Earthworks

Financial Assurance and Superfund

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Acid mine drainage in Arizona.

Across the country, families that live near polluted industrial facilities are faced dirty water, dirty air and contaminated soils.  Too often, taxpayers have left with the clean-up costs. 

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 (i.e., financial assurance) in place for clean-up, so that industry, not taxpayers, bear the cost of clean-up. But for more than thirty years, EPA failed to issue rules to implement financial assurance.

Court Decision

In response to litigation filed by Earthjustice on behalf of Earthworks and our coalition partners, the court ordered the EPA in February 2016 to complete new regulations that require these polluting companies to post financial assurance up front for the cost of cleaning up the hazardous materials they generate – a critical step in protecting public health and clean water. The court ordered the EPA to develop draft regulations for hardrock mining by Dec. 1, 2016 and final regulations by December 1, 2017.  

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 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: superfund, mining, financial assurance, cercla 108b, cercla, bonding

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