On September 9, 2021, the House Environmental and Natural Resources ("ENR") Committee finished its mark-up of the $3.5 trillion reconciliation budget measure. Inserted at the very end of the 117-page mark-up is Section 70807: Hardrock Mining, which is a quiet attempt to reform the Mining Law of 1872.

The ENR Committee's change would, for the first time, impose fixed royalties on all locatable minerals mined on Federal land. Under the terms of the proposed legislation, minerals, mineral concentrates, or products derived from locatable minerals, would be subject to royalty fees at the following rates:

  • 8% for all new mining operations
  • 8% for all new federal land added by plan modification to existing mining operations
  • 4% for mining operations with an existing approved plan of operations, or who submitted a plan of operations prior to the effective date of the legislation

All royalty percentages would be calculated based on gross income derived from mining.

In addition to the royalty requirement, the legislation also adds additional compliance and penalty mechanisms, including: notification requirements for production starts; bookkeeping requirements that may be subject to audit; and civil penalties of up to $10,000 per day per violation for failure to pay royalties.

In addition to the royalty payments, mining claim holders and operators would also be subject to a 7 cents per ton "reclamation fee," assessed on all rock actually mined on federal lands. Failure to pay the required fee would result in penalties of up to $10,000 and liability for the unpaid fee.

If you have any questions regarding the proposed royalty fees, other changes, or impacts to your mining project, please contact JMBM's Natural Resources and Mining Group.

Click here for a copy of the legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.