Reid’s Sale of Mining Rights Revives Allegations of Cronyism

Democratic Leader blocked regulations on mining companies represented by Reid’s family

Senate Majority Leader Harry Reid (D., Nev.) / AP
June 12, 2014

Decades of legislative work by Senate Majority Leader Harry Reid (D., Nev.) on behalf of Nevada’s gold mining industry culminated this week when he sold the rights to a number of mines and moved to Las Vegas.

Reid pulled down $1.7 million on the sale, which included the mineral rights to 10 mines and 110 acres of land in Searchlight, Nev.

Reid has worked for decades to preserve the carve-outs for mining companies in the General Mining Law of 1872, allowing those companies to forego an estimated $100 million to $200 million in annual royalty payments to the federal government.

Debate over the laws governing the mining industry was heated in the mid-1990s, when Reid squared off with Sen. Dale Bumpers (D., Ark.). Bumpers decried the lack of royalty payments from the industry and its influence in Congress.

"They own enough people in the United States Congress; they know they don't have to pay a royalty and never will," Bumpers said at the time.

It was in the midst of this debate that Reid introduced the Mining Reform Act of 1997, which would have increased payments to the federal government for the sale of federal mining land from $2.50 per acre to a "fair market value."

However, the calculation of "fair market value" excluded any land that actually contained minerals—the most valuable portions of the land. If passed, the law would have been a boon to the mining industry.

But the bill died in the Senate. Two years later, the Bureau of Land Management looked to implement more stringent environmental regulations on mining activity on federal land. Reid fought the proposal tooth-and-nail.

President Bill Clinton also sought rules limiting the amount of federally owned land that could be used for dumping, milling, and other activities associated with mining. Reid introduced legislation exempting existing mines from the regulations. The bill died in committee.

The Clinton regulations that made it through initial bureaucratic hurdles were delayed when Reid pushed for extended public comment periods. The regulations went into effect on Clinton’s last day in office.

When President George W. Bush took office, he rolled back many of those regulations, with Reid cheering on the effort.

That rare turn of bipartisanship continued into the Obama administration, during which Reid has continued to block efforts to more stringently regulate mining on federal lands and to increase royalty payments to the federal government.

Despite decrying efforts by congressional Republicans to block revenue-raising tax provisions in late 2010, Reid was cool to Obama’s proposal to increase royalty payments and tax hard-rock mining operations to pay for the reclamation of abandoned mines.

Reid said he was "willing to consider any proposal for mining reform that protects the mining industry, doesn't kill jobs, and shares revenues with the state."

Obama’s proposals petered out in early 2011.

"Congress has talked for years about reforming this law only to have the effort blocked by Western senators," said a New York Times editorial faulting Reid for the effort’s failure. Reid, the editorial went on, "has long been the leading opponent."

Reid has seen a dramatic increase in the value of his mining rights since he began working to ensure lax regulatory treatment and favorable royalty rates for the industry.

The mineral rights he sold this week were worth between $200,000 and $415,000 in 1995, the first year for which his personal financial disclosure forms are publicly available. By 2012, those rights were worth between $315,000 and $900,000.

Reid’s allies attribute that increase to the steady rise in the price of gold over the same period.

Additionally, all four of Reid’s sons—Rory, Leif, Josh, and Key—have worked for the Nevada firm Lionel Sawyer & Collins, which represents a number of the state’s mining companies.

Reid’s daughter Lana is married to Washington, D.C., lobbyist Steven Barringer, who has represented the National Mining Association, Barrick Gold, Placer Dome, Newmont Mining, Coeur D’Alene Mines, Hecla Mining, Echo Bay Mines, Independence Mining Company, Battle Mountain Gold, and Homestake Mining.

Barringer had "earned as much as $3.7 million lobbying for mining interests," Mother Jones reported in 2009.

"In Nevada, the Name to Know is Reid," a Los Angeles Times headline on the family’s extensive political clout in the state declared.

Recent controversies have revived allegations that Reid has used his official position to his family members’ benefit.

Reid came under fire earlier this year when his campaign bought more than $30,000 in jewelry from Ryan Elisabeth Reid, his granddaughter.

Her father, Reid’s son Rory, has represented a Chinese company that won public plaudits from the majority leader before a county commissioner in Nevada sold the company a large plot of land on which to build a solar farm for a sixth of its appraised value.

Another Chinese company represented by Rory Reid was looking for financiers through a federal program frequently criticized for its susceptibility for fraud that awards U.S. visas to foreign investors. The company was rejected due to security concerns, but Reid the elder intervened, and the Department of Homeland Security agreed to reconsider the rejection.

Critics see existing federal laws and regulations, which exist as they do in large measure of Reid’s consistent advocacy on behalf of Nevada mining companies, as maintaining favorable treatment for that industry.

"Congress has gotten rid of all of the other land giveaways, from eliminating the homestead laws to charging for coal, oil, and gas. But companies still get to mine gold for free," a spokeswoman for environmentalist group Earthworks told Mother Jones in 2009.

UPDATE 1:03 P.M.: Adam Jentleson, a spokesman for Reid, said in an email"Senator Reid is proud of his work fighting for the mining industry and Nevada jobs and appreciates the Free Beacon highlighting his work on this issue. However, the argument that the value of Senator Reid’s sale of private land to a gold mining company is somehow tied in any significant way to his work on predominantly public lands—and not, say, to the historic spike in the price of gold, which has more than quadrupled over the period discussed in the story—is rather tortured. Points for effort I suppose, but there’s a word for jerry-rigging reality to fit a preconceived worldview and it’s not ‘journalism.’"

Published under: Cronyism , Harry Reid