1872 mining law hamstrings cleanup, critics say.

Byline: Diane Dietz The Register-Guard

MINING'S TOXIC LEGACY 

Taxpayers have scant control over mining companies that dig on federal land. And when those companies disappear and leave a mess behind, taxpayers are stuck with the bill.

That's the controversial state of affairs that has prevailed since President Ulysses S. Grant signed the nation's mining policy into law 134 years ago.

The 1872 law was meant to entice prospectors and settlers to the West, so it freely gives all the gold, silver, copper, mercury and other minerals on federal lands to any enterprising company that can haul them away.

The law gave away timber on mining land, too, until mid-1950s reforms discontinued the practice. And miners could buy the surface land over their claims for $5 an acre clear up until 1994.

Sen. Wayne Morse, D-Ore., denounced the law in the middle of the last century; Rep. Peter DeFazio, D-Ore., lambasts it now.

These days, critics focus on the lack of environmental safeguards in the law and the public's inability to stop a mining operation on federal land, even if it's feared to cause irreparable harm.

"It's absolutely amazing that the law has survived to this day, and it's still the law of the land," said Ken Marcy, a Seattle-based manager for the U.S. Environmental Protection Agency. "It's pretty insane."

Modern messes

Critics say the 1872 law leaves Oregon's federal lands open to exploitation when world mineral prices spike, as they are doing this year.

Today, no commercial-scale metals mines are in operation. Still, the potential for large-scale mines flash like gold in the eyes of would-be miners.

The recent history of the Formosa mine in Douglas County shows just how bad a mess miners can make. During a meteoric rise in metals prices, Canadian start-up Formosa Exploration Inc. launched the mine on federal and private land, then folded 2 1/2 years later as prices slumped, leaving an environmental quagmire.

Formosa Exploration's Canadian parent company was formed on the Vancouver, British Columbia, stock exchange, where ephemeral mining companies arise and disappear, said Roger Flynn of the Western Mining Action Project, a nonprofit law firm that specializes in mining.

The Vancouver exchange - now merged with the Toronto exchange - eventually delisted Formosa's parent company for failing to file financial reports.

"People will try to raise money fast," Flynn said. "They invest in a mine where, maybe, the mineral value is inflated or environmental problems are low-balled, or they don't talk about the public opposition."

And when the going gets tough, the companies dissolve.

The phenomenon was so pronounced by the late 1990s that the Canadian Broadcasting Corp. documented environmental disasters around the world made by Canadian mining firms. The documentary title: "The Ugly Canadian."

This spring, the market-driven interest in mining has quickened - worldwide, and in Oregon.

Copper has reached its highest price since recordkeeping began in the late 19th century. Zinc rose 80 percent in the past year. Gold soared to 25-year highs of $700 an ounce in May.

Companies are rehabilitating old mines from Colorado to Alaska. Oregon officials report nibbles of interest in old claims in this state.

Prospectors are even sniffing around the blighted Formosa mine, state Department of Environmental Quality officials say.

"Metal prices are so high right now that if this was running, it would make a tremendous amount of money," said Jay Wilson, a technician who worked there in the 1990s. "There's still a substantial resource there."

In the Bohemia Mining District in Lane County, lumberman Cliff Brown said he is negotiating to sell to a global mining company a 50-acre mining site where he owns both the underground minerals and the surface land. He's also acquired an option to sell miner Richard Secord Jr.'s claim in the once-prolific Champion gold mine.

"World Famous Gold Mine!!!" Cottage Grove's Century 21 Westover Reality Inc. crows in an Internet ad for Brown's offerings. The asking price: $2.5 million.

Miner Jim Potterf and his family have bought 16 mining claims underneath federal land in the Bohemia district in recent years. In the vein of Bohemia's traditionally secretive prospectors, Potterf declines to say what he has planned.

But he hints.

"This summer may be the start of it," the retired Eugene radiator shop owner said. "When you've got gold up to $650 an ounce, it looks better all the time."

Happen again?

Do federal and state regulators in Oregon have the will, expertise and legal authority to make sure taxpayers aren't stuck with a future mining messes?

Regulators have the will, said Charlie Landman, an attorney for the DEQ. They were chastened by the mess that Formosa Exploration made in Douglas County on their watch.

"If there's ever a mine proposed in Oregon again, the regulating agencies will look very closely," he said.

But there's a question of authority: The 1872 federal law gives miners the right to go ahead with a mine on federal land, no matter the consequences.

"Federal agencies can shape the operation a little bit," anti-mine activist Larry Tuttle said, "but they can't deny it. It's the miners who decide where and when to mine, not public policy."

The old law has withstood much opposition.

Before President Clinton left office, he granted federal land managers authority to deny a mine proposal that would cause "substantial irreparable harm." Nine months later, the Bush administration revoked that authority.

Oregon law has sharper teeth when it comes to mines on private land. The state has the authority to deny an application if "reclamation cannot be accomplished." So far, regulators have never used that provision.

Federal agencies need more authority over mining, some lawmakers say.

Sen. Maria Cantwell, D-Wash., recently mounted an effort to give government agencies more power to collect damages from parent companies of bankrupt subsidiaries. She also wants to require the EPA to exercise long-dormant authority to force mining companies to post adequate cleanup bonds.

Cantwell's bills were spurred by the Chapter 11 bankruptcy filing last August of global mining company Asarco, which could allow the company to escape liability for 94 polluted sites in 21 states, including a former copper smelter in Washington. Taxpayers would inherit the $1 billion cleanup tab.

The legislation is based on an August 2005 federal Government Accountability Office report that found that metal mines "present taxpayers with an especially serious risk of having to pay cleanup costs."

Environmental groups are pushing the mining industry to pay for damages through a royalty on the metals they take out of federal land. Today, oil and gas companies that take resources from public lands pay royalties. But the federal government doesn't require metal mining companies to pay.

If companies paid a 4 percent royalty, the federal government would have $175 million over five years to clean up mines, the environmental group Earthworks figures.

But prevention is the best way to protect taxpayers, Tuttle said. That means requiring bonds - financial guarantees - upfront, before the companies sink a pick, he said.

Today, bond amounts that agencies require for mines on public or private lands are laughably small, Tuttle said.

On its lands in Oregon, the U.S. Forest Service requires mining bonds of $5,000 to $10,000. But cleanups can easily run into millions of dollars per mine.

The state Department of Geology and Mineral Industries requires a $100,000 per acre bond on private lands when harmful metals are in the ore. That's a stiff enough requirement, says the agency's assistant director, Gary Lynch.

But mines that wind for miles underground and yield large amounts of metals can have a tiny topside foot print, which triggers only a small bond. And the state formula doesn't account for the possibility of creating a perpetual stream of acid waters, which would require expensive, perpetual treatment, critics note.

At the Formosa mine, state regulators secured a $1 million bond, but the cleanup may cost $15 million and ongoing treatment may top $270,000 annually.

"You have to have a bond that's adequate to do a full, worst-case cleanup. At least have that in place," Tuttle said. "If you can't post that kind of a bond, you shouldn't be mining."

CAPTION(S):

A metal tag marks the corner point of a mining claim outside the small town of Riddle.