On December 1, 2016, the Environmental Protection Agency ("EPA") announced plans to require mining companies to prove up their financial wherewithal to be able to pay for environmental cleanup and potential pollution issues. Specifically, the EPA has "proposed financial responsibility requirements for the hardrock mining and mineral processing industry."

  • What is the proposal?

The rule is called "Financial Responsibility Requirements Under CERCLA Section 108(b) for Classes of Facilities in the Hard Rock Mining Industry."

The full information can be found on the EPA's website here.

  • Purpose of the rule?

According to the EPA, the financial instruments are designed to provide an additional source of funding to support these processes – it is a complement to existing CERCLA cost recovery and enforcement procedures. It is not intended to replace the existing CERCLA mechanisms.

  • What are the basics of the rule?

Basically, it is truly to "show the EPA the money."

According to the EPA's proposed rule summary: "This proposed rule would establish financial responsibility requirements under section 108(b) of CERCLA, as amended. By requiring owners and operators of hardrock mining facilities to demonstrate financial responsibility, this proposed rule would increase the likelihood that those owners and operators will have funds necessary to address the CERCLA liabilities at their facilities, thus preventing the burden of cleanup from falling to other parties, including the American taxpayer. By adjusting the amount of financial responsibility to account for environmentally safer practices, the EPA expects this proposed rule would provide an incentive for implementation of sound practices at hardrock mining facilities, and thereby decrease the need for future CERCLA actions."

  • What would the requirement apply to?

Bottom line – certain classes of facilities within the hardrock mining industry as identified in the EPA's 2009 Priority Notice. According to ABC News article entitled, "EPA to Require Mines to Offer Cleanup Assurances," the rule "would cover mines and processing facilities in 38 states;" and to give you an understanding of the scope, "there are about 300 hardrock mines in the U.S...Of those mines, the EPA said 221 would be subject to the rule"

  • What does the definition of "hardrock mining" include?

Interestingly, NOT coal.

The EPA has defined "hardrock mining" for purposes of the 2009 Priority Notice as "the extraction, beneficiation or processing of metals (e.g., copper, gold, iron, lead, magnesium, molybdenum, silver, uranium, and zinc) and non-metallic, non-fuel minerals (e.g., asbestos, phosphate rock, and sulfur)." According to the EPA, this definition does not include coal mining.

  • What are the proposed requirements?

According to the EPA, owners and operators of facilities subject to the proposed rule would be required to:

  1. Notification: Notify EPA that they are subject to the rule;
  2. Do the Math: Calculate a level of financial responsibility for their facility using a formula provided in the rule (and provide supporting documentation for the calculation);
  3. Show Me the Money: Obtain a financial responsibility instrument (for example, a letter of credit, insurance, trust fund and surety bond are listed as possible instruments), or qualify to self-assure, for the amount of financial responsibility if that option is adopted in the final rule;
  4. Prove it: Demonstrate to EPA that they have obtained such evidence of financial responsibility; and
  5. Keep it Going: Update and maintain financial responsibility until EPA releases the owner or operator from the CERCLA section 108(b) regulations.
  • Controversy?

Yes, according to the Jackson Hole News & Guide, "[t]he National Mining Association blasted the rule as 'unnecessary, redundant and poorly constructed,' because existing programs prevent mines from becoming Superfund sites."

According to the ABC News article, the National Mining Association "accused government officials of overstating the potential risks from modern mining techniques, in a rushed attempt to put a new rule in place before President Barack Obama leaves the White House next month."

Reportedly echoing the industry's concerns were some key Republicans – U.S. House Natural Resources Committee Chairman Rob Bishop of Utah and Energy Committee Chairman Fred Upton of Michigan were said to have maintained that "programs in place at the state level already ensure the environment is protected."

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