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EPA Reverses Course; Declines to Impose CERCLA Financial Responsibility Rules on the Hardrock Mining Industry

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by John D. Burnside

In a stunning change of course, the United States Environmental Protection Agency announced on December 1, 2017, that it would not issue final regulations imposing financial responsibility requirements on hardrock mining operations to fund the estimated cost of future Superfund cleanup.

EPA’s decision effectively withdraws proposed rules published January 11, 2017, in the final days of the Obama administration, that would have required active and temporarily idled hardrock mining operations to demonstrate financial responsibility to cover the estimated future costs of response under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or Superfund).  The proposed rule would have tied the amount of required financial assurance to the physical size of mining facilities, and therefore would have required every large copper, silver, gold, lead, or other hardrock mine to post letters of credit, surety bonds, trust funds, or other financial assurance amounting to tens or hundreds of millions of dollars, with little regard to site-specific circumstances that might reduce or eliminate the risk that the mine will someday become a CERCLA site.  Withdrawal of the rule will come as a major relief to mining industry participants, many of whom legitimately worried that the proposed rule, if finalized, could cripple the domestic mining industry by hobbling the development of new mines and the expansion of existing mines, while potentially even causing the premature closing of some mines that could not operate profitably while complying with the proposed rule.

During the public comment period, EPA received over 11,000 comments, most of which were critical of the proposed rule.  A diverse group of interests opposed the rule, including a number of states, members of Congress, industry trade associations, individual companies, and financial services providers.  EPA also received comments in favor of the proposed rule, primarily from conservationists and environmental organizations.  These organizations applauded EPA’s effort to save taxpayers from the burden of future CERCLA sites and even advocated that the scope of the final rule be increased to draw in a larger universe of mining operations.

In its December 1 press release, EPA explained that it had decided not to issue final regulations because the record developed during the public comment period established that the risks associated with modern hardrock mining operations are sufficiently addressed by existing federal and state programs and industry practices. (See EPA’s press release here).  According to EPA, The degree and duration of risk associated with the modern production, transportation, treatment, storage, or disposal of hazardous substances by the hardrock mining industry does not present a level of risk of taxpayer funded response actions that warrant imposition of financial responsibility requirements under CERCLA.

EPA’s decision to withdraw the CERCLA financial assurance rule follows a pattern whereby the Trump administration has systematically sought to undo Obama-era environmental regulations, including the Clean Power Plan, the Clean Water Rule, and the Waste Prevention Rule.  EPA had issued the proposed CERCLA financial assurance rule as part of the resolution of a lawsuit brought by environmental groups.  There is no doubt that EPA’s decision not to finalize the rule will lead to years of additional litigation as environmental groups will sue on the grounds that EPA’s reversal of course was contrary to law.