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How EPA can ensure mining companies, not taxpayers, pay for mine clean-up

The Executive Summary

Thirty years after being charged to do so by the CERCLA (Superfund) statute Section 108(b), EPA is finally drafting rules that will require hardrock mining companies to demonstrate, up front, that they have the financial resources to remedy any environmental damage caused by their operations.

These rules are distinct from, and do not preempt, federal and state permits for operations closure and reclamation. Nor do they alter or substitute Superfund enforcement and cost recovery – they supplement them.

These rules, which are required by court order, are long overdue. The backlog of cleanup costs for hardrock mines in the U.S. are estimated at $20-54 billion, and new sites are being added to the list as unfunded liabilities every year. Without these rules, taxpayers will be responsible for the cost of that cleanup.

As EPA drafts these rules, there are many important components and criteria it should include. Among the most critical:

  • EPA must not allow “self-bonding” or corporate guarantees. Financial assurance must be in a form that is secure, independently guaranteed, and readily accessible. Cleanup bonds are needed when the mining operator is in financial extremis. As coal companies go bankrupt, state and federal governments are finding out the hard way that “corporate guarantees” are no guarantee at all.
  • Sites that require water treatment for more than one hundred years, or “in perpetuity,” must be prioritized. These sites present financial liabilities that will continue long after the reasonable expected life of the company.
  • The detailed calculation of the financial assurance must be accurate and complete. It must encompass all clean-up costs, costs for government or other implementation (i.e. direct and indirect costs associated with executing the bonded cleanup), and emergency preparedness/planning.
  • Deductions for engineering controls must be clearly demonstrated to reduce the estimated costs of clean-up and financial assurance.
  • Public review at all phases of the financial assurance process must be an integral part of the rules. It is the public that incurs the financial liability if the bond is insufficient.