Golden Patents, Empty Pockets A 19th Century Law Gives Miners Billions, the Public Pennies. by Thomas J. Hillial'd with James S. Lyon Beverly A. Reece MINERAL POLICY CENTER • \VASHINGTON, DC • JUNE,1994 • COVER PHOTOGRAPH, America n Ibrrick Corpo r;I Lio n's Golclstrike ,\ line Ileal" Elko. i'<ev;\cb . In Ma y 199-1. lI "ing lllc pa tenting process, Barrick gained fec ti tle 10 [he publi c b nel on which the mine is located. That bnd c0 l11:1in s o\'er S10 billion in recovera ble gold ore reSe[T es for \\~ hi c h llarrick paid a ni), $5, 190 in sale price. Golden Patents, Empty Pocl{ets COPl'right (e) 1994 by Mineral Policy Cente r, Was hington, D.C. All rights reserved. Except in the case or brief ci t;:ltions used in rcvie\vs, permi ss ion to reprod uce any portion of this public ltion by an y mea ns Illust be obta ined fro l11 Mineral Policy Center, 16 12 K Street NW, Suite 808, Was hington DC 20006. Print ed in th e Unit ed St:ltes of Am eri ca on recycled p:lpcr using soy-based inks. No paper manufa ct ured by Noranda Inc. lIsed in the prod uction of this report. Contents PAGE ~J[~<=llti,,~ ~1l11OU[[l~~ ••••••••••••••••••••••••••••••••••••••••••••••••••••••• JL o The Public Stake In Patenting ...................... ........ ....... 9 ~ JE[()~ l?Clt~tlting ~()1r~ ••••••••••••••••••••••••••••••••••••••••••••••••• 15) ~ Th~ (jjlL~Clt ~~~ClIJ~ ........................................................ ~~ o BIM, KeeIJer of Secrets ............................................... 35 o Patenting: A Brief Histo~ ................... ....................... 43 o Patenting And ~nvironmental Destruction .............. 49 8 Patenting For Real ~state: Miners Need Not AIJIJly ...................................... 57 fD Conclusion......................................................... ......... 61' Notes ....................................................................•••••••................•.••...•.••••. 62 Ackn.owledgements ................................................................................. 66 Mineral Policy Center ............................................................................. 67 Author ...................................................................................................... 67 • MINERAL PO LI CY CENTER- Coldell Patellls, Emply Pockels Public la llds m allaged by the u.s. Bureall oj Lalld MaliC/gem elli {fIul u.s. Forest Service ill Westem sla les Land Status (llot all pllblic lallds Bu reo u of La nd Mana ge me nt Miles depicted ill map are opell 10 U.S. Fo re s! Service 100 250 palenting IIlIder 18 72 M illing Law). SO l/rce - U, S. Geological SUI'l:c)' Executi ve SUllllllnry Executive Summary Unless Congress takes action during the 103 rd Congress, title to more than $34 billion in mineral resources belonging to the Ameri ca n taxpayers w ill be signed over w ithin the next several months to private mining companies for no more th an S800 ,000, a price less than 55. 00 per acre. These transac­ ti ons, mandated by an obscure practi ce called "patenring," w ill benefit only the buyers. Through patenting, mining companies get a golden dea l, w hile taxpayers get nothing but empty pockets. Goldel/. Patellts, Empty Pockets reports rhe full scope and dimension of the patenting boondoggle and its origins in an outmoded Civil Wa r-era statute - the 1872 Mining Law. The sca ndal of patenting has been hidden from public scrutiny by the very federal agency charged with protecting the public interest. The Burea u of Land Management , an agency o f the U.S. Department of the Interior, con­ ducts the patent process in secret, discourag ing public participation or pub­ lic comment. The Bureau makes decisions involving billions of dollars on the ba sis of documents it refuses to release to the public. Open decision­ making is taken for granted at other agencies, even other areas of BLM - but it is not tolerated in the patent process. The General Mining Law o f 1872 governs hardrock mining (gold, silver, copper, platinum, etc.) on Weste rn public lands. According to the Mining Law, mineral development is the '" highest and best use" of public 1'lIld, rega rdless of any other competing land uses. Anyone ca n enter public lanels to explore for harelrock minerals. Upon finding recoverable minerals, anyone ca n fil e a minera l cla im to extra ct and sell them. Patenting is the Mining Law's ce nterpiece. A company that discovers a va luable mineral deposit on its clai m Gin "patent," or ga in fee title to, the land for a p rice no t to exceed S5.00 per acre. Upon patent issuance, title to public lands is transferred to priva te ownership. However, patenting is not necessary to mine on public lands. Many companies choose not to patent and operate hardrock mines on public land w ithout difficulty. Those companies are permitted to extract and se ll hardrock minerals, anel are not required by the Mining Law to pa y royalties or any other form o f compensa ti on to the American public. 2 MINERA L POUCY CENTER- Goldell Pa lents, EllljJty Pockels Mineral Policy Ce nter bega n this study of patenting more than two yea rs ago. In its research the Center reviewed numerous government and company documents anel interviewed a large variety of state and federal personnel, mining company officials, independent experts and know ledgeable citizens. Goldell Patellts, EmjJty Pockets reports seve ra l key findings: o $34 billion in publicly-owned minet'als is at stake: An asso rtment of Ca nad ian, South Africa n and Ameri ca n-owned compani es is prepa ring to patent more than 534 billion in hardrock mineral reserves. At sta ke are some extremely valuable deposits of gold, Silver, platinum, beryllium and other minerals. After the Interi or Department iss ues patents to all its current applica nts, almost all mines of an y importance on public lands w ill have passed into priva te hands. In return, the American public will rece ive less than $800,000 for the land and nothing in roya lties for th e minerals. The most successful of all patenters is the Goldstri ke mine in northern Nevada. As this report goes to press , Goldstrike's operator, the America n Ba rrick Resources Corporation, has jllst received patents on 1,038 acres. Those acres hold mineral reserves va lued at more th an $10 bi llion, which the Interior D epartment solei to Barrick for $5, 190 at a price of $5 per acre. @ Bureau of Land Management keeps patenting secret: The U.S. Bureau of Land Ma nagement (BLM) is keeping the truth about pa tenting from the Ameri ca n public. BLM, as custodian of the minera l patent process on all public lancis , has hidden the trLle scope and impor­ ta nce of the patent process behind a wa ll of confidentiality cla ims and elaborately secretive procedures. Fu ll public participation in th e patent process is esse ntial, in view of patenting's enormous fi scal and environmenta l costs. But BLM has locked OLit the public, most dramatically in its handli ng of mineral reports. The cornerstone of any patent applica ti on, minera l reports prove th e profiwbili­ ty of ex tracting, processing and selling the mineral deposit. BLM keeps secret the most important sections of the mineral report. Agency decisions to approve any given patent applica tion are thereby shielded from account­ ability to the Ameri can public. BLM violates most common procedures of open government: • No Public Hearings: BLM holds no public hearings on the impact of pending patent s. Executi ve Summary 3 • No Public Comment: I3LM does not seek or accept comments from the public on the impact of particular patents or on poss ible mitigative measures. • No Public Notice: BLM does not alert th e public when a patent applica­ tion is underway. @) Patenting rush is underway: l3 y mea ns of the patent process, mining companies ha ve begun ra cing to privatize some of the most valuable hard rock mines in the United States. 613 patent applica tions are currently being processed by BLM. 'rhe companies hope to escape before proposed Congress ional reforms of the 1872 Mining La w ca n be enacted. Besides abolishing the patelll process, the comprehensive reforms being proposed during th e 103rd Co ngress Ivould impose a production roya lty, and establish Federal minimum environmental protection and reclamation standard s. The reforms w ould also give authority to Fed eral land managers to deny ill-conceived and poorly designed mine proposa ls, and to assess and designate lands unsuitable for mining. Sa nchez Mine and New World Mine are two mining projects for w hich patent applica tions are now underway: • Sanchez Mine, At-izona: In southern Arizona's Coronado National Fo rest lies a major copper ore deposit known as Sa nchez, w hich the Arizona Mining Company (Azco) is proposing to mine - and to patent. The 550,000 tons of copper Azco's engineers estimate to be prese nt would be worth about $] billion at today's prices . An 8% royalty would yield Ameri ca n taxpayers more than $80 million. • New World Mine, Montana: This proposed gold/ silver mine is located less than three miles from the world's oldest national park, Yellowstone. The [oranda Resources Corporation, one of Ca nada 's largest compa­ nies, has been lobbying th e Forest Service for permiss ion to construct th e mine. But the National Park Se rvice, th e Environmental Protection Agency, many citi ze ns groups and nearby community residents have noted th e high potential for th e mine to degrade the Yellowstone envi­ ronment, pa rticularly its streams and underground aquifers. If New World 's opera tor receives its patents, th e Federal government w ill have lillie land management authority Ivith w hich to prevent possible envi­ ronmenta l damage to Yellowstone National Pmk.