Financial Assurance and Superfund

Who Should Pay for Mine Clean-Up: Industry or Taxpayers?

Congress enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, commonly known as the Superfund Program, in 1980 with the intent of responding to and preventing environmental and health risks caused by industrial pollution.

“If financial assurance requirements have been established and required by law, we would not now be faced with an $800 million liability at the CMI Questa mine. It is time for industry to be accountable for their own toxic mess. The public and the environment have paid the price for too long.” –Rachel Conn, Project Director, Amigos Bravos

Under Section 108b of CERCLA, EPA is directed to require that industrial polluters have adequate funds (i.e., financial assurance) in place for clean-up, so that industry bears the cost of clean-up – not taxpayers. But for more than thirty years, EPA failed to issue rules to require financial assurance.

Court Decision forces EPA into action

In response to litigation filed by Earthjustice on behalf of Earthworks and our coalition partners, the court ordered the EPA in February 2016 to make good on CERCLA 108b’s requirements and develop draft regulations for hardrock/metal mining by Dec. 1, 2016 and final regulations by December 1, 2017.

Draft rules were published in the waning days of the Obama Administration. Under the Trump Administration, we expect the final rule to be much, much weaker.

The High Cost of Hardrock Mining Cleanup

Numerous GAO reports document the need for financial assurance for hardrock mining.  Here are some reasons why:

  • Hardrock mining is the nation’s largest source of toxic releases. Metal mining accounted for 37% of the 3.36 billion pounds of toxics released into air, water and land in 2015. The list of toxins includes arsenic, mercury, cadmium, lead, and selenium, according to the 2015 EPA Toxic Release Inventory.
  • The EPA has identified 156 hardrock mining sites nationwide that have the potential to cost between $7 billion and $24 billion total to clean up (at a maximum total cost to EPA of approximately $15 billion). This is over 19 times EPA’s total annual superfund budget of about $775 million for 2013.
  • 59% of mining sites are estimated to need 40 years of cleanupand mines with acid mine drainage are likely to require water treatment in perpetuity.
  • Gaps in financial assurance requirements, corporate bankruptcy and the cyclical nature of commodities prices within the hardrock mining industry increase the likelihood of uncontrolled releases of hazardous substances being left unmanaged.

Funding Shortfalls Leave Communities and the Environment at Risk                  

A 2010 GAO Report says that insufficient EPA funding has led to an “increase [in] the length of time it takes to clean up a site; the total cost of cleanup; and, in some cases, the length of time populations are exposed to contaminants.” EPA and taxpayers will foot the bill for escalating cleanup costs unless financial assurance requirements are strengthened.

Non-partisan government reports have recommended better financial assurance mechanisms to protect taxpayers and the environment from mining impacts.  Financial assurance mechanisms are based on the polluter pays principle that makes liable parties pay for cleanup costs. Ultimately, this protects taxpayers from a multi-billion dollar tax liability for cleanup. The EPA could better ensure that companies at high risk of incurring environmental liabilities meet their cleanup obligations by implementing CERCLA 108b authority and requiring financial assurance.