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LETTER: Governors highlight concerns over EPA financial assurance requirements

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March 29, 2016

Honorable Gina McCarthy
Administrator
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, N.W. (1101A)
Washington, D.C. 20460

Dear Administrator McCarthy:

Many western states rely on the hard rock mining industry for economic development and employment. Western states where mining occurs have staff dedicated to mine permitting and compliance. They ensure that hard rock mining facilities are designed, constructed and operated to minimize risks to the environment and ensure reclamation. State regulators ensure proper mine closure on both private and public lands when the time comes. They coordinate with federal land agencies to ensure bonding is adequate.

A recent D.C. Circuit court decision approved a settlement agreement negotiated by the Environmental Protection Agency (EPA) and several non-governmental organizations. It requires EPA to publish a notice of proposed rulemaking pursuant to section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) for the hard rock mining industry by December 1, 2016. (1)

Western Governors are concerned that EPA may impose additional financial assurance requirements on the hard rock mining industry. As stated in section A(3) of WGA Policy Resolution 2014-07, Bonding for Mine Reclamation (attached to these comments and incorporated by reference), western states have developed regulatory bonding programs to evaluate and approve financial assurance requirements for hard rock mining operations. Each western state has also developed detailed design, construction, operating, monitoring and permitting standards for hard rock mining facilities.

Governors have specific concerns with the potential introduction of EPA bonding requirements including:

  • Duplicative Federal Regulations – Proposed federal requirements would duplicate existing state financial assurance requirements and could preempt existing state requirements for hard rock mining operations. They would require compliance with federal design, construction and operating standards, to the exclusion of proven state standards. These additional financial assurance requirements would impair western economies and the hard rock mining industry in America. Section B(2) of WGA Policy Resolution 2015-09, National Minerals Policy, reinforces the importance of the mining industry to both local and national economies. Reliable supplies of American minerals play a critical role in meeting national security needs.
  • Inappropriately Hampering Effective State Programs – EPA has not indicated to states what, if any, problems or gaps the agency perceives in state financial assurance requirements. EPA has likewise failed to indicate that modern, state-driven standards necessitate any alternative program. Western states have the staff and expertise necessary to ensure environmental compliance, reclamation and site closure. Reclamation and closure bonding calculations are based on the unique circumstances of each mining operation, the local ecology and post reclamation land use. Local expertise allows for informed decisions on financial assurances required – based on real values over the life of the mine and after its closure. Many of the hard rock mines in the Western U.S. are on private or public lands, and at times on both. Only state regulatory agencies can oversee bonding and closure on sites with dual ownership and split mineral estate.
  • Failure to Recognize States’ Primacy Role in Water Management – Hard rock mine reclamation and bonding are required to protect water resources. States are identified under the Clean Water Act as the primary regulators of water. It is appropriate to recognize the lead and primary role of states in regulating water-related impacts incident to mine reclamation – including associated bonding requirements.

The referenced D.C. Circuit court order directed EPA to determine by December 1, 2016 whether to issue notice of proposed rulemaking on CERCLA 108(b) financial assurance requirements for (a) chemical manufacturing; (b) petroleum and coal products manufacturing; and (c) electric power generation, transmission and distribution industries. We note similar concerns regarding EPA’s introduction of bonding requirements for these industries.

Prior to publishing a notice of proposed rulemaking for any of these industries EPA should consult with Governors and engage state regulators. This should occur early in the process – before rulemaking. Substantive consultation during development of rules or decisions should occur well before formal rulemaking is launched. This should include a review by Governors and state regulators of any proposals before they are sent to the White House Office of Management and Budget for finalization.

As part of early consultation on any proposals, we request that EPA provide Governors and state regulators the following:

  • A detailed state consultation timeline and plan for obtaining individual state comments from Governors and state regulators;
  • All technical and scientific materials and analyses used to support any proposed rule, denoting whether any such materials were peer-reviewed;
  • A statement indicating how the EPA solicited ideas about alternative methods of compliance and potential flexibilities in order to reduce the economic burden placed on affected entities;
  • A statement indicating how EPA solicited information from the Governors and state regulators as to whether the proposed rule will not duplicate similar state requirements;
  • A copy of a federalism assessment or the reason why EPA did not complete a federalism assessment;
  • Explanation of the reason existing state programs are insufficient to address the concerns and an analysis of any conflicts in the proposed rule with state programs; and
  • Analysis of financial assurance instruments that would satisfy any proposed EPA requirement.

Western states are committed to environmental protection and to responsible and comprehensive regulation and bonding for hard rock mining operations. Western Governors urge you to consider the concerns raised here.

Sincerely,

Matthew H. Mead
Governor of Wyoming
Chairman, WGA

Steve Bullock
Governor of Montana
Vice Chair, WGA

cc: Honorable Lisa Murkowski, Chairwoman, Senate Energy & Natural Resources Committee;
Honorable Maria Cantwell, Ranking Member, Senate Energy & Natural Resources Committee;
Honorable Fred Upton, Chairman, House Energy & Commerce Committee;
Honorable Frank Pallone, Ranking Member, House Energy & Commerce Committee

(1) Order In re: Idaho Conservation League, et al., No. 14-1149 (D.C. Cir. Jan. 29, 2016).

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