Tuesday, May 11, 2004
Once public land goes private
Foreign firms own acres of mineral-rich land
By ROBERT McCLURE
SEATTLE POST-INTELLIGENCER REPORTER
Under a 132-year-old federal law, foreign companies have gained control of an estimated 1.2 million acres of federal lands containing gold, silver and other minerals -- an area roughly six times the size of Mount Rainier National Park, a new analysis shows.
Together with U.S. citizens and companies, the foreign companies have been able to convert 9.2 million acres of public land to private use, according to a report released yesterday by the non-profit Environmental Working Group.
When Congress passed the General Mining Law of 1872, it said the privilege of carting away minerals dug from public land -- and in some cases, buying the land for $5 an acre or less -- was for "citizens of the United States and those who have declared their intention to become such."
But an 1898 Supreme Court ruling that gave corporations legal treatment as "persons" effectively overruled that, leaving public lands in the West open to non-American mining companies.
The mining law was approved to encourage settlement of the Western frontier but never repealed, as were like-minded statutes, such as the Homestead Act.
The group's analysis, "Who Owns the West?," was more than a year in the making after the Washington, D.C.-based group obtained a federal database of land sales and claims authorized by the mining law. The organization supplemented it with other publicly available data to produce yesterday's report.
Echoing many revelations in a wide-ranging Seattle Post-Intelligencer analysis of the law in 2001, the report represents the first time the scope of the mining law's largesse has been completely documented. The P-I investigation also showed how companies in the highly cyclical business have gone belly-up, leaving taxpayers to fork out hundreds of millions of dollars in environmental cleanup costs.
"The system through which we give away land to these multinational corporations amounts to a large public subsidy," said Jane Houlihan, the group's vice president for research. "Under our current regulatory system, companies can get billions of dollars of gold and other precious metals for just a fraction of that. ... It shortchanges the public."
She cited as an example the 1994 purchase of Nevada gold-mining land worth an estimated $10 billion by Barrick Gold Corp., a Canadian company, for less than $10,000.
In another instance, an U.S. company, Phelps Dodge, last month paid $875 for 155 acres in Crested Butte, Colo., where real estate sells for up to $1 million an acre.
Mining industry spokesmen said they agree that the antiquated law needs to be changed. But focusing on foreign companies is "disingenuous," said Joe Danni, vice president of corporate relations for Placer Dome, based in Vancouver, B.C..
"I find it interesting that the opponents of mining throw up this specter, this xenophobia, of foreign-owned mining. ... It's offensive. It conjures up guys who wear dark glasses and trench coats," said Danni, an American citizen. "The debate is over what it has been for all too long now, and that is what changes should be made to the mining law."
Since the late 1980s, a number of efforts to reform the law have run aground in Congress. After President Clinton vetoed a version heavily influenced by the industry, his administration put regulations into effect to curb mining companies' power under the law.
And, in 2001, the Bush administration called for reforming the law, too. But it said the Clinton administration reforms went further than the law allows and overturned them. Since then, little has been done by the Bush administration or Congress to push reform.
A key to the unresolved dispute is how much mining companies should pay to mine minerals on public land. Currently, they cover administrative and other fees, but not a percentage of the minerals' value.
Carol Raulston, a spokeswoman for the National Mining Association, said the industry still wants reform.
"The underlying premise (of the environmental group's report) is somewhat faulty in that we and our member companies have supported updating the General Mining Law for a decade now," she said. "We've worked with the Congress and two separate administrations now on what would be a workable royalty payment."
The environmental group took the Bush administration to task for overturning Clinton-era provisions that allowed federal agencies to turn down otherwise-permissible mining in environmentally sensitive areas and limited the amount of public land where mining waste can be dumped.
Jim Hughes, deputy director for policy and programs at the U.S. Bureau of Land Management, which administers the mining law, said the Bush administration believes mining needs the government's help.
"If you look at those Western communities where mining jobs are pretty good pay, they keep communities vibrant. The question of who owns the company becomes a secondary issue for them," Hughes said. "They're happy to have good-paying jobs that make their rural communities go."
For example, Newmont Mining Co. pays an average wage of about $55,000 and is the economic engine in northern Nevada, said Doug Hock, a Newmont spokesman. Denver-based Newmont was the largest holder of mining claims, the group found.
However, the group's report showed that mining jobs affected by the law have decreased from about 32,000 in 1993 to about 18,000 in 2002. And the jobs per ton of metal mined also dropped as mining technology became more efficient.
The report breaks down by state those who control land under the mining law. The two largest in Washington are Canadian companies, Toronto-based Kinross and Vancouver-based Teck Cominco.
Teck Cominco is in a dispute with the U.S. Environmental Protection Agency over how to clean up millions of tons of toxic mining wastes that have washed across the border from the company's smelter in Trail, B.C., contaminating the Columbia River and Lake Roosevelt.
"We're giving Teck Cominco thousands of acres of our most valuable public property and, in exchange, they're giving us millions of tone of toxic waste," said Dusty Horwitt, the prime author of the group's report. "It's not exactly a fair trade."
Dave Godlewski, an executive of Teck Cominco American Inc., Cominco's American subsidiary, questioned why environmentalists would challenge foreign companies sparking U.S. investment at a time when exporting of U.S. jobs overseas is a hot campaign topic.
"The way the world economy is today, certainly the jobs that accrue are American jobs, the taxes that are paid on extraction of these mineral resources, and a lot of the (mining company) stockholders are Americans," said Godlewski, whose company is reopening a lead and zinc mine near Metalline Falls in northeastern Washington.
ABOUT EWG
Environmental Working Group, based in Washington, D.C., specializes in analyzing legal, government and scientific data, and sometimes hires laboratories to conduct analysis of consumer products.
The non-profit has investigated who benefits from federal farm subsidies, as well as toxic harm from flame retardants, health risks of beauty aids, pesticide residues in baby food and lead poisoning of children.
* The group's mining report is online at www.ewg.org/mining.
P-I reporter Robert McClure can be reached at 206-448-8092 or robertmcclure@seattlepi.com.
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