-needed reforms to the Claims Act, eliminating the blank check given to the mining industry to effectively steal from the public. This is not small change: $3 billion dollars’ worth of minerals are extracted from public lands each year. The 8% royalty alone would have a value of $240,000,000 – which is only a drop in the bucket of the federal government’s budget, but it is nonetheless rightfully owed to the government. This multi hundred million dollar rip-off of the American people is enabled primarily by our silence. The powerful mining interests have shown that they care about this issue. It is about time that we show that we care, too. We ought to act as if we’re being taken for a ride, because we are.