Hardrock Miners Avoid Millions in Cleanup Assurance Costs

Mining industry and state government representatives have convinced the EPA to back down from a Superfund regulation that would have cost the industry more than $170 million annually and required companies to pay for environmental cleanup.

According to the Environmental Protection Agency, industry representatives and state and federal agencies “overwhelmingly opposed” a rule that would ensure hardrock mining companies had the financial means to clean up contaminated sites and offer operators incentives to minimize the risk of an environmental disaster.

“We viewed this proposal, from the get-go, as just completely punitive, without any merit,” Luke Popovich, spokesman for the National Mining Association, told Bloomberg Environment.

The EPA notified the public Dec. 1 that it would not finish the proposed rule (RIN:2050-AG61). Mining companies would have had to prove that they could pay for the environmental risks of their operations, whether through insurance, bonds, or guarantees.

“The costs could have been extremely significant to Hecla’s U.S. operations,” Luke Russell, vice president for external affairs for Hecla Mining Co., told Bloomberg Environment.

The rule would have cost the mining industry an additional $111 million to $171 million annually, according to the EPA.

For taxpayers, the cost of not having the rule would be “relatively small,” the EPA said. Its analysis found that the proposed rule would keep the federal government from spending about $15 million annually.

No Need for Regulation

The agency said in a Dec. 1 notice that it did not originally consider state or federal programs when it formulated the rule.

But it determined on Dec. 1 that existing federal and state mining programs and mine operators’ protective practices decrease the amount of environmental contamination risk involved with hardrock mining, making the rule unnecessary.

“We believe EPA made the right decision,” Eric Kinneberg, a spokesman for mining Freeport-McMoRan Inc., told Bloomberg Environment in a statement.

Hardrock mining refers to the extraction of hard metals, such as gold, copper, iron, zinc, and lead. About 200 facilities would have been subject to the proposed rule, the EPA said.

State and federal representatives who commented on the proposed rule, issued in 2016, told the EPA that such a rule would overlap with existing requirements.

EPA’s decision to drop the rule “acknowledges the robust environmental regulation and financial assurance requirements that already exist from state and federal levels,” Russell said.

Legacy mine sites are more likely to be placed on the National Priorities List, the EPA’s list of the most contaminated sites in the country, said John R. Jacus, partner at the Denver office of Davis Graham & Stubbs LLP. Those mining operations are not subject to current safety and financial regulations.

“The fact that we’re not seeing active mine sites—or sites constructed that went into operation sort of in the post-1990 time frame—being added to the NPL speaks for itself,” Jacus told Bloomberg Environment.

Environmentalists, including Earthworks and the Sierra Club, took their concerns about financial assurance to court in 2014. They asked the EPA to take action on financial assurance regulations that they say is necessary because of the environmental risks of hardrock mining. The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg, the ultimate owner of Bloomberg Environment.

In response, the U.S. Court of Appeals for the District of Columbia Circuit ruled in 2016 that the EPA must make a decision about issuing a rule by Dec. 1.

“We intend to see the EPA back in court,” Bonnie Gestring, northwest program director for Earthworks, said.

Next Steps

The EPA has been considering regulations related to financial assurance for various industries since at least 1979. At that time, the agency’s assistant administrator for water and waste management told a Senate subcommittee that financial responsibility requirements would improve safety practices.

Though the EPA just decided not to issue a rule, it still could require individual mining operations to implement financial responsibility requirements as part of a cleanup effort or enforcement action.

The EPA did not respond to request for comment on whether it will regulate financial assurance for other industries, including chemical manufacturing, petroleum, coal, and electric power.