Mining Reclamation Deduction
$200 million

Background A provision in the U.S. tax code allows mining companies to deduct reclamation and closing costs as soon as they begin to mine, even though the eventual closing and reclamation of the mine site will not occur for some time. Without this provision, general tax rules would require the companies to wait until the mine site is closed, restored, and the costs associated with these activities are paid before being able to deduct these costs.

Green Scissors Proposal Repeal the special rules that allow costs for mine reclamation to be deducted before they are actually paid. Require companies to post adequate reclamation bonds and establish a national program to clean up abandoned mines. These actions would save taxpayers $200 million over five years.

Project Hurts Taxpayers Taxpayers could get stuck paying for the closing and reclamation of mines for which mining companies have already claimed a deduction. A current deduction without a requirement to post an adequate bond raises the possibility that closing and reclamation will never occur. Simply put, there is no guarantee that there will be money available for clean up or mine closing, and taxpayers could conceivably get stuck with the tab.

Project Hurts Environment Since 1977, there have been more than 6,000 coal mines closed but not reclaimed. Until proper standards exist to address the environmental impacts of mining, no tax subsidy should be available to the industry.