Chapter 7 INTEGRATION OF ESG CONSIDERATIONS INTO MINING PROJECTS ON FEDERAL OR STATE LANDS TO ALIGN WITH ENVIRONMENTAL REVIEW PROCESSES, GOVERNMENTAL AND COMMUNITY EXPECTATIONS, AND PROJECT GOALS

• Jurisdiction: United States

Mining Law
Chapter 7

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INTEGRATION OF ESG CONSIDERATIONS INTO MINING PROJECTS ON FEDERAL OR STATE LANDS TO ALIGN WITH ENVIRONMENTAL REVIEW PROCESSES, GOVERNMENTAL AND COMMUNITY EXPECTATIONS, AND PROJECT GOALS
Aleava R. Sayre Stoel Rives LLP Minneapolis, MN

ALEAVA R. SAYRE is a partner in Stoel Rives' Environment, Land Use & Natural Resources group who focuses her practice on environmental law, mining law and litigation. Her exceptional public speaking and presentation skills, her ability to adapt complex legal and technical information to different settings, and her solution-oriented approach allows her to effectively advocate for her clients before an array of audiences. In the environmental and regulatory space, she counsels clients in environmental issues arising under federal, state and local laws that relate to project development, administrative challenges or proceedings, enforcement actions, and litigation. Her substantial experience working with technical experts, nuanced and novel legal issues, and with regulatory officials enables her to identify potential substantive or procedural obstacles and proactively develop solutions that achieve her clients' objectives. Before joining Stoel Rives, Aleava was an attorney at Stinson Leonard Street LLP. After law school, she was a law clerk for the Honorable Harriet Lansing of the Minnesota Court of Appeals.

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Synopsis

Introduction

I. Effective Integration of ESG Principles Is Critical to Financial and Regulatory Outcomes for Mining Projects by Ensuring Projects Meet Community and Governmental Standards

II. Alignment of ESG Principles with Governmental Responsibilities in Programmatic Land Management and Environmental Review Programs

A. When Reviewing Mining Projects on Public Lands, Federal and State Agencies Have Broad Responsibilities, Which Align with ESG Principles
B. Mining Projects that Effectively Integrate ESG Principles Can Better Align with Agency and Community Expectations in Programmatic Land and Resource Management Planning Decisions

III. Integration of ESG to Align Mining Project with Regulatory Processes Required to Secure and Maintain Land Authorizations for Federal or State Lands

A. Land Authorizations for Mining Projects
B. Integration of ESG Considerations Arising in Context of Federal and State Lands into Company Assessments of Land Tenure, Financing, and Risk Management
3. Surface and Mineral Tenure

2. Corporate deals and financing (AngloGold-Newmont)

3. 43-101 and securities (Doe Run or ______; new mining disclosure requirements to SEC (Dorsey))

Conclusion

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INTRODUCTION

The United States holds some of the world's "major mineral deposits" for certain minerals necessary to advance the nation's energy, economic, natural resource, and national security interests.¹ After centuries of mining, these important resources are rarely located in areas that are both readily accessible and devoid of major controversy.² Rather, these mineral resources are often on or near federal³ or state lands⁴ and are routinely located near wilderness areas,⁵ national monuments/park,⁶ protected waterbodies, sensitive environmental receptors, or cultural resources of significance to Tribal entities.⁷ The perceived or actual conflict in these interests and

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mining, which is often generations in the making,⁸ becomes an essential part of the agency review and public response to a company's proposal for a new or expanded mining-related activity (Mining Project). And even a decades-long governmental⁹ or social agreement about mining practices or a community's previous acceptance of other forms of mining¹⁰ does not always insulate a Mining Project from renewed examination, especially with increased concerns about climate change and environmental harm.

As federal and state agencies review a Mining Project, they must abide by a complex and interwoven web of laws intended to ensure a rigorous examination of all environmental, natural resource, energy, and other public interests as part of the decision-making process.¹¹ Increasingly, agencies are providing expanded and increased opportunities for Tribal engagement and public participation, including (1) extended and repeated public comment periods, (2) multiple public meetings and/or administrative hearings,¹² and (3) remedies for aggrieved or affected parties.¹³ In this setting, mining companies have, like many other corporate entities, recognized the need to fully integrate environmental, social, and governance (ESG) principles and criteria into the design, environmental review and permitting, construction, and operation of a Mining Project.¹⁴

This Paper discusses how the integration of ESG considerations into company decision-making, particularly during assembly of the surface and minerals necessary for the project, results in an improved interface between the Mining Project and governmental and community expectations. While the various participants in the regulatory processes will certainly have differing perspectives

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or even adverse interests on key issues, proactively addressing ESG considerations before proposing a Mining Project facilitates a constructive and ongoing dialogue based on understood procedures and requirements.¹⁵

It is during this process that the project proponent has an opportunity to develop and present for consideration concepts and approaches that are pragmatic, solution-oriented, and responsive to the concerns raised by other participants. Given the robust public participation in decisions relating to both public lands and Mining Projects and the nature of the environmental and other concerns involved, the efficiency of the regulatory process will be informed by, among other things, how well the project proponent has anticipated these concerns. A well-orchestrated and inter-disciplinary ESG team can help avoid unwanted delays and develop the necessary administrative record by providing timely responses, including technical data and reports, legal analyses, and regulatory pathways, and by developing a multi-tiered and inter-disciplinary communications strategy.

To explain the important role ESG consideration has played, and will continue to play, in securing rights to public lands and other approvals associated with Mining Projects, this Paper is structured as follows:

PART I discusses the financial and regulatory importance of ESG considerations when seeking necessary approvals for a Mining Project in the United States.
PART II provides an overview of how ESG considerations align with agencies' land management responsibilities and programmatic and planning decisions for public lands intended for use in Mining Projects.
PART III examines the role ESG principles play in securing long-term surface and mineral tenure for public lands and in aligning the requirements for financing, disclosures, and other business matters with requirements for federal and state land authorizations.

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I. EFFECTIVE INTEGRATION OF ESG PRINCIPLES IS CRITICAL TO FINANCIAL AND REGULATORY OUTCOMES FOR MINING PROJECTS BY ENSURING PROJECTS MEET COMMUNITY AND GOVERNMENTAL STANDARDS.

In the wake of the "uncertainty and unprecedented economic and social change that unfolded in 2020, there has been a significant shift in the integration of [ESG] factors into investment decision-making."¹⁶ As a result, the mining industry has:

witnessed a material change in the level of sophistication and understanding of the importance of ESG, and the risks and opportunities it poses to the mining sector. It's no longer just enough to tell a great story about a significant discovery or great production numbers. It's equally important to demonstrate how you're working alongside local communities, and how you're contributing to the low carbon economy transition and to the responsible sourcing of prime materials.¹⁷

In this context, it is unsurprising that, for mining like other industries, "[r]esponsible investing is widely understood as the integration of [ESG] factors into investment processes and decision-making."¹⁸ As of November 2019, McKinsey & Company has noted that "ESG-oriented investing has experienced a meteoric rise. Global sustainable investment now tops $30 trillion--up 68 percent since 2014 and tenfold since 2004."¹⁹ Fortunately, the "overwhelming weight of accumulated research finds that companies that pay attention to environmental, social, and governance concerns do not experience a drag on value creation--in fact, quite the opposite."²⁰ In addition to higher equity returns, use of effective ESG practices "also corresponds with a reduction in downside risk."²¹

Even those companies that are reluctant to embrace ESG considerations in their financial analyses are subject to agency oversight and proceedings in which critical financing matters are tethered to regulatory approvals or other requirements. Regulatory agencies, financial institutions, and business partners have long required a company's finances and disclosures account for and allocate the financial risks associated with certain environmental matters such as contaminated properties, enforcement actions, and contractual compliance obligations (e.g., indemnity).²²

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Recently, these ESG-related considerations have expanded into areas such as pension funds, banking, and other financial analyses and have extended to environmental risks such as those related to climate change.²³

For potential Mining Projects, federal and state agencies have also exercised their discretion to deploy expansive requirements for financial assurance to cover all phases of mining, including construction, operations, closure, reclamation, and post-closure maintenance.²⁴ These financial assurance requirements are often informed by decades of experience with bankruptcies and abandonment, the agencies' resulting aversion to financial risk, and concern about the potential shift of reclamation obligations to the...