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Rahall's H.R. 2262 proposes the first changes to the law since President Ulysses S. Grant signed it 135 years ago. Rahall's bill would establish first-ever royalties on hardrock minerals to fund the cleanup of abandoned mines.

The bill would impose an 8 percent royalty on the net smelter return of minerals on new claims and a 4 percent royalty on existing claims filed under the law. The royalty system would collect an estimated $30 million to $70 million for cleanup of abandoned mines on federal lands.

It also would put an end to the sale of land at 1872 prices, which could be as little as $2.50 per acre.

Rahall, the chairman of the House Natural Resources Committee, defended his bill on the floor, saying he drafted it in "the interest of all Americans who are the true owners of these public lands."

"Because the name of every American is on the deed to these lands," he said.

The House also approved several amendments to the bill, including a provision by Rep. Dean Heller (R-Nev.) to direct 50 percent of the funds deposited in to the Hardrock Reclamation Fund to states in proportion to the royalty funds generated by the bill.

That amendment was cleared by voice vote, along with one by Rahall to clarify the definition of "valid existing rights" associated with existing mining claims and another by Rep. Doris Matsui (D-Calif.) that would allow river watershed areas to be considered as eligible to receive funding from the Abandoned Locatable Minerals Mine Reclamation Fund.

For the second time, Rep. Steve Pearce (R-N.M.) failed in his attempt to add a proposal for the formation of a minerals commodity information office. The proposal for the office, which would maintain information on domestic mineral supplies, failed during the House Natural Resources Committee's markup session last week; the full House also voted it down, 173-244.

Also failing was an amendment by Rep. Chris Cannon (R-Utah) to eliminate certain technical issues from the bill's mineral materials section.

During floor debate on the bill, House Republicans repeatedly assailed Rahall and the Democratic leadership for the handling of the bill, accusing them of boxing out Republicans during its development and resisting their call for more hearings.

"It didn't have to be this way," said Pearce, adding that "had we been given a fairer hearing, we would have reached an agreement on these goals."

Groups like the Pew Center for Responsible Mining and Earthworks praised the bill's passage yesterday, claiming the bill will go a long way toward addressing the pitfalls of mining, including cleaning up abandoned mines.

The Forest Service and the Bureau of Land Management, using data compiled by the Bureau of Mines in 1995, estimate there are approximately 38,500 abandoned mine sites on National Forest System lands and 65,000 on BLM lands. Of those, about 10 percent may be releasing toxic heavy metals, acidity and radioactivity into different waterways.

The Congressional Budge Office concluded that H.R. 2262 would generate a total of $160 million over the 2009-2012 period on existing claims and $310 million over the 2009-2017 period. It did not expect new claims to generate any significant royalties until after 2017 because it typically takes about 10 years after a claim is made before a mine can begin producing significant quantities of minerals to generate royalties.

Senate prospects, SAP

Rahall's legislation now heads to the Senate, where it will meet an uncertain future.

Luke Popovich, spokesman for the National Mining Association, said the group was upset with the passage of the bill, but "we were frankly very encouraged by the 166 votes in opposition, ensuring that it will land in the Senate with a thud."

The bill represents the third attempt by Rahall to reform the law. He first attempted to overhaul the law in 1992, but the conference to reconcile the Senate and House's versions collapsed without an agreement.

Sens. Jeff Bingaman (D-N.M.) and Pete Domenici (R-N.M.) said in a joint statement today that they support the House efforts but would work together on a Senate version of the bill.

Other senators plan to take on other aspects of hardrock mining. Sens. Russ Feingold (D-Wis.) and Maria Cantwell (D-Wash.) introduced their own piece of legislation today that would end the "percentage depletion allowance" that allows hardrock mining operations to take tax deductions beyond the value of investments they have made.

Senate Majority Leader Harry Reid (D-Nev.) could end up as the Senate's most vocal opponent to Rahall's bill.

While calls to his office were not returned by press time, Reid told the Associated Press that the House bill "won't stand over here" but that he could support a royalty scheme similar to Nevada's "net profits" royalty.

President Bush issued a veto threat against Rahall's bill yesterday, claiming the bill is redundant and could represent a constitutional conflict.

According to the statement of administration policy on the bill, the White House is concerned the measure could conflict with the U.S. Constitution's Takings Clause because it does not consider the effect the bill would have on existing property rights prior to its enactment.

While it does not explicitly object to levels at which the royalties were set, the statement said royalties "should be set at a level that does not threaten the continued, reliable domestic mineral production on which this nation relies."

It also said that certain provisions in the bill's environmental and judicial sections were "unnecessary and redundant" given that existing laws like the Clean Water Act and National Environmental Policy Act already provide sufficient regulations and opportunities for legal challenges.

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