Superfund

Proposed Rule: Financial Responsibility Requirements Under CERCLA Section 108(b) For Classes of Facilities in the Hardrock Mining Industry

Rule Summary

The EPA Administrator signed the proposed rule, Financial Responsibility Requirements Under CERCLA Section 108(b) For Classes of Facilities in the Hardrock Mining Industry, on December 1, 2016 and it was published in the Federal Register on January 11, 2017. The comment period ends on July 11, 2017.

This proposed rule would establish financial responsibility requirements under section 108(b) of CERCLA, as amended. By requiring owners and operators of hardrock mining facilities to demonstrate financial responsibility, this proposed rule would increase the likelihood that those owners and operators will have funds necessary to address the CERCLA liabilities at their facilities, thus preventing the burden of cleanup from falling to other parties, including the American taxpayer. By adjusting the amount of financial responsibility to account for environmentally safer practices, the EPA expects this proposed rule would provide an incentive for implementation of sound practices at hardrock mining facilities, and thereby decrease the need for future CERCLA actions.

Applicability

This proposed rule would apply to certain classes of facilities within the hardrock mining industry. In the 2009 Priority Notice EPA identified hard rock mining classes of facilities, and defined “hardrock mining” for purposes of the notice as the extraction, beneficiation or processing of metals (e.g., copper, gold, iron, lead, magnesium, molybdenum, silver, uranium, and zinc) and non-metallic, non-fuel minerals (e.g., asbestos, phosphate rock, and sulfur). This definition did not include coal mining.

CERCLA section 108(b)(1) also requires that EPA accord “[p]riority in the development of such requirements . . . to those classes of facilities, owners and operators [that EPA determines] present the highest level of risk of injury.” EPA proposes to not include in the regulation some classes that present a lower level of risk of injury. These are: (1) mines conducting only placer mining activities as defined in Title 40 of the Code of Federal Regulations (CFR) section 320.62, (2) mines conducting only exploration activities as defined in 40 CFR section 320.62, (3) mines as defined in 40 CFR section 320.62 with a disturbance of less than five acres not located within a mile of mine disturbance that occurred in the prior 10 year period and that do not employ hazardous substances in their processes; and (4) mineral processors as defined in 40 CFR section 320.62 with less than five acres of surface impoundment and waste pile. The remainder of the hardrock mines included in the 2009 Priority Notice would thus be identified as those presenting the “highest level of risk of injury.”

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Proposed Requirements

Owners and operators of facilities subject to the proposed rule would be required to:

  • notify EPA that they are subject to the rule;
  • calculate a level of financial responsibility for their facility using a formula provided in the rule (and provide supporting documentation for the calculation);
  • obtain a financial responsibility instrument, or qualify to self-assure, for the amount of financial responsibility if that option is adopted in the final rule;
  • demonstrate to EPA that they have obtained such evidence of financial responsibility; and
  • update and maintain financial responsibility until EPA releases the owner or operator from the CERCLA section 108(b) regulations.

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Available Financial Instruments

The financial responsibility instruments required by the rule would cover all types of CERCLA section 107 liabilities– response costs, natural resource damages, and health assessment costs. Accordingly, the formula includes components for each of these categories. The funds assured for would be available for any future response action, natural resource damages, or health assessment costs, regardless of the particular formula input values. Because CERCLA section 108(b) is a stand-alone financial responsibility authority, the rule does not include technical requirements for the operation or closure of mines.

Facilities subject to the proposed rule would be required to demonstrate financial responsibility using one or more of the following financial responsibility instruments:

  • letter of credit;
  • insurance;
  • trust fund; and
  • surety bond.

In addition, this proposal includes two proposed options for use of a financial test: (1) the no financial test option (“Option 1”), and the financial test option (“Option 2”). Option 1 requires all owners and operators to acquire third-party financial instruments to demonstrate financial responsibilities. Under Option 2, the owner or operator could qualify to self-insure (or use the corporate guarantee) by passing the proposed financial test. Owners or operators unable to qualify for the Option 2 financial test must acquire a third-party instrument or a trust fund to comply with the rule.

The instruments included in the proposed rule would be different from those in other EPA programs because they reflect the unique CERCLA response program. For example, the instruments are structured to pay out to multiple parties who may have CERCLA claims.

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Rule Implementation

The proposed rule is designed to complement, but not change or substitute for, existing CERCLA cost recovery and enforcement procedures. Thus, the EPA and other entities (including other Federal agencies, states, and private parties) would continue to effect clean-up at facilities regulated under CERCLA section 108(b) using other CERCLA tools, such as federal government orders under CERCLA section 106, settlements under CERCLA section 122, and private party cleanup with cost recovery or contribution litigation. The financial instruments are designed to provide an additional source of funding to support these processes.

This proposed rule would be implemented by the EPA. Unlike other EPA statutes, CERCLA does not provide a mechanism to delegate CERCLA section 108(b) rule implementation to the states, or authorize state programs.

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Financial Responsibility Formula

The proposed rule includes a financial responsibility formula that owners and operators would use to calculate the financial responsibility amount for their facilities. The formula is structured to allow facilities, upon certain showings, to reduce the calculated amount of financial responsibility to account for site controls. EPA expects that by adjusting the amount of financial responsibility to account for environmentally safer practices, it would provide an incentive for implementation of sound practices at hardrock mining facilities and thereby decrease the need for future CERCLA actions.

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Comment on the Proposed Rule

EPA has extended the comment period an additional 120 days, so that comments are now due on or before July 11, 2017. Instructions for submitting public comments are provided in the preamble to the proposed rule. 

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Additional Resources

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