Financial Assurance Regulation

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Western Governors' Association
Policy Resolution 2017-06

Financial Assurance Regulation


  1. All Western states in which mining occurs have staff dedicated to ensuring that ongoing mine operations develop and follow appropriate reclamation plans.
  2. An important component of a state’s oversight of mine reclamation is the requirement that mining companies provide financial assurances in a form and amount sufficient to fund required reclamation if, for some reason, the company itself fails to do so. These types of financial assurances protect the states and the public from having to finance reclamation and closure if the company goes out of business, or fails to meet its reclamation obligation.
  3. All Western states have developed regulatory financial assurance programs to evaluate and approve the financial assurances required of mining companies. The states have developed the staff and expertise necessary to independently calculate the appropriate amount of the financial assurance, based on the unique circumstances of each mining operation and environmental and ecological requirements of each state, as well as to make informed predictions of how the real value of current financial assurance may change over the life of the mine, and even post-closure. The states have also developed expertise in evaluating each financial assurance instrument used for financial assurance that complies with individual state statutory requirements.
  4. Western states have a proven track record in regulating mine reclamation in the modern era – including for hardrock mines – having developed appropriate statutory and regulatory controls, and are dedicating resources and staff to ensure responsible industry oversight.
  5. In contrast, EPA currently has no staff dedicated to oversight of mine reclamation, the development of site-specific closure costs, the approval of financial assurance and the evaluation of financial assurance instruments associated with mine reclamation. Consequently, if EPA proceeds to promulgate financial assurance requirements for the hardrock mining industry under CERCLA section 108, it will have to create a new federal regulatory program – an unnecessary investment of federal funds – at a time when the federal government is trying to get its fiscal house in order.
  6. Section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9608(b), requires EPA to promulgate financial responsibility requirements for industrial facilities that take into account the risks associated with their use and disposal of hazardous substances. After the Sierra Club sued EPA for failing to timely comply with this section of CERCLA, a federal District Court in California ordered EPA to do so. (1)
  7. In response to the Court’s ruling, EPA announced in July 2009 that it had selected hardrock mining as the first industry sector for which it would undertake an analysis of whether federal financial assurance requirements under CERCLA section 108 (2) were needed.
  8. Since EPA’s 2009 announcement, Western Governors have expressed concern that any financial assurance requirements that EPA may develop for the hardrock mining industry could be duplicative of state requirements, and could even pre-empt them entirely. The Governors have also questioned whether EPA has the resources to implement reclamation financial assurance and evaluate the compliance of the financial assurance instruments used for hard-rock mines, since assurance calculations usually reflect very site-specific and ecological reclamation needs, tasks and costs.
  9. State mining agencies provided detailed comments to EPA in August 2011 on the structure and extent of each state’s hardrock mining financial assurance requirements. EPA has yet to indicate if or what problems or gaps the agency has found in existing state requirements.
  10. A January 2016 D.C. Circuit Court opinion approved a settlement agreement negotiated by EPA and several non-governmental organizations. (3) It requires EPA to publish a notice of proposed rulemaking under CERCLA section 108(b) to establish financial assurance regulations for the hardrock mining industry by December 1, 2016.
  11. This settlement agreement also requires EPA to announce by December 1, 2016 whether it will pursue CERCLA section 108(b) financial assurance regulations for the:
    1. Chemical manufacturing industry;
    2. Petroleum and coal products manufacturing industry; and
    3. Electric power generation, transmission and distribution industry.


  1. Because mine reclamation is needed primarily to protect adjacent waters, it is both appropriate and consistent with Congressional intent to recognize the states’ lead and primary role in regulating water related impacts of mine reclamation, including the associated financial assurance. (4)
  2. Western Governors believe that states currently have financial responsibility programs in place that are working well, and that functional programs should not be duplicated or pre-empted by any program developed by EPA pursuant to section 108(b) of CERCLA.
  3. Prior to determining whether to pursue CERCLA section 108(b) financial assurance regulations for any of the chemical manufacturing; petroleum and coal products manufacturing; or electric power generation, transmission and distribution industries, EPA should consult with Western Governors and state regulators regarding existing state regulations. EPA should take into account state data and expertise in development and analysis of underlying science that serves as the legal basis for federal regulatory action.
  4. In the event EPA opts to pursue financial assurance regulation of the chemical manufacturing industry; petroleum and coal products manufacturing industry; or electric power generation, transmission and distribution industry, it should enter substantive pre-publication consultation with Western Governors and state regulators to prevent duplication or preemption of existing state law. This should include substantive consultation with states during development of rules or decisions and a review by states of any proposal before a formal rulemaking is launched.


  1. The Governors direct WGA staff to work with Congressional committees of jurisdiction, the Executive Branch, and other entities, where appropriate, to achieve the objectives of this resolution.
  2. Furthermore, the Governors direct WGA staff to consult with the Staff Advisory Council regarding its efforts to realize the objectives of this resolution and to keep the Governors apprised of its progress in this regard.

(1) See Sierra Club v. Johnson, 2009 WL 2413094 (N.D. Cal. 2009)
(2) See 74 Fed. Reg. 37213 (July 28, 2009).
(3) Order In re: Idaho Conservation League, et al., No. 14-1149 (D.C. Cir. Jan. 29, 2016).
(4) See Clean Water Act, Sec. 101(b), 33 U.S.C. § 1251(b).

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