Can The Mining Regulatory Clarity Act of 2023 Cut Red Tape Without Causing Problems?

The Mining Regulatory Clarity Act of 2023 (henceforth, “the bill”) is a bipartisan bill that waives the so-called “discovery requirement” for mining on federal land. The “discovery requirement” makes developers physically prove the presence of a mineral deposit on federal land as a method for ensuring that designated mining areas are used for their intended purposes.

However, verifying physical proof is an unnecessary administrative step for ensuring good faith mining operations. Instead, agencies can maintain proper use of federal land by restricting activities to those reasonably incident to mining, as they already do alongside other regulatory safeguards that collectively make discovery redundant. Furthermore, the requirement has historically been poorly defined. Therefore, waiving the requirement not only helps reduce agency workload by clarifying their responsibilities in overseeing mining operations, but also provides regulatory consistency to the mining industry as they navigate the permitting process.

These effects offer modest benefits to domestic production of critical minerals for clean energy transition and supply chain security goals, advancing efforts to improve permitting efficiency. But, without clarifications, the bill’s language poses the risk of unintended consequences, such as, superseding existing types of allowable mining activities, removing discovery requirements specifically for mining in sensitive areas that should be maintained, or increasing the threat of squatting on federal land. Policymakers must ensure that both the letter and the spirit of this bill do not expand the rights of a mine operator and, instead, only waive discovery requirements to conduct normal operations.

Effect on clean energy minerals: minor positive if revised with clarifications (reduces agency workload; provides regulatory consistency for industry)

In order to mine for minerals like gold or iron on federal land, mine operators must file a claim which outlines the parcel of land they intend to develop. The General Mining Law of 1872 (GML) requires that a mining claim contain a valuable mineral deposit in order for operators to attain rights to develop it. This requirement ensures that the portions of federal land open to mining are in fact used for such purposes.

Ostensibly, the intent of the bill is not to erode the GML requirement, but rather to refine what criteria satisfies it and how agencies can verify that mine operators have met it. Namely, the bill imparts rights to claimants to conduct operations ‘with or without the discovery of a valuable mineral deposit.’ The bill does not define the term ‘discovery’, but presumably it refers to furnishing physical evidence of a mineral deposit through means like core drilling, for example. Assuming this is the case, explicitly waiving discovery requirements would provide much needed clarification on how agencies must verify that mine operators have satisfied the GML requirement. Otherwise, agency obligations to verify actual physical proof will remain poorly defined and its application will continue as it has historically: inconsistently and guided by patchwork legal precedents.

At any rate, physical evidence is only one potential criteria for meeting the GML requirement. Instead, agencies could ensure proper use of federal lands by verifying that mine operators only engage in activities that are reasonably incident to mining. This criteria is based on the simple assumption that a mine operator would not develop a mine if there were not a reasonable prospect that the claim contains a valuable mineral deposit. While this may seem like a subjective, interpretive method, it is already the assumption that agencies make under the current interpretation of the criteria. In practice today, agencies only execute official procedures for verifying physical evidence at their discretion, aside from special circumstances.

Beyond the lack of clarity regarding when to apply discovery requirements, verification of actual physical evidence is an outdated conception of satisfying GML requirements. Modern industry requires considerable effort, time, and capital to conduct mining operations compared to artisanal 19th-century practices. No mine operator would be willing to begin operations without legitimate mineral resources present.

Furthermore, the practice of claim patenting—where a mine operator would apply to transfer their mining claim from public to private ownership—likely created another historical motivation behind verifying physical evidence, given that a mine operator could patent a claim without fully developing a mine. However, with annual bans on claim patenting successively approved and extended by Congress since 1994, abuse of mining claims in such a fashion is not a realistic concern.

If the objective of the GML requirement is to ensure operators pursue mining claims in good faith, then verifying that mine operators only engage in allowable mining activities and activities reasonably incident to mining operations satisfies agencies’ due diligence obligations. The requirement that a mine operator physically demonstrate the existence of a valuable deposit on their mining claim thus represents a symbolic and superfluous administrative obligation.

The real issue with the discovery requirement is that its application is unclear and inconsistent. This poses risks to industry as they try to navigate all the detailed steps of the permitting process and also potentially encourages agencies to perform work that is not necessary. Introducing clear, uniform requirements would alleviate these two regulatory deficiencies, either by requiring verification of discovery or waiving it entirely. However, given the discovery requirement’s outdatedness and the opportunity to reduce agency workload, eliminating the discovery requirement and focusing on enforcing allowable uses of claims is the more efficient path forward.

Still, this bill may understandably evoke concerns that waiving discovery requirements would encourage abuse of federal lands and bad faith claim filing. Lawmakers should consider this concern seriously. However, this potential already exists within the current system, mainly through long-term squatting. The bill’s only change is to remove discovery verification as an enforcement mechanism. Existing regulations require operators to use claims for mining purposes only, excluding the possibility of misuse for reasons like constructing residences. And agencies already have inspection and enforcement authority—including revocation of claims and imposing civil and criminal penalties—in order to prevent misuse of federal land.

Granted, abuse through inactivity such as squatting is perhaps more difficult to enforce. But again, this is already possible given that agencies do not currently require verification upon filing a claim. The application of discovery requirements is at best a reactive enforcement mechanism. Policymakers could maintain this safeguard by requiring discovery for excessive periods of inactivity. Beyond that, agencies could more proactively deter bad faith squatting by introducing provisions such as significantly raising the initial claim filing fee or having claim maintenance fees increase periodically over time. If policymakers are concerned that squatting could interfere with renewable energy deployment, then provisions could maintain discovery requirements for parcels that possess valuable potential for such uses.

At a minimum, policymakers should ensure that the new bill’s language does not impart any additional rights to claimants beyond those stemming from the GML, the Omnibus Budget Reconciliation Act of 1993, the Federal Land Policy and Management Act of 1976, or any right-of-way laws. The only change should involve removing the discovery requirement for attaining these same rights.

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Source
https://thebreakthrough.org
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