Mining Oversight and Accountability Commission for Nevada meets

December 27, 2011

Nevada’s newly formed Mining Oversight and Accountability Commission held its first meeting on Dec. 20, and it received a rundown of agencies’ interactions with the miningl industry and was briefed on proposed regulations that would make the industry pay more in taxes.

The Oversight Commission was formed by the 2011 Legislature because of concerns that the industry has suffered from a lack of critical attention from the state. For example, the Department of Taxation did not have a trained auditor in the mining tax for two years, despite an industry that was projected to claim more than $4 billion in tax deductions during the coming two years. The commission heard from five agencies on their roles, including the division of industrial relations, which oversees safety.

Donald Jayne, administrator of the division, said the agency can shut down a mine or a portion of an operation for unsafe conditions but tries to work with the operators to improve safety. It has shut down one mine, briefly, during the past three years, the Las Vegas Sun reported.

Alan Coyner, administrator of the Division of Minerals said, “We are an advocate for streamlining regulation. We are an advocate for economic development. The state needs mining. It provides jobs and industry.”

The Oversight Commission also heard new proposed limits on tax deductions that would increase taxes paid by mining an estimated $48 million over the next two years. They include preventing mining operations from deducting 100 percent of contracting costs, severance packages for workers and health insurance costs.

The state is auditing Toronto-based Barrick Gold Corp., the state’s largest mine operator, according to Chris Nielsen, deputy director of the department of taxation. Five of about 40 auditors on staff are working on the audit. Senate Bill 493 created the Oversight Commission, but the commission is largely advisory. It has no power to enact regulations or propose legislation. But critics of the industry said it’s needed to bring transparency to the powerful industry.

John Restrepo, who owns a Las Vegas consulting firm, was named by its members as chairman of the commission. He said he believed the commission should give “third-party oversight” to the industry, as the Gaming Control Board and Gaming Commission do to the gambling industry. Tim Crowley, president of the Nevada Mining Association, said the industry welcomes greater transparency. “There’s never any harm in oversight by the public,” he said.

Mining came under increased scrutiny during the legislative session because it’s enjoying a boom while the state remains mired in recession. Nevada trails only China, Australia and Russia in gold production. The commission was appointed by lawmakers, and Gov. Brian Sandoval is tasked with adding oversight to the major Nevada industry. Jan Gilbert, a lobbyist with the Progressive Leadership Alliance of Nevada, which has been critical of mining, said she hoped that the commission would gather information about mining that could lead to legislation. “This could be very useful,” she said.