An Industry Under Assault

Democratic Congress Spells Bad News for Mining Companies

Posted January 25, 2008 at 5:44pm

The second session of the 110th Congress is barely two weeks old, but the mining industry is already battening down the hatches as it seeks to weather what could be a perfect storm of legislation affecting a wide swath of its membership.

Despite the abbreviated election-year session, mining companies are suddenly facing the very real possibility of new mine safety mandates, costly changes to the federal law that governs minerals extraction on public lands,

and greenhouse gases controls that would discourage the use of fossil fuels such as coal to produce energy.

But the industry isn’t taking the threats sitting down.

Buoyed by a strong forecast for domestic coal and metals production in 2008, mining firms are pouring money into lobbying and advertising to boost their image, especially in key states and Congressional districts ahead of the November elections.

“With the resources we’ve been provided, I think we’re in a position to even more aggressively pursue the objectives of this industry,” said Kraig Naasz, president and CEO of the National Mining Association, the industry’s leading trade group, last week.

In anticipation of a busy legislative year, the NMA’s board of directors last fall approved a nearly $20 million operating budget for 2008 — a 25 percent increase over 2007 levels. Naasz said those funds would be used to expand its presence on the Hill, hire new expertise and boost its communication efforts.

The spending increase hasn’t gone unnoticed by environmentalists, who have highlighted the mining industry’s contribution to air, water and land pollution for years.

“It’s obvious they have been spending a lot of money to protect their political interests,” said Ed Hopkins, the director of the environmental quality program for the Sierra Club.

On the Hill, the NMA is turning to both Republican and Democratic lobbying shops to promote its views, reflecting the fact that the legislative challenges it faces often break along regional, rather than partisan, lines.

The group has retained The Nickles Group, headed by former Oklahoma GOP Sen. Don Nickles, as well as Democratic consultants the Alpine Group. Through an NMA spokeswoman, Nickles declined to be interviewed about his work for the group. The Alpine Group did not return several phone calls.

The industry will need all the help it can muster in 2008, as Democrats have propelled long-simmering issues affecting the mining sector to the front burner.

One of the first votes of 2008 in the House was on the S-MINER Act, sponsored by House Education and Labor Chairman George Miller (D-Calif.).

Inspired in part by the Crandall Canyon Mine disaster that left six miners dead in Utah in August, the legislation mandates the use of new technologies in mines and other requirements. It passed Jan. 16 on a 214-199 vote but still faces a White House veto threat.

The industry and the Bush administration say the bill is premature, noting that mining companies are still working to comply with requirements from a 2006 mine safety law — the MINER Act — that was passed in the wake of the Sago Mine disaster in West Virginia.

“The industry has invested heavily in its implementation,” Naasz said of the MINER Act. “We believe that needs to run its course” before making changes. The NMA is pinning its hopes on the Senate, where it hopes to derail companion legislation sponsored by Senate Health, Education, Labor and Pensions Chairman Edward Kennedy (D-Mass.).

The industry also is looking to the Senate to blunt the impact of hardrock mining reform legislation passed by the House in November.

The Hardrock Mining and Reclamation Act, sponsored by House Natural Resources Chairman Nick Rahall (D-W.Va.), makes changes to the General Mining Law of 1872, the 135-year-old law signed by President Ulysses S. Grant to encourage settlement of the West.

Reforming the law has been a legislative crusade for Rahall for more than a decade.

The NMA admits the law is outdated and supports “reasonable reform,” Naasz said, but strongly opposes the royalty and environmental requirements contained in the House bill.

The changes could affect the industry’s bottom line at a time when gold, copper and other metals are commanding high prices on global markets.

The NMA is likely to find a more receptive audience in the Senate, where Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) and ranking member Pete Domenici (R-N.M.) are writing their own bill.

In addition, any reform legislation that comes to the floor will require the blessing of Majority Leader Harry Reid (D-Nev.) — the son of a hardrock miner who represents a state with a large mining industry. His office did not respond to a request for comment.

Looming even larger on the legislative horizon is the specter of climate change. Reid this year will try to bring to the Senate floor a bill sponsored by Sens. Joe Lieberman (ID-Conn.) and John Warner (R-Va.) that attempts to reduce global warming through a market-based cap-and-trade mechanism.

The plan would encourage the use of low-carbon or alternative energy sources — a potential dagger in the heart of the coal industry, which currently provides about half of U.S. electricity — as well as large quantities of carbon dioxide, the main culprit in global warming. The House is planning similar legislation.

The NMA’s focus is ensuring that climate change policies are “synchronized” with available technologies that enable the use of coal while preventing the release of harmful carbon dioxide, Naasz said.

To that end, the NMA joined other utility groups in asking the White House earlier this month to spend at least $900 million on “clean coal” research in fiscal 2009. The figure represents a doubling of fiscal 2008 spending on the issue.

The message appears to be getting through to lawmakers as well.

More than three dozen House Members from both parties urged President Bush last week to “use your State of the Union address to call on Congress to expand upon the nation’s successful clean coal programs.”

The industry also is flexing its political muscles outside the Beltway. A group called Americans for Balanced Energy Choices, which includes coal companies and electric utilities, is spending nearly $40 million on an advertising campaign to highlight the role coal plays in the U.S. economy.

The group, which includes NMA members, already has run ads in the early primary and caucus states of Iowa, Nevada and South Carolina.

The campaign serves as a reminder of the industry’s political clout.

“[T]he road to the White House travels through coal country,” noted NMA Chairman James F. Roberts, also the head of Maryland’s Foundation Coal, in a speech earlier this month.

“Kentucky, Ohio, Pennsylvania and West Virginia — individually or collectively — likely will determine who will next occupy 1600 Pennsylvania Avenue.”