Grijalva scrutinizes mining revenue

GOP calls to open up lands for extraction require look at taxpayer returns, he says
2011-10-17T00:00:00Z 2014-07-15T17:51:30Z Grijalva scrutinizes mining revenueTony Davis Arizona Daily Star Arizona Daily Star
October 17, 2011 12:00 am  • 

U.S. Rep. Raúl Grijalva wants to know if taxpayers are getting a good deal on the extraction of hard-rock minerals and oil from public lands.

Girding for conflict over environmental regulations and royalties, Democrats Grijalva of Tucson and Sen. Tom Udall of New Mexico have asked the Government Accountability Office to find out how much is being mined on public land and how much revenue that's bringing in for companies.

Industry spokesmen are concerned that if this upcoming report leads to a renewed push for higher royalties and other fees on the mining and oil industries, it could discourage investment and make the U.S. industries less competitive globally.

The GAO, Congress' investigative arm, is planning to do the study, but it may be a few months before it can assign staff and start, said Chuck Young, its managing director for public affairs.

Here are some questions and answers with Grijalva about the effort:

Q. Why does this matter?

A. The whole discussion by my Republican colleagues (is) that there are jobs out there, if regulations are loosened on our public lands. So there are about 250 million acres of surface and 700 million acres of subsurface mineral rights on public lands and about 1.75 billion acres of public lands on the Outer Continental Shelf. So we ask: What is the net value of these lands to taxpayers?

Q. What do you want to know?

A. We asked simple questions: What is the amount of minerals extracted and what is the dollar value? How much does the federal government collect for these minerals, including royalties, rents and bonuses?

Q. What do you expect to find?

A. With hard-rock minerals such as copper and gold, there is no giveback to the taxpayer. There's 1.12 million tons of copper mined every year, and there is no royalty. When it's done, we're looking at a national cleanup of mining pollution costing $20 billion to $54 billion, according to the Environmental Protection Agency.

What is the American taxpayer's fair rate of return for this extraction? I think it will be pretty obvious that taxpayers are taking a really big hit on this.

Q. What difference could this information make?

A. Right now, we're in the middle of this fiscal discussion. We're facing permanent cuts in very needed programs, deep cuts. I see this as an offset (to get some more revenues). We want to be able to have facts and figures to put this discussion on the table. All we're arguing now is on the defensive - people are talking about opening up areas for oil and mining companies. If we really want to balance our budgets, these corporations made unbelievable profits.

Q. Do you expect trouble getting this information?

A. No. We consulted with the GAO before we asked the questions. That's why the questions are as specific as they are. They were a result of the GAO feeling that in a lot of these areas, a lot of them such as profit figures are hard to get to. These are areas that are traceable.

Q. President Obama is trying to be more business friendly, and you're seeking information that could be used against business. How do you feel about that?

A. I don't feel in the least that I should follow the administration line. I think there is a lot at stake here. I think that in political issues now there are a lot of attempts to placate industry, and the environment has been thrown under the bus.

Q. Industry spokesmen say they are afraid this information will be used to impose higher taxes and fees that will hurt their ability to compete globally.

A. It's impossible to respond directly to a vague hypothetical, but just rolling that concern out there and hoping someone picks it up seems pretty shallow. It's their industry. They should have some hard data. Peru recently increased the royalties it charges - that hasn't exactly slowed the Peruvian mining boom. It's a red herring.

Q. Why doesn't this information exist now?

A. First of all, the federal Minerals Management Service that existed prior to this administration - and I give them credit for reforming in this area - I think there's been a cozy relationship with the agencies and industry. I just think it's been overlooked. It's been considered a non-issue in environmental fights. But now that money has entered so heavily into the discussion, that will change.

On StarNet: Read more about local, state and national political news at azstarnet.com/politics

OTHER VOICES

• "The price of these commodities, copper, gold and molybdenum, are set on a world market. We are competing with the rest of the world on whether or not we can produce these commodities in the United States. If our cost structure gets so high that investors are going to say 'I'm better off going to West Africa or part of the former Soviet Union,' then we will lose mining investment dollars here in the United States, and that means mining jobs. It means we become more dependent on other countries to meet our domestic needs for metals and minerals." - Carol Raulston, senior vice president, National Mining Association.

• "Obviously, these mining companies have gotten away with a free ride for too long, especially considering our deficit right now. It's not to say that if mining companies are paying their fair share then it's OK to mine everywhere and everyplace. But certainly the mining companies can afford to pay their fair share at this time." - Roger Featherstone, executive director, Arizona Mining Reform Coalition.

• "We certainly support congressional inquiry, analysis and informed decision making on all things related to mineral policy, mineral production and mineral economics on public and private lands. We also support balanced analysis - where the total tax burdens are analyzed for mineral production products - including corporate federal income tax, payroll taxes, property taxes, sales taxes, severance taxes, state income taxes and the indirect taxes generated by mineral production in the form of personal income taxes, capital gains and taxes on dividends." - Jamie Sturgess, senior vice president, corporate development, Rosemont Copper.

Contact reporter Tony Davis at tdavis@azstarnet.com or 806-7746.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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