Financial assurance for hardrock mining
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January 08, 2014
Financial assurance for hardrock mining

In 2009, the EPA announced plans to develop financial responsibility regulations under CERCLA to ensure that hardrock mining companies clean up hazardous substances generated by their operations.  The Agency subsequently announced that it would propose a financial responsibility rule in 2014 for classes of facilities within the hardrock mining and mineral processing industries.  These moves by the EPA have been watched for several years by Senator Lisa Murkowski (R-AK). 

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In a recent Senate hearing, Murkowski asked two nominees for top Department of Interior posts why EPA needs to be involved in a financial responsibility activity that is already being covered by Department of the Interior (DOI) regulations. 

“I think this is overreach by the EPA,” said Murkowski.  “The BLM [Bureau of Land Management], the Forest Service, and every relevant state already have programs in place.  Based on the correspondence I have had with the DOI and the Forest Service, these programs all seem to be working at the federal level.  I’m not certain why the EPA needs to inject itself and add requirements.” 

Murkowski asked the two nominees if they think there are deficiencies in existing programs that would necessitate the EPA involvement.

Many discussions with the EPA

Neil G. Kornze, the administration’s nominee for BLM director, said the agency’s “3809” regulations (“prevention of unnecessary or undue degradation of public lands by operations authorized by the mining laws”) have produced an impressive record of keeping hardrock operations in environmental compliance.  He added that the BLM has had “many discussions” with the EPA about projects up and down the Western U.S. and that they “share thoughts about the appropriateness of the various roles and continue to work on that relationship with the EPA.”

Janice M. Schneider, nominated to be Assistant Secretary of Land and Minerals Management, added that the BLM regulations are “strong and adequate to support necessary reclamation for mineral development” and that a dialog on the issue with the EPA is needed.

These vaguely conciliatory responses to Murkowski do not erase EPA’s authority and responsibility under CERCLA Section 108(b) that “classes of facilities establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances.” 

In its July 28, 2009, Federal Register notice, the EPA identified hardrock operations that would be subject to the financial responsibility requirements as those that extract, beneficiate, or process metals (e.g.,copper, gold, iron, lead, magnesium, molybdenum, silver, uranium, and zinc) and nonmetallic, nonfuel minerals (e.g.,asbestos, gypsum, phosphate rock, and sulfur).  CERCLA Section 108 says that financial responsibility may be established by any one or any combination of insurance guarantee, surety bond, letter of credit, or qualification as a self-insurer. 

2005 GAO report

In its notice, the EPA cited a 2005 report in which the Government Accountability Office (GAO) found that 48 hardrock mining operations on DOI and BLM lands had ceased operations and not been reclaimed by operators since the BLM began requiring financial assurance under its regulations.  Of the 48 operations, 30 cited bankruptcy as the reason for not completing reclamation activities.   “Numerous other examples exist of bankruptcies in the hardrock mining industry that resulted in or will likely require significant federal responses,” said the EPA.

It remains to be seen if the EPA will follow through with its promise for rulemaking in 2014 or whether regulatory changes or tighter enforcement by the DOI departments since GAO’s 2005 report have resolved the financial responsibility needs the EPA described in its 2009 notice.  

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