Wow. Our experiment is off to a great start—let's see if we can finish it off sooner than expected.
In the midst of America's financial crisis, one of the biggest government giveaways goes to an industry that least needs it: gold mining. Even as prices for gold hover near historic highs and mining exacts a deep environmental toll, the General Mining Law of 1872 allows $1 billion in hard rock minerals to be taken from federal lands each year royalty-free. All told, mining companies have been exempted from paying at least $100 billion in royalties, taxes, and fair land prices.
On Thursday, the House Natural Resources Subcommittee on Energy and Mineral Resources will hold a hearing on updating the 137-year-old law, which was enacted during the Grant administration. The House is expected to pass sweeping royalty and environmental reforms, but the bill must also clear the Senate, where last year a similar effort stalled in the hands of Senate Majority Leader Harry Reid, the gold mining industry’s most powerful ally.
Reid faces a delicate political dance. Typically a reliable ally to environmentalists, he’s also the son of a gold miner, father of children who maintain ties to the industry, and representative of a state that mines more gold than all but three nations. In a nod to his virtual veto power over mining reform, last year the House held a similar hearing in the town of Elko, ground zero for Nevada's mining industry. There, Reid expressed his support for "real and reasonable reform" before ultimately turning on the House’s reform bill as "not something Nevada can accept."
A spokesman for Jeff Bingaman, who oversees mining legislation as the chairman of the Senate Energy Committee, sees this as the year that a reform bill finally passes. With the treasury bleeding dollars and the gold mines swimming in cash, Reid may be headed for the final showdown between two seemingly incompatible sides of his political identity. Whatever compromise he supports could make him an historic statesman, put him out of a job, or both. I explore how it all might shake out in the March/April issue’s feature, Gold Member.