By Melissa Pistilli-Exclusive to Silver Investing News

It’s not a surprise to most that the U.S. mining industry has not been immune to the ravages of the current global economic crisis.

Hard-rock miners, including silver companies, have been especially hard hit as metal prices crumble and production costs soar. Faced with crippling profit losses, many mining companies have been forced to layoff employees and put projects on hold.

U.S. miners are now faced with a new challenge as a Democratic-majority Congress is threatening mining reform legislation that has many in the industry worried about the future of mining under the Obama administration.  “It will be much more challenging for us now,” said Laura Skaer, Executive Director of the Northwest Mining Association.

Skaer and many other industry leaders were in attendance at the association’s annual meeting and trade show in Sparks, Nevada. The five day annual mining convention is the second largest in the U.S. and this year over 2,200 were in attendance. House bill 244-166, a mining reform bill that passed Congress last year but was stalled in the Senate, proved to be a hot button issue at the conference.

Many in the industry expect that the bill, which proposes to toss out a 136-year-old law overseeing hard-rock mining (gold, silver, copper, etc.), will rear its head once again. The bill was originally sponsored by Rep. Nick Rahall, D-W.Va and aimed at requiring hard-rock miners to pay royalties on ore mined from public lands and enforcing new environmental regulations.

Jim Butler, a mining attorney with Parsons Behle  & Latimer, predicted that another mining reform bill under Rep. Rahall will pass the House in 2009. Rahall’s last mining reform bill, which was adopted by the House this year, has four or five veto methods for mine projects, said Butler.  Despite meeting all environmental standards and federal and state regulations, the House will likely demand that agencies still have the right to veto the project, he explained.

Not surprisingly, those demanding veto power over mining permits are “people who do not want mining in the United States,” said Nils Johnson, Director of legislative and regulatory affairs for Holland & Hart.

“We are going to have mining law reform that is not going to be good,” said U.S. House Natural Resources Committee staff member and former exploration geologist, Kathy Benedetto. The mining industry has lost some key supporters in Washington since the election including Senator Larry Craig, R-Idaho, Representative Bill Dali, R-Idaho, Senator Pete Domenici, R-New Mexico and the ranking member on the Senate Energy and Natural Resources Committee, and Representative Steve Pearce, R-New Mexico and ranking member of the House Subcommittee on Energy and Mineral Resources.

According to Laura Skaer, the industry has now pinned their hopes on support from Senate Majority Leader Harry Reid, D-Nevada, who is also a gold miner’s son and represents the world’s fourth-highest gold producing region.

Both Senator Reid and President-elect Obama opposed Rahall’s bill in 2007, said Skaer.  “But I am still concerned because we do not have as many friends in Congress who truly understand the importance of the mining industry and where our stuff comes from,” she added.  Despite the current crisis, Skaer said “miners are cautiously optimistic because they have rebounded before.”

Jim Butler is hopeful that the economic crisis will overshadow mining reform legislation for the time being. In his convention speech, Butler called on attendees to press lawmakers to view mining products and jobs as integral to restoring the health of the U.S. economy.

“That argument could prove effective,” said Mineweb reporter Dorothy Kosich. This past Saturday, Obama said his administration would introduce the county’s largest public works program since the 1950s construction of the interstate highway system.  Butler believes that “mining jobs will have to be part” of the discussion. Metals will of course be necessary for any infrastructure and renewable energy projects that the Obama administration will be implementing,

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