Government misses out on mining royalties

  • Article by: EDITORIAL , Washington Post
  • Updated: December 28, 2012 - 9:02 PM

As with oil and gas, the government should allow mining firms to unearth as much gold and silver as they can responsibly and profitably.

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The debate about managing the natural resources on America's vast tracts of federal land usually begins with oil and natural gas, and it often ends there, too. A Government Accountability Office study out this month shows a big reason why: That's where the money is.

The GAO reports that extraction firms brought $98.6 billion of oil, gas, coal and other resources to market in 2011 and paid $11.4 billion in lease and royalty payments into federal coffers.

The GAO notes that oil and gas royalties are "one of the largest non-tax sources of revenue to the federal government." These figures, in turn, represent an industry that helps sate the nation's ravenous demand for energy and improve its trade deficit. For all of these reasons, economically viable and environmentally sensitive oil and gas drilling should be encouraged.

On that score, the Obama administration has a mixed record. New rules on the controversial method of natural gas extraction known as "fracking" neither give drilling companies a free hand nor shut down the industry. That's good.

But large sections of the Outer Continental Shelf, such as that off the coast of Virginia, remain off-limits to oil and gas drilling. Congress, too, has dropped the ball. The legislative response to the 2010 Deepwater Horizon accident has been meager, with lawmakers failing even to enshrine a reorganization of federal regulators in law.

But, the GAO report underscores, other sections of the law on federal natural resources are far more outdated and far less discussed. Companies engaged in so-called hard-rock mining for minerals such as gold, silver, copper and uranium operate under the 1872 General Mining Act, which obliges them to pay a mere $189 to make a claim on federal land, and $140 a year to keep it.

Because the government doesn't collect royalties based on how much companies extract or sell, the GAO found, it is -- astonishingly -- not clear how much those firms are taking, or how much money they get for it all.

As with oil and gas, the government should allow mining firms to unearth as much gold and silver as they can responsibly and profitably.

 

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