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Harry Reid, Gold Member

Is our Senate leader in bed with America's worst polluter?

in the back of goldie's, a dive bar in Elko, Nevada, I was talking rocks with a miner with a steadily growing heap of beer bottles in front of him. He was about 50, with a sun-scorched face and a starched cowboy shirt, and refused to give his name. "With a high school degree you can make $70,000 a year here," he boasted, though he fretted that President Barack Obama "will probably screw us with taxes." He was a supervisor for Barrick Gold, a Canadian mining conglomerate with several big operations near Elko, including Betze-Post, a four-square-mile open pit that's the nation's most productive gold mine. Lighting a Camel and flagging a bartender, he ordered a shot of Jägermeister and another for the curvaceous stripper in his arms. "He's got money—and a good heart," she told me, before leaning in to nibble the miner's ear.

Elko is the wind-blasted heart of Nevada's mining country. The five surrounding counties produce all of the state's copper, almost a third of its silver, and nearly 90 percent of its gold. In 2007, mines in Nevada extracted nearly 190 tons of gold—three times the total yield in all other states. Only China, Australia, and South Africa dig up more. A billboard on the edge of town proclaims in a Victorian scrawl, "Discover the new economic gold rush."

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Nevada's first gold rush peaked in the 1870s, a little more than a decade after Mark Twain visited a boomtown where "money was as plenty as dust." Today, pickax-wielding miners descending narrow shafts have been replaced by fleets of air-conditioned excavators working massive open pits. Yet the frontier ethos remains carved into the state's popular mythology and the strike-it-rich ads of casino chains like the Nugget and Boomtown. Money from the mines still fuels whorehouses, corrupt speculators, and boozy bar fights. (Before night's end at Goldie's, one man grabbed another by the throat and pinned his head to the edge of the stool I'd been sitting on.)

Nevadans' stubborn attachment to the old ways is also evident in a relaxed attitude toward the environmental costs of an industry that, according to the epa, releases more toxic waste than any other. "You can't mine in California, Arizona, Montana, or Washington," the gold miner told me. But in Nevada, he added with a twinkle in his eye, "We're in the wild, wild West."

The Silver State owes its holdout status in part to Senate majority leader Harry Reid, who went from a hardscrabble childhood in a gold town to becoming one of the mining industry's most reliable allies in Congress. Reid has been instrumental in blocking efforts to reform the archaic General Mining Law of 1872, a legal blank check that's allowed miners to take an estimated $408 billion worth of gold and other hard rock minerals from public lands without paying a single cent in federal royalties—ever. When those mines are tapped out or go bust—as they inescapably do—taxpayers are often stuck with the cleanup bill, estimated at more than $30 billion nationwide. But Reid, who owns a handful of defunct gold mines and whose sons and son-in-law have ties to mining companies, has vigorously fought off efforts to make the industry pay its way.

This makes for good politics back home. Even in Elko County, where Barack Obama got just 28 percent of the vote despite making three campaign stops here (what a former Reid staffer considers "an absurd number of times to go to Elko") and declaring himself an "honorary Elkonian," Reid is forgiven for being a Democrat. "He has been our biggest proponent," said the miner at Goldie's.

Yet Reid's loyalty to mining has increasingly put him at odds with other Democrats, who have sought to end more than a century of giveaways to the nation's dirtiest industry. It's also been a curious contrast with his own record as an environmentalist and a champion of Nevada's growing urban population. As congressional Democrats once again prepare to drag the mining industry into the 21st century, Reid may be headed for the final showdown between the two seemingly incompatible sides of his political identity.

 

the mining industry's free ride began with the General Mining Law of 1872, which has been interpreted to enshrine mining as the "highest and best use" of the federal government's vast Western holdings, giving prospectors the right to claw minerals from a public domain twice the size of Texas for virtually nothing. In contrast, coal, oil, and gas companies operating on federal land must kick back 8 to 17 percent of their take to the government. If those same royalty rates were applied to hard rock minerals, Washington would get an annual cut estimated at $100 to $200 million.

But that's not all: Under the 1872 law, mining companies have been able to buy mineral-rich federal land for $5 an acre or less. Before Congress banned the practice in 1994, Toronto-based Barrick Gold paid just $9,765 for 1,950 acres in Nevada that held an estimated $10 billion in gold.

All told, since 1872, mining companies have been exempted from paying at least $100 billion in royalties, taxes, and fair land prices. "It is the last great boondoggle for companies in the West," says Cathy Carlson, a policy adviser at the mining watchdog Earthworks. "Congress has gotten rid of all of the other land giveaways, from eliminating the homestead laws to charging for coal, oil, and gas. But companies still get to mine gold for free. It's a legacy of the 19th century that doesn't make any sense in the 21st century."

The mining law was sponsored by Nevada's first senator, William Stewart, an attorney who made a fortune representing mining companies and had a reputation for fisticuffs in and out of the courtroom. In one colorful episode, he defended a mining claim by tackling a challenger into a ditch and choking him with a woolen shirt.

With a stroke of the pen, Stewart codified the customs of the West's free-for-all, such as claim staking and free access to land. Emboldened, mining companies essentially governed Nevada for the next several decades. When the state legislature tried to tax the mines in 1875, major mine owners simply refused to pay. Governor L.R. Bradley's attempts to hold their feet to the fire prompted a leading newspaper to openly wish for his death; he was voted out of office the next year. By the 1890s, the state's most powerful party was the Silver Party, which sought to palliate an economic slump by minting more silver coins.

The mining law is often credited with helping to settle and develop the West. In reality, its effect has been less to lure small-timers than to benefit the large mines that now dominate the industry. And its laissez-faire approach has permitted intensive mining without serious consideration of environmental impacts. Since gold, copper, and uranium prices began spiking in 2003, the number of active mining claims on federal land in the West has doubled, to more than 400,000. Around 16,000 of those claims are staked within five miles of major cities; 2,900 are within five miles of national parks.

Since his earliest days in the Senate, Harry Reid has been a vocal—and at times aggressive—opponent of modernizing how mines operate on public lands. Starting in the early '90s in what became a tradition of sorts, Reid and Arkansas Democrat Dale Bumpers annually debated the 1872 law, which Bumpers once called "a license to steal and a colossal scam. To paraphrase the old song, they get the gold and we get the shaft."

During their 1997 debate, Bumpers went even further. The mining companies "own all the senators here," he blurted. "They own enough people in the United States Congress; they know they don't have to pay a royalty and never will." Reid curled his right hand into a fist and began shouting at his colleague. "Thinking that people here are voting because somebody owns them—I consider that an insult," he thundered. "I consider it an insult and I think that should be stricken from the record. Nobody owns me, and I've been insulted."

though physically unassuming and soft spoken, Reid is known for his quick temper and intense pride. A boxer in college, he once decked his future father-in-law after the old man tried to stop him from pursuing his daughter. Twenty years later, while serving as chairman of the Nevada Gaming Commission, Reid helped the fbi conduct a sting operation on a man who had offered him a bribe. After the culprit handed over $12,000 during a secretly videotaped rendezvous, Reid put him in a choke hold, yelling, "You son of a bitch, you tried to bribe me!"

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