Environmental Protection Agency Will Not Pursue Financial Assurance Rule For Hardrock Mining

Introduction

On December 1, the Environmental Protection Agency (EPA) announced that it will not promulgate a final rule requiring hardrock mining facilities (i.e., facilities for the extraction, beneficiation, and processing of metals and non-metallic, non-fuel minerals) to establish financial assurances under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Had EPA moved forward with promulgating a final rule, the statute would have required an effective date within four years. 42 U.S.C. § 9608(b)(3). Because the agency has instead stepped back from the proposed rule, there is no immediate need for hardrock mining companies to prepare to establish the types of financial assurance mechanisms the proposed rule envisioned.

The announcement concludes a rule-making process that began when the previous administration released a proposed rule one year ago, and that is itself the result of protracted litigation by environmental groups seeking to force action by EPA. While EPA's decision eliminates the concern that hardrock mining companies would have to establish some new or additional forms of financial assurance to comply with the new rule, it does not put the issue to bed completely. Environmental groups will likely return to the courts and appeal the decision not to proceed.

Proposed Rule

Section 108(b) calls on the president (with delegated authority to EPA) to "promulgate requirements . . . that classes of facilities establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, . . . treatment, storage, or disposal of hazardous substances." 42 U.S.C. § 9608(b)(1). The agency has discretion to establish the magnitude of the financial responsibility that will be required and the mechanisms which count as proof of those financial requirements. Id. § 9608(b)(2).

On December 1, 2016, EPA released a proposed rule that used historical data from prior CERCLA cleanups and natural resource damage restoration at mining sites to set the amount of required assurances for hardrock mining facilities. Under the proposed rule, the obligation could be satisfied through establishment of a surety bond, a letter of credit, trust fund, or insurance. The draft rule also proposed for consideration, but did not endorse, allowing companies to "self-insure" by showing they met certain financial metrics.

Earlier Litigation

The proposed...