Financial Assurance, Bonding and CERCLA 108b


Acid mine drainage in Arizona.

Congress enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, in 1980 with the intent of responding to and preventing environmental and health risks caused by industrial pollution.

“If financial assurance requirements have been established and required by law, we would not now be faced with an $800 million liability at the CMI Questa mine. It is time for industry to be accountable for their own toxic mess. The public and the environment have paid the price for too long.” --Rachel Conn, Project Director, Amigos Bravos

Under Section 108b of CERCLA, EPA is directed to require that industrial polluters have adequate funds in place for clean-up, so that industry, not taxpayers, bear the cost of clean-up. But EPA has failed to issue rules to implement  financial assurance for more than thirty years.

After an order from a federal district court in 2009, EPA found that financial assurance rules were warranted for the hardrock mining industry. Despite the explicit directive from the court and EPA’s own findings, they have failed to issue such rules, and respond to a very serious problem within a reasonable time.

Earthworks and other environmental organizations are petitioning the Court of Appeals for a Writ of Mandamus that would require the EPA to issue rules ensuring that industries that handle hazardous substances are able to clean them up. The petition requests a finding that EPA has unreasonably delayed issuing financial assurance rules and seeks an order for the EPA to finalize such rules by Jan, 1, 2016.

CERCLA & The High Cost of Hardrock Mining

The funding mechanism of CERCLA, known as the “Superfund,” is a public trust fund that helps with the cleanup costs of abandoned mines and other industrial waste sites. This fund has been dwindling since the Superfund corporate tax expired but the number of sites requiring cleanup has not. The need for financial assurance rules for industries like hardrock mining is all the more pressing.

Hardrock mining is the nations largest toxic polluter:

Funding Shortfalls                     

2010 GAO Report says that insufficient EPA funding has led to “increase [in] the length of time it takes to clean up a site; the total cost of cleanup; and, in some cases, the length of time populations are exposed to contaminants.” EPA and taxpayers will foot the bill for escalating cleanup costs unless financial assurance requirements are strengthened.  

Non-partisan government reports have recommended better financial assurance mechanisms to protect taxpayers and the environment from mining impacts.  Financial assurance mechanisms are based on the polluter pays principle that makes liable parties pay for cleanup costs. Ultimately, this protects taxpayers from a multi-billion dollar tax liability for cleanup. The EPA could better ensure that companies at high risk of incurring environmental liabilities meet their cleanup obligations by implementing CERCLA 108b authority and requiring financial assurance.

Financial Assurance Pays

Financial assurance is a financial guarantee, usually paid before mining begins, that regulators use to fund reclamation and cleanup in the event that the company is not capable or not willing to pay for cleanup. Financial assurances usually take the form of:

Financial assurance rules would be especially helpful to mining activities on non-federal land that are not covered by the financial assurance requirements of other federal agencies.

Financial assurance not only ensures that responsible parties can cover the cost of cleanup but it also prevents contamination in the first place. Financial assurance, which puts the onus on polluters to pay for hazardous releases, plays a preventative role that can save money for businesses and taxpayers while protecting human and environmental health.

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Tagged with: mining, financial assurance, cercla 108b, cercla, bonding

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