Deep inside the newly passed government spending bill is a provision requiring U.S. EPA to study the viability of new financial assurance requirements on hardrock mining companies before proposing its forthcoming rule on the subject. The issue is gaining prominence, with mining companies worried about dealing with too much red tape.

EPA plans to propose the new requirements sometime this year to prevent taxpayers from being on the hook for abandoned mine cleanups under the Superfund law. In 2009, EPA put hardrock mining at the top of the list of industries the agency is targeting for new financial assurances, like bonds or letters of credit.

The omnibus spending bill requires EPA to "collect and analyze information from the commercial insurance and financial industries regarding the use and availability of necessary instruments for meeting any new financial responsibility requirements." EPA must make the analysis available to lawmakers and the public 90 days before proposing a rule.

The provision is more lenient than an amendment by Rep. Denny Rehberg (R-Mont.), which would have stripped all funding for EPA rulemaking on financial assurances without further study. The House Appropriations Committee passed the amendment in July, but it failed to make the cut during budget negotiations last month.

The mining industry and its boosters on Capitol Hill have stressed market conditions as a reason for EPA to reassess moving forward with new requirements.

"Recent economic circumstances have tightened the market for financial assurance instruments, and further restrictions on the use of any of these instruments will only serve to exacerbate the costs of obtaining financial assurance," the National Mining Association wrote in a lengthy comment letter to EPA in 2010.

"EPA should analyze and document those potential costs before imposing any new financial assurance requirements," the NMA said. "Limiting the availability of affordable financial assurance instruments may drive up the costs of remediation and compliance obligations."

Environmental advocates, who have long been pushing for more financial assurance requirements, believe the industry argument over financial assurance market conditions is a red herring.

"It just sounds to me like they're throwing a cloud of smoke," said Ed Hopkins, the Sierra Club's environmental quality program director, in an interview. "It sounds like a very self-interested argument. I don't see why they couldn't provide funds themselves to provide these financial assurances."

In February of 2009, U.S. District Court Judge William Alsup for the Northern District of California ordered EPA to identify the industries subject to future financial assurance requirements under Superfund law. The NMA and other industry advocates object to EPA picking hardrock mining companies -- including gold, uranium and phosphate -- as their first priority.

"EPA's first analysis of financial assurance needs for metals mining neglected to include the financial assurance currently required and provided for under state and federal laws and regulations requiring mine land reclamation bonds," NMA spokeswoman Carol Raulston said in a statement. "NMA noted this deficiency in its comments to the agency but has had no response from EPA."

Earlier this year, Alaska Sen. Lisa Murkowski, top Republican on the Senate Energy and Natural Resources Committee, suggested EPA's rulemaking was an "intrusion" and a "power grab" and stressed requirements already in place to protect taxpayers (E&E Daily, March 9, 2011).

EPA has promised to consider existing reclamation and financial assurance requirements by states and other federal agencies like the Bureau of Land Management to prevent duplication.

If all is well with financial assurance requirements, Hopkins said, "Why are the federal government and the taxpayers still on the hook for cleaning up the messes that they have created?"

Lisa Evans, Earthjustice senior administrative counsel who helped represent the environmental community before Judge Alsup, has called for strong financial assurance requirements. In a 2010 letter to EPA, she asked the agency to shy away from allowing companies to use financial instruments that could prove unreliable.

"Time is of the essence," Evans wrote. "The absence of financial assurance requirements for large classes of high-risk generators and handlers of hazardous substances injures human health and the environment as well as depletes public clean-up funds."

While taxpayers have spent billions of dollars to help clean abandoned mine waste, the industry says it should not be judged by past mistakes. It notes that many Superfund sites are legacy mining operations.

A proposal by President Obama to tax the hardrock mining industry to help pay for cleanup efforts has failed to gain traction in Congress.

Both Rehberg and Murkowski were members of the conference committee that helped craft the final spending language with the rider on financial assurances. Rehberg, who is running for Senate, has received almost $100,000 connected to the mining industry this year, according to the Center for Responsive Politics. Murkowski has also received significant mining contributions throughout her career.