United States: EPA Proposes Financial Responsibility Requirements For Hardrock Mining Industry

Amy L. Edwards is a partner and Aaron S. Heishmanis an associate at the Washington DC office

The Proposed Rule Could Set a Precedent for Other Industries and Directly Impact Financial Institutions


  • The U.S. Environmental Protection Agency (EPA) has issued a pre-publication version of a proposed rule to require hardrock mining facilities to demonstrate their financial ability to clean up releases of hazardous substances. EPA will formally publish the proposed rule in the coming weeks.
  • The proposed rule will apply to approximately 221 facilities nationwide that extract, beneficiate and process metals (such as copper, gold, iron and uranium) or non-metallic, non-fuel minerals (such as asbestos, sulfur and phosphate rock). The rule will not apply to coal mines, former operations, or many hardrock operations that extract or process non-fuel commodities such as granite, marble or lime.
  • EPA is soliciting regulatory comments from all industry sectors that may be subject to similar financial responsibility requirements in the future, as well as financial institutions that provide financial responsibility instruments such as insurance, surety bonds and letters of credit.
  • EPA also announced its intent to evaluate the need for similar financial responsibility requirements for the following industry sectors: chemical manufacturing; electric power generation, transmission and distribution; and petroleum and coal products manufacturing.

U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy on Dec. 1, 2016, signed a pre-publication version of a proposed rule that seeks to establish financial responsibility requirements for approximately 221 facilities nationwide that extract, beneficiate and process metals or non-metallic, non-fuel minerals. EPA expects to formally publish the proposed rule in the Federal Register in the coming weeks, a step that will trigger a 60-day public comment period.

EPA's legal authority for the proposed rule is Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which directs the agency to require classes of facilities to maintain evidence of financial responsibility to cover the costs associated with releases or threatened releases of hazardous substances. The proposed rule was set in motion by a 2008 lawsuit filed by environmental advocacy organizations that sought to require EPA to evaluate the need for financial responsibility regulations in the hardrock mining sector and a follow-up lawsuit in 2014 that sought a court order requiring EPA to publish proposed financial responsibility rules. As part of the most recent lawsuit, EPA agreed to publish a proposed rule by Dec. 1, 2016, and a final rule by Dec. 1, 2017.

Rationale for the Proposed Rule

EPA estimates that it spent approximately $1.1 billion from 2010 to 2014 cleaning up contamination at hardrock mining operations. The agency believes that the proposed rule will make hardrock mining owners and operators more likely to provide funds to address CERCLA liabilities at their facilities, rather than shifting the cleanup burden to EPA and taxpayers.

Hardrock Mining Operations Covered by the Proposed Rule

In total, EPA said it believes that 221 facilities owned by 121 parent companies will be subject to the rule. The proposed rule will apply to classes of facilities that extract, beneficiate and process metals (such as copper, gold, iron and uranium) and non-metallic, non-fuel minerals (such as asbestos, sulfur, and phosphate rock). Owners and operators of such facilities will be required to demonstrate an amount of financial responsibility consistent with the degree of risk the facility poses through its treatment, production, transportation, storage and disposal of hazardous substances.

The rule will not apply to coal mining operations and facilities associated with 59 non-fuel hardrock commodities such as cement, granite, marble and lime.1 Also excluded from the proposed rule's coverage are abandoned facilities, mines engaged in only exploration activities, placer mines that do not use hazardous substances to extract ore, and mining operations of less than 5 acres that are not located within 1 mile of another area of mine disturbance that occurred in the past 10 years.

Methods of Demonstrating Financial Responsibility

The proposed rule will allow entities to use the following financial instruments, alone or in combination, to demonstrate financial responsibility: insurance, guarantees, surety bonds or letters of credit. An owner or operator can use a single financial instrument to cover multiple facilities.

EPA is also soliciting public comment on whether to allow owners and operators to use self-insurance, through a credit rating-based financial test and corporate guarantee, to demonstrate financial responsibility. EPA has expressed reservations about self-insurance, noting that self-insuring operations that experience sudden financial difficulties may then have trouble securing financial responsibility instruments from third parties.

CERCLA Claims Against Financial Responsibility Instruments

Financial responsibility instruments can be used to satisfy final judgements from a federal court ordering a facility to pay CERCLA response costs, health assessment costs or natural resource damages. The financial responsibility instruments will cover all types of CERCLA actions, including actions brought by government claimants such as EPA or private claimants. If the culpable owner or operator becomes bankrupt or unavailable, the proposed rules allow a CERCLA claimant to bring an action directly against the third-party financial institution. Representatives of the surety industry and banking community have already expressed concern about the proposed direct action provision. Therefore, EPA is specifically soliciting public comment from financial institutions about this element of the proposal.

EPA's proposed financial responsibility rule will be distinct from other financial responsibility requirements under state, federal or tribal laws. For example, a hardrock mining facility currently subject to federal reclamation bonding requirements will nevertheless have to demonstrate additional financial responsibility under CERCLA Section 108(b).

Owners and operators will have to remain covered by financial responsibility instruments until EPA releases them from that obligation. The agency will release an owner or operator that transfers a facility to a new owner or operator that demonstrates financial responsibility. An owner or operator may also escape the financial responsibility requirements by demonstrating to EPA that the risk associated with the facility's production, transport, treatment, storage and disposal of hazardous substances is minimal. EPA proposes a site-by-site evaluation of the facility's risk before releasing it from CERCLA Section 108(b) requirements. Any release determinations will be subject to public notice and comment.

Calculating Amount of Financial Responsibility

The proposed rule includes a formula for calculating the amount of financial responsibility that each hardrock mining facility must demonstrate. The formula assigns values to an individual facility's characteristics, such as open pits, waste rock, process ponds, water management and monitoring. The formula is designed to calculate the approximate costs if a Superfund action were required at the facility. By implementing environmentally protective practices, the proposed rules allow a facility to reduce the amount of its financial responsibility instrument. EPA proposes that a facility recalculate its financial responsibility amount every three years and within 60 days after a successful CERCLA claim against its financial responsibility instrument.

Potential Financial Responsibility Requirements for Other Industries

Alongside EPA's proposed rule on financial responsibility requirements for the hardrock mining industry, the agency also released a pre-publication Regulatory Determination Notice explaining that the agency intends to evaluate whether financial responsibility requirements are appropriate for the chemical manufacturing, electric power generation/transmission/distribution, and petroleum and coal products manufacturing industries.

EPA has explained that the regulatory framework developed for hardrock mining operations will serve as the model for other industry sectors that the agency determines should also demonstrate financial responsibility. Therefore, even though EPA's proposed rule for hardrock mining applies to only a few hundred facilities nationwide, other industries that are likely to be subject to similar requirements in the future should take this opportunity to comment on the soundness of the EPA's proposed regulatory framework.


1.A full list of the excluded facilities is available at Mining Classes Not Included in Identified Hardrock Mining Classes of Facilities (U.S. EPA Memorandum, June 29, 2009).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.