POTENTIAL ADDITION OF CERCLA FINANCIAL ASSURANCE REQUIREMENTS

• Jurisdiction: United States

Mine Closure, Financial Assurance, and Final Reclamation
(Nov 2009)
CHAPTER 2A
POTENTIAL ADDITION OF CERCLA FINANCIAL ASSURANCE REQUIREMENTS
Joseph H. Baird
Baird Hanson Williams LLP
Boise, Idaho

Joseph H. Baird is a partner in the mining and mineral resources law firm of Baird Hanson Williams LLP. He provides environmental and mining counsel to a wide variety of NYSE, TSE and venture capital mineral companies, including base and precious metal production companies, industrial mineral producers, exploration programs and mineral land management companies. Mr. Baird co-founded Baird Hanson Williams LLP in June 1997, prior to that he was a partner in the law firms of Givens Pursley and Elam Burke & Boyd. Before moving to Idaho in 1988, Mr. Baird practiced mining and environmental law in Colorado, where he was Associate General Attorney with Union Pacific Resources Company and an attorney with Holland & Hart. Mr. Baird graduated from the University of Virginia School of Law in 1981. He clerked for Exxon Minerals Company, USA in 1980 and the American Mining Congress in 1979. Prior to law school, Mr. Baird was with the U.S. Environmental Protection Agency in Washington, D.C. He graduated Magna Cum Laude from Colgate University in 1976, with majors in Geology and Political Science. Mr. Baird has served the Northwest Mining Association (NWMA) continuously since 2004 as either a member of the Executive Committee or the Board of Trustees. He is currently the Second Vice President of NWMA. Mr. Baird has been the NWMA Environmental Chair or Co-Chair of throughout this same period. Mr. Baird's professional memberships include the Rocky Mountain Mineral Law Foundation (former Trustee at Large) and the Society for Mining, Metallurgy, and Exploration (SME).

EPA Potential CERCLA 108 Hardrock Financial Assurances Program: Another Potential Solution in Search of a Problem

1.0 EPA's Potential CERCLA 108 Program threatens to create a fourth set of potentially applicable financial assurance requirements in the western U.S:

1.1 U.S. Forest Service - 36 C.F.R. 228 A (1974)

1.2 U.S. Bureau of Land Management - 43 C.F.R. 3809 (1981)

1.3 State Agencies (e.g., Nevada Division of Environmental Protection)

1.4 U.S. Environmental Protection Agency - Potential CERCLA 108 Program

2.0 Federal and state regulators have used existing regulatory authorities to create successful reclamation programs with adequate financial assurances. See "The Evolution of Federal and Nevada State Reclamation Bonding Requirements for Hardrock Exploration and Mining Projects," Jeffrey V. Parshley, and Debra W. Struhacker, prepared for Northwest Mining Association, January 2008.

3.0 In 2009, there are very few gaps in the system of financial assurances covering modern hardrock mine and mill reclamation ("Modern Mines and Mills"), specifically those Modern Mines and Mills designed and initially approved after the promulgation of the BLM 3809 regulations (i.e., 1981, almost 30 years ago).

4.0 Imposing yet a fourth potentially applicable financial assurances program would only make sense IF:

4.1 EPA had more experience regulating and bonding Modem Mines and Mills compared to the BLM, USFS or State agencies ("Existing Programs"), but in fact, EPA has less experience than the Existing Program agencies, OR;

4.2 The Existing Programs have created environmental damage cases that have required significant use of CERCLA funds to remediate Modem Mines and Mills because companies have forfeited reclamation bonds that were inadequate to complete reclamation.

[Page 2A-2]

5.0 Thus, if EPA seeks to promulgate a CERCLA 108 financial assurances program, EPA should identify all "Damage Cases" involving:

5.1 Modern Mines and Mills (post 1981 - date of the BLM 3809 regulations);

5.2 Forfeited Bonds; AND,

5.3 Requiring expenditure of Superfund monies.

6.0 Mine Reclamation Bond Forfeitures in Idaho - "[From 1986 through 2005] ... no hard rock mine in Idaho ever defaulted on their financial assurances such that the mine was not closed and reclaimed in accordance with: (1) the reclamation/closure plan approved by the [Federal and State] Agencies; and (2) with the financial assurances retained by the Agencies. In fact, I believe this to be true for the period before and after [1986 through 2005]." See Scott Nichols, former Idaho Department of Lands, Chief, Mine Lands Reclamation, May 23, 2007, Letter to Joe Baird.

7.0 Nevada Experience?

8.0 Question and Answer/Panel Audience Discussion - Identify Damage Cases outside of Idaho and Nevada involving:

8.1 Modem Mines or Mills (post 1981 - date of the BLM 3809 regulations);

8.2 Forfeited Bonds; AND,

8.3 Requiring expenditure of significant Superfund monies (more than $1,000,000).

9.0 Q&A/Discussion - For any Modem Mine or Mill Damage Case identified, is their a recognizable programmatic problem? Has it been fixed?

[Page 2A-3]

Our membership and services span the globe

10 N Post St. Ste 220 | Spokane, WA 99201-0705

Phone: 509.624.1158 | Fax: 509.623.1241

Email: nwma@nwma.org | Web: www.nwma.org

THE EVOLUTION OF FEDERAL AND NEVADA STATE RECLAMATION BONDING REQUIREMENTS FOR HARDROCK EXPLORATION AND MINING PROJECTS:

A Case History Documenting How Federal and State Regulators Used Existing Regulatory Authorities to Respond to Shortcomings in the Reclamation Bonding Program

Prepared by:

Jeffrey V. Parshley

Principal Geologist

SRK Consulting

Reno, NV

775/828-6800

And

Debra W. Struhsacker

Environmental Permitting & Government Relations Consultant

Reno, NV

775/826-3800

January 2008

[Page 2A-4]

Introduction and Executive Summary

This Northwest Mining Association (NWMA) white paper documents the evolution of the federal and the Nevada state bonding requirements for hardrock exploration and mining projects. Although this white paper focuses primarily on Nevada - the state with the most exploration and mining activity on federal land and the hub of the U.S. gold mining industry - other western states have similar regulatory programs and reclamation bonding requirements for hardrock mineral activities.

Key findings in this white paper include:

• The Nevada mining industry and state and federal regulators recently worked together to update and refine bonding requirements.

o The resulting modifications to the Nevada bonding program reflect a collaborative effort to develop comprehensive and conservative bonds that consider all likely contingencies based on agency costs to implement, manage, and complete reclamation of sites requiring governmental intervention.

• Existing federal and Nevada state laws and regulations governing hardrock exploration and mining clearly...