As part of an attempt to prevent hardrock mining companies from avoiding cleanup payments by filing for bankruptcy, the U.S. Environmental Protection Agency announced on Monday, July 13, that it will include phosphate mining when it develops financial assurance requirements by spring 2011.
The announcement came in the wake of a federal judge’s February order requiring EPA to close loopholes that force taxpayers to pay for environmental cleanup when companies go bankrupt. The National Mining Association said its industry already is regulated by other state and federal laws establishing financial responsibility for cleanup.
Jack Lyman, Idaho Mining Association executive vice president, said phosphate mining normally is not considered “hardrock mining,” but the EPA included it in a notice: “For purposes of this notice, hardrock mining facilities include those which extract, beneficiate or process metals (e.g., copper, gold, iron, lead, magnesium, molybdenum, silver, uranium and zinc) and non-metallic, non-fuel minerals (e.g., asbestos, gypsum, phosphate rock and sulfur).”
“It’s hard to assess the impact of this effort on the phosphate industry until we see a more fully developed proposal,” Lyman said. “That being said, in general, we can anticipate this would increase the cost of phosphate mining, perhaps dramatically.”
Lyman noted that phosphate mines on federal lands operate under a leasing system. They pay royalties and cannot obtain ownership of federal lands at any price. “One of the major concerns in water quality bonding is the determination of what is going to be covered and for what period of time.”
Phosphate mine operators already post reclamation bonds with Idaho regardless of land ownership and with the federal government if federal lands are mined. If a tailings unit is included in the mine plan, a dam safety bond also may be posted with the Idaho Department of Water Resources. The bonds generally cover potential impacts on water quality.
“If additional and separate water quality bonding is required for a ‘worst case scenario’ and is calculated to provide sufficient resources to cover water treatment in perpetuity for that worst case scenario, the cost could be tens of millions of dollars,” Lyman said. “Since such a bond would need to be posted at the start of a project, this could have a chilling effect on the decision to make the initial investment.”
A system based on a realistic review of the mine plan and potential water quality threat, which accounts for other performance bonds in place, may result in bonding requirements that are more reasonable, Lyman said. “We just don’t know until we see an actual proposal.”
David Cuoio, a J.R. Simplot Co. spokesman, said both federal and state requirements for financial assurance on Simplot mines are substantial. The company has consistently met those requirements, which are updated periodically, he said.
“It is not clear how EPA’s potential regulations would interface with existing federal and state financial assurance regulations,” Cuoio said, noting those provisions – which are unique to mining – provide financial assurance for cleanup, closure and post-closure care.
Obligations include remediation-related work required under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), better known as the Superfund Act.
“We meet this requirement and always have,” Cuoio said, noting an Associated Press story regarding the EPA announcement erroneously referred to Simplot’s Smoky Canyon Mine in Eastern Idaho as a Superfund site.
Dave Farnsworth, Monsanto’s minerals lead in Soda Springs, Idaho, stated: “With the millions of dollars of selenium investigation and cleanup in Southeast Idaho, it has been Monsanto’s policy to cover our own costs, as well as those of the appropriate federal oversight agencies. We have done this even though, in the case of phosphate ore, the taxpayer has benefited from the royalties paid on each ton of ore removed.”
The EPA said it will develop similar financial set-asides for chemical manufacturers, but started with hardrock mining because of the size of its operations, volumes of waste, and number of mining sites.
At a hearing on Tuesday, July 14, the U.S. Senate Energy & Natural Resources Committee started the process of changing America’s Mining Law of 1872. Three reform bills in Congress would tax mining companies for the minerals they extract from public lands.
Interior Secretary Ken Salazar told the committee he advocates reasonable mining royalty payments as part of the Obama administration’s reforms. “While the responsible development of our mineral resources is critical to both our economy and our environment, this statute has not been updated in 137 years,” he said. “In those years, much has changed. It is time to ensure a fair return to the public for mining activities that occur on public lands and to address the cleanup of abandoned mines.”