EPA Declines To Issue CERCLA Financial Responsibility Rules For Hardrock Mining Industry But Leaves Open What It Might Do For Other Industries

Pillsbury Winthrop Shaw Pittman LLP
Anthony B. Cavender

December 7, 2017

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly referred to as Superfund, was enacted in December 1980, and Section 108(b) provides that the Environmental Protection Agency (EPA) shall promulgate, no later than December 11, 1985, financial responsibility requirements for classes of facilities—designated by EPA—consistent with “the degree and duration of risk associated with their production, transportation, treatment, storage or disposal of hazardous substances.” Despite this directive, EPA has not issued any financial responsibility rules under Section 108(b). This record of inaction prompted a lawsuit demanding compliance with the law.

On January 29, 2016, in In re Idaho Conservation League, the U.S. Court of Appeals for the District of Columbia, resolving a petition for writ of mandamus, issued an order approving a joint motion for order on consent for EPA to adhere to an agreed schedule by which EPA would issue a notice of proposed rulemaking seeking comments on a proposal to establish financial assurance requirements affecting many facilities in the hardrock mining industry by December 1, 2016, and to issue a notice of the EPA’s final action by December 1, 2017. EPA adhered to this schedule, issuing the Notice of Proposed Rulemaking on January 11, 2017, and the Administrator signed for publication EPA’s final action on December 1, 2017.

In the end, EPA’s final action was a decision not to issue any rules at all affecting the hardrock mining industry. After reviewing the administrative record and the comments submitted, EPA determined that such rules were no longer appropriate. Somewhat remarkably, EPA states that it was compelled to reconsider whether the record now supports the complex financial assurance rules it had proposed. EPA states that it has been persuaded that modern mining techniques, which have significantly improved since CERCLA’s enactment, lessen the risks to current mining operations that have hitherto been associated with “legacy” mining sites which have proved to be very complex, expensive and take an exceedingly long time to complete.

Moreover, EPA notes that its earlier foray failed properly to evaluate the effect that existing federal and state regulatory safeguards now in place reduce the risk that there will be unfunded CERCLA responses for which the public will bear the cost. EPA determined that the risk of EPA-funded responses at these mining sites were estimated to range from $15 million to $15.5 million per year, while the projected financial assurance costs to industry would be $111 million to $171 million.

In addition, the proposed rules created the potential for a federal preemption of state financial responsibility rules, and the insurance industry pointed out that CERCLA Section 108(c)(2) allows direct claims to be made against an entity providing evidence of financial responsibility, a practice which is at variance with relevant commercial law and practice. EPA cautions, however, that this decision is based on the record compiled in this proceeding and limited to this rulemaking proceeding, and it will not affect EPA’s ability to respond to site-specific releases from hardrock mining operations.

Finally, it should be noted that EPA has identified other classes of industry for which it would review the need for CERCLA financial responsibility rules: chemical manufacturing, petroleum and coal production, and electric power generation, production and distribution. The January 29, 2016 Order of the Court of Appeals also established a schedule by which other rulemakings may be taken, if EPA decides to take these actions, but obviously, EPA may now be disinclined to proceed. Certainly, these decisions will be tested in the courts. This decision will be effective thirty days after its Federal Register publication.

This article is being provided for informational purposes only and not for the purposes of providing legal advice or creating an attorney-client relationship. You should contact an attorney to obtain advice with respect to any particular issue or problem you may have. In addition, the opinions expressed herein are the opinions Mr. Cavender  and may not reflect the opinions of Synergy Environmental, Inc., Pillsbury Winthrop Shaw Pittman LLP or either of those firms’ clients.

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