CHAPTER 7 Federal and State Permits and Bonds Needed for Exploration, Development and Operational Phases of Hardrock Mineral Activities

• Jurisdiction: United States

Western Land Use Regulation and Mined Land Reclamation
(Nov 1979)
CHAPTER 7
Federal and State Permits and Bonds Needed for Exploration, Development and Operational Phases of Hardrock Mineral Activities
Stephen H. Foster ^*
Counsel The Anaconda Company
Denver, Colorado

I. INTRODUCTION

A. Purpose

The purpose of this paper is to review the myriad of state and federal permitting and bonding requirements which are conditions precedent to every phase of a hardrock mining venture. Although under the 1872 Mining Law operators have a right to enter on public lands to locate and extract valuable hardrock minerals, a growing body of federal statutory and administrative laws closely circumscribes this right. To a somewhat lesser extent, conditions have been imposed on the right to mine on private lands as well. Over the years, the increasing concern the mining industry has felt with its loss of freedom to exploit the nation's mineral resources has spawned numerous studies, speeches and articles which have explored the somewhat mystical processes involved in securing approval for mining operations. Many papers on various aspects of the law of mineral development have been delivered at prior gatherings of the Rocky Mountain Mineral Law Foundation.¹ This is another attempt to analyze, and perhaps clarify, a portion of the field.

The paper focuses on major permitting and bonding requirements for hardrock mining in seven leading Western hardrock mining states: Arizona, Colorado Idaho, Montana, Nevada, New Mexico and Utah. No effort has been made to list all such requirements; to do so would be an impossibility given limitations of time. Because the federal regulatory structure was analyzed in detail at the 25th Annual Rocky Mountain Mineral Law Institute in Seattle, federal requirements will be noted in this paper, but in a more cursory fashion.²

[Page 7-2]

The federal system is considered first, because state environmental and other restrictions are often established in direct response to federal regulatory programs and can be better understood in the light of the principles underlying the federal schemes.

B. Definitions

Whenever the term "permit" is used herein, it is understood to include licenses, authorizations and other written approvals by a governmental agency.

Permits and bonds are required, of course, to ensure compliance with governmental programs. These programs have been established and have evolved in an effort to accomplish certain societal goals set by governmental bodies. For ease of analysis, we have grouped permitting and bonding requirements according to four major areas of regulatory concern. The first area involves permits which regulate use of public land and resources. An example is restrictions placed upon entry to public lands for mineral exploration for the purpose of minimizing the surface effects of that entry. The goal of regulatory programs of this type is to preserve the surface features of land, and its resources, in a manner that will allow its continued use by others to the maximum extent consistent with the right to extract valuable minerals. The second category contains the "classic" environmental laws, which are designed to protect air and water quality and regulate disposal of solid wastes. This body of law places limits and conditions on man's use of the physical environment as a disposal medium for various waste products.

The third regulatory program involves public and worker health and safety, and to other types of permits that do not fit neatly into one of the other categories.

The fourth regulatory program is the one relating to mined land reclamation. Athough the reclamation laws are based in part on all of the above considerations (with land use, "classic" environmental and community health and safety aspects), they are considered important enough in their own right to be the principal topic of discussion at this conference. Therefore they will be covered separately below.

[Page 7-3]

C. Caveats and Disclaimers

Obviously, the subject assigned to this paper is encyclopedic and would result in a multi-volume product if an attempt were made to cover the entire field. The body of laws affecting hardrock mining is of staggering proportions. In order to make the subject matter manageable, we have eliminated a number of aspects of this law and an operator and his attorney should note this fact, as well as recognize the fact that in the analytical portion of the paper we have not attempted to consider every aspect of each statute.

At the outset it should be emphasized that only those laws which will result in issuance of a permit are examined. This is with full knowledge of the fact that in so doing we have foregone analysis of a major statute which has generated perhaps more consternation within the mining industry than any other: the National Environmental Policy Act (NEPA). There are several reasons for this exclusion. First, and perhaps most important, NEPA is essentially a procedural statute which merely requires analysis of the environmental effects of projects which are subject to federal approval requirements under separate statutory authority.³ Thus, it supports permits, and can be a tool to be used by an agency to justify a decision to approve or disapprove a permit, but it is not in itself a permitting statute. Second, NEPA has been covered exhaustively in other papers, and a reiteration here would be redundant and would make this paper unmanageably long.⁴

Second, other laws which require coordination between and among federal, state and local authorities, but which ordinarily do not require issuance of a permit as that term is defined here, will not be covered, for essentially the same reasons NEPA is excluded. Examples of such laws are the federal Endangered Species Act of 1973,⁵ the federal Fish and Wildlife Coordination Act of 1934,⁶ the National Historic Preservation Act and its antecedents,⁷ and various state statutes which cover the same ground.

A third regulatory program which is not covered deals with questions of the mitigation or alleviation of the so-called "socio-economic" impacts of large scale mining operations in areas of sparse population. To an increasing degree states and localities, and the federal government, are becoming concerned about the need to provide greatly increased levels of public services to small towns and rural areas suddenly impacted by an

[Page 7-4]

influx of population associated with a major mining venture. While the concern has been expressed most often in terms of impact from energy-related mining, the same effects can be felt in hardrock mining areas as well. Coordination, consultation and discussion are the rule, often under the "umbrella" of an EIS or plan of operations approval. These concerns frequently result in passage of state industrial and mine siting legislation, which often addresses questions relating to resource preservation, zoning and environmental questions in addition to socio-economic impact analysis. This subject matter is being addressed in a separate paper at this conference, and therefore will not be examined herein.⁸

In like manner, local ordinances, regulations and land planning and zoning requirements as they affect mining are being addressed by other participants. General licensing and taxation requirements which are not specific to hardrock mining (even though they may be required for such activity) as well as the many specific and often separate and detailed requirements for operations on Indian lands will not be considered in this paper. Additionally, state water appropriation laws will not be examined in detail, despite their extreme importance to mining in the arid west. Any mine operator who wishes to appropriate, divert, store and supply water to an operation must comply with sophisticated and often complex state water laws. The miner is urged to pay close atention to those requirements at an early date.

After eliminating the above subjects from further examination, we are left with a still-considerable body of law relating to major permit requirements affecting the hardrock mining industry. The regulatory structure that remains presented some severe problems in drafting this paper. As mentioned previously, environmental law continues to evolve at far too rapid a pace to allow leisurely scrutiny. Any one of the permit requirements that will be discussed below could logically be the source of an entire paper of its own.⁹ If such a narrow subject were chosen, day-to-day changes in the regulatory structure could be followed and analyzed in depth. That task is extremely difficult in a paper such as this, which has a wide scope covering a multitude of varying requirements. Therefore, we can only hope to survey the field, and set out each requirement with a minimum of detail. This is by way of both apology and warning. We apologize to those experts in any given field — and we suspect that in this audience there are experts in just about every topic presented — who may think this paper too elementary in dealing with their particular specialty. At the same time we warn

[Page 7-5]

potential mining operators that they should not treat this paper as a "bible" of permit requirements. Each statutory and regulatory scheme contains enough areas of ambiguity and uncertainty to require an in-depth analysis that can only be provided by an expert. This paper is meant to be only a beginning.

Despite all of the above disclaimers and admissions, we feel that a study such as this is critically important to the mining industry. This overview can provide the would-be operator with a valuable tool for helping to determine what requirements he likely will have to meet before he gets too deeply into the process and expense of planning a possible mining venture.

II. Federal Permitting Requirements

Certainly, the mining industry is one of the prime targets of the ongoing federal...