Small Scale Mine Owners To Loose Fee Exemption And Other Surprises In The Proposed 2016 BLM Budget

New challenges could be in the works for prospectors on Bureau of Land Management claims.

Yesterday, February 2, 2015, The BLM posted the Obama Administration’s proposed 2016 budget for the Bureau of Land Management. While the press release highlights conservation and renewable energy priorities, nestled deep in the budget are some unpleasant surprises for miners with BLM claims.

In what is presented as an effort to discourage inactive prospectors from squatting on unused land and increase accountability, the BLM is proposing legislating “Hardrock Mining Reform.”  These initiatives are being presented as two forms of legislation.

The BLM intends to introduce a new leasing process for certain minerals mining, including gold, silver, lead, zinc, copper, uranium, and molybdenum.

“Mining for these metals on Federal lands will be governed by the new leasing process and subject to annual rental payments and a royalty of not less than five percent of gross proceeds.”

Though maintenance fees have been known to be subject to increases in the past, this is a striking departure from the usual flat annual price.

While preexisting claims will not be subject to this royalty system, they will be hit with a fee increase and remove past breaks for small scale miners:

“The proposal also increases the annual maintenance fees under the General Mining Law of 1872 and eliminates the fee exemption for miners holding ten or fewer mining claims.”

We are unclear as to the amount of the fee increase. Given that the proposal declares “these changes will discourage speculators from holding claims that they do not intend to develop” clearly, they are intending to make these claims too expensive not to be aggressively developed. This may put too much pressure on the small scale and hobbyist miners to continue having their own BLM claims. The proposal even extends an option for “holders of existing mining claims for these minerals could voluntarily convert their claims to leases.” We can only presume under what conditions entering a rental and royalty program is preferably to the old lease arrangement. Yet this leads one to the unpleasant concern that these proposed changes are aimed squarely at the “small guys.”

The proposal lists the Office of Natural Resources Revenue as being responsible to “collect, account for, and disburse the hard rock royalty receipts.” It remains a matter of conjecture how the BLM intends to police royalty amounts, particularly in the cases of smaller scale miners who have smaller and less obvious amounts of minerals and gems to move.

Larger scale mining operations likely will be more effected by the other proposed legislation. In this proposal, the industry will take responsibility for abandoned sites a volume basis: “Just as the coal industry is held responsible for abandoned coal sites, the Administration proposes to hold the hardrock mining industry responsible for the remediation of abandoned hardrock mines.”  Though miners have long been held accountable for their tailings, this is potentially a notable expansion. “The proposed AML fee on the production of hardrock minerals will be charged on the volume of material displaced after January 1, 2016.”  This is to be applied to both public and private land.

While this is, as of yet, only a proposed budget, and we are a long way off for 2016, it poses a significant shift in the BLM’s relationship with miners. We will be watching closely to see how this proposal proceeds.

Download the whole proposal at: