Document MGnVpMDy6g5vD7qLKNq8xdxb9

NMA July 11,2017 Submitted via www.regulations.gov The Honorable Scott Pruitt Administrator U S. Environmental Protection Agency 1200 Pennsylvania Avenue N.W. Mail Code 1101A Washington, DC 20460 Attention Docket ID No.: EPA-HQ-SFUND-2015-0781 RE: Financial Responsibility Requirements Under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry; 82 Fed. Reg. 3388 (Jan. 11, 2017) Dear Administrator Pruitt: The National Mining Association ("NMA") submits these comments in response to the U S. Environmental Protection Agency's ("EPA") proposed rule to establish "Financial Responsibility Requirements under Section 108(b) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") for Classes of Facilities in the Hardrock Mining Industry." 82 Fed. Reg. 3388 (Jan. 11,2017). NMA is a national trade association representing the producers of most of America's coal, metals, industrial and agricultural minerals; the manufacturers of mining and mineral processing machinery, equipment and supplies; and the engineering and consulting firms, financial institutions and other firms serving the mining industry. NMA's membership includes the classes of facilities targeted in the proposed rule and thus NMA has a direct and substantial interest in the rulemaking. Domestic mining is an important economic driver. The value added by major industries that consume the $78 billion of minerals produced in the U S. is an estimated $2.78 trillion in 2016, up from 2.69 trillion in 2015, and represent nearly 15 percent of our GDP. Mining's direct and indirect economic contribution includes nearly 2 million jobs with wage and benefits well above the state average for the industrial sector. In addition, domestic mining generates $46 billion in tax payments to federal, state and local governments. And, if we can unlock our mineral resources, mining could contribute even more to our economic security. This is especially true as the demand for minerals continues to grow. 1 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00001 The proposed rule is flawed in many respects, all of which raise significant questions about its legality. The most serious defect, however, is EPA's abject failure to meet the statutory obligations imposed by CERCLA 108(b) to first assess the risks posed by the hardrock mining and mineral processing industry (hereafter the "HRM" industry) to determine if the imposition of new financial responsibility requirements is merited. This flaw and the overwhelming evidence that NMA, its members, various states with significant HRM activity, federal land management agencies, the Small Business Administration ("SBA"), governors and others have presented regarding the risk-reducing nature of existing federal and state programs compel one outcome - EPA should publish a notice of final action withdrawing the proposed rule because the HRM industry does not present the "highest level of risk of injury" or the "degree and duration of risk" contemplated under the statute, and thus a CERCLA 108(b) program is unwarranted for the HRM industry. Katie Sweeney Senior Vice President, Legal Affairs & General Counsel Tawny Bridgeford Deputy General Counsel & Vice President, Regulatory Affairs Sierra Club v. EPA 18cv3472 NDCA 2 Tier 2 ED 002061 00087255-00002 Table of Contents Executive Summary........................................................................................................5 I. EPA's Proposed Rule Violates CERCLA 108(b)................................................9 A. EPA's 2009 Finding that the HRM Industry Presented the "Highest Level of Risk of Injury" is Fundamentally and Irreversibly Flawed...................................................... 9 B. CERCLA 108(b) Financial Responsibility Requirements Must Be "Consistent with the Degree and Duration of Risk" ....................................................................... 11 C. CERCLA 108(b) Financial Responsibility Requirements Cannot Duplicate Existing Federal Reclamation Programs..................................................................... 13 D. CERCLA 108(b) Financial Responsibility Regulations May Not Duplicate RCRA Financial Responsibility Requirements....................................................................... 17 E. CERCLA 108(b) Financial Responsibility Regulations Must Account for Existing State Programs............................................................................................................ 18 II. EPA's Finding of Continuing Risk in the HRM Sector is Fatally Flawed........ 21 A. EPA Failed to Assess Risk from Today's HRM Facilities....................................22 B. EPA Fails to Consider Risk-Reducing Effects of Current Federal, State, and Voluntary Programs.....................................................................................................23 1. The HRM Industry's Arc of Environmental Improvement............................... 24 2. Efficacy of Today's Mining Regime in Addressing CERCLA Risk................. 28 a) Federal and State Environmental Regulations Adequately Address CERCLA Risk.......................................................................................................29 b) Federal and State Financial Assurance Programs Reduce Risk of Public Funds Being Needed to Address Releases from HRMFacilities........................35 C. EPA Has Not Supported Its Claims that Bankruptcy Is an Actual Indicator of Risk to the Fund or a Reason to Disallow Corporate Guarantees.................................... 38 D. EPA's Alleged Evidence of Releases from Current Mining Operations is Unsubstantiated and Does Not Justify EPA's Risk Determination............................. 41 1. Focus on Wrong Timeframe........................................................................... 42 2. Lack of Peer Review...................................................................................... 44 3. Lack of Data on Funding of Any Needed Response Costs........................... 46 4. EPA's Releases Report................................................................................. 46 5. EPA's Practices Report.................................................................................. 49 6. EPA's Evidence Report.................................................................................. 51 7. EPA Misuses Data from the Toxics Release Inventory, RCRA Hazardous Waste Biennial Report and Emergency Response Notification System to Support its Risk Determination..............................................................................................54 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00003 a) EPA's Reliance on Toxics Release Inventory Data as Support for its Risk Determination for HRM Facilities is Inappropriate and Contrary to EPA's Repeated Position on TRI Data.......................................................................... 54 b) EPA's Reliance on RCRA Hazardous Waste Biennial Report Data Does Not Support the Agency's Risk Determination for HRM Facilities...................... 59 c) EPA's Reliance on Releases Reported Under the Emergency Response Notification System Does Not Support the Agency's Risk Determination for HRM F acilities............................................................................................................... 62 8. EPA's Reliance on Studies Completed in the 1990s Does Not Justify EPA's Risk Determination...................................................................................................64 9. EPA's Faulty Reasoning on ContinuingRisk................................................ 66 III. EPA's Financial Responsibility Formula isFatally Flawed.............................. 67 A. EPA's Generic, Formulaic Approach is Fundamentally Flawed......................... 68 B. EPA's Reduction Criteria and Methodology are Fundamentally Flawed............ 72 C. EPA's Approach to Determining Health Assessment Costs is Arbitrary and Capricious.................................................................................................................... 75 D. CERCLA 108(b) Should Not Include NRD Costs and EPA's Approach to Determining the Multiplier is Arbitrary and Capricious................................................75 E. Conclusions on EPA's Flawed Approach to the Formula.................................. 76 IV. EPA's Economic Analysis Significantly Underestimates the Economic Impact on the HRM Industry.....................................................................................................77 V. EPA Failed to Adequately Assess Market Availability and Affordability and Proposed Instrument Terms and Conditions that Will Limit Market Participation 79 A. EPA's Market Capacity Study Provides No Value in Assessing Affordability or Availability of CERCLA 108(b) Financial Responsibility Instruments...................... 80 1. EPA's Inadequate Research and Consultation Results in Unjustifiable Conclusions............................................................................................................. 80 2. EPA Failed to Examine the Correct Market Segment....................................83 B. EPA's Consultation with the Insurance, Surety, and Banking Community Was Woefully Inadequate....................................................................................................85 C. The Terms and Conditions for the Proposed Third-Party Instruments Will Discourage Providers from Participating in this Market..............................................87 VI. Implementation Issues..........................................................................................91 A. CERCLA 108(b) is Prospective in Nature and Should Not Apply to Inactive HRM Facilities............................................................................................................. 91 B. NMA Opposes EPA's Proposed Requirements for Public Notice....................... 93 Conclusion..................................................................................................................... 94 4 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00004 Executive Summary Nearly 40 years ago, Congress enacted CERCLA to address threats to human health and the environment posed by the nation's past waste disposal practices. CERCLA is both a backward and forward-looking statute - backward to find responsible parties, or in their absence, otherwise address remediation of existing sites - and forward to prevent creation of new sites. As the EPA acknowledges in the proposed rule, CERCLA 108(b) is one of the forward-looking provisions of the statute.1 CERCLA 108(b) requires EPA to determine the classes of facilities that present the "highest level of risk of injury" and promulgate financial responsibility for such facilities "consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances." 42 U.S.C. 9608(b)(1). Clearly, Congress intended that risk be the primary criterion when determining the classes of facilities that should be subject to new financial responsibility requirements under CERCLA 108(b). EPA did not take affirmative steps to promulgate any CERCLA 108(b) regulations until 2009 when, prompted by litigation, it published its "Identification of Priority Classes of Facilities for Development of CERCLA Section 108(b) Financial Responsibility Requirements." 74 Fed. Reg. 37,213 (July 28, 2009) ("Priority Notice"). In the Priority Notice, EPA identified several classes of facilities within the "hardrock mining industry" as the agency's first priority for development of financial responsibility requirements. Notably, during EPA's decades of inactivity, state and federal regulatory programs were maturing and evolving to address the same types of risks contemplated by CERCLA 108(b). These federal and state programs were established, implemented, and amended to ensure that FIRM facilities are comprehensively regulated, including prevention of releases of hazardous substances, from exploration through operation, reclamation, closure, and post-closure. EPA failed to take these programs into consideration when it published its Priority Notice and relegated any discussion of them to a single footnote despite the clear relevance of such programs to identifying facilities that pose the "highest level of risk of injury." For the next five years, EPA struggled with the complexities of developing this first-of-its-kind rule, and indicated it was determining how CERCLA 108(b) interacts with existing state and federal programs that regulate the FIRM industry and impose significant financial assurance obligations. Given these complexities, EPA set a course to make a final decision as to whether a rule was warranted by 2019, but litigation again accelerated the schedule. In 2014, several nongovernmental organizations sought a writ of mandamus in the U S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to force EPA to finalize an FIRM rule by Dec. 1,2016. Feeling the intense pressure from a court that signaled obvious displeasure at oral argument with the agency's over 30-year delay, EPA voluntarily entered into an imprudent consent decree to fast-track the FIRM rulemaking. Notably, NMA attempted 1 The rule would apply to "current owners or operators of facilities that are authorized to operate, or should be authorized to operate, on or after the effective date of the rule." 82 Fed. Reg. at 3486. 5 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00005 to intervene in the litigation but ultimately was denied standing to do so. The court's rationale in denying standing, however, clarifies whether EPA is obligated to finalize a HRM rule. In denying standing and blessing the consent decree, the D C. Circuit made it clear that while EPA had to act by Dec. 1,2017, the final action could be no rule at all: "[T]he proposed joint order `does not require EPA to promulgate a new, stricter rule. At most, it `merely requires that EPA conduct a rulemaking and then decide whether to promulgate a new rule - the content of which is not in any way dictated by the [proposed order on consent] - using a specific timeline." In re Idaho Conservation League, 811 F.3d 502, 524 (D.C. Cir. 2016) (emphasis in original). Certainly, the court's order did not give EPA permission to short-circuit the risk analyses mandated by CERCLA 108(b) simply because the agency was entering into the fourth decade of delay. Yet EPA, still stinging from the court's rebukes on delay, did just that and the result is a fatally flawed rulemaking process. As laid out in the comments below, the flaws in the rulemaking are numerous and wide-ranging from flaws in the process (e.g., shortchanging the federalism consultation, failing to conduct peer reviews of "highly influential scientific documents" upon which the proposed rule places heavy reliance, failing to perform an accurate regulatory impact analysis) to flaws that unequivocally undercut EPA's ultimate erroneous conclusion: that today's HRM industry continues to present such "degree and duration of risk" as to merit the imposition of financial responsibility requirements under CERCLA 108(b). These flaws provide numerous grounds for legal challenges to the rule but none more so than EPA's arbitrary and capricious "continuing risk" conclusion. As such, a considerable portion of NMA's comments and the following discussion is devoted to providing concrete evidence to rebut this conclusion. EPA failed to conduct any quantitative, or even qualitative, risk analysis either in 2009, when it improperly identified classes of the HRM industry as presenting the "highest level of risk of injury," or in 2017 when it wrongly determines that today's HRM industry continues to present the "degree and duration of risk" that warrants regulation under CERCLA 108(b). Most importantly, the agency fully ignores the risk-reducing effects of existing state and federal programs, which include financial assurance components. EPA cannot meet its duty to assess the "degree and duration of risk" posed by HRM facilities by largely ignoring the existing requirements that address those same risks. Instead, the agency engaged in a determined effort to overwhelm the docket with anecdotal, circumstantial, and irrelevant evidence in an attempt to attribute risk to today's HRM industry. These comments methodically evaluate the data, documents, and reports upon which EPA's continuing risk determination rests and provide ample evidence to rebut that conclusion. As detailed below, much of the agency's so-called evidence is historical in nature - describing operations that inflicted their environmental damage decades and even generations ago - and not representative of today's HRM industry. Many of the studies cited or relied upon were completed decades ago, and many of the facilities EPA "scrutinized" began operations a century ago or longer. EPA additionally misuses a host of data sources, including the Toxics Release Inventory ("TRI"), the Emergency 6 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00006 Response Notification System ("ERNS"), and Resource Conservation and Recovery Act ("RCRA") Hazardous Waste Biennial Reports to exaggerate the risk-profile of the HRM industry. None of these sources addresses potential exposure to CERCLA hazardous substances or the probability that a CERCLA response action may occur in the future. The significant limitations of these data sources - and EPA's deliberate misuse of them - devalue their utility in determining the "degree and duration of risk" or "highest level of risk of injury" in any industry sector. In an effort to claim more recent evidence, EPA prepared a trio of reports in 2016 allegedly evaluating releases, practices, and exposures at currently operating facilities. EPA relies heavily on these reports to conclude "there is abundant evidence that hardrock mining facilities continue to pose risks associated with the management of hazardous substances at their sites." 82 Fed. Reg. at 3470. As the NMA comments herein make clear, proper evaluation of these releases, practices, and exposures, however, logically compel the opposite conclusion. While there may be superficial similarities in the releases, practices, and exposures that historically occurred and those at today's HRM facilities, the risks and outcomes are not comparable. Modern state and federal regulatory programs prohibit many management practices that were industry standards 50 years ago. These programs prevent the vast majority of impacts that are common at some (not all) legacy sites. In the event of releases of hazardous substances at current HRM facilities, today's regulatory programs ensure those releases are identified by monitoring, reported to regulatory authorities, and corrected by the operator under the supervision of federal and/or state regulators without risk of lasting environmental injury or response costs. As such, these actions are the hallmarks of effective regulatory programs rather than any evidence of risk. NMA contends that in the face of EPA's failure to properly assess risk as required by CERCLA 108(b), as well as the evidence provided by the HRM industry and others of the risk-reducing nature of existing federal and state regulatory programs, the agency must conclude that this rulemaking is unnecessary. NMA's comments, however, raise a number of other significant flaws that independently provide grounds for the agency to change course, such as EPA's fatally flawed financial responsibility formula, its wholly inadequate Regulatory Impact Analysis ("RIA"), and its failure to evaluate the market availability and affordability of requisite financial responsibility instruments. Overall, EPA's approach to establishing a formula to calculate the level of financial responsibility is full of circular reasoning, inconsistencies, internal contradictions, and unsupported assumptions. EPA's basic premise that CERCLA 108(b) is functionally different from closure and reclamation requirements covered under existing state and federal programs is contradicted by its own methodology, which relies on closure and reclamation costs to calculate hypothetical CERCLA response costs and the amount of additional financial responsibility required under the rule. Moreover, despite acknowledging the precision accorded by site-specific financial responsibility, the agency instead adopts overly simplistic formulas based on statistical manipulation of misunderstood and misinterpreted data. EPA's failure to consider the 7 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00007 probability of occurrence compounds the problems associated with the formula, resulting in egregiously high financial responsibility calculations. By designing the formula to replicate costs incurred in remediating the most expensive legacy Superfund sites, EPA's approach is in no way "consistent with the degree and duration of risk" presented by today's HRM industry and thus the financial responsibility formula is arbitrary and capricious. EPA's approach to providing financial responsibility reductions does not solve the fundamental problems with the formula since the reductions will be difficult or impossible to attain due to the prescriptive nature of the reduction criteria. The financial responsibility proposed in this rule will impose an unreasonable burden on an already highly regulated industry without reducing any significant risks not already addressed by existing state and federal programs. All in all, the proposed CERCLA 108(b) financial responsibility formula and the proposed reduction criteria go far beyond what Congress authorized under the statute, make the proposed rule indefensible legally and as a matter of policy, and thus support the withdrawal of the rule. EPA's RIA so significantly underestimates the economic impact on the HRM industry as to constitute another incurable shortcoming of the proposed rule. EPA's RIA estimates that the proposal would impose $7.1 billion in financial assurance obligations on the HRM industry. As detailed in NMA's comments, however, an analysis by an independent firm, OnPoint Analytics, demonstrates that EPA substantially underestimated the cost of the rule to the HRM industry by orders of magnitude. OnPoint concludes that the cost of the proposal could be as high as $39.4 billion on a net present value basis, or over five times the total amount estimated by EPA's RIA. A comparison of these costs to the EPA's "best case" benefit scenario shows how the costs of the rule eclipse the projected savings to the government of $527 million over 34 years (or $15.5 million per year). Moreover, it strongly appears that the agency completed the RIA before finalizing the reduction criteria in the proposed rule. Consequently, the RIA is an arbitrary assessment of the exorbitant costs that this proposal would impose on the HRM industry. NMA's comments also demonstrate how EPA's market capacity study lacks credibility and fails to satisfy the Congressional mandate pursuant to which it was written. Congress, echoing the statutory language in CERCLA, directed EPA to consult with the commercial insurance industry in assessing market capacity. EPA failed to engage in any rigorous consultation, which resulted in a study divorced from true market capacity conditions. EPA's extremely limited consultation occurred prior to the rule's proposal and therefore was not based on full disclosure of the scope of EPA's program. Instead, EPA relied primarily on its own perfunctory and inadequate research to assess market capacity. The agency simply researched published industry data on insurance and surety premiums as if these were a reliable measure with which to assess market capacity. Based on this cursory analysis, EPA concluded coverage is available or will become available as the program is implemented. To suggest coverage is available without careful analysis of the details of the rule and reasoned justification is indefensible given the immense economic repercussions of this rule. 8 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00008 I. EPA's Proposed Rule Violates CERCLA 108(b) EPA's authority to issue financial responsibility requirements under Section 108(b) is constrained by three key phrases in the statutory language. First, the statute directs the agency to prioritize the development of any financial responsibility requirements for "those classes of facilities, owners, and operators which the President (and EPA) determines presents the highest level of risk of injury." 42 U.S.C. 9608(b)(1) (emphasis added). This first step is the identification phase of the rulemaking. Second, if certain classes of facilities meet this threshold risk determination, the President (and EPA) is then directed to promulgate regulations to ensure that those "classes of facilities establish and maintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances." Id. (emphasis added). Third, these regulations should establish and, when necessary adjust, the level of financial responsibility "to protect against the level of risk which the President in his discretion believes is appropriate based on the payment experience of the Fund, commercial insurers, courts settlements and judgments, and voluntary claims satisfaction." 42 U.S.C. 9608(b)(2) (emphasis added). These sections apply to the second phase of any rulemaking: setting an appropriate level of financial responsibility to cover the identified risk. EPA failed to appropriately evaluate the hardrock mining and mineral processing industry (hereafter referred to as the "FIRM industry") in every step of this statutory analysis and rulemaking. A. EPA's 2009 Finding that the HRM Industry Presented the "Highest Level of Risk of Injury" is Fundamentally and Irreversibly Flawed In 2009, EPA issued a seven-page Federal Register notice identifying priority classes of facilities for development of CERCLA 108(b) financial responsibility requirements. 74 Fed. Reg. 37,213, et. seq. In this Priority Notice, EPA identified several classes of facilities within the "hardrock mining industry"2 as the agency's first priority for development of financial responsibility requirements. In developing the Priority Notice, "EPA chose to look for indicators of risk and its related effects to inform its selection of classes for which it would first develop requirements under CERCLA Section 108(b)." Id. at 37,214 (emphasis added). More specifically, EPA developed a methodology comprised of eight factors3that the agency claimed had 2 For purposes of the notice, EPA defined the hardrock mining industry as "facilities which extract, beneficiate or process metals (e.g., copper, gold, iron, lead, magnesium, molybdenum, silver, uranium, and zinc) and non-metallic, non-mineral fuel minerals (e.g., asbestos, gypsum, phosphate rock, and sulfur)." 74 Fed. Reg. at 37,214. 3 These factors included: (1) annual amounts of hazardous substances released to the environment; (2) the number of facilities in active operation and production; (3) the physical size of the operation; (4) the extent of environmental contamination; (5) the number of sites on the CERCLA site inventory (including both National Priority List (NPL) sites and non-NPL sites); (6) government expenditures; (7) projected clean-up expenditures; and (8) corporate structure and bankruptcy potential. 74 Fed. Reg. at 37,214. 9 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00009 demonstrated: (1) releases and exposures to hazardous substances from the HRM industry; and (2) the severity of consequences resulting from these releases and exposures. Through this woefully limited and misdirected analysis, EPA determined that "hardrock mining facilities present the type of risk th a t. . . justifies designating such facilities as those for which EPA will first develop financial responsibility requirements pursuant to CERCLA Section 108(b)." Id. (emphasis added). Compared to 40 U.S.C. 9608(b)(1) ("those classes of facilities, owners, and operators which the President determines presents the highest level of risk of injury.") (emphasis added). Inexplicably, EPA did not formally solicit public comment on the Priority Notice or the underlying methodology the agency used to identify the HRM industry as the first (or highest risk of) classes of facilities warranting financial responsibility requirements under Section 108(b) of CERCLA.4 As NMA explained in detailed comments to the record for the Priority Notice, EPA's methodology for identifying the HRM industry as the first classes of facilities for regulation was fundamentally flawed and arbitrary and capricious. Simply stated, the agency's decision to promulgate financial responsibility requirements for any particular class of facilities under Section 108(b) must be based on two concepts of risk: (1) risk to human health and the environment (i.e., a future release of hazardous substances from currently permitted and operating facilities); and (2) financial risk (i.e., risk to the Fund). See 42 U.S.C. 9608(b)(1)-(b)(2), However, EPA's attempt to evaluate both types of risk in the Priority Notice veered drastically off-course from a proper risk-based determination and resulted in a risk characterization of the HRM industry that is not remotely tied to today's reality. Overall, EPA's methodology did not evaluate actual or potential human health or environmental risks (or risks of injury) posed by today's operating HRM facilities and whether those risks were the "highest level of risk of injury' warranting regulation going forward. Instead, EPA's methodology blindly looked to legacy mines that solely or predominantly operated prior to current regulations to characterize future risks from today's HRM sites. Compounding that fundamental flaw, EPA chose not to evaluate the robust state and federal environmental and reclamation regulations that prevent, control, minimize, and, in some cases, eliminate the risk of release of hazardous substances from today's HRM facilities. These comprehensive regulations, as well as 4 EPA claimed that its notice was "not itself a rule, and [did] not create any binding duties or obligations on any party." 74 Fed. Reg. at 37,214 n.5. Instead, EPA deferred to future informal "outreach to stakeholders" that never happened. Id. In a subsequent advance notice of proposed rulemaking (ANPRM) on "Identification of Additional Classes of Facilities for Development of Financial Responsibility Requirements Under CERCLA Section 108(b)," EPA extended that important regulatory procedural step to stakeholders outside of the HRM industry. See 75 Fed. Reg. 816 (Jan. 6, 2010) (setting a comment period of Feb. 5, 2010, which was later extended to Apr. 6, 2010). See also 75 Fed. Reg. 5715 (Feb. 4, 2010). As EPA is aware, NMA filed detailed comments on the Priority Notice and submitted those comments to the docket for the ANPRM. NMA requested that these comments be considered by the agency as it developed the proposed rule at issue in today's comments. EPA never placed NMA's comments in the Priority Notice docket (only three comments appear), despite NMA's request for the agency to do so. They only appear in the ANPRM docket. See NMA Comments docketed at EPA-HQ- SFUND-2009-0834-0097. NMA's 2010 comments are incorporated in these comments as well. 10 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00010 their associated financial assurance requirements, are inextricably related to the first decision that must be made: whether this rule is even warranted in the first place 5 EPA cannot simply ignore the almost 40 years since Section 108(b) was signed into law during which state and other federal regulatory authorities acted in this regulatory space. As described in detail in Section II.B below, these federal and state programs were established, implemented, and amended to ensure that HRM facilities are comprehensively regulated, including prevention of releases of hazardous substances, from exploration through operation, reclamation, closure, and post-closure. Today, these programs adequately address CERCLA releases and the risk to the Superfund. Finally, EPA's manipulation of data and government reports to make general assumptions and allegations regarding the risks presented by today's HRM industry further worsened the underlying methodology used to identify the HRM sector for this rulemaking. All things considered, a new EPA program is not warranted because the human health and environmental risk from the HRM industry is well-managed under current state and federal regulatory programs, and financial risk to the Superfund is adequately covered. The statute is clear that EPA must first decide what (if any) classes of facilities present the "highest level of risk of injury' warranting financial responsibility requirements under Section 108(b) of CERCLA. EPA's Priority Notice and the fundamentally flawed methodology underpinning that notice did not reasonably or defensibly address this critical first step of this rulemaking process. In fact, EPA candidly admits in the proposed rule that it skipped this important step. The proposed rule specifically acknowledges that the Priority Notice did not "purport to identify which `classes of facilities, owners and operators . . . present the highest level of risk of injury' as required by CERCLA 108(b)(1)." 82 Fed. Reg. at 3398 (emphasis added). In other words, EPA did not fulfill its statutory obligation in the initial Priority Notice, but has now allegedly done so in this proposed rule. Regardless, as shown in NMA's comments below in Section II, seven years after issuing its Priority Notice, EPA continues to use a methodology that is not credible, resulting in a gross distortion of the alleged risks presented by today's HRM industry to prop up its findings and move forward with an insupportable and unwarranted rule. B. CERCLA 108(b) Financial Responsibility Requirements Must Be "Consistent with the Degree and Duration of Risk" Regardless of the procedural infirmities of the Priority Notice and EPA's inexcusable choice to conduct a cursory risk analysis - disconnected entirely from today's operating HRM facilities and inconsistent with EPA's own risk assessment guidelines - to identify the sector as the first classes of facilities warranting financial responsibility requirements, EPA cannot continue to eschew its statutory responsibilities in establishing the level of financial responsibility in this proposed rule. Any financial 5 EPA relegated this important issue to a footnote in the Priority Notice: "In addition, EPA is aware and will consider in its development of proposed and final rules, that mining on federal land triggers either the Bureau of Land Management's (BLM) Part 3809 regulations (43 Part 3809) and the Forest Service's Part 228 regulations (36 CFR Part 228), both have financial responsibility requirements that cover reclamation costs. Many states also have reclamation laws." 74 Fed. Reg. at 37,219 n.50. 11 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00011 responsibility requirements established by the agency must be "consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances." 42 U.S.C. 9608(b)(1). EPA's approach in the proposed rule, as described more thoroughly in Section III below, impermissibly goes beyond the statutory bounds of CERCLA Section 108(b). EPA claims that because "the statute provides only general direction" on determining the financial responsibility amount, the statute "confers upon EPA significant discretion in both methodology and in the ultimate selection of the appropriate amount." 82 Fed. Reg. at 3460. NMA agrees that the statute does not include a specific methodology for evaluating risk or the injuries for which financial responsibility requirements should be implemented to cover. However, EPA's authority for establishing the level of financial responsibility is ultimately limited by the "degree and duration of risk" presented by the identified classes of facilities. 42 U.S.C. 9608(b)(1). EPA disregarded the critical statutory phrase "degree and duration of risk" in establishing the proposed financial responsibility requirements. Instead, EPA unjustifiably chose "to provide assurance against all potential risks associated with hazardous substance management at [a] facility." 82 Fed. Reg. at 3405. Stated another way, by covering all potential risks the agency is creating a program that addresses the risk of a risk and therefore exceeds a reasonable interpretation of "degree and duration of risk" consistent with CERCLA's risk-based approach. Consequently, EPA is not setting a level of financial responsibility to cover the environmental or financial risks that Congress contemplated, but instead creates an expansive and duplicative federal program in an attempt to reach a "zero risk" threshold. EPA is not authorized to cover "all potential risks" and should not require facilities to secure financial responsibility instruments to cover "all potential risks." CERCLA does not require or allow such an expansive reading of "risk." The statute demands consideration of the actual "degree and duration of risk." EPA instead punts on this analysis in favor of concepts of potential risk or non-minimal risk and therefore imposes requirements that are intentionally overly-inclusive in a manner that exceeds the agency's statutory authority. EPA, however, has the authority and responsibility to draw the line between acceptable and unacceptable risks and then only require financial responsibility for those unacceptable risks according to their "degree and duration." In fact, EPA may lawfully determine that the risks from certain classes of facilities, after careful analysis and on reasonable bases, do not warrant financial responsibility requirements at all. While EPA did not choose that more reasonable and defensible approach in this proposed rule, it certainly has the discretion to make the right choice for the HRM industry by withdrawing this proposal and determining that no new financial responsibility requirements are warranted under CERCLA 108(b). NMA explains those reasons in detail below in Section II. Importantly, EPA's decision to cover "all potential risks" from the outset is not the only problematic approach in this rule. By not establishing a threshold risk standard at the identification phase or in setting the level of financial responsibility, EPA punts any real decision-making to the final step of this program. In the proposed rule, EPA 12 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00012 includes a superficial procedure whereby a facility can petition the EPA Administrator to be released from its financial responsibility obligation. Specifically, under proposed Section 320.27, a facility must "demonstrate] that the degree and duration of risk associated with the production, transportation, treatment, storage and disposal of hazardous substances is minimal." 82 Fed. Reg. at 3489 (emphasis added). EPA's proposed method for releasing facilities from this obligation is so vague as to be arbitrary and capricious and does not cure the underlying flawed approach to this entire rule. EPA's duty under the law is to make the following fundamental decision: What is the appropriate level of financial responsibility, based on the "degree and duration of risk' presented by the identified classes of facilities? Here, EPA established a regulatory program based on a worst-case scenario, assuming that every site feature at a company's operation will have a release(s) of a hazardous substance(s) requiring full source controls that would require a full blown CERCLA response and that such a response would otherwise be unfunded by the company but for this new regulatory program. The only way out of the program is to prove to the agency that a facility's risk profile is "minimal." Yet, to add injury to insult, EPA does not even define what "minimal" means in the context of this regulatory program. CERCLA 108(b) does not authorize this type of regulatory program. A more defensible reading of the statute places the duty squarely on EPA to make a reasonable determination on the "duration and degree of risk" posed by classes of facilities prior to imposing financial responsibility requirements on them, and then set the level of financial responsibility requirements, if any, according to the same standard. EPA's arbitrary and capricious approach to the HRM industry fails to comply with either of these statutory directives. C. CERCLA 108(b) Financial Responsibility Requirements Cannot Duplicate Existing Federal Reclamation Programs CERCLA 108(b)(1) directly addresses the relationship of EPA's program to other federal requirements. Specifically, Congress directed EPA to promulgate requirements for classes of facilities "in addition to those under subtitle C of the Solid Waste Disposal Act [42 U.S.C.A. 6921 et seq.] and other Federal law[.]" 42 U.S.C. 9608(b)(1) (emphasis added). EPA claims to "read this provision in a most straightforward way: Requirements in this proposed rule are quite literally `in addition to' whatever financial responsibility requirements may be imposed under other Federal laws for other purposes." 82 Fed. Reg. at 3402 (emphasis added). EPA further argues that the phrase "in addition to" provides no "limitation on the applicability of this section." Id. Consequently, under EPA's reading of the statute, "CERCLA 108(b) requirements apply even where a hardrock mine or mineral processor may be subject to, for example, federal reclamation bonding requirements." Id. at 3402-3403. Contrary to EPA's position, a plain language interpretation of the "in addition to" language in the statute expressly limits EPA's authority and prohibits the agency from duplicating financial responsibility requirements that are in place pursuant to the RCRA (previously referred to as the Solid Waste Disposal Act) or other federal laws that 13 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00013 share the same purpose, including federal reclamation bonding requirements. The legislative history behind Section 108(b) supports this commonsense reading of the statute. Specifically, the Senate Report to CERCLA explained that "[i]t was not the intention of the Committee that operators of facilities covered by [RCRA financial responsibility requirements] be subject to two financial responsibility requirements for the same dangers '' S. Rep. No. 96-848, at 92 (1980) (emphasis added). Instead, CERCLA 108(b) was intended to cover those facilities "who are not now covered by any [financial responsibility] requirements under [RCRA] section 3004(c)."6 Id. (emphasis added). While the statute and the legislative history call out RCRA financial responsibility requirements specifically, the phrase "other Federal law" clearly shows that Congress envisioned that duplication may also occur with other federal financial responsibility requirements and thus EPA should avoid duplicating these programs in a similar manner. Because EPA did not promulgate CERCLA 108(b) financial responsibility requirements in the 1980s as Congress directed, this phrase in the statute becomes even more central in interpreting EPA's appropriate regulatory role today as the federal regulatory landscape has substantially grown - particularly for the HRM industry - to include other comprehensive programs that protect against the same risks that triggered Congressional action in the first place.7 In fact, Congress recently reaffirmed this clear intent to avoid duplication in the Conference Committee Report attached to the Consolidated Appropriations Act of 2016 (Public Law 114-113): "Prior to proposing any rule pursuant to section 108(b). . . the [EPA] Administrator is directed to . . . [include in an analysis]. . . the Agency's plan to avoid requiring financial assurances that are duplicative of those already required by other Federal agencies." EPA's choice to summarily dismiss these programs in critical elements of this rulemaking (e.g., determining "degree and duration of risk") is baffling. Prior to issuing the proposed rule, EPA stated in a declaration defending the agency's delay in proposing financial responsibility rules that one of the challenges the agency faced was 6 See also United States Treasury, The Adequacy of Private Insurance Protection under Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980: A Report in Compliance with Section 301 (b) of P.L. 96-510 (June 1983), at 72 ("[F]acilities already covered by the financial responsibility requirements of RCRA and other federal law are not yet again by Section 108.") 7 EPA argues that "if Congress intended to insert limitations based on other Federal law into CERCLA, it clearly stated them as such." 82 Fed. Reg. 3402. This argument is also not convincing in this context. In 1980, there were few similar programs on the statutory books, with RCRA being the lead example. Congress could not have possibly predicted what other federal departments within the government would do in the future on this same subject matter. The phrase "other Federal programs" recognizes this basic reality. EPA's examples in other sections of CERCLA containing different limiting language are irrelevant to interpreting Section 108(b), which is clearly structured in a specific way to accomplish a purpose that would necessarily evolve overtime. See Comment from The Honorable Darryl L. DePriest, Chief Counsel, Office of Advocacy, U.S. Small Business Administration at 4 (Jan. 19, 2017) (EPA-HQ-SFUND-2015-0781-1406) ("SBA Letter") ("When Congress enacted CERCLA in 1980, there were few financial assurance requirements in either state or Federal regulations, and what requirements existed were largely untested."). 14 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00014 "how to integrate CERCLA section 108(b) requirements with not only other EPA programs such as the RCRA, but also those of other federal agencies, such as the United States Department of the Interior, Bureau of Land Management [(BLM)] and the U S. Department of Agriculture, United States Forest Service [(U.S. Forest Service)]." Opposition of Respondent United States Environmental Protection Agency to Petitioners' Petition for Writ of Mandamus, Idaho Conservation League v. EPA (No. 141149) (filed Nov. 19, 2014); Barnes Johnson Declaration at H 10 (emphasis added). EPA did not specifically address how it would incorporate these programs into its underlying risk determination. EPA instead focused on the "structure" of the rule, stating that "[the] general instruction in section 108(b) has not lent itself to obvious answers." Barnes Johnson Declaration at ]j 55. At that time, EPA stated that coordination with federal agencies, including the BLM, U.S. Forest Service, and Nuclear Regulatory Commission, would "inform EPA's decision making on how the rules should be structured."8 Barnes Johnson Declaration at If 56. EPA acknowledged that these agencies "require financial responsibility to address specific environmental risks." Id. However, EPA's focus on "structure" of the rule and "integration" with other programs, to the exclusion of the agency's duty to first assess the "degree and duration of risk" presented by the HRM industry taking into consideration the risk-reducing effects of these federal programs, ultimately biased the rulemaking. Two years later, in response to Congress's request for a plan on avoiding duplication with federal programs, EPA in three short paragraphs and without any supporting analysis concluded that "Section 108(b) requirements established to address CERCLA liabilities are distinct from federal closure and reclamation bonding requirements imposed under other statutes." U.S. EPA, "CERCLA 108(b) Hardrock Mining and Mineral Processing Evaluation of Markets for Financial Responsibility Instruments, and The Relationship of CERCLA 108(b) to Financial Responsibility Programs of Other Federal Agencies" ("Market Capacity Study") at 6 (Aug. 25, 2016). EPA also revealed the approach it would pursue in this rulemaking, claiming that CERCLA 108(b) is entirely distinguishable from the BLM and U.S. Forest Service programs, while at the same time recognizing that "some federal mine closure program requirements help to address releases to the environment and thereby may have the effect of reducing the risk a facility presents." Id. (emphasis added). However, not once did EPA recognize that its underlying risk determination should also include consideration of the risk-reducing impacts of other federal programs. EPA persisted with that approach in the proposed rule. EPA continues to argue that CERCLA 108(b) financial responsibility requirements are "structured . . . to address the CERCLA liabilities at a regulated facility" and "not designed to ensure compliance with technical engineering requirements imposed through a permit, or to ensure proper 8 NMA shares the same concerns voiced in the U.S. Small Business Administration (SBA) Office of Advocacy comments this year that EPA did not correctly analyze the relevant documentation provided in this consultation or the small business advocacy review panel process. See SBA Letter at 4. ("Advocacy is concerned that EPA may not have correctly analyzed the relevant documentation."). NMA's comments discuss this issue in more depth in Section II.B 15 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00015 closure or reclamation of an operating mine." 82 Fed. Reg. 3403. While EPA admits in the proposed rule that "past operating procedures, before the advent of environmental laws, were likely in many cases to give rise to environmental problems that current regulations and modern operating practices can prevent or minimize," Id. at 3461, this conclusion plays essentially no role in the agency's finding of "continuing risk" from today's HRM industry. See id. at 3470-3480. Instead, EPA designates the HRM industry as a "high risk" sector warranting a CERCLA 108(b) rule and imposes an inferior, onesize-fits-all financial responsibility formula that assumes a worst-case risk scenario in which existing federal regulations play no role. EPA further distinguishes its program from the BLM and U S. Forest Service programs by stating that it will "create incentive for practices that will prevent the need for future CERCLA responses." Id. at 3403. Attempting to create "incentives for practices" is inarguably a duplication of existing federal and state regulation that are expressly designed to require practices that reduce the "degree and duration of risk" at HRM facilities. EPA's failure to appropriately consider these programs in the underlying risk determination is patently wrong. Essentially, EPA never gave any credit to these federal programs and how they reduce the risk of releases from the HRM industry in the first place. By focusing on form over function, EPA ignored the core objectives of these programs and how they function to control, minimize, and prevent hazardous substance releases. Consequently, EPA distorts and exaggerates the risk profile of today's HRM industry, resulting in a rule that on its face is arbitrary and capricious. The BLM and U S. Forest Service programs serve a functionally equivalent purpose as CERCLA financial responsibility requirements. As described in Section II.B, these programs address the same risks EPA seeks to cover under its own rule and therefore demonstrate why this additional regulatory program is unnecessary in the first place. EPA cannot refuse to consider the programs simply because their authorizing statutes and implementing regulations use different words to describe the same objective and address the same risks. Likewise, EPA cannot cure the inherent duplication in this rule through unsound reduction criteria. The contradictory nature of EPA's approach is clear in its use of existing financial responsibility requirements to determine response category costs and the proposed reductions to the total financial responsibility amount that theoretically allow facilities to "account for reductions in risk at a facility that may result from compliance with applicable Federal. . . requirements." Id. at 3467. See also U S. EPA, "Regulatory Impact Analysis of Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule," at ES-2 (Dec. 1,2016) ("RIA") ("The formula is also structured to allow facilities, upon meeting certain criteria, to reduce their [financial responsibility] liability to account for enforceable reclamation plans that meet environmental performance standards."). Essentially, EPA attempts at the very backend to give credit to federal (and state) programs in the calculation for the response category through potential reductions in the financial responsibility amount. This regulatory approach is flawed and is an affront to the limitations Congress placed on EPA in promulgating rules under CERCLA 108(b). 16 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00016 To make matters worse, EPA cherry-picked reduction criteria that it believed could "confidently be tied to reductions in risk in a nationally applicable rule." 82 Fed. Reg. at 3467. Yet, as discussed in Section III, these reduction criteria are also significantly flawed and thus do not reduce the duplication with federal programs or give them proper credit. EPA's disregard for the decades of experience held by the BLM and the U.S. Forest Service in regulating the HRM industry with site-specific criteria and substitution of its own one-size-fits-all blueprint for the site-specific engineering and operating controls that should be in place is indefensible.9 D. CERCLA 108(b) Financial Responsibility Regulations May Not Duplicate RCRA Financial Responsibility Requirements EPA's overall approach of simply ignoring federal programs is apparent in the notice of intent to proceed with rulemakings for the three other industries. See 82 Fed. Reg. 3512, 3514 (Jan. 11,2017). In that notice, EPA states: "[CERCLA 108(b)] requirements, which are designed to help ensure that CERCLA liabilities are paid if CERCLA claims are made, are distinct from financial responsibility requirements for closure imposed under other statutes, such as RCRA, which are more narrowly designed to assure compliance with those closure requirements." Id. (emphasis added). EPA's insistence that its CERCLA 108(b) program is fundamentally different from RCRA demonstrates its ultimate failure in listening to Congress's express direction to avoid duplication. This contradictory policy choice by the agency also spills over into the HRM industry proposed rule. Specifically, EPA entirely omits any discussion of the corrective action program established under RCRA and imposed pursuant to a RCRA Part B permit or other legally binding instrument, such as a RCRA corrective action order.10 See 42 U.S.C. 6924(u) & (v). Yet, this RCRA program provides a powerful example of functionally equivalent financial responsibility requirements imposed today on some of NMA's members. These members would be required to secure additional and duplicative CERCLA financial responsibility, which Congress directed EPA to avoid in any future CERCLA 108(b) rule. The RCRA corrective action program shares the same goals of protecting human health and the environment from releases of chemicals, addresses substantially the same waste management units, and imposes financial responsibility.11 9 EPA's approach creates a significant inconsistency with the mandate in Executive Order 12,866. See Executive Order 12,866, 58 Fed. Reg. 51,735 (Oct. 4, 1993) ("Each agency shall avoid regulations that are inconsistent, incompatible, or duplicative with its other regulations or those of other Federal agencies."). 10 RCRA is only mentioned when the agency is describing the bases for certain requirements related to the terms and conditions of the financial responsibility instruments. See e.g., 82 Fed. Reg. at 3416, 3419, 3420, & 3422. 11 EPA failed to avoid duplication with RCRA's corrective action program as directed in the statute. The RCRA corrective action requirements are expansive. RCRA-regulated facilities must investigate current and former releases of hazardous waste and hazardous waste constituents from any hazardous waste management unit or solid waste management unit (SWMU). If releases above risk-based action levels are detected, the owner or operator of the facility must perform a Corrective Measures Study 17 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00017 Moreover, the RCRA corrective action program's approach to identifying and conducting remediation and in setting financial responsibility levels is far superior to the regulatory approach EPA proposes under CERCLA. EPA's choice to ignore these programs in the underlying "risk" determination for the HRM industry and in setting the level of financial responsibility is unjustifiable, arbitrary, and capricious. E. CERCLA 108(b) Financial Responsibility Regulations Must Account for Existing State Programs Congress directed the President (and EPA) to first develop financial responsibility requirements for classes of facilities that pose "the highest level of risk of injury." 42 U.S.C. 9608(b)(1). Congress further directed the President (and EPA) that any regulations promulgated must be "consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances." Id. (emphasis added). Accordingly, and as explained above in Section I.B., EPA must limit its program to reflect the environmental protection and related financial assurance requirements rooted in state regulations, which are directly related to the "degree and duration of risk" posed by the HRM industry. EPA failed to appropriately account for state programs in its underlying risk evaluation and in setting the level of financial responsibility under this rule, and thus violated the statutory directives found in CERCLA 108(b). EPA's inattention to and superficial analysis of the state regulatory programs has plagued this entire rulemaking process. In developing the Priority Notice that identified the HRM industry as the first classes of facilities for regulation, EPA omitted any evaluation of existing state programs. Instead, the agency committed to a future "examination and review of existing federal and state authorities, policies, and practices that currently focus on hardrock mining activities" in determining "what proposed financial responsibility requirements may be appropriate." See 74 Fed. Reg. at 37,219. EPA did not commit to re-evaluating its 2009 "high risk" determination based on this new evaluation. Instead, EPA moved straight to developing the agency's financial responsibility regulations for the HRM industry without accounting for the risk-reducing effects of state regulatory programs.12 (CMS) with alternative remedial measures. Upon completion of the CMS, EPA or a state agency with delegated authority selects the remedy which is to be performed. Importantly, the facility must achieve stringent cleanup levels within the facility or anywhere beyond its boundaries where off-site releases are detected, as necessary to protect human health and the environment. Following the agency selection of the remedy, the facility must implement and complete within a reasonable time the necessary remedy. A schedule for compliance is put into place and the facility must establish financial assurance for completing the corrective action. This entire process is closely reviewed by EPA or the state delegated agency. Notably, the RCRA definition of SWMUs includes all the types of units listed in proposed 40 C.F.R. 320,63(a)(1)-(7) and many additional types of units, such as ditches and spills. This program is directly related to whether certain facilities present the "degree and duration of risk" that warrant a new CERCLA financial responsibility requirement. EPA cannot simply disregard this program in its regulatory approach. 12 EPA, without explanation, established a different methodology and rulemaking process for other industry sectors. In the ANPRM for additional industry sectors, EPA announced that financial responsibility requirements may be warranted for classes of facilities outside of the HRM industry, but that 18 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00018 EPA's willful disregard for state programs in its underling risk determination is also evident in the administrative steps preceding this proposed rule. In defending against the D C. Circuit lawsuit seeking to compel agency action, EPA set forth a host of "major challenges" to explain why EPA had not completed a financial responsibility rule for the HRM industry. The only "challenge" EPA identified related to state regulations involved the need to "[address] the potential for preemption of state regulatory programs, including state mine bonding programs." Barnes Johnson Declaration at H 33 (emphasis added). According to EPA, "the preemption issue is especially pressing for the hard rock mining sector, because many states already have mine financial responsibility requirements." Barnes Johnson Declaration at H69. At that time, "EPA's initial review of state mining programs indicated that financial responsibility requirements vary, and that states use mine permitting authorities to enforce compliance with state mining regulations. Additionally, some states may address different risks from, or may address risks in a different manner than, what EPA is considering for the section 108(b) rule." Id. In addressing the role of state programs, EPA did not once mention that they had any relevance to EPA's underlying risk determination. EPA wrongly maintains this position in the proposed rule. The two pages of Federal Register text addressing state programs is solely focused on preemption concerns without any mention of how these programs reduce the environmental risks or risks to the Fund posed by the HRM industry and thus fundamentally influence the underlying risk determination. Yes, preemption is a fundamental concern of this proposed financial responsibility program. In fact, there are significant preemption concerns because of the proposed rule's inherent and pervasive duplication of state regulatory programs. Yet, instead of properly examining how state programs address the "degree and duration of risk" presented by the HRM industry,13 EPA bends over backwards to distinguish its program in a futile and unpersuasive attempt to allay concerns about preemption. According to EPA, its main consideration was "what effect, if any, compliance with the Federal requirements would have under [CERCLA's express preemption provision] relating to specific state financial responsibility requirements." 82 Fed. Reg. at 3403. EPA's answer: "EPA does not intend its CERCLA 108(b) regulations to result in widespread displacement of those programs, nor does EPA believe that such it would first "carefully examine . . . Federal and state authorities, policies, and practices to determine the risks posed by these classes of facilities and whether requirements under Section 108(b) will effectively reduce these risks." 75 Fed. Reg. at 818 (emphasis added). EPA requested comment on two sets of information for these other industry sectors: (1) financial responsibility provisions under state requirements; and (2) how state requirements "might affect the environmental risks posed." Id. at 831 (emphasis). EPA never afforded the HRM industry the same opportunity to engage on the initial risk determination. 13 See Appendix A for a thorough description of state regulatory programs. 19 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00019 preemption is intended by CERCLA, necessary, or appropriate."14 Id. EPA backs this unhelpful and circular reasoning by characterizing state programs as having "a limited relationship to liability for the release of hazardous substances" and "not similarly limited to CERCLA hazardous substances or their release." Id. at 3403-3404. As shown in greater detail in Section II.B and Appendix A, EPA's superficial assessment of and conclusions about state programs could not be farther from the truth. State programs address the exact CERCLA response cost liabilities that EPA proposes in the financial responsibility formula for this rule. EPA insistence that there is no overlap and no preemption is a semantic maneuver that does not excuse or justify EPA's failure to properly address these issues in the rulemaking. EPA cannot entirely disregard this overlap simply because the regulations are also designed to ensure reclamation and closure.15 Most notably, EPA's position that only programs that are "expressly focused on hazardous substances, the risks they present, and financial responsibility associated with liability stemming from their release or threatened release" would be in danger of preemption is fundamentally flawed. 82 Fed. Reg. at 3403 (emphasis added). State programs are not "expressly focused" on reclamation and closure--they address hazardous substances--and much more. In fact, EPA ignored state programs governing groundwater or state delegated programs for surface water and the efficacy of such programs in controlling the "degree and duration of risk" presented by the HRM industry. As the summary of state and federal programs included with these comments and many of the comments from mining states show, current regulations and permits require monitoring of facilities, immediate reporting of releases of hazardous substances (and sometimes other releases) and immediate corrective action under supervision of state regulators. State programs include requirements that reduce the risk of release of hazardous substances and the risk that taxpayer funded response will be required. Moreover, these programs seek to prevent releases and avoid the need for these response categories altogether. Finally, these programs have financial assurance requirements and mechanisms that EPA entirely ignored throughout this rule, such that even where state programs would be viewed as meeting some aspects of the rule's proposed reductions, the financial assurance mechanisms would be disallowed by EPA and therefore ineffective. These state financial assurance mechanisms indisputably 14 EPA caveats its discussion on preemption as representing "general views" and that the courts "would make any final determinations about the preemptive effect of CERCLA 108(b) regulations at any particular facility." Id. at 3403 n.46. EPA should not establish a program that has obvious and significant overlap with functionally equivalent state programs, summarily claim that such overlap essentially does not exist, saddle the HRM industry with an additional and exorbitant regulatory burden, and then basically challenge industry and the states to litigate issues of preemption (also a costly endeavor). This approach flies in the face of responsible regulation. See e.g., Executive Order 12,866, 58 Fed. Reg. 51,735 (Oct. 4, 1993) (the agency "shall design its regulations in the most cost-effective manner to achieve the regulatory objective" and "shall seek to harmonize Federal regulatory actions with related State, local, and tribal regulatory and other governmental functions"). 15 In fact, reclamation and closure is also fundamentally about returning land to a designated use and preventing releases of hazardous substances. In other words, preventing uncontrolled release of hazardous substances is integral to reclamation and closure - there is no dichotomy. 20 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00020 mitigate risk and cannot be ignored. To summarily dismiss these programs using a semantic argument is indefensible. CERCLA 114(d) further reinforces this reading of the statute. Here, Congress made it clear that no owner or operator of a facility "who establishes and maintains evidence of financial responsibility" in accordance with CERCLA "shall be required under any State or local law, rule or regulation to establish or maintain any other evidence of financial responsibility in connection with liability for the release of a hazardous substance from such . . . facility." 42 U.S.C. 9614(d). Instead, "[evidence of compliance with the financial responsibility requirements" of CERCLA "shall be accepted by a State in lieu of any other requirement of financial responsibility imposed by such State in connection with liability for the release of a hazardous substance from such . . .facility." Id, While Congress preserved the right of states "to [impose] any additional liability or requirements with respect to the release of hazardous substances within such State," 42 U.S.C. 9614(a), it also made clear that if EPA were to act in the same regulatory space and require financial responsibility, then the federal program would preempt any similar state requirement. 42 U.S.C. 9614(b). According to EPA, CERCLA 114 "quite naturally preserve[s] state mine bonding requirements as `additional requirements' to the extent that they may also address the releases of hazardous substances." 82 Fed. Reg. at 3403. EPA's interpretation of the statute, however, produces absurd results. EPA made no effort to develop financial responsibility requirements for almost 40 years. In that time, the states did act and have been developing, implementing, and enforcing comprehensive programs, including financial assurance. Congress could not have predicted that EPA would not act. Moreover, there is no reason to believe that Congress intended the disruptive result that EPA is proposing in this rule. It is not enough for EPA to minimize preemption of state law requirements, as it claims in this proposed rule, or to simply distinguish them without basis. A more rational and defensible approach would avoid duplication and preemption altogether, particularly given that well-functioning state programs exist and achieve the same objective. II. EPA's Finding of Continuing Risk in the HRM Sector is Fatally Flawed Section VI.D.7. of the proposed rule is devoted to EPA's determination of continued risk at hardrock mining facilities. In this section, EPA identifies the data it relied upon to reach its conclusion that there is "abundant evidence that hardrock mining facilities continue to pose risks associated with management of hazardous substances at their sites." 82 Fed. Reg. at 3470. To reach this conclusion, EPA relies on the following: (1) data it has gathered since issuing the 2009 Priority Notice, including the three 2016 reports it prepared in conjunction with this rulemaking to document alleged examples of hazardous substance releases from currently permitted and operating HRM facilities (discussed in further detail in Section II. IE.D below); (2) CERCLA site data; (3) TRI, RCRA Hazardous Waste Biennial Report (BR), and ERNS data; and (4) several EPA reports developed outside this rulemaking context that the agency claims also show continuing risk from the HRM industry. 21 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00021 A. EPA Failed to Assess Risk from Today's HRM Facilities In its analysis of continuing risk, EPA utterly fails to quantitatively or even qualitatively assess risks posed by today's regulated HRM facilities. As a result, not only has EPA ignored its statutory obligation under CERCLA as discussed in Section I above, but the rulemaking record is bereft of any direct evidence that HRM facilities pose the "degree and duration of risk" necessitating imposition of a CERCLA 108(b) program. Instead, EPA relies on dated information and incorrect, tangential, and circumstantial evidence to make its risk determination and attempts to obfuscate this fatal flaw by overwhelming the docket with over 230,000 pages of documents. When discussing its authority regarding the calculation of a financial responsibility amount, EPA blithely asserts that its CERCLA obligation related to risk is unfettered: CERCLA 108(b) establishes a general end-point for the Agency's financial responsibility requirements, which must be "consistent with" the "degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances" at the facility. EPA does not interpret this to require any precise association with a risk calculation. 82 Fed. Reg. at 3460 (emphasis added). CERCLA 108(b) does vest a certain amount of discretion in EPA, but the plain language of the statute does not allow EPA to make its decisions about classes of facilities in a vacuum. The phrase "consistent with the degree and duration of risk" has meaning and obligates EPA to consider the relevant facts in making decisions about which classes of facilities will fall under CERCLA 108(b). Regardless of whether EPA can ascertain the precise level of risk associated with a particular site in the absence of any response action, EPA cannot abdicate its statutory responsibility to assess the "degree and duration of risk" of an industry sector prior to developing financial responsibility requirements. Otherwise, EPA is reading the word "risk" out of CERCLA 108(b) contrary to Supreme Court precedent and canons of statutory construction that all words of a statute should be given effect. The starting point in construing a statute is the language of the statute itself. The Supreme Court often recites the "plain meaning rule," that, if the language of the statute is plain and unambiguous, it must be applied according to its terms. Words that are not terms of art and that are not statutorily defined are customarily given their ordinary meanings, frequently derived from the dictionary.16 CERCLA does not define "risk" in the context of Section 108(b) or otherwise, but EPA's historical use of the term in the CERCLA context accords with the ordinary meaning of the word. For example, EPA's 16 FDIC v. Meyer, 510 U.S. 471,476 (1994) (In the absence of a statutory definition, "we construe a statutory term in accordance with its ordinary or natural meaning.") See also, U.S. v. Lehman, 225 F. 3d 426, 428 (4th Cir. 2000). ("A fundamental canon of statutory construction requires that `unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.'"). 22 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00022 Risk Assessment Guidance for Superfund defines risk as "a measure of the probability that damage to life, health, property, and/or the environment will occur as a result of a given hazard."17 EPA's Exposures Factors Handbook similarly defines risk as "the probability of an adverse effect in an organism, system, or population caused under specified circumstances by exposure to an agent."18A more basic definition is found on EPA's Risk Assessment webpage: "EPA considers risk to be the chance of harmful effects to human health or to ecological systems."19 Common to each of these risk definitions is that the word risk is inextricably intertwined with the concept that harm or damage could result. If there is no potential for harm or damage, there is no risk. Also common to each is the concept of probability or the likelihood of harm occurring.20 Yet, throughout the proposed rule and supporting documents, EPA again and again divorces the term risk from these concepts and equates "risk" with the occurrence of a "release" and other inappropriate risk surrogates. For example, in the 2016 reports that EPA uses to support its risk determination, the agency conflates risks with releases without acknowledging that the mere existence of releases is inadequate to demonstrate that any meaningful risk exists. In fact, EPA does not address whether the risk has been abated. B. EPA Fails to Consider Risk-Reducing Effects of Current Federal, State, and Voluntary Programs Most notably absent from EPA's overall analysis of continuing risks is any evaluation of the role that existing federal and state environmental regulations play, including those that impose financial assurance requirements, in addressing and reducing risks in the first instance. This omission mirrors perhaps the biggest flaw in EPA's Priority Notice in which the entire topic of these programs was relegated to a single footnote. As described in more detail below, all states with significant HRM activity and the key federal land management agencies (e.g. BLM and U S. Forest Service) have robust regulatory programs that address all aspects of HRM operations. EPA cannot meet its duty to assess the "degree and duration of risk" posed by HRM facilities by largely ignoring the existing requirements that address those same risks. 17 U.S. EPA, Risk Assessment Guidance for Superfund: Volume 1 Human Health Evaluation Manual Supplement to Part A: Community Involvement in Superfund Risk Assessments, EPA 540-R-98- 042 (March 1999). 18 U.S. EPA, Exposure Factors Handbook: 2011 Edition, National Center for Environmental Assessment, Washington, DC, EPA/600/R-09/052F (2011). 19 Available at https://www.epa.gov/risk/about-risk-assessment. 20 In EPA's Priority Notice, the agency did at least minimally acknowledge the importance of these two concepts in assessing risk. While NMA did not agree with the eight factors EPA selected, the agency did attempt to characterize them according to the categories: (1) the probability of release of and exposure to hazardous substances; and (2) the severity of the consequences as a result of releases and exposure to hazardous substances. See 74 Fed. Reg. at 37,214. 23 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00023 As discussed in Section I above, while EPA ignores these programs in the context of its risk determinations, paradoxically EPA relies on these same programs in two contexts: (1) to determine the possible amount of response costs; and (2) to determine backend reductions to the total amount of the financial responsibility obligation. EPA cannot have it both ways and claim that EPA's program is completely distinct from existing federal and state programs while simultaneously relying on the cost estimates from these programs' reclamation and closure plans as the foundation of the formula for determining the level of financial responsibility that would be required under CERCLA 108(b) program. Moreover, EPA cannot ameliorate this glaring inconsistency through an ill-crafted process at the backend that supposedly reduces HRM facilities' financial responsibility amounts, but which will fail to do so in practice. Most notably, EPA's proposed rule fails to appropriately account for the comprehensive ways these programs reduce risk at HRM facilities and therefore is not consistent with the statute's focus on "degree and duration of risk" or "highest risk of injury."21 1. The HRM Industry's Arc of Environmental Improvement Mining and mineral processing has a lengthy history in the United States. Commercial mining transactions are documented from the early colonial period. Records indicate that iron ore was shipped from the Jamestown Colony to England as early as 1608, only one year after the colony was founded.22As the country expanded westward, so did mining. Mining in the west began nearly 170 years ago in the 1840s and was actively encouraged by the laws and policies of the federal government. The history of mining dwarfs the relatively brief history of environmental laws and regulations that govern modern industrial activities including HRM operations. Over the last four decades there has been a sea-change in environmental awareness, ushering in numerous federal and state laws and regulations, environmental management systems, design standards, engineering controls, environmental monitoring requirements, best management practices, improved technology, training and, most significantly in this context, financial assurance. These developments were aimed at all industrial activities that could adversely impact human health and the environment. It was during this era that Congress passed CERCLA and directed EPA to develop appropriate financial responsibility requirements for classes of facilities that present the "highest level of risk of injury." 42 U.S.C. 9608(b)(1). Regardless of whether it would have been appropriate to target the HRM industry if EPA had begun this rulemaking in 1980 when CERCLA was passed, it is inappropriate today. In the intervening nearly 40 years, the HRM industry has become one of the most comprehensively regulated industries in the country, as states and federal land management agencies developed mining-specific regulatory programs. 21 The fundamental flaws of EPA's proposed financial responsibility formula, including the proposed reduction criteria, are more fully laid out in Section III and Appendix B. 22 Bolles, Albert S., Industrial History of the United States, From the Earliest Settlements to the Present Time: A Complete Survey o f American Industries. Book IV, at 668 (1879). 24 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00024 Most of these programs came into being in the 1970s and 1980s, with a few into the 1990s. Importantly, these regulatory programs have not been static but have evolved over time, as operators and regulators alike learned from past experiences and as new advances in science and technology have occurred. As a result, many past practices are no longer allowed today (i.e., unrestricted dumping of wastes into surface waters; construction of tunnels that intercepted groundwater). Prevention is the watchword of today's HRM industry and the authorities that regulate them. New facilities are specifically designed, constructed, operated, and closed in a manner to prevent environmental degradation and avoid the types of problems that were caused by past practices. Examples of preventive practices and technologies include enhanced liner systems and leachate collection systems. Monitoring requirements compliment prevention techniques and have evolved as an important tool to ensure environmental compliance. In the 1800s and early 1900s, monitoring for environmental impacts was rarely (if ever) considered at HRM facilities and consequently releases that occurred at these legacy HRM sites went undetected for decades or longer. Environmental monitoring, which became an important tool for enforcing the new environmental laws and regulations, arose not only to provide early warning signs of potential releases but also to promote corrective action when releases occur. As federal and state mining programs and groundwater protections have matured, monitoring, reporting, and corrective action have become core components of HRM programs and permits. For example, when BLM updated its regulations in 2000, the agency began requiring the submission of a comprehensive monitoring plan to meet the following objectives: To demonstrate compliance with the approved plan of operations and other Federal or State environmental laws and regulations, to provide early detection of potential problems, and to supply information that will assist in directing corrective actions should they become necessary. Where applicable, you must include in monitoring plans details on type and location of monitoring devices, sampling parameters and frequency, analytical methods, reporting procedures, and procedures to respond to adverse monitoring results. Monitoring plans may incorporate existing State or other Federal monitoring requirements to avoid duplication. Examples of monitoring programs which may be necessary include surface- and groundwater quality and quantity, air quality, revegetation, stability, noise levels, and wildlife mortality. 43 C.F.R. 3809.401 (b)(4). As a result of the progress of the last few decades, mining related activities have become increasingly protective of the environment and the public. By 1999, these programs had evolved to a point that the National Academy of Sciences ("NAS") concluded that "the overall structure of the federal and state laws and regulations that provide mining-related environmental protection is complicated but generally effective." 25 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00025 "Hardrock Mining on Federal Lands," National Academy of Sciences, National Academy Press, at 89 (1999) ("NAS Report"). Progress has continued since the NAS Report was published both in response to various recommendations in that report and independently, particularly related to financial assurance.23 Financial assurance requirements applicable to FIRM facilities have become increasingly robust over time, especially as states and the federal land management agencies abandoned one-size-fits-all formulas and began basing financial assurance amounts on site-specific data. As described by the U S. Forest Service in their comments on the proposal: A similar [to EPA's proposed] formula approach was used early on by federal and state agencies to put cost per acre figures to reclamation. To our knowledge, all of the surface management agencies have moved away from this approach to implement a site-specific method of calculating projected reclamation and closure costs. Modeling, using site-specific data, is used to predict likely and possible post-closure scenarios.24 Current state and federal financial assurance requirements too will continue to evolve, especially since by law they are reviewed and adjusted on a regular basis, often annually, to ensure they keep pace with inflation and on-the-ground conditions. Further, regulatory authorities can now require the establishment of a funding mechanism to ensure the construction and continuation of treatment to achieve water quality standards and for other long-term, post-mining reclamation and maintenance requirements. As a result of these advancements, today's financial assurance requirements significantly reduce the risk that the public will have to fund the cleanup of FIRM facilities in the event an operator is unable to meet that responsibility. Furthermore, these regulatory improvements have been supplemented by the development and adoption of industry best management practices (BMPs) and other voluntary programs.25 Citing the voluntary nature of these programs, EPA gives these risk-reducing activities even less credit than federal and state regulatory programs as the agency did not propose to allow reductions in the financial assurance amount for 23 For example, the agencies have updated their regulations to: require financial assurance for operations of five acres or less; strengthen the criteria for modifications of plans of operations; address temporary closures; and allow for funding mechanisms needed for any long-term, post-closure management. 24 Comment submitted by Leslie A. C. Weldon, Deputy Chief, National Forest System, U.S. Forest Service, Department of Agriculture at 5 (Apr. 18, 2017) (EPA-HQ-SFUND-2015-0781-2400) ("U.S. Forest Service Comments"). 25 EPA neglects to consider how often HRM facilities work collaboratively with state and/or federal regulators to incorporate BMPs into facility permits. As such, EPA wholly ignores the industry's leadership and its willingness to be proactive in environmental performance and prevention to beyond minimum regulatory requirements. 26 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00026 such activities.26 As EPA is well aware, these types of voluntary measures can prove extremely successful in improving environmental performance. As described in EPA's "1995 Profile of the Metal Mining Industry," BMPs are: used to reduce the amount of pollution entering surface or groundwater, air, or land, and may take the form of a process, activity, or physical structure. BMPs include treatment requirements, operating procedures, and practices to control plant site runoff, spillage or leaks, waste disposal, drainage from raw material storage or other disturbed areas. U S. EPA, Profile of the Metal Mining Industry (EPA 310-R-95-008), at 65-66 (Sept. 1995). BMPs continue to evolve over time as EPA acknowledged in its "Mining Hardrock Framework:" In recent years, environmental practices employed by the mining industry have improved considerably. Installation of [BMPs] for control of storm water runoff, improvements in treatment of wastewater, better management of tailings and waste rock, and more efficient metal recovery technologies have all contributed to reduced environmental impacts from mining projects. U.S. EPA, National Hardrock Mining Framework (EPA 833-B-97-003), at 2 (Sept. 1997). The advent of Environmental Management Systems ("EMS") in the 1990s was another key development for improved environmental performance. An EMS is a framework that helps an organization meet its regulatory compliance requirements and otherwise achieve its environmental goals through consistent review, evaluation, and improvement of its environmental performance.27 This consistent review and evaluation are intended to identify opportunities for continuous improvement in the environmental performance of the organization. Many HRM facilities have implemented EMS programs. In fact, at EPA's behest, NMA, in association with the Society for Mining, Metallurgy, and Exploration ("SME"), developed a model EMS guide to address the agency's concerns about the ability of smaller and medium size mining companies to 26 EPA only "solicits comment on allowing reductions to the financial responsibility amount for other risk reducing practices and/or controls (e.g., voluntary practices) that are implemented at hardrock mining facilities that should be accounted for in the reductions, and on how, if reductions were allowed for such practices and/or controls, EPA could assure that those controls would remain in place and be effective over time where there is no regulatory program overseeing their maintenance and operation." 82 Fed. Reg. at 3468. 27 See U.S. EPA, Learn About Environmental Management System, available at https://www.epa.qov/ems/learn-about-environmental-manaqement-systems#what-is-an-EMS. 27 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00027 develop and implement EMS programs.28 The objective of the EMS guide is to assist companies in achieving reliable regulatory compliance, reducing adverse impacts to the environment, improving environmental stewardship, and continually improving environmental performance. The most commonly used framework for an EMS is the one developed by the International Organization for Standardization ("ISO") for the ISO 14001 standard. Established in 1996, this framework is the official international standard for an EMS and includes an optional third-party certification component, meaning an independent certification body audits an organization's practices against the requirements of the standard. Many HRM facilities have taken this extra certification step. And, even EMS standards have evolved over time as lessons are learned and new information comes to light. For example, ISO 14001, first published in 1996, underwent significant revisions in both 2004 and 2015.29 EPA cannot adequately evaluate the risk of today's HRM facilities by blindly looking to the distant past and ignoring the arc of environmental improvement of the HRM industry. EPA must give appropriate weight to the progress achieved in reducing the "degree and duration of risk" posed by today's HRM industry. As shown in more detail below, these advancements obviate the need for EPA to impose any CERCLA 108(b) financial responsibility obligations on the HRM industry. 2. Efficacy of Today's Mining Regime in Addressing CERCLA Risk Mining is comprehensively regulated by a vast range of federal, state, and local environmental laws and regulations. Importantly, these laws and regulations provide "cradle to grave" coverage of virtually every aspect of mining from exploration to operations through mine reclamation and closure/post-closure. As explained in Sections I B. and I.C. above, despite EPA's claims to the contrary, these regulations do address the kinds of risks contemplated by CERCLA 108(b). SBA shares the industries' concerns about the duplicative nature of EPA's proposed program as highlighted in recent comments on the proposed rule: Although EPA states that these mining regulations are "distinct" from CERCLA 108(b) requirements, this does not mean that the Federal and state mining requirements do not address the same response categories using other legal authorities and different language. An entirely duplicative CERCLA 108(b) financial responsibility program would be inconsistent with the degree and duration of risk associated with potential releases from 28 NMA, Hardrock Mining & Beneficiation Environmental Management System Guide (2012), available at http://nma.org/wp-content/uploads/2016/09/Toolkit-Hardrock-Mining-and-Beneficiation- Environmental-Management-System-Guide.pdf. 29 See ISO, ISO 14000 Family - Environmental Management, available at https://www.iso.om/iso- 14001-environmental-management, html. 28 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00028 current highly regulated and fully bonded hardrock mines. EPA is proposing an additive regulatory scheme in the absence of a clearly articulated need as to why these existing programs are deficient or require additional financial assurance. SBA Letter at 5. a) Federal and State Environmental Regulations Adequately Address CERCLA Risk To start, the HRM industry is subject to all major applicable federal environmental laws including the: Clean Air Act ("CAA"); Clean Water Act ("CWA"); Safe Drinking Water Act; Toxic Substances Control Act; RCRA; Emergency Planning and Community Right-to-Know Act; Endangered Species Act; and numerous others.30 States with HRM facilities also have an additional layer of laws dealing with protection of groundwater, management and disposal of solid waste, closure, and reclamation. Furthermore, mature regulatory programs for HRM facilities are in place at both the federal and state levels that include rigorous requirements designed to ensure that HRM operations are protective of public health and the environment. For example, BLM's mining regulations, promulgated in 1980 and extensively revised in 2001, are designed to prevent unnecessary or undue degradation of public lands by HRM facilities.31 Not only do these regulations require reclamation after mining, they additionally contain operational, design, and environmental standards to prevent harmful releases and impacts to the environment both during and after operations. Similarly, the Forest Services' hardrock mining regulations, which went into effect in 1974, are designed to minimize adverse environmental impacts both during and after operations.32 In addition, states have their own comprehensive regulatory programs for hardrock mining.33 Notably, regulatory authorities will not issue permits to a HRM facility if the applicant cannot demonstrate that it will comply with numerous design and operational requirements tailored specifically to HRM facilities. These requirements are in place to minimize the risk of significant spills or other releases that could adversely impact the environment. If any such accidents occur, the relevant regulations require the mining company to take appropriate corrective action. Additionally, these regulations require post-mining reclamation activities. 30 NMA provided a comprehensive list of these statutes and regulations in comments on the priority notice of action. See Appendix A of NMA's Comments (EPA-HQ-SFUND-2009-0834-0097). 31 43C .F .R . Subpart 3809. 32 36 C.F.R. 228 Subpart A. 33 For example, see Nevada Administrative Code (NAC), chapters NAC 535, NAC 445A and NAC 519A, and the Arizona Mined Land Reclamation Act, Ariz. Rev. State. Ann. 27-901 through 1026, and the Aquifer Protection Permit, Ariz. Rv. State. Ann. 49-241 through 252. See also Appendix A. 29 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00029 The number of approvals and permits the typical mining operation must obtain is evidence of the thoroughness of the regulatory framework. For example, a typical operation must obtain: Approval of a plan of operations from the BLM or U S. Forest Service (or state regulatory authority), including a reclamation plan, closure plan, and environmental monitoring. A federal plan of operations is also scrutinized under the National Environmental Policy Act ("NEPA"), usually requiring the preparation of an environmental impact statement, which evaluates potential environmental impacts of the mining operation, assesses alternatives, and requires the identification of mitigation measures to reduce potentially significant environmental impacts. Fifteen states also have their own NEPA-like statutes.34 Air quality permits from EPA or state agencies with delegated programs under the CAA. The complexity of the air quality permits increases if there are substantial onsite processing facilities. All sites must have an approved fugitive dust control program. CWA permits from EPA, the Army Corps of Engineers, or state agencies with delegated CWA programs. Mining operations may require CWA permits for the discharge of mine and process water,35 management and discharge of stormwater, and discharge of dredged or fill material. State water quality permits to address potential impacts to ground water. Rights to use or consume water from appropriate state authorities. EPA identification number and other applicable hazardous waste requirements under RCRA that govern storage, transportation and disposal of hazardous wastes generated at FIRM facilities. Authorization under the National Historic Preservation Act if cultural or historic resources are present. M See Mandelker, NEPA Law and Litigation, (2016) Section 12.2. Important HRM states with state NEPA-like statutes include California, Minnesota, Montana, South Dakota, and Washington. 35 Such permits, issued pursuant to the National Pollutant Discharge Elimination System, typically include technology-based effluent limits established through application of EPA's Ore Mining and Dressing Point Source Category Effluent Limitations Guidelines and New Source Performance Standards. See 40 C.F.R. Part 440; 47 Fed. Reg. 54,598 (Dec. 3, 1982). Those regulations, which establish a minimum level of treatment of pollutants from ore mining and dressing facilities, include restrictions on the discharge of process water from mining operations, including a "zero discharge" limit on process water for numerous facilities. Permits for zero discharge facilities typically include strict monitoring requirements to ensure that no process water is being discharged. 30 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00030  Permits to construct tailings impoundments or other impounding structures for structural integrity and to prevent releases of hazardous substances. Detailed site environmental monitoring and reporting requirements to verify compliance with project permits. Financial assurance equal to the cost that would be borne by the government if it had to contract with a third-party to maintain environmental controls, address releases of hazardous substances and complete reclamation of the site, including any necessary long-term water treatment. Clearly, existing federal and state laws and regulations already give regulators the tools to protect the environment from hazardous substance releases from HRM facilities and deal effectively with unexpected releases should they occur in the future. In light of these programs, there is no need for an EPA CERCLA 108(b) program to "provide an incentive for implementation of sound practices at hardrock mining facilities and thereby decrease the need for future CERCLA actions." 82 Fed. Reg. at 3388. These "incentives" are built into the existing federal and state environmental regulatory programs as implemented by HRM facilities and noncompliance with these programs can result in corrective action, fines, other enforcement actions, and even permit revocation.36 Throughout the rulemaking process, there has been a chorus of comments from federal and state regulators in defense of the comprehensive nature of their regulatory programs. A sample of these statements is provided below. U.S. Forest Service: "the laws and regulations governing mining operations on NFS land prohibit releases of hazardous substances, and the Forest Service requires surety that is reasonably calculated to insure that operations and reclamation are conducted to avoid releases and respond to releases that may occur."37 Interstate Mining Compact Commission (IMCC): "EPA has repeatedly stated that what CERCLA 108(b) would regulate is different from what the states are doing, emphasizing that states' programs are `preventive' in nature and only address mine reclamation and closure requirements, as opposed to addressing releases of hazardous substances. The fact is, 36 The regulatory programs administered by the federal land management agencies similarly have such "incentives" built in. For example, BLM considers bonding to be a function of BLM's enforcement program in that it ensures all requirements will be met. See BLM Presentation, Hardrock Reclamation Bonding, (June 2016 Small Business Advocacy Review Panel meeting). 37 U.S. Forest Service Comments at 2 (emphasis added). 31 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00031 State reclamation programs are designed to prevent such releases from ever occurring and thereby to eliminate the risk."38 Western Governors Association (WGA): "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."39 Environmental Council of States (ECOS): "The states have acquired extensive expertise and understanding of the various mining methods and technologies used by their hard rock industries, and have gained significant experience in evaluating mining operations, calculating bond amounts based on the unique circumstances of each mining operation, assuring that the completion of reclamation and proper mine closure take place, addressing public health and environmental risks, regulating hazardous substances used in mining and preventing and remediating hazardous releases. The states have also developed the staff and expertise necessary to make informed predictions of how the real value of financial assurance may change over the life of the mine, including post closure. They have authority to make adjustments to financial assurance requirements when necessary."40 Nevada Division of Environmental Protection (NDEP): "As we have explained during recent work group calls with EPA, NDEP has specifically designed our mining program and regulations to minimize the potential for hazardous substance releases. In the event these releases occur at 38 Comment submitted by Beth A. Botsis, Deputy Executive Director, Interstate Mining Compact Commission at 2 (Aug. 16, 2016) ("IMCC Comments"). 39 Comment submitted by Wyoming Governor Matthew H. Mead and Montana Governor Steve Bullock, Chairman and Vice Chair of Western Governors Association at 2 (March 29, 2016). 40 Comment submitted by Alexandra Dapolito, Executive Director and General Counsel of the Environmental Council of the States, at 1 (Aug. 17, 2016). 32 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00032 permitted mine facilities, both mitigation and financial assurance are then required to ensure these releases are addressed."41 Utah Department of Natural Resources: "The rules promulgated under the Utah Mined Land Reclamation Act have been effective in requiring operators to control deleterious materials and to reduce or eliminate adverse environmental effects from these materials. Additional regulation by EPA is not necessary and would be a duplication of Utah's efforts."42 To provide further evidence of the duplicative nature of EPA's proposal, NMA commissioned a "Review of State Financial Responsibility Requirements for Hardrock Mining Facilities" ("State Report") on the duplication between EPA's proposed rule and the comprehensive and effective environmental protection regulations and corresponding financial responsibility requirements in state laws, regulations, and permits. The report is included as Appendix A to these comments. Specifically, the narrative and comparison tables in this analysis demonstrate that the environmental controls required in state regulations, which were almost entirely disregarded by EPA, are directly related to the statute's threshold standard on risk and level of appropriate financial responsibility. The report includes a detailed narrative and comparison of each state's regulations to the response cost categories in EPA's proposed financial responsibility formula for the following states: Alaska, Arizona, California, Colorado, Florida, Idaho, Michigan, Minnesota, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. The analysis also includes tables comparing the programs administered by the BLM and the U S. Forest Service to the response cost categories in EPA's financial responsibility rule. The report details how EPA analyzes the sufficiency of state financial assurance programs in a vacuum without consideration of the interaction between each state's environmental protection and financial assurance laws and regulations. As a result of this failure, EPA overlooks key facts that ultimately impact the degree and duration of risk posed by any HRM facility: The states' environmental protection laws and regulations, together with implementation of federal laws and regulations, including delegated programs, are designed to prevent environmental degradation due to a release of a hazardous substance and thereby substantially minimize the risk of releases of hazardous substances; The environmental monitoring and reporting requirements in state operating permits act as real-time, early-warning systems that provide state regulators and operators with indicators of a possible release of a hazardous substance. If project monitoring data indicate there may be a release, state regulations compel 41 Comment submitted by David Emme, Administrator, Nevada NDEP at 1-2 (Aug. 17, 2016). 42 Comment submitted by John R. Baza, Director of Division of Oil, Gas and Mining, Utah Department of Natural Resources at 1. (Aug. 17,2016). 33 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00033 the operator to report and investigate the potential release and take remedial action. These requirements minimize both the "degree and the duration of risk" associated with that release; and The costs associated with operating and maintaining the environmental controls specified in mine operating permits are included in the financial assurance. Thus, the financial assurance requirements extend far beyond physical reclamation; they include costs to operate and maintain a project's environmental controls necessary for compliance with the environmental protection and performance standards in the mine's operating permits. See State Report at 8. By providing the full picture of how the state programs work, the State Report thoroughly rebuts EPA's contentions that states are addressing different risks, or addressing "risks in a different manner from those for which EPA's proposed Financial Responsibility Formula is designed to account." 82 Fed. Reg. at 3403. The tables in the report show how each state program addresses all of EPA's 13 identified response categories and, therefore, are compelling evidence that state programs reduce both the risk of release and the risk that taxpayers will incur response costs and that EPA's proposal duplicates the existing state programs. A review of the HRM facilities on the CERCLA NPL provides additional confirmation about the efficacy of these programs in addressing CERCLA risks. As BLM and the U S. Forest Service attested in 2011 in responding to a request by Senator Lisa Murkowski (R-Alaska), no HRM facility approved by these agencies since 1990 has been added to the NPL.43 44 This data refutes EPA's fundamental assumptions that all currently operating and future mine sites will require CERCLA response actions for all site features. If this premise were true, one would expect to see currently permitted and operating HRM facilities, including those with no legacy contamination, added to the NPL at a rapid pace. In fact, as Figure 1 demonstrates, only one HRM site that began operations after CERCLA's passage is included on EPA's list of "mining sites proposed for and listed on the NPL as well as mining sites being cleaned up using the Superfund Alternative Approach."45 The greatest percentage of sites on this list began operations in the mid- to late-1800s, well before the state and federal regulatory programs came into existence. Furthermore, EPA's assumption that all sites will require remedies for every response category is not consistent with historical HRM CERCLA sites at which not all mine features are universally present and not all remedies are required. 43 Letter from Robert V. Abbey, BLM Director at 5 (June 21,2011) (None of the 659 plans of operation for mine production authorized by the BLM have been placed on the NPL). 44 Letter from Thomas J. Vilsak, Secretary U.S. Department of Agriculture at 4 (July 20, 2011) (None of the 2,685 mines permitted by the U.S. Forest Service have been placed on the NPL). 45 This list is maintained at https://www.epa.qov/superfund/abandoned-mine-lands-site-information. 34 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00034 HRM Sites on the NPL By Year Operations Began b) Federal and State Financial Assurance Programs Reduce Risk of Public Funds Being Needed to Address Releases from HRM Facilities Requirements related to financial assurance are an essential component of the federal and state regulatory scheme to effectively reduce the "degree and duration of risk" posed by the HRM industry.46 HRM facilities are subject to financial assurance requirements imposed by BLM and the U S. Forest Service as well as the states.47 In fact, in today's regulatory world, HRM facilities cannot begin operations without first providing financial assurance. These financial assurance requirements have evolved over time as regulators gained expertise in calculating the amounts necessary to cover the obligation. As mentioned above, one of the biggest changes is the shift from use of a generic formula 46 EPA's summaries of the states' financial assurance requirements do not adequately describe how the states' regulatory programs and environmental protection requirements are coordinated with the financial assurance programs and the relationship of the environmental regulations to determining the amount of financial assurance ultimately required. 47 See BLM - 43 CFR 3809.500; U.S. Forest Service - 36 CFR 228.13; State example - Nevada Administrative Code 519A. 35 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00035 to determine financial assurance amounts to use of site-specific information to do so. As even EPA admits, a site-specific determination is much more precise and better reflects potential risks.48 The comprehensive nature of these programs is highlighted in a recent comment letter submitted by the Interstate Mining Compact Commission (IMCC) during the agency's federalism consultation conducted last year: [T]he states have acquired extensive expertise on and understanding of the various mining methods and technologies used by their hardrock industries, and have years of experience in evaluating mining operations, calculating bond amounts based on the unique circumstances of each mining operation, assuring that completion of reclamation and proper mine closure takes place, addressing public health risks and environmental risks, regulating hazardous substances utilized in mining, and preventing and remediating hazardous releases. The states have also developed the staff and expertise necessary to make informed predictions of how the real value of financial assurance may change over the life of the mine, including post closure, and they have the authority to make adjustments to financial assurance requirements over time when necessary. IMCC Comments at 2. For example, EPA points to the shortfall in the bonded amount at the ZortmanLandusky mines in Montana as evidence of flawed bonding programs. But the specific problem with the bond calculations at Zortman have been solved for twenty years. According to the Final Environmental Impact Statement on the Reclamation Plan for those mines: Shortfalls in certain reclamation scenarios exist largely due to an assumption made during bond calculation that the mine configuration would be different at closure than actually existed when the operator filed for bankruptcy. As a result, more material has to be moved than was planned for in the bond calculations. This problem has been corrected in the new 3809 regulations, and in the State's bonding procedures, which specify that the bond amount should be adequate to cover the point of maximum reclamation liability, and not necessarily the conditions that would exist as the `anticipated' end of mine life. BLM, "Final Supplemental Environmental Impact Statement for Reclamation of the Zortman and Landusky Mines," at 6-14 (Dec. 2001). Site-specific determinations are also in-line with the recommendations of the 1999 NAS Report. The report cautioned against applying inflexible, technically 48 See 82 Fed. Reg. at 3460 ("This approach is the most precise of the three approaches considered by EPA. However, it is also the most resource intensive to implement. It requires gathering detailed information about the site, including an assessment of the site conditions.") 36 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00036 prescriptive standards stating that "simple `one-size-fits-all' solutions are impractical because mining confronts too great an assortment of site-specific technical, environmental, and social conditions" and urged that "each proposed mining operation be evaluated on its own merits." NAS Report at 5. The NAS Report also contained specific recommendations to the federal land management agencies on how their financial assurance requirements could be strengthened. Since the NAS Report was published, the federal land management agencies have acted to make their effective regulatory programs even stronger. For example, BLM's regulations now require financial guarantees for all mining and exploration disturbances, no matter how small, before activities can proceed. Both agencies require the financial guarantee to cover the full cost to reclaim the operation, as if the agencies were to contract with a third-party to conduct reclamation. In addition, the agencies can now require the establishment of a funding mechanism to ensure the continuation of long-term treatment to achieve water quality standards and for other long-term, post-closure care and maintenance requirements. Due to these developments, federal land managers now hold a record amount in financial assurance. BLM holds nearly $3 billion, a 71 percent increase over the past five years. The Forest Service, which oversees far fewer FIRM facilities holds an additional $325 million. States have strengthened their financial assurance programs as well. For example, South Dakota has made significant refinements to its reclamation bond calculation program to ensure better precision in the amount of financial assurance required. As another example, the State of Idaho amended its Surface Mining Act in 2015 to increase the level of financial assurance. Major mining states also hold significant amounts in financial assurance.49 Furthermore, the vast majority of states now have the authority to require assurance for longer-term post-closure activities. Additional details about various key mining states' financial assurance programs are included in the State Report in Appendix A to these comments. The improvements in financial assurance requirements, combined with sustained environmental compliance, will ensure that the public will not ultimately become responsible for releases of hazardous substances or reclamation of FIRM facilities. As such, a separate and duplicative EPA program is simply unnecessary to protect the taxpayers from these liabilities. 49 For example, Nevada holds $2.66 billion and New Mexico $692 million. See letter from David Emme, Administrator, Nevada NDEP at 1 (Aug. 17, 2016). See also, presentation by Bill Brancard, General Counsel of the New Mexico Energy, Minerals and Natural Resources Department to the CERCLA 108(b) Small Business Advocacy Review Panel. 37 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00037 C. EPA Has Not Supported Its Claims that Bankruptcy Is an Actual Indicator of Risk to the Fund or a Reason to Disallow Corporate Guarantees Much of the impetus for the rule is to protect the taxpayer from shouldering CERCLA liabilities.50 In its RIA, EPA estimates that absent the rule, defaults on CERCLA 108(b) liabilities at mining facilities, including response costs, natural resource damages, and health assessment costs, would cost the government or taxpayer approximately $527 million. EPA's assumptions about the risk of bankruptcy in the HRM sector are fundamentally incorrect. First, EPA overstates the risk that HRM facilities will file for bankruptcy. EPA fails to make any showing that this risk is greater for HRM companies than other industries. In fact, a key report that EPA relies upon in making its conclusions about bankruptcy rates clearly indicates that bankruptcy rates are much higher for a variety of other industries, noting that the manufacturing sector experienced seven times the number of bankruptcies during the analyzed timeframe. Industrial Economics, Inc., "Background Document for Financial Test Analyses," at 6. And this same report overstates the rate of bankruptcy for HRM facilities that would be subject to the proposed rule.51 The report identifies 43 mining company bankruptcies between 1981 and 2010 but 20 of these companies were associated with sectors that are not included in the HRM sector (as defined in the proposed rule), such as coal mining, oilfield drilling, and petroleum ore processing. As explained in an analysis of EPA's RIA,52 prepared by OnPoint Analytics for Freeport-McMoRan ("OnPoint Analysis"), the differences in market structure and industry characteristics make it inappropriate to compare risk of bankruptcy across these sectors. The OnPoint Analysis identifies other significant flaws with EPA's examination of bankruptcy risk including: EPA fails to consider how portfolio diversification across, and within, the operating activities of HRM facilities reduces bankruptcy risk. EPA fails to look at key financial ratios related to leverage, profitability, and stability for the HRM industry that demonstrate when compared to 50 See e.g., 82 Fed. Reg. at 3394 (The primary effect of this proposed rule is to transfer the risk associated with CERCLA liabilities from the taxpayer to the private sector) and at 3394 (if a company files for bankruptcy and defaults on its financial responsibility obligations EPA assumed the taxpayers would assume those obligations). 51 Many states' experience with rate of default or bankruptcy confirm EPA's overstatements of risk. See e.g., comment letter submitted by Governor C. L. "Butch" Otter to EPA Administrator Gina McCarthy at 2-3. (Aug. 17, 2016) ("No hard rock mine approved since 1986 for which financial assurances were posted has defaulted on the financial assurance such that the mine was not closed and reclaimed in accordance with (1) the reclamation/closure plan approved by the relevant federal and/or State agencies; and (2) the financial assurances retained by the agencies"). 52 This report is covered in more detail in Section IV. 38 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00038 other industries, the HRM exhibits better financial ratios that are indicative of financial stability. Furthermore, EPA significantly exaggerates the risk to the Fund by ignoring three key facts: (1) even in documented cases of bankruptcy, EPA has frequently obtained substantial recoveries and hence, the "gross cost" is not the "net cost' to the government; (2) many bankruptcies end as reorganizations with the entity continuing to operate during the proceeding and emerge from bankruptcy after recapitalization or sale to another entity as a financially viable company with its pre-filing financial assurance obligations unchanged;53 and (3) the bankruptcy of one potentially responsible party (PRP) does not necessarily mean that the government will be responsible for all remediation at the site since most, if not virtually all, CERCLA mining cases have multiple PRPs subject to government claims of joint and several liability. As evidenced by EPA's "Recovering Costs from Parties in Bankruptcy" webpage, the agency uses its "enforcement authority to ensure that responsible parties, and not taxpayers, pay for the cleanup of hazardous waste."54 Through this effort, EPA has "pursued some sizable claims and achieved excellent recoveries through settlement of bankruptcy." Id. Thus, EPA's assumption in the economic analyses that the agency would recover none of what is required to fund cleanup and restoration is patently incorrect. Nor is EPA able to demonstrate a link between bankruptcy and frequency or severity of releases. As acknowledged by EPA, the findings that operator bankruptcy and abandonment are associated with releases "reflect anecdotal evidence of the contributing factors to releases. In a literature review, no systematic reviews studied operator financial health in the hardrock mining sector and the creation of CERCLA liabilities." U S. EPA, "Comprehensive Report: An Overview of Practices at Hardrock Mining and Mineral Processing Facilities and Related Releases of CERCLA Hazardous Substances," at 8, fn. 17 (Nov. 30, 2016). EPA nevertheless uses its bankruptcy narrative to bolster its position on use of a financial test or corporate guarantee. The proposal states that [t]he Agency remains extremely concerned regarding the boom and bust nature inherent to the hardrock mining industry and recent volatility in commodity prices and global markets. History suggests that the increased risk of default for these companies makes this sector particularly problematic from the perspective of allowing them to self-insure through a financial test. Finally, many hardrock mining facilities require long-term care, such as long-term water treatment of acid mine drainage. Allowing owners or operators to self-insure where such long-term liabilities are 53 Even operators that are in bankruptcy may resolve their financial obligations to debtors while maintaining environmental compliance. For example, one of the major mines involved in the Pegasus Bankruptcy, the Florida Canyon Mine in Nevada, was purchased from the bankruptcy estate and has continued to operate without any taxpayer dollars to address environmental issues. Hycroft Mining Corp. in Nevada emerged from Chapter 11 bankruptcy in October 2015. Environmental responsibilities and performance were unaffected by the bankruptcy. 54 Web page available at https://www.epa.gov/enforcement/recovering-costs-parties-bankruptcy. 39 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00039 anticipated may be ill-advised given that some sites require treatment into perpetuity. 82 Fed. Reg. at 3432 (emphasis added). As discussed above, EPA's concerns about widespread defaults by the HRM industry are unfounded.55 Regardless, EPA is not free to ignore the CERCLA 108(b) mandate that "financial responsibility may be established by any one, or any combination, of the following: insurance, guarantee, surety bond, letter of credit, or qualification as a self-insurer." 42 U.S.C. 9608(b)(2). The plain language of the statute therefore requires EPA to allow a corporate guarantee and financial test option. However, the announced preferred option in the rule, Option 1, would completely prohibit any means of self-bonding by anyone. EPA's secondary option, Option 2, similarly fails to meet the statutory obligation. While Option 2 does include a financial test, its stringency will make it unavailable even to financially strong companies and that stringency is not justified by the administrative record. Given the numerous fatal deficiencies with this rulemaking, NMA believes the only defensible outcome is for the agency to conclude that the imposition of additional financial responsibility requirements is not necessary given the "degree and duration of risk" presented by the HRM industry. As such, NMA is not providing specific recommendations on how an appropriate financial test could be structured.56 However, to preserve any legal arguments in the event the rule is finalized, NMA raises some significant concerns with the proposed approach. First, the approach to the financial test contradicts EPA's use of a financial test under RCRA and for companies with existing CERCLA response obligations. Under these other programs, EPA has established reasonable financial tests to satisfy cleanup obligations. For example, EPA allows the use of a financial test to satisfy RCRA financial responsibility requirements for closure and post-closure costs57 and to satisfy CERCLA cleanup obligations embodied in settlement agreements and CERCLA 106 administrative orders. It is mystifying that EPA refuses to do so in the context of CERCLA 108(b) obligations, especially since the agency explicitly acknowledges that 55 In fact, the duplicative nature of the regulation could potentially lead to unintended counterproductive environmental and economic consequences as hard rock mining companies are potentially induced into bankruptcy by the costs of the regulation. See, OnPoint Analysis at 41. 56 NMA notes, however, that the agency should allow the ability to self-insure up to 100 percent of the obligation for companies that can meet any of the following: (1) have an investment grade (BBB- or better) credit rating; (2) satisfy the Nevada financial assurance test; or (3) have sufficient net worth and total assets. 57 See 40 C.F.R. 264.143(f) ("Financial test and corporate guarantee for closure"); 40 C.F.R. 65.143(e) (same); See also 70 Fed. Reg. 53419, 53439 (Sept. 8, 2005) (explaining the Agency's reasoning for retaining the RCRA financial test in response to comments suggesting that it be abandoned). 40 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00040 there have not been "widespread" problems with self-bonding under those other programs.58 Second, the proposed rule indicates only audited financial statements prepared in accordance with the U S. Generally Accepted Accounting Principles ("U.S. GAAP") will be recognized for purposes of the financial test.59 NMA believes the use of International Financial Reporting Standards (IFRS) prepared financial statements should also be allowed. EPA's rationale for disallowing use of IFRS-audited statements for the purpose of supporting financial test or parent guarantee financial assurance is based on incorrect assumptions.60 Any disparities between U.S. GAAP and IFRS statements are already addressed by the adjustment employed in the Standard & Poor's (S&P) financial rating evaluation process. S&P adjusts an entity's financial data prepared under U.S. GAAP or IFRS to S&P's view of the entity's underlying financial stability. The credit ratings set by S&P (e.g., A- or BBB) would have considered any accounting differences between U.S. GAAP and IFRS. S&P credit ratings, therefore, do not make any distinction between U.S. GAAP and IFRS financial statements. D. EPA's Alleged Evidence of Releases from Current Mining Operations is Unsubstantiated and Does Not Justify EPA's Risk Determination It is through the lens of steadfastly ignoring the risk-reducing nature of the federal and state programs that EPA mistakenly concludes that today's FIRM industry is "high risk" and merits creation of a CERCLA 108(b) program. To justify its conclusion, EPA prepared a series of reports (collectively referred to as the "2016 Reports") that the agency contends provide the evidence showing there is continuing risk posed by currently permitted and operating FIRM facilities: U.S. EPA, "Office of Resource Conservation and Recovery, Memorandum to the Record: Releases from Flardrock Mining Facilities" (Nov. 22, 2016) ("Releases Report"). U.S. EPA, "Comprehensive Report: An Overview of Practices at Flardrock Mining and Mineral Processing Facilities and Related Releases of CERCLA Hazardous Substances" (Nov. 30, 2016) ("Practices Report"). U.S. EPA, "Evidence of CERCLA Hazardous Substances and Potential Exposures at CERCLA 108(b) Mining and Mineral Processing Sites" (Sept. 2016) ("Evidence Report"). 58 See 82 Fed. Reg. at 3432. 59 See id. at 3,437-38, 3,492-93. 60 See 82 Fed. Reg. at 3,438 ("[T]o accept both IFRS and GAAP financial statements in support of the financial test would yield a potentially disproportionate playing field wherein some companies using IFRS may pass the test where they might otherwise fail under GAAP, and vice versa."). 41 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00041 Only by bundling these reports, each of which is significantly flawed, can EPA create the illusion that today's HRM activities are not only as risky, but perhaps even riskier than historical and largely unregulated HRM activities. But this house of cards cannot withstand scrutiny. When these reports are carefully examined, they reveal how profoundly EPA has misinterpreted or misunderstood its own data. EPA concludes that the "risk" of releases triggering response costs remains high and therefore CERCLA 108(b) financial assurance requirements are necessary. These reports, however, support the opposite conclusion: if "releases" of hazardous substances at mine sites do occur, current regulatory programs ensure those releases are identified by monitoring, reported to regulatory authorities and corrected by the operator under the supervision of federal and/or state regulators without risk of environmental injury or response costs. As such, these actions are the hallmarks of effective regulatory programs rather than any evidence of risk. While the 2016 Reports purport to demonstrate hundreds of "releases" occurred over the past decade, there is no evidence that the current federal and state regulatory programs are not adequate to identify and respond to these releases. Nor do the reports provide evidence that response costs funded by taxpayer dollars would have been or will be required to address any of these "releases." Each of the reports is addressed below. NMA notes there are general criticisms that apply to each report. Additionally, Appendix C is NMA's "Analysis of Facilities EPA Alleges Demonstrate HRM Facilities Present Continuing Risk," which provides an extensive critique of EPA's characterization of the 72 specific HRM facilities mentioned in the three reports and the preamble to the proposed rule. This appendix corrects EPA's mischaracterizations and/or omissions of key facts for the HRM industry that EPA stubbornly and mistakenly relies upon to reach its conclusions about the continuing risks posed by HRM facilities. 1. Focus on Wrong Timeframe While not stated explicitly in the preamble to the proposed rule, EPA appears to have adopted a firm year, 1980, as the year marking the changeover from historical/legacy mining to modern mining. While 1980, the year CERCLA was enacted, may seem like a practical choice, it is arbitrary and ignores the evolution of other environmental laws and mining regulations and practices over time (see discussion above in Section II.B), especially as many federal and state environmental regulatory schemes applicable to mining were in their infancy in 1980.61 Due to this faulty assumption, EPA nonsensically equates the risks from HRM facilities that were in operation in 1980 (regardless of when they were built or how long they operated pre1980) to the risks from currently permitted and operating HRM facilities. EPA's inappropriate conflation of 1980 sites with currently permitted and operating facilities is evidenced by the 2016 Reports that the agency published to 61 For example, BLM's surface management regulations, 43 C.F.R. Subpart 3809, which have been the primary regulatory framework for HRM on federal lands, were proposed in 1980 and became effective in January 1981. 42 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00042 support the proposed rule. For example, the Releases Report addresses sites that were "recently or currently operating" as illustrated by a chart of HRM facilities with operations from 1980-present. The Practices Report also segregates pre-and post-1980 releases.62'63 The Evidence Report most explicitly indicates EPA's decision to conflate the risks from all post-1980 HRM operations, noting that "sites that operated after 1980 represent current mining and processing operations and practices." Evidence Report at ES-1 (emphasis added). EPA admits that "the focus on post-1980 is to strengthen the relevance of the data to . . . current sites because sites operating after 1980 would be more likely to use techniques similar to those in use today, compared with pre-1980 sites."64 65 Id. (emphasis added). Even more troubling than equating 1980 sites with currently permitted and operating HRM facilities, EPA relies heavily on historical (pre-1980) and largely unregulated mines throughout the development of the rule. For example, in developing its formula, EPA conducted analysis of historical response costs at HRM sites on the NPL and non-NPL CERCLA sites and then used this information to help further identify the magnitude of continuing risks from HRM facilities potentially subject to the rule. As an example, EPA relies on NPL data to inform the formula's water treatment response costs for operating facilities instead of properly acknowledging that many permitted and operating facilities will not require water treatment.66 By not focusing on the much lower 62 "Many facilities within the non-operating and currently operating sample have been active for a century or longer. When a post 1980 release occurred at these facilities it was difficult to determine if the equipment or practice responsible for the release was newly constructed or part of the site's past operations." Practices Report at 5. 63 "Federal and state authorities, including EPA, [BLM] and states, promulgated environmental regulations applicable to hard rock mining and primary processing operations throughout the 1970s, 1980s and 1990s. During this period, incremental requirements and applicability of standards continued to bring hardrock mining and mineral processing operations into the period of contemporary mining." Practices Report at 6. 64 "Post-1980 sites more likely to represent sites where practices resulting in contamination are confirmed, are expected to be similar to current-day practices where risks have been characterized." Evidence Report at 3. 65 NMA does not support the establishment of any firm date to demarcate historical and modem mining as doing so cannot substitute for assessing the actual risks posed by currently permitted and operating HRM facilities. NMA notes, however, that EPA has in the past determined 1990 is the more appropriate date. See Phase 1 Preliminary Analysis Report, available in the docket EPA established for the HRM Priority Notice (EPA-HQ-SFUND-2009-0265-0019), at ES-2 (EPA eliminated sites from consideration that were "proposed to the NPL strictly as a result of `legacy' contamination, i.e., sometimes the results of decades, even centuries of practices that were not subject to modern waste management regulations . . . Most of the sites listed prior to 1990 would tend to be on the NPL due to poor waste management practices that occurred before the full implementation of modern state and federal environmental waste management laws."). 66 "One of the highest-dollar response categories, water treatment, also presented one of the smallest cost sample sizes with only 15 facilities represented. As a result, EPA supplemented the closure plan cost data on water treatment costs with data from the three CERCLA sites contained in EPA's 43 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00043 potential risks from currently permitted and operating HRM facilities, EPA grossly distorts the risk profile of today's HRM industry and proposes a financial responsibility obligation that is completely out of touch with the reality of current conditions. 2. Lack of Peer Review Individually and as a group, each of the 2016 Reports meet the criteria that require peer review outlined in the Office of Management and Budget's ("OMB") 2004 Bulletin M05-3 "Final Information Quality Bulletin for Peer Review." U S. OMB, Final Information Quality Bulletin for Peer Review, M05-3 (Dec. 16, 2004) ("Peer Review Bulletin"). However, they have not been subject to adequate peer review and consequently are insufficiently reliable to support EPA's continuing risk determination. Specifically, the Bulletin requires all agencies to conduct peer review of influential scientific information before it is disseminated by the federal government. The Bulletin defines the term "scientific information" as: .... factual inputs, data, models, analyses, technical information, or scientific assessments related to such disciplines as the behavioral and social sciences, public health and medical sciences, life and earth sciences, engineering, or physical sciences. Id. at 10-11. To determine which scientific information is "influential," the Bulletin refers to OMB's guidance implementing the Information Quality Act. Based on this law, OMB defined "influential information" as: "Influential", when used in the phrase " influential scientific, financial, or statistical information", means that the agency can reasonably determine that dissemination of the information will have or does have a clear and substantial impact on important public policies or important private sector decisions. U S. OMB, Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information Disseminated by Federal Agencies, 67 Fed. Reg. 8452, 8460 (Feb. 22, 2002). One of the examples of "influential" in the OMB Bulletin is an agency's assessment of risk that influences state, local, and international action. The 2004 Bulletin also created the term "highly influential" if the agency or the OMB Office of Information and Regulatory Affairs ("OIRA") Administrator determines that the dissemination could have a potential impact of more than $500 million in any one year on either the public or private sector or that the dissemination is novel, controversial, or precedent-setting, or has significant interagency interest. Peer Review Bulletin at 23. The Bulletin requires all agencies to have certain minimum peer review standards for "highly influential scientific information." These minimum standards CERCLA site data set, for which water treatment cost data were readily available, and could be disaggregated from the sites' full costs." 82 Fed. Reg. at 3463. 44 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00044 include that agencies provide the public the written charge to the peer reviewers, the peer reviewers' names, the peer reviewers' reports and findings, and the agency's response to the peer reviewers' findings. Agencies must also form a peer review process with the necessary expertise and with best practices to avoid potential conflicts of interest. The Bulletin contains some exemptions, deferrals, and waivers but does not automatically permit an agency to waive the peer review requirements due to a judicial deadline for a rulemaking. Specifically, the Bulletin states: "Deadlines found in consent decrees agreed to by agencies after the Bulletin is issued will not ordinarily warrant waiver of the Bulletin's requirements because those deadlines should be negotiated to permit time for all required procedures, including peer review." Id. at. 32. EPA's description of how it complies with the Bulletin is contained in its peer review handbook. U S. EPA, Peer Review Handbook 4th Edition (EPA/100/B-15/001) (October 2015). The 2015 edition includes OMB's definitions for "highly influential scientific information" and incorporates the OMB Bulletin requirements into EPA's overall peer review process. As such, EPA is obligated to fulfill the OMB peer review bulletin requirements for "highly influential scientific information." EPA failed to follow these requirements for the 2016 Reports despite the fact these reports are "highly influential" under the OMB criteria. First, the reports meet the criteria that "the dissemination is novel, controversial, or precedent-setting, or has significant interagency interest." Namely, the SBA's Jan. 2017 letter demonstrates substantial interagency interest. The primary point of the SBA letter is that EPA should withdraw its proposal as "there is no statutory need for this regulation, nor are there any significant environmental benefits demonstrated by EPA." SBA Letter at 3. In its letter, SBA references the preamble discussion and 2016 Reports that EPA is relying upon to support the need for the CERCLA 108(b) rule. Specifically, SBA questions the findings of the Releases Report, pointing out that EPA: simply describes evidence of recent releases, while not addressing the fact that the responses to these releases are potentially being handled effectively under the existing regulations. If other federal and state programs adequately handle these releases, this would undermine, rather than support the foundation for this proposal. SBA Comment Letter at 7. The U S. Forest Service and BLM are other federal agencies that have expressed significant interest and concern regarding the proposal. During the federalism consultation, several states also expressed this same concern. The agencies have worked diligently since the 2009 Priority Notice to educate EPA about the comprehensiveness and strength of their respective programs to reduce the "degree and duration of risk" posed by HRM facilities. Both agencies provided extensive Sierra Club v. EPA 18cv3472 NDCA 45 Tier 2 ED 002061 00087255-00045 overviews of their environmental regulatory programs and how they calculate financial assurance for the HRM industry.67 Additionally, the 2016 Reports are "highly influential under the criteria that the dissemination could have a potential impact of more than $500 million in any one year on either the public or private sector." While EPA estimates that the annual cost to industry for the rule is $174 million, EPA's estimate is extremely conservative and wrong. According to Freeport-McMoRan Inc.'s preliminary analysis, its company alone could add more net financial responsibility than EPA projected for the entire mining industry ($4-7 billion) if the rule is finalized as proposed.68 In addition, the aforementioned OnPoint Analysis of the EPA RIA reveals significant flaws in the RIA that demonstrate the agency significantly underestimated the costs of the rule.69 3. Lack of Data on Funding of Any Needed Response Costs Each of the 2016 Reports refers to alleged releases from currently operating HRM facilities to support the agency's overarching conclusion on continuing risk. Missing from each, however, is complete information about whether taxpayer dollars were required to conduct any necessary response or remediation. As such, these reports fail to accurately assess whether such releases pose a risk to the Superfund itself. At many of the facilities described in these 2016 Reports, the HRM facility operator paid for and/or conducted any needed remediation for the discussed releases. Importantly, most of these activities were achieved without any need for enforcement action by any regulatory agency as the operators frequently self-identified the problems from project monitoring data, notified any necessary authorities as required under federal and state laws and voluntarily engaged in cleanup activities. Ironically, it is the ever-evolving state and federal regulatory programs that EPA has disregarded throughout this rulemaking that creates the setting, including the project monitoring requirements, that allows operators to identify any environmental concerns early and obligates them to address such problems quickly and effectively. 4. EPA's Releases Report The stated intent of the Releases Report is "to substantiate the ongoing existence of environmental risk from releases to the environment from hardrock mining in spite of improved regulation of and practices instituted by the hardrock mining and mineral processing industry" Releases Report at 2 (emphasis added). In the attempt to make this connection, the report included sites that allegedly were "recently or currently operating" and that allegedly "had no previous significant legacy mining issues." 82 Fed. 67 Most recently, both agencies gave lengthy presentation about their programs at the June 2016 Small Business Advocacy Review Panel meeting. EPA representatives were present at this meeting. 68 Comment Submitted by William E. Cobb, Vice President, Environmental Services, Freeport- McMoRan Inc. to EPA Administrator Scott Pruitt at 3 (May 5, 2017). 69 See section IV of these comments for discussion of OnPoint Analysis' conclusion that the true cost of the proposed rule could be as high as $39.4 billion on a net present value basis. 46 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00046 Reg. at 3471. EPA places huge weight on a flimsy report with a page length (26) that is shorter than the number of HRM facilities it examines (27). The Releases Report summary indicates that the agency evaluated three types of incidents and response actions from HRM facilities: CERCLA actions, CERCLA-like actions, and potential CERCLA actions.70 EPA's terminology regarding the types of actions evaluated is very misleading, especially the use of the term "CERCLA-like." Specifically, the report identifies "a number of other mine sites have resulted in releases to the environment that were subsequently mitigated using CERCLA-like actions under state and/or federal statutory authority." Releases Report at 9. NMA objects to the characterization of responses to the alleged releases at these sites as "CERCLA-like." For the vast majority of the facilities EPA characterizes as CERCLA-like, the releases were identified by the operator and reported to the appropriate regulatory authority under state environmental regulatory programs. Ultimately, most of these releases were addressed by the operator under the supervision of applicable state and federal mine regulators without the invocation of CERCLA authority or the expenditure of any public funds. The designation this entire group of releases as "CERCLA-like" has no basis in law, regulation, or guidance. In fact, rather than supporting EPA's continuing risk conclusion, the CERCLA-like narrative of the Releases Report demonstrates that existing regulatory programs are effective, that risk of injury or response action is low, and that no duplicative financial assurance is necessary. While EPA contends that for each included HRM facility, it attempted to identify: (1) the source of the release; (2) the proposed or implemented clean up actions; and (3) to the extent available, the approximate cost of cleanup, financial assurance amounts and underlying cause of the release, in fact, the site narratives are almost uniformly incomplete, and they therefore mislead the reader about risks from currently permitted and operating HRM facilities. Far from documenting or clarifying the risk of hazardous substance releases from HRM facilities, the Releases Report does the opposite: it obscures the kinds of releases that occur, how and why operators respond, and who pays for the response. For example, very little information about financial assurance is provided and there is wide variation in the site descriptions especially between those related to CERCLA actions and those associated with CERCLA-like actions. The former are in a more detailed narrative format while the latter often are simply excerpts of site permits taken out of context. Other major flaws that damn EPA's reliance on the Releases Report as a basis for its continuing risk determination include limited sample size and selection bias, lack of peer review, and inclusion of sites with legacy mining issues. First, the data set of facilities reviewed is extremely limited. The report only includes 27 HRM facilities, which from a statistical standpoint is hardly a sufficient sample to substantiate the proposition 70 While the report references a third category - potential CERCLA actions - there is no such section of the report. A draft version originally included in the docket included at least the preliminary outline of this section, which the final did not contain. Apparently, EPA decided not to include it, perhaps because the agency could not identify any sites that fit within such a nebulous category. 47 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00047 that current mining regulations and practices do not reduce environmental risks of releases. Second, EPA does not explain how or why these facilities were selected for inclusion in this analysis or how they are representative of current operations. This selection bias is not limited to the Releases Report but is a troubling trend in many of EPA's "supporting" documents, including the selection of the 63 sites relied upon to develop response costs for the financial responsibility formula. Because "an analysis is only as good as the data on which it rests," EPA's cherry picking of sites and failure to consider that not all historic facilities warranted CERCLA response or dollars instills a bias in this rulemaking.71 EPA's selection bias further exaggerates the risk of releases and threatened releases requiring CERCLA response.72 Third, as EPA acknowledges, the peer review of the document was minimal and included those who generated the report such as internal EPA staff and EPA Contractor James Kuipers. As such, the peer review fails to meet the aforementioned peer review obligations imposed by the OMB bulletin for "influential" or "highly influential" "scientific information," including the requirements to provide the public the written charge to the peer reviewers, the peer reviewers' names, the peer reviewers' reports and findings, and the agency's response to the peer reviewers' findings. Further, while EPA contends the Releases Report only includes recently or currently operating mines and mineral processing facilities that had no previous significant legacy mining issues, such claims are patently untrue. At least 12 of the sites in the Releases Report data set are associated with significant historical and largely unregulated HRM activities and therefore, cannot be used to support conclusions about the risks associated with currently permitted and operating HRM facilities. As previously demonstrated in Figure 1 of these comments, the vast majority of HRM sites on the NPL began operations before the advent of any environmental regulations and there is only a single HRM facility included on the list that commenced operations post-1990. The Releases Report's overarching flaw is the excessive focus on demonstrating that releases occurred without evaluating whether such releases actually posed risk of harm to the environment and whether the release was fully addressed by the operator, posing no risk whatsoever to the Fund. As such, EPA's simplistic methodology is divorced from the concept of "risk" under CERCLA 108(b) and inconsistent with the Agency's risk assessment process under CERCLA and RCRA programs. Simply put, 71 Michael J. Saks, et al., Ann Reference Manual on Sci Evid. 83 (2d ed.) at 7 -1 7 (discussing study design and the dangers of selection bias). S e e also , In re C o u n try w id e F in a n c ia l C orp. M o rtg a g e -B a c k e d S ecu ritie s Litigation, 984 F.Supp.2d 1021, 1039-1041, (C.D. Cal. 2013) (finding a report inadmissible because selection bias rendered the data unreliable). 72 In 2012 EPA presented a strategy for evaluating 464 lead smelter sites as part of a national site assessment program under CERCLA. S e e E P A S tra te g y fo r A d d re s s in g 4 6 4 L e a d S m e lte r S ite s (Aug. 30, 2012), a v a ila b le a t http://semspub.epa.gOv/src/document/HQ/176082. At the time of this white paper, EPA had concluded that of the 350 sites screened, only 132 were considered for preliminary assessments and of those, only 6 were eligible for the NPL. This document demonstrates the fallacy in EPA's assumption that 100 percent of currently operating and permitted mines are likely to result in NPL listing and eligibility for the Superfund. 48 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00048 the Releases Report overstates the risk of release, the potential severity of any release, and the risk that the release exceeds the ability to remediate without the use of taxpayer funds. Moreover, its stated objective is an admission that EPA's rulemaking efforts are results-driven and, therefore, by definition, biased, arbitrary and capricious. 5. EPA's Practices Report The stated intent of the Practices Report is to evaluate the validity of public comments received in response to the Priority Notice that EPA's rule is not necessary "in light of existing environmental regulatory programs at both the state and federal levels, and considering the risk of future releases of hazardous substances from current mining operations." Practices Report at 1. Further, EPA relies heavily on the Practices Report to conclude that "the results of this relatively recent effort to further document the state of current mining practices substantiates the findings from the other documents described herein and further reinforces the Agency's belief that currently operating hardrock mining and mineral processing facilities subject to this proposal continue to present risks of release of hazardous substances." 82 Fed. Reg. at 3475. It is mystifying how this document can be used to support EPA's risk conclusions when the document contains the following disclaimers, "[tjhis document does not endeavor to develop a formal risk assessment of the non-operating and currently operating sites and facilities," Practices Report at 4 (emphasis in the original), and "[tjhis review did not attempt to characterize the environmental or human health risks associated with specific releases. No comparison of magnitude and severity was drawn between releases at non-operating sites and currently operating facilities." Id. at 5. Despite these disclaimers, once again, EPA conflates and equates releases with risk and wrongly asserts that the mere occurrence of a release means harm will result and taxpayers will foot the bill. And once again, EPA completely ignores the risk-reducing nature of today's regulatory programs or how they apply to each of the practices summarized in the report. In a surprising turn, this document is one of the rare instances when the agency tepidly admits there are difficulties in looking to the past to determine risks from today's FIRM industry. EPA acknowledges that: [Mjany sites and facilities within the non-operating and currently operating samples have been active for a century or longer. When a post-1980 release occurred at these facilities, it was difficult to determine if the equipment or practice responsible for the release was newly constructed or part of the site's past operations. Id. This single statement is sufficient to materially undercut the Practices Report and its conclusion that today's mining practices continue to pose a risk as "all of the practices either resulted in releases or contributed to increasing the volume or environmental harm of a release, or both." Id. at 9. Combine this statement with the following admission from EPA and it becomes evident that the Practices Report cannot be relied upon to make any conclusions about ongoing risks from FIRM facilities: 49 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00049 [Systematic and comprehensive information about facility characteristics, waste management, releases, and regulatory oversight was not available for either non-operating sites or currently operating facilities. Thus, this profile is based on information that may be incomplete or anecdotal. Id. at 4-5. Another major flaw in the Practices Report is the overly simplistic description of HRM practices and the unsupportable premise that because legacy sites have HRM components like waste rock and tailings storage facilities or used flotation or cyanide processing reagents that the problems at these pre-regulation sites will be replicated at current mines that have similar components. There is no factual basis for EPA's assertions about the likelihood that those practices will result in releases at currently regulated HRM facilities. The description of mining practices reads as if drafted by a layperson without the requisite expertise, resulting in overly simplistic descriptions and not very precise or meaningful descriptions of mining practices.73 The document shows no understanding by EPA of the impacts of technological advances in HRM practices on risks posed by the HRM industry. NMA solicited the expert assistance of SME to critique the Practices Report's description of practices and to provide an accurate assessment of how technology can reduce risks.74The SME Analysis, "Review of Environmental Protection Agency Reports," is included as Appendix D to these comments. The analysis' primary focus is the technical validity of statements by the EPA about practices and technologies employed in mining, and the degree and duration of risk associated with the use of those practices and technologies. Specifically, SME methodically reviews the agency's description of the following: non-entry solution mining and ion exchange processing; physical processing and gravity and magnetic separation; flotation processing; cyanidation; acid leach, solvent extraction and electrowinning; pyrometallurgical processes; Bayer process; mine influenced water; waste rock piles; tailings management; and mining process leaks and spills. Overall, the SME Analysis concludes that EPA's findings are overly simplistic and ignore the weight of scientific evidence demonstrating the evolution and improvement of mining practices and mineral and ore processing technologies since the enactment of CERCLA more than thirty 73 While in a different context, NMA agrees with views expressed by Reviewer 4 that EPA's analyses would "benefit from closely interacting with industry professionals. While I have not been privy to the generation of the Formula or report, the little bit of close data inspection that I have done gives me the impression that there is a stark lack of understanding of the workings of the industry that the EPA is tasked with regulating." "Response to Peer Review Comments: CERCLA 108(b) Financial Responsibility Formula for Hard rock Mining Facilities Background Document" at 6-16. (Dec. 2016). 74 SME is a professional society whose more than 15,000 members represent all professionals serving the mining industry in more than 100 countries. SME members include engineers, geologists, metallurgists, educators, students and researchers. SME advances the worldwide mining and underground construction community through information exchange, education and professional development. A panel of experts within SME prepared its analysis. 50 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00050 years ago. SME's Analysis corrects EPA's omissions and mischaracterizations in the descriptions of these practices and technologies, and thereby provides evidence that the improvements in today's HRM practices and technologies greatly reduce both the degree and duration of risk of release of hazardous substances. In addition, SME responds to EPA's unreasonable use of a 25-year old paper, "Mining Sites on Superfund's National Priorities List - Past and Current Mining Practices," which the proposed rule indicates is one of the underpinnings of the Practices Report. 82 Fed. Reg. 3472, fn. 194. Notably, the conclusions EPA draws from the Practices Report that today's HRM practices do not significantly differ from historic practices contradicts previous EPA analyses. For example, EPA's "Report to Congress: Wastes from the Extraction and Beneficiation of Metallic Ores, Phosphate Rock, Asbestos, Overburden from Uranium Mining, and Oil Shale," contains several statements about the differences in practices over time. (EPA/530-SW-85-033) (Dec. 1985). The Report to Congress analyzes various HRM damage cases and CERCLA sites and concludes that "many of the waste disposal practices that have resulted in major incidents of environmental contamination at abandoned mine sites are no longer used (i.e., the dumping of tailings into streams or onto uncontained piles)." Id at 4-64.75 6. EPA's Evidence Report The stated intent of the Evidence Report is to compare case study historical sites with 2009 current sites in order "to describe the extent to which those same practices, contamination patterns, releases and exposures might occur at current and future sites." Evidence Report at ES-1. Of the three 2016 reports, the Evidence Report is the most reliant on circumstantial evidence to conclude that currently permitted and operating HRM facilities are similar enough to sites where CERCLA response actions were required in the past to conclude they continue to pose a risk of CERCLA release. For example, EPA merely looked at four data points, none of which provide any direct evidence for the agency's continuing risk conclusion: Whether mining and mineral processing practices at the historical sites continue to be used at the 2009 current sites; Whether there are similarities between priority constituents of concern ("COCs") reported at historical sites and the CERCLA hazardous substances reported in TRI and National Pollutant Discharge Elimination System ("NPDES") permit reporting from 2009 current sites; Whether human and ecological receptors at historical sites have parallel potential receptors at 2009 current sites; and 75 Further, the report states "It is not clear, from the analysis of damage cases and Superfund sites, whether or not current waste management practices can prevent damage from seepage or sudden releases but it is clear that some of the problems at abandoned or Superfund sites are attributable to waste disposal practices not currently used by the mining industry." Id. at E S - 18 51 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00051  Whether environmental settings and exposure pathways at historical sites have corresponding environmental settings and potential exposure pathways at 2009 current sites. This is a list of the wrong questions; they have nothing to do with CERCLA's statutory charge. The correct question is whether the "degree and duration of risk" presented by currently operating and permitted HRM facilities merits development of a CERCLA 108(b) program. EPA's analysis is irrelevant to the correct question. Furthermore, the data uncertainties and the flaws in the methodology and assumptions that underlie the Evidence Report are so numerous and significant that the report's conclusions should be rejected. The discussion above regarding the Practices Report, as well as the associated SME Analysis, addresses the flaws with EPA's reliance on perceived parallels in practices to draw conclusions about continuing risk and is equally applicable here. Contrary to EPA's conclusions and persistent reliance on dated material,76 advances in practices and techniques have occurred over time, and these advances reduce the "degree and duration of risk" from HRM facilities. Regarding COCs, the fact that similarities exist between historic COCs and TRI/NPDES hazardous substances does not answer the question of whether such constituents pose a risk at currently permitted and operating HRM facilities. Since most hazardous substances associated with mining occur naturally in ore, it is obvious that the COCs at legacy and currently operating properties will be similar. That fact alone illustrates the flaw in EPA's reliance on this question as probative. As explained in greater detail in Section II.D.I.E.7, TRI data are an inappropriate surrogate for risk as TRI data are strictly a volume-based reporting requirement, not an assessment of risk to human health or the environment. Thus, that fact that 24 percent of the 2009 current sites reported TRI on-site releases says nothing about whether such releases pose the type of risks EPA is supposed to be focused on. As EPA acknowledges elsewhere, there is no direct correlation between such releases and risk. Equally unavailing is EPA's use of CWA NPDES Discharge Monitoring Reports (DMRs) related to point source discharges to surface water bodies. Similar to TRI data, DMRs are merely reports of releases to surface water, without any accompanying assessment of risk. The overly simplistic question about whether there are parallels between receptors at historic and currently permitted and operating sites seems particularly absurd as there are a limited number of human and ecological receptors to evaluate in the first instance. A similar evaluation would take place regardless of the type of industrial activity involved. For example, all sites being scored pursuant to the CERCLA 76 Similar to the Practices Report, EPA again uses dated information about historic practices to draw inferences about current practices: See U.S. EPA, Identification and Description of Mineral Processing Sectors and Waste Streams (Dec. 1995). 52 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00052 Hazard Ranking System ("HRS"), are evaluated for four pathways: ground water migration (drinking water); surface water migration (drinking water, human food chain, sensitive environments); soil exposure (resident population, nearby population, sensitive environments); and air migration (population, sensitive environments). U S. EPA, "Introduction to the Hazardous Ranking System," available at https://www.epa.gov/superfund/introduction-hazard-ranking-system-hrs. As such, similarities in receptors cannot be an accurate indicator of likelihood of risk of release or severity of release. To the extent EPA was attempting to draw more substantive comparisons between historic and currently permitted and operating sites regarding environmental settings and exposure pathways, the agency lacked the data to be able to do so. EPA acknowledges that "human health and ecological risk assessments are site-specific and highly variable," Practices Report at ES-5, and notes significant uncertainties in the data and geographic information systems used to estimate the proximity of human and ecological receptors to current sites including: the exact location of current mines; use of census data to estimate residence locations; and dated nature of the census data from 2000. Significantly, EPA noted: Although substantial amounts of data are available on many of the factors influencing human and ecological exposures, direct evidence of exposures of either human or ecological receptors to CERCLA hazardous substances, with corresponding evidence of adverse effects, is available for only a few 2009 current sites. This data gap constitutes the largest source of uncertainty in the overall comparisons to the Case Study Historical sites. Evidence Report at 52 (emphasis added). To put it more bluntly, EPA cannot demonstrate that receptors are at risk at any currently operating sites. Importantly, the Evidence Report's discussion of the essential role of site characteristics in assessing risk of future CERCLA releases, acknowledges both the probability and harm component of risk that are notably absent from EPA's continuing risk conclusion. In the context of historical sites, the report acknowledges: [T]he probability of a CERCLA hazardous substance release occurring is also influenced [in addition to practices used] by site characteristics, as well as physical phenomena such as rate of release and its magnitude. Site characteristics such as climate, soil types, geological settings, topography, and hydrology can play a major role in influencing CERCLA hazardous substance releases. Id. at 5. Despite this acknowledgement, EPA failed to analyze site specific conditions at currently permitted and operating sites, even though "such characteristics can affect rates or magnitudes of hazardous substance releases." Id. 53 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00053 Another key admission in the Evidence Report - but not represented in any of the overall risk findings - is the acknowledgement that other programs besides CERCLA can mitigate risk of releases of hazardous substances. In its discussion of aluminum smelters, the report notes use of the historical practices at current sites but clarifies that "an important difference between the three historical sites and the aluminum smelters operational in 2009 is that the hazardous waste regulations under the [RCRA] have been in effect for a number of years; those regulations modify the waste management practices substantially compared with the practices that resulted in contamination at the three historical sites." id.at 13. As discussed in detail throughout these comments, EPA should have adopted a similar approach to state and federal regulatory programs applicable to HRM facilities, and its failure to so do is arbitrary and capricious and inconsistent with the agency's statutory mandate to assess the degree and duration of risk posed by the HRM industry. 7. EPA Misuses Data from the Toxics Release Inventory, RCRA Hazardous Waste Biennial Report and Emergency Response Notification System to Support its Risk Determination To bolster its claims of "continuing risk" in the HRM industry, EPA identified other sources of data that the agency claims are relevant to a CERCA 108(b) risk determination. Despite resounding criticism from multiple industry sectors on the use of these sources in the Priority Notice on the HRM industry and the Advance Notice identifying other industry sectors, EPA chose to adopt the TRI and RCRA BR data as valid sources for attributing risk. In this proposed rule, EPA adds the ERNS as a third source. As described in greater detail below, the agency misuses these data sources to exaggerate the risk-profile of the HRM industry. None of these sources address potential exposure to CERCLA hazardous substances or the probability that a CERCLA response action would occur in the future. The significant limitations of these data sources devalue their utility in determining the "degree and duration of risk" or "highest level of risk of injury" in any industry sector. EPA cannot simply ignore these limitations and tack on claims of non-compliance, studies completed by environmental organizations, or incomplete case studies to overcome these limitations. In the end, EPA's reliance on these sources undermines EPA's credibility and further shows the agency's abdication of its statutory obligations in developing a rule consistent with the "degree and duration of risk" as CERCLA expressly requires. a) EPA's Reliance on Toxics Release Inventory Data as Support for its Risk Determination for HRM Facilities is Inappropriate and Contrary to EPA's Repeated Position on TRI Data In the Priority Notice, EPA used TRI data submitted by the metal mining sector for the 2007 reporting year to summarily conclude that the data demonstrates "the industry's potential for posing health and environmental risk." 74 Fed. Reg. at 37,215, n.11. NMA objected to this use of TRI data to reach a broader conclusion on risk 54 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00054 posed by the HRM industry. See NMA 2010 Comments at 16-19. NMA repeats those objections here. Overall, any assessment of facilities presenting the "highest level of risk of injury," as required by CERCLA 108(b)(1), or the establishment of financial responsibility, should rely on established risk assessment tools rather than TRI reports. As EPA has repeatedly recognized, TRI data are strictly a volume-based reporting requirement, not an assessment of risk to public health or the environment. Since 2009, EPA "has continued to gather data and information on hardrock mines, practices, and risks associated with classes of facilities within the industry." 82 Fed. Reg. at 3470. As part of this exercise and in the proposed rule, EPA continues to defend its use of TRI data, specifically in its determination that HRM facilities "continue to pose risks associated with hazardous substances at their sites." Id. Specifically, the agency "examined [2010 through 2013] TRI data in order to identify the types, amounts, and methods of hazardous substance management at facilities potentially subject to the rule." Id. at 3477. EPA concludes that "the presence of such significant amount of hazardous substances, even if subject to regulatory controls, provides some indication of the potential for risks to result if improperly managed." Id. (emphasis added). EPA's continued use of TRI data as evidence of risks associated with the HRM industry is unjustifiable. First, NMA is deeply troubled by EPA's continued blatant disregard of its own position on the limitations of using TRI data to determine risk. EPA provides the following disclaimer on the use of the 2015 TRI data (the most recent available under the TRI program): "Pounds of releases, however, is not an indicator of any health risks posed by the chemicals."77 U S. EPA, "TRI National Analysis 2015," at 36 (Updated Jan. 2017) (providing a short overview of factors that influence risk including: emissions, fate, exposure, toxicity, and risk of adverse effect). EPA further explains that "[t]he human health risks resulting from exposure to toxic chemicals are determined by many factors. . . TRI contains some of this information, including what chemicals are released from industrial facilities; the amount of each chemical released; and the amounts released to air, water, and land." Id. EPA expounds on this disclaimer in a separate question and answer document: Users of TRI information should be aware that TRI release estimates alone are not sufficient to determine human exposure to toxic chemicals or to calculate potential risks to human health and the 77 The 2015 National Analysis may be accessed at https://www.epa.gov/trinationalanalysis/report- sections-2015-tri-national-analysis. In the 2013 TRI National Analysis, EPA characterized this limitation differently. EPA states that "trends in pounds of chemical releases do not account for p o te n tia l risk of chemical releases." U.S. EPA, "TRI National Analysis 2013," at 34 (Updated Jan. 2015), available at https://www.epa.gov/sites/production/files/2017-01/documents/2013-tri-national-analysis- complete 1 O.pdf. This characterization is more in sync with the numerous limitations EPA recognizes in underlying guidance documents as discussed in more detail below. EPA also provided a more in depth summary of the concepts of hazard and risk and the additional steps needed to evaluate potential risks to human health and the environment. 55 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00055 environment. Different chemicals can pose different health hazards . . . In addition, chemicals can have these different effects at different concentrations of exposure. U.S. EPA, "2015 TRI National Analysis Questions and Answers," at 6 (2016) (emphasis added) 78 EPA even cautions the public that: When using TRI data one should be aware that a release of toxic chemicals does not automatically mean that local communities are at risk. Large release numbers do not necessarily mean there is a large risk, nor do small releases necessarily mean there is a low risk. "Disposal or other releases" represent a wide variety of management methods. These range from highly controlled disposal, such as in hazardous waste landfills, to uncontrolled releases due to accidental leaks or spills. Many releases reported to TRI are subject to permits and/or environmental standards that establish emissions limits under Federal or State laws such as, for example, air permits issued under the Clean Air Act. Other factors, such as exposure to the release, route of exposure (e.g., breathing, via skin), bioavailability from the exposure route, and sensitivity of exposed individuals to effects caused by a toxic chemical must be considered before any judgments regarding risk can be made. Id. at 6-7 (emphasis added). EPA's proposed rule does not acknowledge these limitations, nor does the agency analyze the other information the agency itself claims to be necessary to evaluate potential risk of or exposure to hazardous substances reported under the TRI program. See id. at 7 ("TRI data can provide lists of top facilities with the largest disposal or other releases, which can be used as screening tools to identify facilities that may warrant a closer examination. This closer examination should include considering factors mentioned above like toxicity of chemicals and potential exposure. In these cases[,] TRI data should be supplemented with data from other sources."). Specifically, EPA never even considers: (1) toxicity of any hazardous substance identified in its description of the HRM industry's TRI data; (2) exposure; (3) type of disposal or release; (4) fate and transport of the chemical in the environment; or (5) on-site waste management of the chemical. Id. at 6. In fact, EPA never conducted a thorough investigation of potential exposures and risks of the HRM industry, taking into consideration the operational controls implemented on-site to minimize releases. The 2015 TRI National Analysis is not the only source for guidance on the limitations of using TRI data. EPA has cautioned from the inception of the TRI program that reports are not intended to assess risk to the public or the environment and should not be used for that purpose. In fact, EPA published a 38-page document to educate the public on how to use TRI data. In this document, EPA presents seven 78 EPA's Q&A document may be accessed at https://www.epa.gov/sites/production/files/2017- 01/documents/tri na 2015 qs and as.pdf. 56 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00056 "key factors" the public should consider when using TRI data. Notably, EPA instructed the public that: The level of toxicity varies among the covered chemicals; data on amounts of the chemicals alone are inadequate to reach conclusions on health-related risks. The presence of a chemical in the environment must be evaluated along with the potential and actual exposures and the route of exposure, the chemical's fate in the environment and other factors before any statements can be made about potential risks associated with the chemical or a release. Regulatory controls apply to many of the releases reported, reporting facilities must comply with environmental standards under statutes such as the CAA and the CWA, in addition to reporting releases to TRI. Many options for managing wastes are subject to stringent technical standards and exacting state and federal regulatory oversight. See U S. EPA, "Factors to Consider When Using Toxics Release Inventory Data," at 4 (2015) (emphasis added).79 Yet again, EPA fails to heed its own advice on the use of TRI data. Not once in the proposed rule does EPA acknowledge these "key factors" or attempt to evaluate them in the context of the HRM industry's TRI data. Instead, EPA summarily concludes that "TRI data provide relevant information on the risks associated with hardrock mining facilities." 82 Fed. Reg. at 3477. The agency failed in 2009 to complete a more robust analysis of potential exposure scenarios before concluding that the HRM industry was "high risk" and thus a candidate for CERCLA 108(b) financial responsibility requirements. Seven years later, EPA again fails to address the legitimate concerns raised by NMA on the agency's blatant misuse of the TRI data to presume "continuing risk" from the industry that warrants imposing CERCLA 108(b) financial responsibility. Second, EPA's misuse of TRI data is particularly alarming in that the agency cites to release numbers without putting any of them into context. For example, in the proposed rule, EPA singles out "catastrophic or one-time events" such as a 194 million pound "release" reported in 2013 to support its finding of "continuing risk" from the industry. EPA, however, takes this data point completely out of context. In the 2015 TRI National Analysis, EPA reported that in 2013 "a mining facility reported a one-time only release of 193 million pounds due to decommissioning a heap leach pad." U S. EPA, "TRI National Analysis 2015," at 66. As EPA knows, the materials on that heap leach pad were added incrementally during years of operations, and managed subject 79 This guidance document may be accessed at https://www.epa.gov/sites/production/files/2015- 06/documents/factors to consider 6.15.15 final.pdf. 57 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00057 to state and federal regulations. The "release"80 number from the decommissioning of the heap leach pad is large because it was reported in compliance with EPA's own TRI reporting rules, which require that the entire amount of material be reported as released only when the pad is closed. This figure, seemingly employed by EPA in the proposed rule to sensationalize the subject of risk, has absolutely nothing to do with the types of risks Congress intended to be covered under a CERCLA 108(b) program. Yet, EPA improperly relies on it anyway and refuses to be accountable for using such data responsibly. Besides this one data point, the larger problem with EPA's reliance on the HRM industry's TRI data is that the agency never puts any of the metal mining industry's TRI data into context. Admittedly, the metals mining industry has and continues to figure prominently in the agency's TRI reports. However, the metals mining industry must report as "releases" on their TRI reports the trace amounts of naturally occurring metal and metal compounds that are present in the rock and dirt that is moved and deposited at a mine site. In fact, the vast majority of what the hardrock mining industry reports from 85 to 99 percent - consists of these naturally occurring substances. Importantly, while the metal mining industry's reports reflect the high volume of materials managed on-site, these materials are managed in engineered facilities that are permitted and regulated under state and federal law. Other "releases" reported by the metal mining industry include materials shipped off-site to approved RCRA Subtitle C hazardous waste management facilities. A small subsection of "releases" by the metal mining industry includes TRI chemicals that are "otherwise used" - such as cyanide, sulfuric acid, and other human-made TRI chemicals. All non-accidental releases reported under TRI are specifically approved under environmental laws, such as air emissions under the CAA or water discharges under the CWA. Moreover, operational controls are in place to prevent or minimize any accidental releases that could impact water and air quality. EPA attempts to diminish the importance of these regulations, permits, and controls in the proposed rule by citing "non-compliance with regulatory standards." 82 Fed. Reg. at 3477. However, EPA's use of the Office of Enforcement and Compliance Assurance's national enforcement initiative (NEI) on the HRM industry is purely a smoke screen and does not address the core problems regarding EPA's reliance on TRI data. Moreover, EPA fails to acknowledge that the agency ended the NEI almost two years ago and returned the HRM industry to the base enforcement program in Fiscal Year (FY) 2017.81 In doing so, EPA recognized that "the NEI has 80 The decommissioning of a heap leach facility triggers the TRI requirement to report this material as a release. However, decommissioning does not create a release to the environment because the material in question remains fully contained on an impermeable liner. It is the merely the change in status from an active heap to a decommissioned heap that triggers the TRI requirement to report this change as a "release." 81 U.S. EPA, "National Enforcement Initiatives," https://www.epa.gov/enforcement/national- enforcement-initiatives (noting that the enforcement initiative on "reducing pollution from mineral processing operations" was returned to the base program in Fiscal Year 2017). 58 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00058 resulted in a number of large, high impact cases to ensure proper handling of these hazardous wastes," and "by the end of FY16 many of the highest risk mineral processing facilities are expected to be under enforceable agreements or orders that will require them to properly address waste." 80 Fed. Reg. at 55,352, 55,353 (Sept. 15, 2015). EPA, however, is relying on claims of non-compliance when in fact there is no significant issue with non-compliance for those facilities that the agency previously deemed were high risk under the NEI.82 To claim differently in this proposed rule is a baseless and contradictory reversal of agency position. Overall, EPA's failure to put the FIRM industry's TRI reports into context results in a distorted and misleading view of the environmental risks posed by the industry. The data reported by the industry are simply volumetric data--predominantly resulting from moving naturally occurring ore and waste rock on-site. The data do not address the toxicity or concentration of the chemicals reported, nor do they reflect potential environmental risk or human exposure. EPA is statutorily directed to evaluate "risk" in deciding which classes of facilities should be subject to financial responsibility requirements under CERCLA, as well as in establishing the level of financial responsibility. This evaluation must go beyond a mere recitation of volumetric data. EPA's misuse of TRI data in the proposed rule - in direct contradiction to its own stated limitations of the data - is arbitrary and capricious. b) EPA's Reliance on RCRA Hazardous Waste Biennial Report Data Does Not Support the Agency's Risk Determination for HRM Facilities In 2009, EPA did not rely on RCRA hazardous waste biennial report (BR) data to evaluate risk in the HRM industry. However, the agency did use this data to identify the chemical and petroleum industries "as those for which the Agency plans to develop, as necessary, a proposed regulation identifying appropriate financial responsibility requirements under CERCLA Section 108(b)." 75 Fed. Reg. at 816. There, EPA stated that the chemical manufacturing and petroleum industries comprised "approximately 74 percent of the total amount of hazardous waste generated." Id. at 820. When EPA included the hardrock mining industry, that percentage increased to "80 percent of all RCRA hazardous waste generated by large quantity generators." Id. EPA clearly did not think that the HRM industry's small contribution to this dataset was significant, since it was absent from EPA's original analysis of the industry. 82 NMA's comments on the national enforcement initiative on mining and mineral processing are attached. These comments explain in great detail the history behind this initiative and the concerns and objections raised by the HRM industry over the last several years. See NMA letter to Michele McKeever, Branch Chief, National Planning, Measures, and Analysis Staff, Office of Enforcement and Compliance Assurance (Feb. 27, 2013) (submitted to Docket ID No. EPA-HQ-OECA-2012-0956); NMA letter to Daniel Palmer, Deputy Director, Planning Measures and Oversight Division, Office of Enforcement and Compliance Assurance (Oct. 14, 2015) (submitted to Docket ID No. EPA-HQ-OECA-2015-0628). 59 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00059 Regardless, EPA now adds the RCRA hazardous waste BR data into its risk evaluation of the HRM industry. NMA is bewildered by the agency's continuing use of this data despite the sound arguments provided by other industry stakeholders against its relevance to the underlying risk evaluations intended under CERCLA 108(b).83 Most perplexing, EPA even admits that "the BR data concerning volume of hazardous waste generated and managed onsite, when considered alone, does not provide a direct indicator of risk of release or of mismanagement of wastes." 82 Fed. Reg. at 3478. For the HRM industry, the reported numbers are so inconsequential they have no bearing on the type of risk that should be covered under a CERCLA 108(b) financial responsibility program. Yet, EPA unconvincingly continues to defend its use of the BR data as offering "insights on the types, amounts, and management of RCRA hazardous wastes (by definition CERCLA hazardous substances) at [HRM] facilities potentially subject to this rule." While the BR data certainly offers insights into types and volumes of hazardous wastes managed, it clearly offers no insights into the "degree and duration of risk" from actual or potential releases of CERCLA hazardous substances. NMA repeats the criticisms previously lodged by other stakeholders against EPA's use of the BR data as their relevance is not diminished by the agency's unsatisfactory attempt to dismiss them in this proposal. The RCRA BR report simply contains the nature, quantities, and disposition of hazardous waste generated (e.g., recycling, treatment, storage, or disposal) at certain facilities (e.g., large quantity hazardous waste generators and treatment, storage, and disposal facilities). Like TRI data, BR data are not indicators of risk (or mismanagement) and thus provide no support for an evaluation of the "degree and duration of risk" as required under CERCLA 108(b). Generation of hazardous waste does not correlate to the risk of an actual or threatened release of a hazardous substance that requires a CERCLA remedy. For EPA to suggest otherwise is a huge misrepresentation of the scope and purpose of this data collection. Further, EPA's attempts to direct attention away from these truths with incomplete discussions of the RCRA Bevill Amendment and a settlement reached through the RCRA NEI does not fix this problem. First, as EPA is well aware, the Solid Waste Disposal Act Amendments of 1980 contained several provisions related to the regulation of mining and mineral processing waste. Section 3001 (b)(3)(A)(ii) suspended any hazardous waste regulation of "solid wastes from the extraction, beneficiation, and processing of ores and minerals, including phosphate rock and overburden from the mining of uranium ore." 42 U.S.C. 6921 (b)(3)(A)(ii). During this suspension, Congress directed EPA to conduct two comprehensive studies on (1) "adverse effects of solid waste from active and abandoned surface and underground mines on the environment;"84 and (2) "the adverse 83 EPA discusses these criticisms in the proposed rule but does not provide a rational response to these comments. See 82 Fed. Reg. at 3478. 84 Study factors included: (1) the sources and volume of discarded material generated per year from mining; (2) present disposal practices; (3) potential dangers to human health and the environment from surface runoff of leachate and air pollution first; (4) alternatives to current disposal practices; (5) the cost of those alternatives in terms of the impact on mine product costs; and (6) potential use of discarded material as a secondary source of the mine product. 42 U.S.C. 6982(f) (covering mining waste). 60 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00060 effects on human health and the environment, if any, of the disposal and utilization of solid waste from extraction, beneficiation, and processing of ores and minerals, including phosphate rock and overburden from uranium mining."85 42 U.S.C. 6982(f) & (p). These reports to Congress were the first step in determining whether hazardous waste regulations were warranted for the HRM industry. In 1986, EPA issued a regulatory determination stating it would not impose Subtitle C rules on extraction and beneficiation wastes because "current hazardous waste management standards are likely to be environmentally unnecessary, technically infeasible, or economically impractical when applied to mining waste." 51 Fed. Reg. 24,496 (July 3, 1986). In 1991, EPA also issued a regulatory determination on mineral processing wastes, finding that 20 "high volume, low hazard" mineral processing wastes (listed in 40 C.F.R. 261,4(b)(7)(ii)) do not warrant Subtitle C hazardous waste regulation. 56 Fed. Reg. 27,300 (June 13, 1991). As EPA states, "it is important for the reader to note that many wastes generated by mining and mineral processing operations are excluded from RCRA Subtitle C hazardous waste regulation under the Bevili Amendment." However, it is more important that the public understand why such exemption exists: EPA found that such regulations are unwarranted for the HRM industry for those studied wastes. This is not a statutory or regulatory loophole that indicates unaddressed or heightened risk as EPA seems to suggest. Second, EPA's one sentence claim regarding concern with "potential co-mingling of hazardous wastes with Bevili excluded wastes or non-hazardous wastes" is also unfounded. Specifically, EPA's reference to its settlement with Mosaic Fertilizer, LLC is completely taken out of context. EPA omits critical facts on the phosphogypsum stack system closure, post-closure care, and corrective action requirements that are currently being implemented to address the releases EPA discusses in this section of the proposed rule. As EPA is aware, this company entered into a consent decree with state and federal governments that requires core injunctive relief, which addresses waste management practices and establishes significant and sufficient financial assurance. Yet, these critical facts - that are directly related to the "degree and duration of risk" posed by classes of facilities within the HRM industry - are completely omitted from EPA's discussion. Any additional federal financial responsibility requirements under CERCLA would be unnecessary and duplicative in this scenario. EPA's mere citation to Study factors included: (1) the sources and volume of discarded material generated per year; (2) present disposal and utilization practices; (3) potential danger, if any, to human health and the environment from the disposal and reuse of such materials; (4) documented cases in which danger to human health or the environment has been proved; (5) alternatives to current disposal methods; (6) the cost of such alternatives; (7) the impact of those alternatives on the use of phosphate rock and uranium ore, and other natural resources; and (8) the current and potential utilization of such materials. 42 U.S.C. 6982(p) (covering extraction, beneficiation and processing wastes); See U.S. EPA, "Report to Congress: Wastes From the Extraction and Beneficiation of Metallic Ores, Phosphate Rock, Asbestos, Overburden from Uranium Mining, and Oil Shale," (EPA/530-SW-85-033) (Dec. 1985); U.S. EPA, "Report to Congress on Special Wastes from Mineral Processing: Summary and Findings," (EPA/530-SW-90- 070B) (July 1990). 61 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00061 the settlement without considering how it fundamentally and significantly reduces future Superfund risk is arbitrary and capricious. Moreover, EPA must base its proposal on facts that can be substantiated not mere possibilities or allegations of illegal co mingling. c) EPA's Reliance on Releases Reported Under the Emergency Response Notification System Does Not Support the Agency's Risk Determination for HRM Facilities A new dataset not in the Priority Notice identifying the HRM industry for this rulemaking is EPA's use of CERCLA hazardous substances reported under the ERNS. According to EPA, the ERNS data provides "a means by which to show the extent of and reasons for reported releases of CERCLA hazardous substances by [HRM] facilities." 82 Fed. Reg. at 3476. Specifically, EPA examined National Response Center data from 1990 to 2014 involving releases of CERCLA hazardous substances, finding that more than 950 releases of CERCLA hazardous substances associated with currently operating facilities in the HRM industry were reported. Id. at 3477. Approximately 435 of the releases were reported since 2000, with an average of only 30 reported releases per year since that date. EPA claims that these data "provide another indicator of ongoing releases of CERCLA hazardous substances from HRM facilities." Id. (emphasis added). EPA's evaluation of ERNS data is egregiously incomplete. As the agency has noted in fact sheets on this program, "[b]ecause ERNS is a database of initial notifications and not incidents, there are several limitations to the data." U S. EPA, "An Overview of ERNS: Fact Sheet," at 1 (EPA 540-F-94-027) (March 1995). For example, the ERNS "contains initial accounts of releases, made during or immediately after a release occurs when exact details are often unknown." Id. See also U S. EPA, "The Emergency Response Notification System," at 2 (EPA 9360 0-21) (Aug. 1989). ("ERNS provides a mechanism for documenting and verifying incident notification information as initially reported."). In fact, "[t]he data are usually not updated unless an EPA Region is involved in the response action." Overview of ERNS: Fact Sheet at 1. While EPA acknowledges these limitations in the proposed rule, it simultaneously disregards them and relies on the data as a risk indicator anyway. EPA's perfunctory analysis is entirely divorced from any type of risk assessment and should be omitted as a source of information in the agency's underlying risk determination. First, EPA does not even attempt to document how these releases were dealt with by the facility that initally reported them. Merely adding up total release numbers for a period of years provides an entirely incomplete picture. EPA ignores the important questions: How many of these releases were large in volume or otherwise significant? How did operators and regulators respond to these reported releases? How many of these releases were cleaned up immediately or in the short-term by the company requiring no action by a state or federal regulatory authority? Did any of these reported releases require a full blown CERCLA response action, much less any state or federal 62 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00062 involvement to remedy the situation? Did any of these reported releases require expenditures from the Superfund itself? None of these questions can be answered because EPA fails to catalogue any of this information in its analysis of the ERNS data, even though EPA claims that the ERNS includes information on response actions taken. Instead, EPA chose to focus on the causes of the release, not the critical response to the release. This approach totally contradicts CERCLA's statutory directive to evaluate the "degree and duration" of risk from classes of facilities. Yet, ERNS reports show evidence of prompt response and proactive management of releases, which reduces risk and the need for future CERCLA response actions. The fact that facilities were monitored and releases were immediately reported means that the risk of injury and response costs from those releases are significantly reduced. Second, by law facilities must report releases of CERCLA hazardous substances if they meet or exceed certain reportable quantities (RQ), many of which are quite low. See 40 U.S.C. 9603(a); 40 C.F.R. 302.4 (if no RQ is established by regulation the threshold is set at one pound). Yet, EPA's analysis again simply aggregates the number of reported releases without attempting to better understand whether these releases resulted in harm to the environment or public health. This type of evaluation most certainly relates to the "degree and duration of risk" standard that limits EPA's authority under CERCLA 108(b). However, EPA never discusses whether any of the reported releases contained constituents of concern that exceeded, for example, soil screening levels or maximum contaminant levels for drinking water requiring significant remedial actions. Accordingly, EPA's superficial analysis of this dataset provides no hard evidence as to the need for a CERCLA 108(b) financial responsibility program, and if EPA would look more closely at the data it cites, it would confirm that risks have been reduced. Finally, in order to comply with the reporting requirements under ERNS, it is not unusual for companies to report a potential release, prior to verifying that a release has actually occurred. Thus, some reported releases are "false alarms" because further site investigations reveal that a release did not occur. EPA also cites to an Earthworks report that it claims relied substantially on ERNS data on copper porphyry mines to document substantial water quality impacts from that commodity sector. See 82 Fed. Reg. at 3477. However, this report lacks any foundation based on the following reasons: (1) prior administrative and judicial settlements resolved or otherwise addressed significant releases (e.g., releases that came into contact with surface water); (2) many releases were confined to on-site areas (e.g., properly-reported on-site releases of leach solutions that happened to exceed the CERCLA reportable quantity for sulfuric acid); and (3) completed and on-going remediation projects have resolved, or are resolving, releases from noted facilities through CERCLA or state-equivalent programs. Sierra Club v. EPA 18cv3472 NDCA 63 Tier 2 ED 002061 00087255-00063 8. EPA's Reliance on Studies Completed in the 1990s Does Not Justify EPA's Risk Determination EPA identified certain documents that it claims "show[s] recent releases of CERCLA hazardous substances at [HRM] facilities and thus continuing risks of release or threatened release of CERCLA hazardous substances associated with those activities." 82 Fed. Reg. at 3475. Specifically, EPA relies on: U S. EPA, "Mining Sites on Superfund's NPL - Past and Current Mining Practices," (1992) (hereinafter "1992 Practices Study"): "Although this document was published over 25 years ago, EPA has concluded that it still presents a relatively accurate description of current mining and mineral processing practices and the potential releases associated with these practices." Id. U S. EPA, "Technical Background Document Supporting the Supplemental Proposed Rule Applying Phase IV Land Disposal Restrictions to Newly Identified Mineral Processing Wastes" (1995) (hereinafter "1995 Technical Background Document"). EPA uses this document to illustrate human health and environmental damages from mining and mineral processing (e.g., landbased management practices). EPA claims these damage cases are "still indicative of current mining and mineral processing practices and potential releases associated with these practices." Id. at 3476. U S. EPA, "Damage Cases and Environmental Releases from Mines and Mineral Processing Sites," (1997) (hereinafter "1997 Damage Cases Study"): "EPA believes this document presents a relatively accurate description of current mining and mineral processing practices and the potential releases associated with these practices." Id. at 3475. First, NMA objects to the use of the 1992 Practices Study. This article, authored by EPA staff outside the context of any rulemaking process and thus, not previously subject to notice and public comment or appropriate peer review, is an out of date and biased depiction of HRM facilities that is not representative of current practices. NMA shares SME's concerns that EPA's reliance "upon a report published more than 25 years ago (Housman/Hoffman) is itself troubling, given the agency's stated intent to assess contemporaneous mining practices." SME Analysis at 2. The SME Analysis specifically addresses the conclusion of that report (which EPA adopts in the proposed rule): While some mining waste management practices have changed over time, the basic technologies for extracting and processing of mineral ores have remained fairly constant over approximately the last 50 years. Mining technology has become more efficient over time in recovering mineral values - allowing lower grade ores to be mined which produce more waste. 64 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00064 At the same time, combinations of economic and technological factors have increased the scale of surface disturbance and waste generation. 82 Fed. Reg. at 3475. As discussed above in section II.D.5., the SME Analysis critiques the 1992 Practices Report as overly simplistic and ignoring the weight of scientific evidence demonstrating the evolution and improvement of mining practices, and mineral and ore processing technologies that reduce the degree and duration of risks from HRM facilities. Second, NMA has thoroughly refuted the conclusions made in the 1995 Technical Background document, and continues to dispute them. Despite EPA's claims, the case histories in this report did not provide support for the land disposal restrictions (LDR) the agency proposed at that time, nor does it provide support for a CERCLA 108(b) financial responsibility rule now. For example, the majority of the case histories EPA relied on to support its LDR proposed rule attempted to document damages associated with historical mining or smelting operations. Historical mining and mineral processing sites are irrelevant to assessing the "degree and duration of risk" posed by today's HRM industry and are excluded from the universe of mining projects that EPA is proposing to regulate under this rulemaking. EPA's rote recycling of this study for this rulemaking is completely inappropriate and not a justifiable approach to assessing risk in the context of a CERCLA 108(b) rulemaking. Third, EPA's use of the 1997 Damage Cases Study is also objectionable. As NMA explained in detailed comments during EPA's LDR IV rulemaking under RCRA,86 that study presented no credible evidence supporting the agency's proposed regulation: (1) of the storage and handling of mineral processing secondary materials prior to reuse; or (2) on the use of secondary materials as an alternate feedstock to mineral beneficiation and mineral processing units. Specifically, 81 percent of all the cases summarized in EPA's 1997 Damage Cases Study solely involved releases that were either violations of existing NPDES permits, represented discharges without such permits, or were violations of state surface water discharge prohibitions. Fifty-nine percent (50 out of 85) of the releases alleged in the 1997 Damage Cases Study resulted in state and/or federal Notices of Violation (NOVs) and/or citations, many of which carried extensive penalties relative to the alleged releases. Additionally, of the 35 incidents in which citations or NOVs were not issued, 5 related to ongoing permit proceedings which directly addressed the alleged release. Thirty of the reported incidents represented proceedings in which state and/or federal regulatory agencies reviewed the release and deliberately decided either to continue the investigation or to not issue a citation or NOV. Even 20 years ago, the incidents described in this document demonstrated the ability of existing state and federal authorities to adequately address the releases at 86 Comments prepared by Welch Associates for the NMA on the "Land Disposal Restrictions Phase IV; Second Supplemental Proposal on Treatment Standards for Metal Wastes and Mineral Processing Wastes, Mineral Processing and Bevill Exclusion Issues; and the Use of Hazardous Waste as Fill," (Aug. 1997). 65 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00065 issue in the 1997 Damage Cases Study. The enforcement actions that were taken to address the incidents described in the 1997 Damage Case Study were not "after the fact," but were designed to avoid and/or prevent future similar incidents. The 1997 Damage Case Study did not support additional RCRA requirements back in the late 1990s and it certainly does not support EPA's finding of "continuing risk" in today's HRM industry. Again, EPA is required to assess the "degree and duration of risk" posed by today's HRM industry. This study simply is not germane to that task. Moreover, EPA's generic claims that this document presents an accurate description of current HRM practices and potential releases are completely unsupported in the record. EPA provides no evidence that this report, or the incidents it discusses, have any relevance to the classes of facilities that would be subject to this proposed rule. 9. EPA's Faulty Reasoning on Continuing Risk EPA's conclusions about the continuing risk presented by currently permitted and operating HRM facilities may seem sensible to the layperson not conversant with the HRM industry. However, applying EPA's reasoning to a more familiar "vehicle," the automobile, better exposes the fallacies of EPA's house of cards argument. Applying EPA's methodology, one could easily conclude that no advancements have been made over the last four decades to reduce the risk of driving a car because today's cars and cars from the 1980s: are made the same basic materials (e.g., steel is the primary component of each); have similar exterior and interior designs; have the same essential features (e.g., brakes; steering wheel, tires, engine etc.); are manufactured in an analogous way using an assembly line process; and are involved in a similar number of car crashes (even with the significantly greater number of cars on the roads in 2015).87 But, as is evident, this analysis completely misses the point and fails to provide a complete or accurate assessment of technological advancements in the last 40 years. While modern cars look quite similar to older cars, the changes in this timeframe have been extensive and significantly reduced the risks associated with driving. Many of the advancements are the result of laws and regulations governing not only how cars are made, (e.g., many safety standards are established by the Automotive Industry Action 87 National Highway Traffic Safety Administration, Traffic Safety Facts 2015 at 17 (Table 1 - Crashes by Crash Severity, 1988-2015). 66 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00066 Group)88 but how they are driven (e.g., driving under the influence laws) and others are the result of improved technologies (e.g., anti-lock brakes, air bags, side and rear cameras, automatic collision-avoidance breaking, lane change warnings, etc.). Voluntary programs have played a role as well, and states have initiated driver education and awareness programs to better inform the public about driving hazards. As a result, while the overall number of car crashes may be similar over this time period, the occupant fatality rate has dropped over 40 percent.89 But, the logic EPA applies under this rule, if applied to automobiles, would have missed this very important fact. If EPA's view were applied, risks of injury would remain because cars can go at higher speeds, and seat belts, airbags, child safety seats, and anti-lock braking systems would all be ignored in the calculation of risk. It is true that today's HRM facilities have many of the same types of components as legacy sites. They mine the same types of minerals (i.e., gold, silver, copper, etc.), use many of the same mining techniques including open pit and underground mining, and build similar milling and tailings storage facilities. But the comparison stops there because today's HRMs are designed, operated, and closed with environmental control measures and environmental monitoring systems that effectively minimize the degree and duration of risk of releases of hazardous substances (analogous to the documented reduction in fatal car crash statistics in modern cars compared to old cars). III. EPA's Financial Responsibility Formula is Fatally Flawed EPA's proposed approach to establishing the level of financial responsibility for the HRM industry CERCLA 108(b) rule results in a gross misrepresentation of the risk presented by the industry in violation of the statutory directives. This is not surprising given EPA's unlawfully expansive reading of its statutory authority as discussed in Section I, as well as its complete mishandling of the underlying risk assessment as described in Section II. However, the arbitrary approach EPA chose to take in this rulemaking process is amplified in how the agency calculates the CERCLA financial responsibility obligation for the HRM industry. A detailed critique of the financial responsibility formulas and proposed reduction criteria, commissioned by NMA and produced by SRK Consulting ("SRK"), is provided in Appendix B. Overall, the formulas are so fatally flawed and unworkable that they do not reflect a realistic or plausible risk scenario for the HRM industry. As a result, there is nothing EPA can do to fix the formulas to reflect the "degree and duration of risk" presented by the HRM industry as required by CERCLA. Thus, the formulas serve as another compelling reason for withdrawal of the rule. 88 AIAG develops and publishes standards for manufacturing within the automotive industry that are involved in the production of virtually every car in the United States and cover nearly every step in the supply chain. 89 Id. at 15. 67 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00067 A. EPA's Generic, Formulaic Approach is Fundamentally Flawed The following is a summary of the main problems contained in EPA's approach to the financial responsibility formula. Appendix B contains SRK's full critique. The arguments regarding peer review in Section 2 apply with equal weight to EPA's financial responsibility formulas. The formulas are a highly influential scientific document that should have been peer reviewed pursuant to OMB guidelines and consistent with the agency's own guidance. EPA's rejection of a site-specific approach is arbitrary and indefensible. As described in Section B above, existing regulatory programs managed by the BLM and U S. Forest Service, as well as the state agencies, already perform site-specific assessment of risks, control those risks, and require financial assurance that reduces the "degree and duration of risk" associated with the HRM industry. Not only does EPA ignore this fact, it unjustifiably abandons a tested and proven site-specific approach for a simplistic formulaic approach because a site-specific approach was simply too "resource intensive to implement." 82 Fed. Reg. at 3460. "Too resource-intensive to implement" is not a sound or rational basis for rulemaking, especially when sister federal agencies are currently conducting the precise reviews EPA claims it cannot muster the resources to conduct. Moreover, EPA's claims that a site-specific approach to setting the level of financial responsibility is not appropriate or practical because there have been no CERCLA remedy decisions is totally unconvincing given the agency's overwhelming confidence in its ability to use site-specific approaches to increase a HRM facility's obligation, as well as when considering a HRM facility's petition to be released from the obligation. See 82 Fed. Reg. at 3461; 82 Fed. Reg. at 3415. In fact, EPA even acknowledges that the agency "has substantial experience making individualized determinations of site risk, as this practice is consistent with EPA's practice under the Superfund program." 82 Fed. Reg. at 3415. Overall EPA's choice to abandon a site-specific approach at the very beginning and rely on a generic formulaic approach is arbitrary and capricious. Flaws in the data collection include: obsolete data (e.g., only 16 percent of the sites EPA used had data that is less than 5 years old) and m^characterized data. Moreover, the data are not a fair representative sample to correlate costs. EPA's decision to select a small number of sites, then to further whittle those down, makes this dataset unrepresentative. Ultimately, EPA has a fundamental lack of understanding of the number of variables that influence risk in the HRM industry. EPA improperly ignored zero cost source control data points and thus, does not account for the probability of occurrence for any specific type of response cost. Instead, the agency assumed that if a specific site feature is present, it will always require EPA's full suite of response cost actions, such as water treatment and source controls, regardless of whether they would actually be 68 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00068 needed at a particular facility. However, there are numerous sites where many of the response actions for which EPA estimates costs are simply not required due to site-specific factors. Therefore, the cost for those response costs for those sites is in fact zero. By not including zero cost data points as appropriate, the formula results in heavily biased (biased high) data sets (e.g., NRD data sets). As discussed above, EPA fails to address the probability of occurrence and assumes that in the future all HRM facilities will require CERCLA responses for every site feature identified in the proposed rule. Yet, EPA has not provided a single example of a CERCLA HRM site that required response actions for every site feature identified. In fact, this assumption contradicts the agency's own data collection. At each site referenced by EPA in support of the proposed rule, the agency identified a specific release or media issue that occurred at one primary HRM component. Correlation is not causation. EPA has incorrectly focused on just three variables (area, precipitation, and flow) with only one (area) being used to determine the cost for most of the response categories. EPA's justification for this decision is that there is a correlation between cost and acreage. However, the correlation factors for all the response categories, except water treatment, are very poor to moderate. EPA inexplicably concludes that simply because a correlation exists, causation is probable. This is simply unsupported by any evidence in the record. Risk of release cannot be accurately assessed based on a single factor and even in the water treatment category, which has the highest correlation factor, EPA's regression analysis and other statistical test results are deceptive. For the analysis to have any meaning, the regression must test the correlation between water treatment cost and the three variables driving this cost (e.g., total disturbed area, underground flow, and in-situ leach flow), and not simply focus on flow rate. EPA's belief that accurate financial responsibility costs can be based on a single factor is a serious oversimplification of what is required to properly estimate financial responsibility costs, particularly in the HRM industry. The overly simplistic financial responsibility formulas that EPA has developed for CERCLA 108(b) do a very poor job of predicting reliable cost estimates because they are not based on realistic or plausible scenarios for today's permitted and operating HRM facilities (e.g., the formulas have very poor precision) and duplicate the financial assurance already held by these facilities under existing state and federal reclamation and closure programs. EPA's treatment of outlier data points, use of smear factors, and handling of source control contributions result in significantly overinflated estimates that are not at all reflective of the "degree and duration of risk" of today's HRM industry. 69 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00069  For almost every site feature that EPA includes in its formula development, there are obvious outlier results that reside at the extreme upper range of the data sets utilized. An extreme outlier is defined as greater than the third quartile plus 3.0 times the interquartile (IQ) range. Nine of the eleven data points are well outside this extreme threshold. In most instances, they range from the third quartile plus 5 - 1 0 times the IQ range. Two data points that EPA relied upon are approximately 20 times the IQ range. The inclusion of these data points significantly skews the regression analysis for EPA's formulas to the extreme high side. As an example, the open pit data set includes six extreme outliers. Excluding these extreme outlier data points would reduce the average cost by 82 percent. Stated another way, the inclusion of these extreme outlier data points means the average of the source data is 450 percent higher than if they were excluded. Overall, EPA's selected method produces an absurd overestimation to reach an extreme level of a few outliers. This approach is unjustifiable and has no relationship to the "degree and duration of risk" associated with today's HRM industry. EPA has incorporated smear factors into its analysis that are meant to account for potentially excluded data points at the extreme range of the data set. However, EPA has failed to identify what sites these data points might represent and has provided no justification for this assumption. The inclusion of smear factors appears to be another statistical manipulation of the data set to skew the formula output to be as high as possible. Effectively, the smear factors increase the costs based on a simple regression of the data by a minimum of 20 percent (in the instance of water treatment) to a maximum of 960 percent (in the instance of drainage). A specific example is found in open pit costs, where the addition of the smear factor increases the average estimate an additional 507 percent (smear factor of 5.07) and results in the formula overestimating costs by 640 percent (when compared to the source data), on average, for the 31 data points that do not classify as extreme outliers. EPA's analysis of open pits, waste rock, heap leach pads, and tailings impoundments included costs for source controls, whether the source data included source controls or not, and thus, sites with zero costs associated with source controls were omitted from the underlying regression. This is a critical omission as EPA's application of source controls has a significant impact on the formula outputs and overall financial responsibility estimates. EPA's arbitrary decision that source controls would be required at every site for these four features fails to account for the probability of occurrence, which is low (7 percent to 16 percent) even when not accounting for the zero cost data points. Simply stated, EPA has created a completely arbitrary multiplier effect. For example, for the open pit category, EPA's improper inclusion of source controls for all sites has shifted estimated costs upward by 1,900 percent (19 times) for those sites that do not require source controls. Although source controls are typically not necessary, EPA's regression 70 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00070 unjustifiably drives a significant portion of the actual cost calculation, further weakening EPA's statistical basis for this formula. By including extreme outliers and inappropriate smear factor calculations, and mishandling of source control data, EPA has created a financial responsibility formula that produces estimates that are significantly higher than the original financial assurance estimates taken from reclamation and closure plans. This result is baffling. EPA chose to use the engineering cost data from cost estimates developed for state and federal mining reclamation and closure plans. Despite this approach's obvious duplication with existing state and federal programs, EPA used this data because it was readily available and represented similar site features and remedy types that have been implemented at HRM CERCLA sites. In fact, the underlying cost data accurately reflects the level of risk presented by each facility. But then, EPA manipulates this data to produce predicted financial responsibility costs that are often multiple orders of magnitude higher than the original source data. The overall result is predicted costs that have absolutely no resemblance to the risk posed by a specific facility. The highly inflated and unrealistic results are clearly evident in the open pit costs, which are on average 32,300 percent higher (or 323 times higher) than the original source costs they are derived from. The most significantly overpredicted cost is more than 3,000 times its original source data estimate (a 300,000 percent overprediction). This problem with the formula is not just present for the open pit response cost category. EPA's formula output substantially overestimates the cost of every response cost category to such a degree that there is no resemblance to the "degree and duration of risk" posed by the HRM industry. EPA's approach to the NRD multiplier is fundamentally flawed. First, EPA's claim that NRD costs are a function of response costs is not valid and the application of NRD costs as a multiplier on top of CERCLA response costs is not appropriate. In fact, SRK's review of the data EPA used in developing its multiplier for the proposed rule shows there is no statistical correlation. Second, EPA's exclusion of certain data points it considered outliers only served to greatly increase the multiplier. Specifically, EPA removed four of the 24 sites because they had response costs that were an extreme deviation from the IQ range. The exclusion of these sites is critical as they have NRD costs that are a relatively small percentage of response costs. Inclusion of these data points reduces the mean of the data set from 13.4 percent to 2.6 percent and the median from 3.8 percent to 2.5 percent. Third, EPA inappropriately used cost data from legacy HRM sites with CERCLA responses. This dataset is biased and not representative of potential future NRD costs as it reflects response costs related to practices that are no longer utilized in the industry. Finally, overall, EPA's multiplier has the effect of arbitrarily and capriciously increasing the amount of financial responsibility on an industry-wide basis. 71 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00071 B. EPA's Reduction Criteria and Methodology are Fundamentally Flawed Compounding the overestimated costs in the formula, EPA then proposes reduction criteria that supposedly account for existing federal and state reclamation bonding requirements but are likely illusory in practice and result in a completely unworkable and unviable financial responsibility regime. Specifically, the proposed rule includes provisions to reduce the financial responsibility amount based on "risk-reducing practices, including controls established in compliance with Federal and state reclamation and closure programs." 82 Fed. Reg. at 3391; See also 82 Fed. Reg. at 3467 (describing the agency's approach to the reduction criteria). As explained in Section I & II above, financial responsibility reductions do not cure the significant overlap between the proposed CERCLA 108(b) rule and existing state and federal reclamation and closure programs. Below are NMA's main criticisms regarding this approach. A more detailed analysis is available in Appendix B. Overall, these backend reductions do not provide a meaningful solution to EPA's inherent duplication of existing state and federal programs. EPA's "all-or-nothing" reduction approach, which contains engineering controls and design standards cherry-picked from various existing state and federal programs for nationwide application, is unjustifiable and only serves to guarantee an overly inflated financial responsibility estimate that is not tied to the actual "degree and duration of risk" presented by an individual facility. Many of these arbitrarily selected reduction standards conflict with existing laws thereby rendering them useless in obtaining any meaningful reductions under the CERCLA 108(b) formula. Furthermore, EPA's reduction criteria and process are so vague that actual reductions may take years and millions of dollars to attain approval, without any bearing on actual "degree and duration of risk." EPA's proposed reduction criteria are inferior to the existing state and federal programs from which the agency plucks out certain engineering controls and design standards for its CERCLA 108(b) rule. Current closure and reclamation plans typically require multiple years of site-specific investigation and engineering work to be developed with the intent of mitigating risk to human health and the environment at a particular site, taking into account the numerous site conditions that influence the potential risk. These plans are then reviewed by experienced regulatory authorities and subject to public comment and/or public hearing prior to final approval. Any identified deficiencies are addressed through the review process. In contrast, EPA's generic, simplistic formula and equally general simplistic reductions to that formula have no scientific basis and are grossly inferior to the requirements of existing site-specific federal and state mining regulatory programs. A good example here is EPA's reduction criteria for open pits, which have no technical relevance to pits that are hydrologic sinks and therefore, make it a moot exercise to try to obtain credits. Further, the credits do not take into account the actions that might be needed for either protection of the public health or environment or compliance with applicable or relevant and appropriate requirements under CERCLA. 72 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00072  If CERCLA 108(b) is implemented as proposed, HRM companies will not be incentivized to implement sound practices that would decrease the need for future CERCLA response actions. To the contrary, HRM companies will be incentivized to modify their reclamation and closure plans to ensure they meet EPA's arbitrary reduction criteria to minimize the significant CERCLA 108(b) financial burden on the operation, assuming its even available as an option, which EPA has not even evaluated. In some cases, HRM companies cannot sufficiently implement EPA's preferred approaches, such as concurrent reclamation, for which EPA's proposal is overly simple and does not consider the complex economics of mining. Even where available, this would focus reclamation and closure plan development on a limited number of specific types of activities arbitrarily mandated by EPA rather than focusing on risk-based, sitespecific measures developed from sound science and engineering. The EPAdirected activities may conflict with existing, applicable federal and state laws and/or mining and reclamation plans, creating a Hobson's choice for HRM companies. Moreover, EPA's proposed approach could result in HRM companies spending large sums of money on controls that are not justified by their sitespecific risk-profile, thereby reducing future investment dollars in controls that could have a positive impact at that site. In short, this approach is less likely to ensure future reduction in risk. The method that EPA has used to develop the reduction criteria is illogical, poorly substantiated, and completely arbitrary. At the most basic level, EPA has provided no scientific basis for the reduction criteria. In fact, EPA never comprehensively compiled recommendations for public review and comment beyond its "Technical Support Document," where it lists selected reduction criteria and compares the criteria to a number of what the agency deems are "best management practices." EPA provides no reason for its selections or reasons for why other practices were ignored. Furthermore, EPA never consulted with the HRM industry or with state and federal expert mining regulators on what criteria may be appropriate under this approach. Instead, the agency arbitrarily selected criteria without any peer review or consultation with knowledgeable persons or agencies, and without providing any justification. EPA's inconsistent use of regulations for the reduction criteria is an exercise in selective omission in which the agency has inappropriately excluded relevant portions of other equally valid regulations, thus misrepresenting the full scope of the relevant regulations. In some instances, EPA's reduction criteria directly contradict the state regulations that the agency uses as a basis for the reduction criteria. Consequently, EPA creates conflicts with existing law and adopts criteria that fundamentally should not apply nationwide. EPA's reductions overlap with existing regulatory programs. Existing state and federal mining programs can include hundreds of pages of detailed requirements and recommendations, which are implemented through approved site-specific 73 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00073 plans. Yet, EPA has taken this comprehensive risk review and whittled it down to just 10 pages of arbitrarily selected and subjective reduction criteria. Many of these criteria are also repeated multiple times for each site feature. Current closure and reclamation plans require multiple years of investigation and engineering work with the intent of mitigating risk to human health and the environment. EPA's generic one-size-fits-all approach is grossly inferior to the requirements of existing state and federal mining regulatory programs. Many of the reductions in the proposed rule are poorly defined and therefore highly subjective and unclear. The use of these reduction criteria will create significant uncertainty as to whether a facility has met the proposed standards and will leave both operators and EPA exposed to significant potential litigation. This concern is especially warranted given that the agency has not adequately defined the standard or process for the agency's approval of a company's estimated CERCLA 108(b) financial responsibility obligation or the release of that obligation. EPA has also selected highly prescriptive and inflexible criteria for other conditions. The agency provides no justification for these criteria, nor does it acknowledge that such criteria simply do not apply nationwide given the varying characteristics of the HRM industry. In fact, to obtain a reduction, many facilities will have to specify those prescriptive (and inferior) criteria in their reclamation and closure plan for no reason other than that EPA's new regulations require them. It is unjustifiable for EPA to refuse to allow the HRM industry site-specific flexibility in selecting criteria that are the most appropriate for their operations. Validation of the model and the reductions shows how far EPA's formula-based calculation is removed from reality. EPA provides one example where an existing closure plan meets all reduction requirements and, therefore, the CERCLA 108(b) bonding requirement is zero dollars. This operation's formula-based calculation for CERCLA financial responsibility is $331 million. The site's estimated reclamation and closure cost is $35 million. Therefore, EPA believes that $35 million in actual closure activity fully reduces the "degree and duration of risk" while its formula would have required almost 10 times that amount. This result is similar for all sites evaluated in the RIA. Where EPA determined a site met the proposed reduction criteria, and thus lowered the final financial responsibility amount, a comparison of the calculated financial responsibility amount to the actual cost estimate used (from existing financial assurance requirements), consistently shows EPA's formulaic costs approaching orders of magnitude higher than actual estimates. Finally, even where EPA claims that the reduction criteria are met, it has not considered its rigid limitations on "acceptable" financial responsibility mechanisms, which would likely disallow the state reductions that EPA purports would be available. Sierra Club v. EPA 18cv3472 NDCA 74 Tier 2 ED 002061 00087255-00074 C. EPA's Approach to Determining Health Assessment Costs is Arbitrary and Capricious EPA claims that health assessment costs are "fairly consistent in cost from facility to facility." 82 Fed. Reg. at 3461. Accordingly, EPA adopted a fixed amount approach through which the agency identified a standard health assessment cost for the HRM classes of facilities subject to this rule. See id. at 3460. Under this method, EPA "does not rely on site-specific factors but rather on historical costs associated with similar facilities to calculate an expected future amount." Id. More specifically, EPA relied on cost information provided by the Agency for Toxics Substances and Disease Registry (ATSDR) on recently completed health assessments. See id. at 3465. Notably, "ATSDR did not provide [HRM]-specific data, and thus non-mining health assessment costs are included in this dataset." Id. The ATS DR data related to health assessments completed with the 18 months preceding EPA's request. EPA's approach to calculating relevant health assessment costs is arbitrary and capricious. First, there is no basis for assessing a flat amount for health risks at every HRM site. Most HRM sites will not have health risks and many have a small or zero resident population in the area. Health assessment costs are therefore not a foregone conclusion. Second, EPA's admitted disregard towards collecting HRM-specific data further erodes the reliability of this approach. There is no record support for the agency's assumption that facilities are the same in this context. This is certainly not true when comparing different industry sectors. It also is not true when comparing individual HRM facilities or in comparing legacy HRM sites to today's HRM sites. Simply stated, EPA's one-size-fits-all $550,000 flat amount has no relation to the "degree and duration of risk" presented by permitted and operating HRM classes of facilities. Finally, NMA is concerned that the proposed formula's separate accounts for response costs and health assessments could result in potential double counting. D. CERCLA 108(b) Should Not Include NRD Costs and EPA's Approach to Determining the Multiplier is Arbitrary and Capricious EPA proposes to make the financial responsibility instruments for all types of CERCLA liability enumerated in CERCLA 107, including NRD. See 82 Fed. Reg. at 3461. Specifically, EPA is proposing a multiplier of 1.134 in the financial responsibility formula for the NRD component. See 82 Fed. Reg. at 3465. NMA objects to the inclusion of NRD in the underlying financial responsibility formula as this proposal exceeds EPA's statutory authority. Congress specifically fashioned through CERCLA 107(f) specific liability recourse and mechanisms for recovery of NRD damages that are not the same as those for CERCLA response costs. See 42 U.S.C. 9607(f) ("Sums recovered by a State as trustee under this subsection shall be available for use only to restore, replace, or acquire the equivalent of natural resources."). The liability provisions are specific to the U S. Government and states or Indian tribes for natural resources within their boundary, management, or possession. Accordingly, a governmental trustee has a direct action for NRD that is outside the traditional realm of CERCLA response costs. The CERCLA 108(b) financial responsibility program was not intended to cover 75 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00075 these damages, as a separate process already exists to recover them as appropriate. CERCLA already provides an exclusive remedy for NRD through CERCLA 107(f). It is arbitrary and capricious to use CERCLA 108(b) as a backdoor to creating another mechanism for securing these funds for every HRM site despite not having utilized the statutory provisions that grant that liability protection in the first place. Moreover, NRD damages are not the kind of response costs that are paid out of Superfund, which is a statutory consideration under CERCLA 108(b)(2), nor are they a foregone result of the release of hazardous substances. In developing the NRD multiplier, EPA studied 319 facilities with CERCLA response costs and only 24 of those sites had NRD. That is only 8 percent of the facilities studied by EPA. This does not even account for those facilities that have no CERCLA releases and therefore no CERCLA NRD liability. If the agency had considered those facilities with CERCLA releases but no NRD in its calculations, then the median NRD as percentage of response costs is zero and the mean is 1.1 percent, both magnitudes of order lower than EPA's proposed 13.4 percent multiplier. However, even with that correction, NMA opposes the inclusion of the NRD. To assume that NRD will occur at all HRM classes of facilities is unsupported in the record and certainly does not reflect the "degree and duration of risk" presented by classes of facilities in the HRM industry. As described above in Section A, EPA also made various faulty assumptions in calculating the proposed multiplier that are arbitrary and capricious. Taken together, EPA has exceeded its statutory authority in including the proposed NRD multiplier for the HRM industry. E. Conclusions on EPA's Flawed Approach to the Formula Overall, EPA's approach to establishing the level of financial responsibility is full of circular reasoning, inconsistencies, internal contradictions, and unsupported assumptions. EPA's basic premise that CERCLA 108(b) is functionally different from closure and reclamation requirements covered under existing state and federal programs is contradicted by its own methodology. Moreover, EPA ignores the industry best practice of calculating site-specific financial responsibility in favor of overly simplistic formulas based on statistical manipulation of poorly misunderstood and misinterpreted data. EPA's failure to consider the probability of occurrence compounds the problems associated with the formula, resulting in egregiously high financial responsibility calculations. By designing the formula to replicate costs incurred in remediating the most expensive legacy Superfund sites, EPA in no way reflects the "degree and duration of risk" presented by today's HRM industry and thus the financial responsibility formula is arbitrary and capricious. EPA's reductions do not solve the fundamental problems with the formula and only serve to further shine a spotlight on EPA's flawed approach. In EPA's zest to distinguish this rulemaking from existing state and federal reclamation programs, it unlawfully substitutes the expertise of state regulators and federal land managers with its own flawed design and operating criteria. While EPA claims throughout the proposal that it is not regulating the design and operation of HRM facilities, this very approach 76 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00076 results in the backdoor regulation of the HRM industry beyond the scope of CERCLA 108(b)'s statutory directive. See 82 Fed. Reg. at 3403 (claiming that the proposed CERCLA 108(b) requirements are not designed to "ensure proper closure or reclamation of an operating mine."). EPA's approach could also incentivize the adoption of practices that simply do not apply to all HRM classes of facilities, and are inappropriate or even harmful when imposed at specific sites. These investments would result in wasted dollars with no meaningful environmental benefit. The financial responsibility proposed in this rule will impose an unreasonable burden on an already highly regulated industry without the benefit of reducing any significant risks not already addressed by existing state and federal programs. All in all, the proposed CERCLA 108(b) financial responsibility formula and the proposed reduction criteria go far beyond what Congress authorized under the statute and thus support the withdrawal of the rule, not its promulgation. IV. EPA's Economic Analysis Significantly Underestimates the Economic Impact on the HRM Industry EPA's RIA is an assessment of compliance costs based on a subset of HRM facilities (49 facilities identified) and related owner companies for which the agency claimed it could obtain detailed technical data. See 82 Fed. Reg. at 3391; See at ES-3. According to EPA's RIA, the proposed rule "may require [HRM] facilities to secure approximately $7.1 billion in financial responsibility obligations."90 RIA at ES-7; 82 Fed. Reg. at 3393 (emphasis added). Under the preferred option, which does not allow the use of the financial test, the entire $7.1 billion would be covered by third-party instruments. Id. EPA estimates that if it allowed the financial test, $4.9 billion would be covered by third-party instruments (or 70 percent of the total). Id. EPA quantifies the annualized compliance cost to industry to procure third-party instruments at $171 million (without a financial test) and $111 million (with the financial test), not including additional annualized administrative costs. Id. (emphasis added). In comparison, EPA's preferred option results in a savings to the government of approximately $527 million over 34 years, or only $15.5 million per year (and even less at the estimated $511 million savings with the financial test). See RIA at ES-7 & ES-8; See also 82 Fed. Reg. at 3395 (emphasis added). 90 To support its RIA and Market Capacity Study, EPA assumes that modeled HRM facilities meet the reduction criteria for many site features, when in practice it is unlikely that most facilities could meet the reduction requirements because of their all-or-nothing nature. Thus, if many site features fail to meet the reduction criteria, which is a likely outcome as described in more detail in Section III.B, EPA's proposed rule will cost significantly more than the estimated $7.1 billion. There is a second fundamental flaw with the RIA; apparently EPA did ot finalized the language for the credits or reductions until after the RIA was completed. The examples calculated for the RIA did not use the same credits that are included in the final text of the proposed rule. NMA members and other companies who are used as examples in Appendix B to the RIA have tried to replicate the calculations, but find either that their facilities do not qualify for the credits under the language of the proposed rule or there are substantial uncertainties about the application of the credits. If the authors of the RIA were not working with the final text of the proposed rule, the entire analysis is useless. 77 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00077 NMA supports and incorporates by reference the independent economic analysis completed by OnPoint Analytics, Inc. and submitted by Freeport-McMoRan Inc. to the docket for this rulemaking. OnPoint's Analysis demonstrates that EPA substantially underestimated the cost of this rule to the HRM industry by several orders of magnitude. Specifically, OnPoint concludes that the cost of the proposed rule could be as high as $ 3 9 .4 b illio n on a net present value basis. That is o v e r five tim e s the total amount estimated by EPA in the RIA. In addition, OnPoint concludes that the proposed rule could directly reduce employment by up to 10,110 jobs in the HRM industry, even before considering the indirect and induced impacts of the rule. In comparison, EPA's RIA does not even attempt to quantify employment losses. See 82 Fed. Reg. at 3395 ("EPA did not have sufficient data to model and quantify the potential changes in mines' employment levels as a result of the proposed regulation.") Importantly, OnPoint's analysis accounts for collateral and annual costs that are typical in the HRM industry to estimate the cost of obtaining a financial responsibility instrument. EPA's analysis wrongly assumes that there will be no collateral costs. F o r the 19 m ines m odeled b y O nPoint, fin an cial resp onsib ility requirem ents are e s tim a te d to to ta l $ 1 5 .0 4 b illio n . This number far exceeds the agency's estimated $7.1 billion total for the universe of facilities impacted by this rule. In addition, these modeled mines would be required to set aside between $3.67 billion and $9.02 billion as collateral and pay annual costs of between $75 million and $376 million according to standard industry percentages. Using a metals mining industry weighted average cost of capital of 8.40 percent, the total annual costs for the modeled universe of setting aside this capital, along with the annual fees, is between $391 million and $1.13 billion. Again, this far surpasses the estimates in EPA's RIA. The annual revenue impact of the proposed rule on these modeled mines alone is between $434 million and $1.26 billion. Notably, OnPoint's modeled universe is estimated to represent approximately 34 percent of the HRM industry. O n P o in t e s tim a te s th a t th e p r o p o s e d ru le w ill c o s t th e H R M in d u s tr y b e tw e e n $ 1 .1 b illio n a n d $ 3 .3 b illio n p e r y e a r. OnPoint's lower bound estimate is 6.4 tim e s EPA's estimate for the annual cost of the preferred option. OnPoint's higher bound is over 19.3 tim e s EPA's estimate for the annual cost of the preferred option. With annual net profits estimated at $5 billion for the HRM industry, th e s e r e g u la to r y c o s ts a re e s tim a te d to b e b e tw e e n 2 3 p e r c e n t a n d 66 p e r c e n t o f in d u s tr y p r o fits u n d e r c u r r e n t c o m m o d ity p ric e s . T h e p r o p o s e d r u le 's reg u lato ry costs are estim ated to reduce the cap ital in vestm en t in the H R M in d u stry b y betw een $5.6 billion a n d $16.1 billion. OnPoint also analyzed the indirect and induced impacts in Alaska, Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, and Utah. OnPoint concluded that the proposed rule would reduce annual economic output by between $1.3 billion and $3.8 billion within these modeled states alone, considering direct, indirect, and induced effects. Furthermore, the proposed rule will result in 3,808 jobs to 11,047 jobs lost in these modeled states alone, again considering direct, indirect, and induced effects. Finally, the proposed rule would lead to a decrease in annual tax revenue between $58 million and $168.4 million at the state and local level, while associated federal tax 78 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00078 revenue will decrease by between $92.5 million and $268.3 million, for these modeled states alone. Altogether, these economic impacts will have a profound and extraordinarily adverse impact on the HRM industry, as well as substantially impact the local communities it supports through the significant loss of high-paying jobs and tax revenue. The proposed rule will significantly reduce mining employment, investment, and revenues. While EPA grossly underestimates the economic impacts of the proposed rule on the HRM industry, the agency also overestimates the benefits to the government. In particular, EPA improperly uses an economy-wide exit rate, instead of the firm exit rate for overall mining companies. This choice alone significantly biases the benefits of this rule. F o r e x a m p le , u s in g th e m o re re a s o n a b le exit ra te o f 2 .2 7 p e r c e n t, th e g o v e r n m e n t's c o s t in th e a b s e n c e o f th e p r o p o s e d ru le - o th e rw is e know n as the benefits o f this rule - is re d u c e d from $5 27 m illion to $1 60 m illion. Importantly, EPA provides no evidence to support its assumption that exiting firms will fail to meet any of their CERCLA obligations. Thus, EPA's calculations represent the maximum possible benefit, as even exiting firms are unlikely to fail to meet all of their environmental obligations. V. EPA Failed to Adequately Assess Market Availability and Affordability and Proposed Instrument Terms and Conditions that Will Limit Market Participation Pursuant to a Congressional request,91 EPA conducted a Market Capacity Study prior to the publication of the proposed rule. 82 Fed. Reg. at 3399. See also Market Capacity Study at 1 ("The subject request asks for the EPA to collect and evaluate information from the insurance and financial industries regarding the use and availability of financial responsibility instruments."). According to EPA, this study "assessed the likely availability of financial responsibility instruments and the capacity of third-party markets to underwrite financial responsibility requirements for responsible parties subject to CERCLA 108(b)." 82 Fed. Reg. at 3399. Based on this study, EPA claims that "sufficient capacity lik e ly w ill b e a v a ila b le to cover the financial responsibility obligations called for under CERCLA 108(b)." Id. (emphasis added). See also Market Capacity Study at 21 ("additional market capacity likely exists to support entities seeking financial responsibility coverage in response to CERCLA 108(b)"). Notably, EPA at the same time admits that "the ultimate availability of CERCLA 108(b) financial responsibility instruments c a n n o t b e p re d ic te d w ith c e rta in ty until the final rule has been promulgated." 82 Fed. Reg. at 3399 (emphasis added). In the RIA, EPA is even more direct, stating that the agency "determined that the market for the 91 The Conference Committee Report attached to the Consolidated Appropriations Act of 2016 (Public Law 114-113) directed EPA to: "collect and analyze information from the commercial insurance and financial industries regarding the use and availability of necessary instruments (including surety bonds, letters of credit and insurance) for meeting any new financial responsibility requirements and to make that analysis available to the House and Senate Committees on Appropriations and to the general public on the Agency website 90 days prior to a proposed rulemaking." 79 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00079 types of [financial responsibility] instruments described above does not yet exist to cover financial responsibility under CERCLA 108(b)." RIA at 4-10 (emphasis added). However, the agency convinces itself that "the market will have an opportunity to respond" and therefore, no real market capacity problems exist that could derail the ability of HRM facilities to obtain affordable third-party instruments to cover this costly new obligation. 82 Fed. Reg. at 3399. See also Market Capacity Study at 2 ("[W ]ith all else equal, standard economic principles suggest that as demand for a new product increases, insurers and sureties will seek to satisfy such demand with new products."). These conclusions read more like wishful thinking than an actual market analysis. Additionally, EPA's attempts to reassure itself and the regulated community are in the end futile. EPA's remarkably limited analysis of market capacity does not reflect, nor do the proposed financial instruments fix, the real-world concerns from experts in the insurance, finance, and banking sectors that will drastically impact the ability of the HRM industry to even obtain, nonetheless afford, third-party instruments to cover this costly new obligation. A. EPA's Market Capacity Study Provides No Value in Assessing Affordability or Availability of CERCLA 108(b) Financial Responsibility Instruments EPA's Market Capacity Study has no real value in assessing the availability or affordability of third-party instruments that could prospectively cover EPA's proposed CERCLA 108(b) financial responsibility obligation. The scope and depth of EPA's Market Capacity Study is limited to examining high level financial measures of the insurance and surety industries. This generic analysis produces a simplistic quantitative assessment which fails to support the conclusion that adequate capacity will be available for the type of financial responsibility obligations proposed for the HRM industry under CERCLA 108(b). Contrary to EPA's assertion in the proposal, the study contains no "qualitative data" that supports the conclusion that "sufficient capacity likely [would] be available to cover the financial responsibility obligations." 82 Fed. Reg. at 3399. 1. EPA's Inadequate Research and Consultation Results in Unjustifiable Conclusions EPA simply researched published industry data on insurance and surety premiums as if these were "a reliable measure with which to assess market capacity." Market Capacity Study at 2. EPA's theory rests on the unsupportable assumption that "[a] `soft' market suggests that there exists the potential for greater instrument supply than demand" and that since current market conditions are healthy it signals "potential capacity for expansion." Id. at 8. Specifically, EPA opines that "the current capacity of (re)insurance and surety markets for the product lines necessary to serve the financial responsibility needs of the [HRM] industry pursuant to CERCLA 108(b) requirements may be as much as $5.6 billion." Id. at 2. The agency completely punted on any relevant analysis of the proposed rule itself, instead summarily concluding: "The timing, pricing 80 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00080 and nature of such products will ultimately depend on the requirements established by the rule."92 Id. at 5. At best, the data in the study supports the single proposition that at the moment the overall insurance and surety markets are currently in sound financial condition. Yet, that "macro" analysis does not inform whether sufficient capacity will exist for the environmental site liability segment of the market or, more specifically, for the HRM industry. Amounts of coverage may be available for standard coverages, but they do not offer any insights into whether coverage may be available for non-standard coverages associated with the unique environmental and financial exposures rooted in the HRM industry CERCLA 108(b) rule. Nor does this global capacity reflect what is truly available for products specific to the HRM industry. Indeed, as described in more detail below, EPA's report contains ample evidence that the market for more volatile lines of business--environmental liability generally and mining more specifically--are constrained if not shrinking. For example, the number of sureties actively participating in the HRM sector is a small percentage of the overall industry and offer more restrictive capacity terms for the HRM industry due to the nature of the underlying risks, the long-term duration of guarantees, and the non-cancellable nature of the bond. In combination, these characteristics result in a smaller aggregate pool of capacity and the amount available to any particular HRM owner or operator is limited. Moreover, a dramatic increase in demand will assuredly drive both higher pricing and higher collateral requirements for many HRM companies. Capacity terms and conditions, including rate and collateral, will depend on specific underwriting criteria such as individual site characteristics, the compliance record of the owner or operator, and various credit metrics. EPA gives short shrift to these important considerations, merely mentioning them without any further analysis. See Market Capacity Study at 2. Notably, EPA conducted its capacity study and consulted (on a very limited basis) with the insurance and surety industries prior to articulating sufficient details on the requirements for the different financial instruments that EPA will allow under the proposed rule. Consequently, the providers of the various acceptable forms of financial responsibility could not provide the type of feedback useful for assessing their appetite--and likely capacity--for underwriting the proposed obligations. In combination, the gaps in relevant information, lack of meaningful analysis, and inadequate consultation with providers, precludes accepting the EPA conclusion "that there will likely exist sufficient providers and capacity to meet the requirements of future CERCLA 108(b) regulations." Market Capacity Study at 22. The hedge that immediately follows--it cannot be predicted with certainty until after those rules are finalized and the market responds--reveals the only honest answer EPA can provide: "We don't know." 92 Even in EPA's very brief discussion of trusts, letters of credit, and financial test, where EPA wrongly assumes that "there is essentially unlimited market capacity for these specific [financial responsibility] options," EPA acknowledges that these forms also have qualifying limitations such as an owner or operators showing of adequate credit and assets, demonstrated performance, financial health, and credit worthiness. Market Capacity Study at 7. 81 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00081 As explained more fully below, the market response to the financial responsibility obligations proposed will be largely negative and any capacity that may emerge will be selective and limited. To suggest coverage is available without reasoned justification is indefensible given the immense economic repercussions of this rule as described in Section IV. This is particularly concerning since EPA assumed that no market capacity constraints exist when estimating the cost of the instruments. See 82 Fed. Reg. at 3392. According to OnPoint's analysis, financial responsibility requirements for just the 19 mines it modeled are estimated to total $15.04 billion. This number is three times over the market that the agency claims will be available to absorb this new obligation. Even taking as truth EPA's $7.1 billion in total financial responsibility obligations, the agency's own estimates completely dwarf the agency's identified market capacity. See 82 Fed. Reg. at 3392; RIA at ES-7. Yet, in complete contradiction, EPA argues that "preliminary results from draft regulatory impact analyses reveal estimates of total demand for instruments to be below that of the Agency's estimate of overall capacity." 82 Fed. Reg. at 3399. To claim market capacity exists without considering the critical elements of the rule that will have an impact on the willingness of market participants to offer these instruments, such as the estimated aggregate liability from the financial responsibility formula, the wording and form of the third-party instruments, and other relevant conditions on each of the instruments, is arbitrary and capricious and fundamentally wrong. Interestingly, the Market Capacity Study is rife with cautionary language relevant to market capacity and instruments associated with environmental liability, as well as more generally for financial assurance available to the FIRM industry under existing programs. For example, EPA acknowledges that the "insurance and surety capacity for environmental liabilities may be contracting." Market Capacity Study at 2. EPA offers a specific example, noting that AIG, the largest underwriter of environmental insurance, announced last year that it would no longer offer environmental impairment liability coverages. Id. at 15. Other examples include statements such as: (1) "[rjeduced underwriting in business lines that are inherently volatile [as] necessary to ensure long term financial stability and profitability in a low interest rate environment;" and (2) "it is important to keep in mind that insurers and sureties will continue to be wary of business lines that are recognized as volatile (as the FIRM industry could be characterized)." Id. at 16. EPA completely downplays these realities. In the agency's summary of key information, several important cautionary statements are also present from brokers with mining experience. For example, Wells Fargo acknowledged in its "2016 Insurance Market Outlook:" "Energy risks, power and utility risks, and mining risks: these industries have significantly less capacity available to them, with carriers generally not willing to write more than a one- or two-year term." Id. at 18. Specific to mining, Marsh stated in its "United States Market Report 2016:" "The sustained downward movement in commodity prices continued in 2015, and mining companies faced constant pressure to contain risk and insurance costs." Id. at 19. EPA also notes that "Willis identifies mining as a risk of concern, warranting careful evaluation." Id. at 20. Willis reported that "increased regulatory scrutiny on 82 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00082 transportation/railroad, mining, energy, and pipeline exposures, [are] resulting in the rvaluation of these sectors by underwriters and inspiring a new push to shift liability to users of facilities." Id. EPA simply glosses over these significant cautions on availability of insurance/surety to the HRM industry. EPA even concludes that the agency's assessment "suggests a growing trend on the part of underwriters to shy away from volatile lines of coverage" and that "[t]his consideration will weigh on the degree of additional market capacity that third-party insurers and sureties are likely to leverage to provide the instruments necessary for [HRM] entities required by any CERCLA 108(b) final rule." Id. at 21. See also RIA at 410 ("observers acknowledge that overall capacity for risk specific to the mining industry will decrease due to the sector's volatility"). However, EPA dismisses these critical facts with essentially no reasoned explanation or further analysis, and instead rests its ultimate conclusion of available market capacity on: (1) general commentary on the growth of capacity in the insurance and surety markets; and (2) the potential and untested role of captives and risk retention groups (RRGs) in filling a market void where traditional forms of third-party instruments are unavailable for a majority of the HRM sector. See Market Capacity Study at 21-22. EPA's RIA is explicit in its reliance on these flawed theories, concluding that the agency "anticipates that the insurance market will endeavor to meet the increased demand . . . through alternative risk transactions, such as layered risk management instruments, and the concurrent formation of risk retention groups." Id. at 4-10. Yet, at no point in the Market Capacity Study or the RIA does EPA even attempt to evaluate the suitability of RRGs for the HRM industry. NMA is greatly concerned with the agency's blanket reliance on these arrangements given that they are difficult to achieve, are completely untested for the kind of expansive financial liability proposed in this rule, and are not widely used in the HRM industry today. To suggest that these arrangements will result in any meaningful increase in capacity is a baseless overstatement. In the end, EPA's unsubstantiated optimism that the market will simply just respond and cover this new obligation is not based on a true evaluation of market capacity, the barriers associated with specific regulatory provisions in this proposed rule, or the aggregate demand that will be placed on and constrain the market. See 82 Fed. Reg. at 3399. Nothing in the Market Capacity Study evaluates the important issues at hand, such as whether there will be a third-party market for the financial responsibility instruments EPA actually proposes in the rule (instead of hypothetical scenarios), or how any such market will price or establish terms and conditions for those prospective products. Consequently, the agency's Market Capacity Study is critically flawed and provides no value in assessing this crucial issue. 2. EPA Failed to Examine the Correct Market Segment EPA's assessment that $600 million in environmental insurance capacity and $5 billion in surety capacity may currently exist for the type of product lines to address HRM financial responsibility needs under the proposed rule lacks credibility. The estimates are based upon written premiums as a measure of the current size of the 83 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00083 overall insurance and surety markets for environmental coverage. However, premiums written captures both rate actions and new business. Accordingly, this metric alone does not provide a reliable indicator of the potential capacity for the proposed financial responsibility obligations. Moreover, capacity and availability varies by both lines of business and industry segments. In short, nothing in the analysis attempts to evaluate how much capacity may exist for the obligation EPA proposes to impose on the HRM industry. Both experience and market analysis confirm that for certain classes, such as mining, significantly less capacity will be available than what EPA surmises may exist for all classes of environmental risk. See Wells Fargo, 2017 Insurance Market Outlook, at 14 ("Therefore, we are confident that there will be continued growth with a soft market in 2017 for most classes or risks, except higher risks such as petrochemical, oil and gas, power and utility, and mining.") (emphasis added). In sum, environmental site liability coverage for the mining sector does not reflect the broader market examined by EPA. Apart from the failure to examine the likely availability of insurance or surety coverage for the proposed financial responsibility obligations for the HRM industry, the analysis does not examine the related availability issue of the limits third-party providers will impose on individual companies. Both insurance and sureties will limit the amount of aggregated exposure for any one company. Both availability and the limits are often accompanied by collateral demands that further impair the company's financial position or credit worthiness. This in turn will compromise their retention of existing coverages under other closure, response, and reclamation programs. Experience over the past several years reveals that environmental site liability insurance for the HRM industry is potentially available on only a very select basis by a few carriers. The terms are becoming more restricted with short policy terms, high deductibles, and often limited to new conditions. See, e.g., Wells Fargo, 2017 Insurance Market Outlook at 14 (noting that one year policy terms are becoming the norm for difficult risks such as mining). Some of the major carriers have reinsurer treaty exclusions for HRM companies. The face amounts, nature of the risks, and the unconventional terms and conditions proposed for the financial responsibility instruments will require access to the Excess and Surplus ("E&S") line of insurance--a small subset of the environmental insurance market. E&S lines are resorted to for high capacity, unique and new, or emerging risks that standard line insurers decline to cover when they do not meet insurers' underwriting guidelines. The total E&S lines of business on a direct premiums written ("DRW " ) basis represents only 7.0 percent of the total Property and Casualty sector. A.M. Best, U.S. Surplus Lines, at 3 (Exhibit 1) (Sept. 2016). The top ten U S. based E&S providers had approximately $11.5 billion in DRW in 2015. Id. at 9 (Exhibit 8). Two E&S Groups, Lloyd's and AIG, account for more than 32 percent of the total E&S line share. Id. at 8 (Exhibit 7). However, as discussed below these markets are consolidating and contracting. 84 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00084 The market is consolidating through increased merger and acquisition activity. Future growth will continue to be inorganic through more mergers and acquisitions. These trends suggest reduced competition with a combination of attendant impacts of reduced underwriting, higher pricing, or eschewing more volatile business lines to preserve profitability. The recent exit of AIG from the environmental site liability product line is especially instructive. AIG had one of the largest books of environmental site liability policies for mining and over 30 years of experience in this market. While a few carriers may have picked up some of AIG's vacated positions, the fact that AIG could not remain profitable in this space despite three decades of actuarial data suggests the remaining few market participants may exit or further reduce their exposures. Apart from a passing mention of the E&S line of insurance, the market capacity study is devoid of any analysis of the capacity for that insurance line, how it interacts with the standard line providers, and how the E&S insurers' view the nature of the risks, high capacity requirements, and the terms and conditions of the proposed financial responsibility instruments. This omission is especially egregious since even EPA's report acknowledges that the E&S line will be the primary source of insurance for the proposed obligations. See Market Capacity Study at 14 ("In general, insurance for purposes of financial responsibility is provided by `surplus' and `excess' lines insurers."). B. EPA's Consultation with the Insurance, Surety, and Banking Community Was Woefully Inadequate As briefly discussed above, EPA's evaluation and conclusions on market capacity are based on insufficient consultation with the third-party instrument providers who are the true experts in this field. In December 2015 and January 2016, EPA held just four meetings, all lasting only two hours, with the insurance, surety, and banking communities.93 At the time of these meetings, EPA had not yet developed critical elements of the rule that are crucial to evaluating and understanding market availability and affordability, including the financial responsibility formula and the CERCLA 108(b) financial responsibility instruments. Instead, the agency walked these stakeholders through the agency's then current thinking on the proposed rule structure, covering various topics such as: (1) scope of coverage; (2) payment triggers; (3) duration and cancellation; (4) amount; (5) direct action; and (6) instrument form. Such discussions, while relevant, should have been the starting point of the consultation, not a one-time 93 See Meeting Notes from CERCLA 108(b) Meeting Between EPA and Insurance Community Representatives (Dec. 8, 2015) (EPA-HQ-SFUND-2015-0781-0447) (Insurance Meeting Notes); Draft Meeting Notes from CERCLA 108(b) Meeting Between EPA and Banking Community Regarding Letters of Credit (Jan. 12, 2016) (EPA-HQ-SFUND-2015-0781 -0446) (LOC Meeting Notes); Draft Meeting Notes from CERCLA 108(b) Meeting Between EPA and Surety Community (Jan. 14, 2016) (EPA-HQ-SFUND- 2015-0781-0445) (Surety Meeting Notes); Draft Meeting Notes from CERCLA 108(b) Meeting Between EPA and Banking Community Regarding Trust Funds (Jan. 28, 2016) (EPA-HQ-SFUND-2015-0781 - 0444) (Trust Meeting Notes). Based on our review of the participants in attendance, NMA is concerned that these meetings were not fully representative of the markets that participate in the HRM reclamation bonding sector, who could have provided necessary expert advice on this proposed rule. 85 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00085 opportunity to provide minimal advice on this complex issue before any details were available. CERCLA clearly directs EPA "[t]o the maximum extent practicable . . . cooperate with and seek the advice of the commercial insurance industry in developing financial responsibility requirements '' 42 U.S.C. 9608(b)(2) (emphasis added). However, EPA never shared the type of information necessary for these stakeholders to provide any meaningful advice in the development of this rule as directed by Congress. In fact, EPA even declined to discuss essential issues with stakeholders. See Surety Meeting Notes at 4 ("EPA responded that EPA is not able to share details on the [financial responsibility] model right now[.]") When the agency consulted with the insurance, surety, and banking sectors, EPA was many months away from finalizing key documents that supported the agency's decisions on the draft terms and conditions of each of the third-party instruments, including the specific wording of each agreement and the eligibility requirements for these instruments.94 In addition, these stakeholders were never given other important information related to the aggregate amount of financial responsibility estimated under this proposed rule,95 the process for regulatory review and approval of financial responsibility amounts, or other triggers in the rule that will require action from an instrument provider. All are key elements related to the exposure that these providers will be insuring against and will directly influence their willingness to participate in the market. Yet, EPA squandered the opportunity to obtain critical advice while developing the proposed rule. Overall, EPA's lack of transparency resulted in a missed opportunity to learn from the experts, including those familiar with the complexities of existing bonding regimes for the HRM industry. The agency did not avail itself of the expertise offered by those in the financial and banking sectors and instead simply "checked the box" and developed its proposal in a vacuum. Because of this choice, EPA was left to guess at what the 94 See CERCLA 108(b) Financial Responsibility Instrument Support: Potential Issuer Eligibility Requirements for Insurance, Surety Bonds, Letters of Credit, and Trust Agreements and Standby Trust Agreements under CERCLA 108(b) (Nov. 2016) (EPA-HQ-SFUND-2015-0781-0504); See also CERCLA 108(b) Financial Responsibility Instrument Specification: Potential Requirements for Insurance, Surety Bonds, Letters of Credit and Trust Agreements and Standby Trust Agreements under CERCLA 108(b) (Nov. 2016) (EPA-HQ-SFUND-2015-0781-0503). 95 EPA even cautions that sufficient capacity "will be highly dependent upon the overall amount of financial responsibility that the market will need to accommodate." 82 Fed. Reg. at 3399. This information was not available during the stakeholder meetings. See Insurance Meeting Notes at 1 ("EPA responded that the model/formula is still under development and that the Agency hasn't established a minimum or a maximum."). The Surety & Fidelity Association of America asked for this information six months after EPA's meetings with stakeholders. Letter from Surety & Fidelity Association of America to Mathy Stanislaus, Assistant Administrator of the Office of Land and Emergency Management at 3 (July 14, 2016) (EPA-HQ-SFUND-2015-0781-0443) (SFAA Letter) ("Does EPA have an estimate of the aggregate required amount of financial assurance for the entire hard rock mining industry?"). EPA did not provide this information before issuing the proposed rule. 86 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00086 financial industry would potentially find palatable. This woefully limited consultation does not comply with the more rigorous outreach intended by Congress. C. The Terms and Conditions for the Proposed Third-Party Instruments Will Discourage Providers from Participating in this Market As demonstrated throughout this rulemaking, limited consultation with the experts has resulted in a fundamentally flawed rule. EPA's failure to continue the conversation and seek the advice of the insurance, surety, and banking experts while developing the key elements of the rule is apparent in the defects found in the proposed financial responsibility instruments. The amounts calculated from the proposed rule are enormous and the form and function of the instruments are unconventional compared to current commercial products used to financially support or transfer risk for environmental obligations. The combination of these features all but guarantee that third-party underwriting will be unavailable except for a select few and expensive for anyone who can access such coverage. One third of the 49 sites EPA modeled yield final financial responsibility amounts in excess of the prevailing $50 million policy limit for environmental site liability. RIA, Appendix B, Exhibit B-9. For companies with multiple facilities, the underwriters' aggregate company exposure limits pose additional constraints on accessing third-party financial responsibility instruments for each of its facilities. EPA's failure to examine the relevant market segment in its "macro" analysis of market capacity is compounded further by erroneously projecting a market response for an entirely different obligation than the current market for the commercial financial products EPA examined in the market capacity study. At its core, the obligation EPA has designed in the proposed rule is disconnected from the actual event or risk of a release of a hazardous substance. This fundamental change arises primarily from the proposed use of cancellation, termination, non-renewal or filing for bankruptcy protection--events distinct from an actual or threatened release of a hazardous substance--as triggers for automatic recovery of the full amount of the financial instrument. So rather than insuring the risk of a release or owners' performance, the obligation EPA is requiring the insurance and surety industry to guarantee is the insured company's financial condition. CERCLA requires EPA "[t]o the maximum extent practicable . . . cooperate with and seek the advice of the commercial insurance industry in developing financial responsibility requirements." 42 U.S.C. 9608(b)(2). The direct inference from this requirement is that Congress intended EPA to fashion financial responsibility requirements in a manner that would align closely with the common available forms available in the commercial market place. Here, EPA has proposed financial responsibility requirements that are directly at odds with the fundamental and customary underwriting practices, the risks they typically underwrite, and the business models of insurance, surety, and LOC providers. There is nothing in the statutory design that compels EPA to fashion a financial responsibility obligation in such a manner. 87 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00087 EPA's apparent answer is simply that "economic principles suggest that as demand for a new product increases, insurers and sureties will seek to satisfy such demand with new products." Market Capacity Study at 2. This "Field of Dreams" bromide {If you build It, they will come) misses the mark. The third-party providers will behave like any other business and find a more attractive use of their capital. Longer-tail and vague exposures such as those proposed delay their ability to report a return and make it more difficult to extract their risk capital. Premature payouts as envisioned under the range of trigger events will prevent the third-party providers from attaining the earnings on premiums to more than offset any payouts. On the other side for HRM companies, financial responsibility instruments that are not available because of lack of qualification, collateral requirements, and higher premiums provide no demand at all. EPA's proposed rule represents a minefield for all participants. NMA highlights some of these concerns in more detail below, which were identified based on discussions with various financial assurance providers in the insurance, surety, and banking communities, as well as internal discussions with member company finance experts. EPA's Approach Restricts the Diversity of Available Options: EPA acknowledges that market capacity will be influenced by the agency's own decisions on: (1) the diversity of instruments allowed; (2) whether risk retention groups (RRGs) are allowed; and (3) whether a financial test is permitted. 82 Fed. Reg. at 3399. According to the agency, "[a]ll such features, if included in the rule, could help to relieve pressure on third-party surety markets and ensure greater market capacity." Yet, EPA's proposal does not even implement the methods the agency has identified as necessary to promote capacity. EPA's preferred option is no financial test, even though the agency recognizes that under this approach "limited market capacity may be burdened." 82 Fed. Reg. at 3440 fn.131. In addition, EPA does not propose to allow captive insurance or RRGs as eligible issuers; rather, it merely seeks comment on various concerns regarding these mechanisms and additional ratings requirements the agency may impose if the agency approved their use. See 82 Fed. Reg. at 3426-27. This baffling bait and switch further erodes the reliability of EPA's overall market capacity analysis. Direct Access by Third Parties: NMA understands that third-party direct action is a major concern raised by numerous instrument providers. For example, we are aware through comments submitted by the Surety & Fidelity Association of America (SFAA) last summer that direct-action claims will pose a major impediment to participation by a significant portion of the surety market. SFAA Letter at 2. In EPA's limited consultation, this theme was also prevalent. See Surety Meeting Notes ("3rd party liabilities that can be claimed by a wide range of claimants may cause concern to surety providers because it can be very expensive and messy"); See also Insurance Meeting Notes at 4 ("direct action is possible, but it's not a preference for the insurer"); LOC 88 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00088 Meeting Notes at 3 ("direct action wouldn't work because it would make the LOC like an insurance policy and a LOC is not, and cannot be, an insurance policy"). While EPA "sought to address the major issues raised by the financial community" in the proposed rule, 82 Fed. Reg. at 3414, NMA remains very concerned that the language in the instruments is not adequate to describe the requirements for direct action claims. Additionally, EPA's failure to impose limitations on a provider's ability to recover costs for defense of these claims from the instrument will limit the number of providers willing to undertake this new liability. The result is likely unreasonably high costs imposed on owners and operators seeking coverage, such as high premiums and fees to cover claims management and defense of claims outside the limits of the policy. Extremely High Limits of Liability: The surety industry is on record that the aggregate demand imposed on the market by this rule will have an impact on market capacity in that sector. SFAA cautioned that "the aggregation of financial assurance requirements could present availability challenges, particularly considering the other risks" identified by the association. SFAA Letter at 3. Notably, SFAA pointed out the inherent duplication of EPA's proposed rule with existing state and federal bond requirements that its members currently provide, emphasizing the need to avoid duplicative liability. Id. at 2-4 ("there is significant overlap of coverage between the 108(b) financial assurance and the surety bonds currently being furnished to meet state and federal requirements"). EPA, however, did not listen to this advice. As discussed above, the estimated amount of financial responsibility for the expected universe of modeled facilities exceeds the current global capacity of the surety and insurance markets identified by the agency. Cancellation, Termination, or Non-Renewal as a Payment Trigger: EPA proposes to use cancellation, termination, or non-renewal of a product as a trigger for recovery of the full-face amount of the instrument. Consequently, EPA can call the face amount of the policy, put it into a standby trust account and hold that money indefinitely. This requirement effectively changes the nature of the risk being covered. Instead of providers assessing the risk of a CERCLA response event, providers will be forced to underwrite the ability of the operator to meet financial and administrative compliance requirements not directly related to CERCLA's statutory purpose. NMA understands that this kind of trigger is at odds with how commercial third-party insurance operates and could result in much higher premiums and collateral requirements. Bankruptcy as a Payment Trigger: As proposed, bankruptcy triggers a claim on the financial responsibility instrument. However, EPA has been warned that bankruptcy alone should not be a trigger for payment and including this payment trigger would constrain the market. See Surety Meeting Notes at 3 ("Zurich commented that the surety provider would prefer that bankruptcy alone not be a trigger for payment" and that this "will impact 89 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00089 surety providers' interest in participating in the program."). See also SFAA Letter at 2 ("Merely filing for bankruptcy should not be the triggering event for rights under the bond."). As discussed in Section C, bankruptcy will not necessarily result in the government being responsible for remediation at the site, since operators are often still able to meet their environmental obligations during bankruptcy proceedings. As one surety stakeholder pointed out to ERA, "to interpret bankruptcy as equivalent to a threatened release . . . could trigger action on EPA's part even if no actual release had occurred at the mining site." Surety Meeting Notes at 3. Constraints on the Form and Function of the Allowable Financial Responsibility Instruments: EPA is imposing technical limitations on specific financial instruments that are not typically seen in the market. For example, EPA has removed horizontal excess coverage for commercial insurance. This is a significant departure from typical insurance underwriting and structuring that eliminates necessary flexibility and therefore restrains the insurance markets. EPA's proposed rule also dictates new terms for multiple sureties that are inconsistent with common surety practices and therefore could limit participation of sureties in this market. Undefined Release Processes: EPA's failure to provide any details on the process for releasing FIRM owners and operators from this obligation is also an impediment. See Surety Meeting Notes at 3 (`" Duration risk' is a concern"). The SFAA explained in the context of surety bonds that "long duration increases the risk to the surety." SFAA Letter at 3. Accordingly, "sureties typically raise their underwriting standards, and provide long-term bonds only to the largest and most financially sound operators." Id. The duration of the liability risk is a crucial element of the proposed rule, yet EPA provides little details on the release procedure. Furthermore, EPA provided no meaningful standard to determine if a facility presents "minimal" risk warranting release of the entire obligation. EPA's failure to clarify the petition process owners and operators would take to obtain a release from the CERCLA financial responsibility program will impact market capacity. EPA is effectively creating an indefinite obligation, regardless of the operating status of the facility. As EPA's Market Capacity Study itself shows, the appetite in the market to cover long-term liabilities with no end date has significantly eroded over the years. This scenario deprives the instrument providers from any certainty on the discontinuation of the obligations, which will ultimately limit market participation. NMA is confident that other issues will be identified in the record that will provide a more comprehensive picture of the ways in which EPA's proposed rule and the terms related to the third-party instruments will result in a significantly constrained market. This will have substantial ramifications on the FIRM sector's ability to procure affordable instruments to cover the full-face value of their estimated CERCLA financial responsibility obligations. EPA's failure to adequately assess market capacity and seek 90 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00090 the advice of the financial and banking industries throughout the entire rulemaking process has resulted in a proposed rule that exposes the HRM industry to liability obligations that far surpass the sector's risk-profile and the existing market capacity. Considered as a whole, these significant errors support the agency's ultimate withdrawal of the proposed rule. VI. Implementation Issues While NMA believes that EPA's proposed rule is unlawful and unsupported by the record and should be withdrawn, NMA provides the following brief comments on two implementation issues: (1) EPA's decision to only apply the CERCLA 108(b) obligation on currently active facilities and not inactive facilities or legacy sites; and (2) EPA's proposed requirements for public notice as outlined in Section 320.9. A. CERCLA 108(b) is Prospective in Nature and Should Not Apply to Inactive HRM Facilities First, NMA agrees with EPA that any CERCLA 108(b) financial responsibility requirements should only apply to "current owners or operators of facilities that are authorized to operate, or should be authorized to operate, on or after the effective date of the rule." See 82 Fed. Reg. at 3486 (Proposed 320.2(a)); See also id. at 3404 ("EPA intends for this proposal to be focused upon an easily-identified, particular subset of parties that has control over and are thus in the best position to control and address hazardous substance management activities."). The text of CERCLA 108(b) makes it clear that financial responsibility requirements are prospective only and can only be made applicable to releases from units at facilities that are active on the date the regulations go into effect. See 42 U.S.C. 9608(b)(1) & (2). Specifically, Congress chose to use language in the present tense to describe the operations to which this requirement would apply. See 42 U.S.C. 9608(b)(1) (identifying "production, transportation, treatment, storage or disposal of hazardous substances"); Compared to 42 U.S.C. 9607(a)(2)-(4) (imposing liability on those who are presently disposing of, transporting, or arranging for disposal of hazardous substances, as well as those who "owned or operated" any facility at the time hazardous substances were disposed, or who "arranged" for disposal or treatment of hazardous substances, or who "accept or accepted" hazardous substances for transport.). Moreover, the financial instruments described in CERCLA 108(b)(2) are also prospective mechanisms for covering those requirements. See 42 U.S.C. 9608(b)(2). Financial responsibility under CERCLA is intended to address current and future risks from ongoing and future mining operations, not to fund the cleanup from legacy mining sites or inactive units at currently operating facilities. This "forward looking" reading of CERCLA 108(b) is also confirmed by how EPA has implemented financial responsibility requirements under RCRA. As the legislative history supporting CERCLA 108(b) indicates, these financial responsibility requirements were modeled on the financial assurance provisions of RCRA. See Report of the Senate Committee on Environment and Public Works, No. 96-848 (July 11, 1980) 91 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00091 ("Senate Report") at 92. (CERCLA 108(b) "is modeled on similar provisions in the Clean Water Act and the Solid Waste Disposal Act."). The wording of the relevant financial assurance provisions of RCRA is in many respects identical to the wording in CERCLA 108(b). RCRA 3004(a)(6) provides that EPA may promulgate requirements relating to financial responsibility applicable to owners and operators of facilities for the "treatment," "storage" or "disposal" of hazardous waste, that are "consistent with the degree and duration of risks associated with [such] treatment, storage and disposal." 42 U.S.C. 6924(a)(6). This wording is very similar to the wording of Section 108(b), which provides for financial responsibility requirements "consistent with the degree and duration of risk associated" with the "treatment," "storage" or "disposal" of hazardous substances, as well as with the "production" or "transportation" of hazardous substances. See also RCRA 3004(t), 42 U.S.C. 6924(t) (discussing the forms of allowable financial assurance, and the manner in which the United States may proceed against the guarantor, in terms that are identical to those contained in Section 108(b) of CERCLA). The only fair reading is that financial responsibility requirements apply only to active units (at the time the rule goes into effect), or those that become operational in the future.96 Finally, a wholly prospective reading of CERCLA 108(b) is also compelled by the legislative history of the statute. The Senate Report - which provides the only real discussion of Section 108(b) - states that Section 108(b) "requires those engaged in businesses involving hazardous substances to maintain evidence of financial responsibility commensurate with the risk which they present." Senate Report at 92 (emphasis added). A fair reading of this sentence is that Section 108(b) requirements are meant to apply only to those currently engaged in handling or otherwise managing hazardous substances - not to wholly inactive businesses or to inactive portions of ongoing businesses. This reading of Section 108(b) is also supported by testimony given by EPA before Congress in 1979. At that time, Thomas C. Jorling, the EPA Assistant Administrator for Water and Waste Management, testified before a Senate subcommittee that new financial responsibility requirements in a hazardous substance liability law would be important to increase "standards of care" with respect to 96 Other federal financial assurance programs only apply prospectively. For example, EPA's financial assurance requirements for underground storage tanks (UST) under RCRA 9003 apply only to tanks operating on or after the compliance date specified in the regulations. See 40 C.F.R. 280.90(b) ("Owners and operators of petroleum UST systems are subject to these requirements if they are in operation on or after the date for compliance established in 280.91.") The same is the case for the functionally equivalent financial assurance requirements imposed on the HRM industry by the BLM and U.S. Forest Service pursuant to other statutes. For instance, the BLM, in its Part 3809 regulations, and the U.S. Forest Service, in its Part 228 regulations, impose financial assurance for reclamation only with respect to units that were in operation on the effective date of the regulations, or that came into existence thereafter. See 45 Fed. Reg. 78,902, 78,906 (Nov. 26, 1980) (original BLM financial guarantee requirements do "not apply to those areas that were disturbed prior to the effective date of this final rulemaking unless operations continue or begin again in the same project area"); 36 C.F.R. 228.2 (U.S. Forest Service requirements "apply to operations hereafter conducted"). 92 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00092 management of such substances.97 Mr. Jorling testified that this goal is not "relevant" to sites where releases have occurred in the past, where "it is already too late; emergency assistance and containment are required." Id. B. NMA Opposes EPA's Proposed Requirements for Public Notice EPA is proposing that owners and operators subject to CERCLA 108(b) requirements create specific websites that would make public certain information regarding their compliance with this rule. Specifically, each covered company would post their initial notification forms that are required under proposed Section 320.5. Companies would also be required to post information on: (1) the initial financial responsibility amount and subsequent changes; (2) application for release from the requirements; (3) when a claim is made on the instrument; (4) upon receiving notification of cancellation of an instrument; (5) upon transfer of ownership of the facility; and (6) upon submitting notice to a regulator of a facility's closure. 82 Fed. Reg. at 3410. According to EPA, this public website will provide incentives for companies to fully comply with the requirement and ensure that the formula is applied as EPA intended. EPA also claims that this public website would support the CERCLA response actions taken by the U S. government, states, and private parties by making information readily available. Id. at 3409. Public disclosure on a company website is unwarranted and unnecessary. EPA has not offered a justifiable reason for putting this onus on the HRM industry. First, it is overreaching and not within the scope of the statutory language. Second, the agency has implemented financial assurance, for example under RCRA, without requiring this type of extensive public disclosure. Third, EPA should not hide behind the selfimplementing nature of this rule to create even more regulatory burden on the HRM industry. If EPA wants to disclose this information for transparency, the agency should create its own clearinghouse of information. To suggest that company websites will create more accurate financial responsibility estimates or compel a higher level of compliance is simply absurd. Companies will have every incentive to determine the appropriate level of financial assurance and obtain coverage for that requirement simply to avoid enforcement by the agency. As EPA is aware, the agency retains enforcement authority over the level of financial responsibility a company establishes through this self-implementing rule. See 82 Fed. Reg. at 3401 ("If EPA determines the financial responsibility amount submitted by the owner or operator to be inadequate, EPA may choose to initiate enforcement proceedings."). EPA cannot simply create this burdensome regulatory requirement and then walk away from any responsibility in its implementation, particularly regarding future claims against the instruments. 97 See Statement of Thomas C. Jorling, Assistant Administrator for Water and Waste Management, USEPA regarding S.1341/S.1480 (Sen. Comm, on Env't and Public Works, Subcommittees on Resource Protection and Environmental Pollution, June 20, 1979). 93 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00093 Conclusion NMA appreciates the opportunity to comment on this important proposed rule. NMA respectfully requests that EPA withdraw this proposal and publish a final notice of action determining that no new financial responsibility requirements are warranted under CERCLA 108(b) because the HRM industry does not present the "highest level of risk of injury" or present the "degree and duration of risk" contemplated under the statute. Accordingly, a CERCLA 108(b) program is unwarranted for the HRM industry. If you have any questions regarding NMA's comments, please contact me at tbhdqeford@nma.org or (202) 463-2629. Sierra Club v. EPA 18cv3472 NDCA 94 Tier 2 ED 002061 00087255-00094 Appendix A Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00095 Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule Preparedfor: National Mining Association NMA Prepared by: Debra W. Struhsacker Environmental Permitting & Government Relations Consultant Reno, Nevada and July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00096 Table of Contents Introduction......................................................................................................................................1 I. ABDECHT..... haPPeEFrCdroifNlnofsroeatajos-cetnucCtickcroitlvienoaMMeasPlnuliAoelnrAasdseisnnicsfMuasogic.drf.aaa.aet.ntnh.nm.id.aeoc.y.egn.IR.esmo.R..emf..p.eg...Sec.u.l..icno..cl.i.amt..ae...t.n.t...mi.i..c.oo....e..nen...s...nss.......Sd....f....t.ao.....u...rt......d.i....o.t...y...h.n........eF.s.........i...C...n...........dE...........i..R....n..........g.C..........s.....L..........o...A......n.................t.......h......1.....e.....0.........F.8..........(.e.....b....d.......)....e.........Rr..........a.....u.....l......l.....R.e.........m....e..........g....a......u.....k......l.....ia......n....t.......i.g.....o...........n..............s................f........o............r............................................................324554 II. Overview of State Regulatory Programs..............................................................................7 IIIABDEFCG. ....... SIAFACCMdtlraloaoaaiitllcrhzeosihfiokordoPinaa.gra.rda..na.o.....o.ni...f...a...i......l.......e..............s................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................3264541159626922 HIJKLMNO........MNOWWMNUeoervtiaywnenaasogtnhhdmaMoeia.nnn.is..ena...go...xg....tt....ioa.....c.....n......o...............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................11.1. 7799802127925604 Exhibit 1 Exhibit 2 List of Exhibits CSeErRviCceL'sAR1e0g8u(lba)tiRonesspfoonrsHe aCradtreogcokryMEiqnuinivgalents in the BLM's and Forest RTheqeuEirveomluetniotns foofrFHedaerrdarloackndENxpevloardaatioSntaatendReMclianminagtiPornoBjeocntsding Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00097 AAC ADEC ADEQ ADNR AKWQS AMLRA AP APP A .R .S . BADCT BLM BMP CCR CDPHE CEQA CERCLA CRB CWA DMO DMR DOGAMI DRMS EAW EMNRD EPA FA F .A .C . FDEP FLMA HLDE IDAPA IDEQ ID L IDW R IFM IW MP LCRS LQD MAR MCA MCL MCL MEPA M IDEQ MMRA List of Acronyms Alaska Administrative Code Alaska Departm ent of Environmental Conservation Alaska Departm ent of Natural Resources Arizona Departm ent of Environmental Quality Alaska W ater Quality Standard Arizona M ined Land Reclamation Act Acid Generating Potential Aquifer Protection Perm it (Arizona) Arizona Revised Statutes Best Available Dem onstrated Control Technology U.S. B ureau of Land M anagem ent Best M anagem ent Procedures or Practices Colorado Code Regulations Colorado D epartm ent of Public Idealth and Environm ent California Environmental Quality Act Comprehensive Environmental Response Compensation and Liability Act Clean W ater Act Colorado Reclamation Board Designated M ining Operation (Colorado) Division of M ine Reclam ation (California) D epartm ent of Geology and M ineral Industries (Oregon) Division of Reclam ation, M ining, and Safety (Colorado) Environmental Assessm ent W orksheet (M innesota) Energy, M inerals, and Natural Resources Departm ent (New M exico) U.S. Environm ental Protection Agency Financial Assurance Florida Administrative Code Florida Departm ent of Environmental Protection Federal Land M anagement Agency Heap Leach Draindown Estim ator (Nevada) Idaho Administrative Procedures Act Idaho Departm ent of Environmental Quality Idaho Department of Lands Idaho Department of W ater Resources Interim Fluid M anagem ent (Nevada) Integrated W aste M anagem ent Perm it (Alaska) Leak Collection and Recovery System Land Quality Division (W yoming) M ontana Administrative Rule M ontana Code Annotated M aximum Contaminant Level M ichigan Compiled Laws M innesota Environmental Policy Act M ichigan Departm ent of Environmental Quality M innesota M ineland Reclamation Act Sierra Club v. EPA 18cv3472 NDCA 11 Tier 2 ED 002061 00087255-00098 MMMRA MNDNR MOU MMD MPCA MTDEQ NAC NDEP NDWR NMA NMAC NMED NMMA NMSA NMWQCA NP NPDES N A S /N A S NREPA OAR ODEQ OOGM PCMS PCWQCA PFCE PFS PPOTMC QAPP RCE RCRA ROW RWQCB SEPA SMARA SMCRA SMGB SRCE SRK TSF UAC UDEQ UDOGM UDWR UMLRA List of Acronyms M ontana M etal M ine Reclamation Act M innesota Departm ent of Natural Resources M emorandum of Understanding M ining and M inerals Division (New M exico) M innesota Pollution Control Agency M ontana Departm ent of Environmental Quality Nevada Administrative Code Nevada Division of Environmental Protection Nevada Division of W ater Resources National M ining Association New M exico Administrative Code New M exico Environment Department N ew M exico M ining Act of 1994 N ew M exico Statutes Annotated N ew M exico W ater Quality Control Act Neutralization Potential National Pollutant Discharge Elim ination System National Research Council/National Academy of Science Natural Resources and Environmental Protection Act (M ichigan) Oregon Administrative Rule Oregon D epartm ent of Environmental Quality Office of Oil, Gas, and M inerals (M ichigan) Process Com ponent M onitoring System Porter Cologne W ater Quality Control Act (California) Process Fluid Cost Estimator (Nevada) Process Fluid Stabilization (Nevada) Point of Com pliance Perm it to M ine (M innesota) Quality Assurance Project Plan (Alaska) Reclam ation Cost Estim ate (Nevada) Resource Conservation and Recovery Act Revised Code of W ashington Regional W ater Quality Control Board (California) State Environm ental Policy A ct (W ashington) Surface M ining and Reclamation Act (California) Surface M ining Control and Reclam ation Act of 1977 State M ining and Geology Board (California) Standardized Reclamation Cost Estim ator (Nevada) SRK Consulting Tailings Storage Facility Utah Administrative Code Utah Departm ent of Environm ental Quality Utah Division of Oil, Gas, and M ining Utah Division of W ater Resources Utah M ined Land Reclamation Act Ill Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00099 WAR WDNR WDOE WDR WEQA WMMMA WPCF WYDEQ List of Acronyms W yom ing Administrative Rule W ashington Departm ent of Naturai Resources W ashington Departm ent of Ecology W aste Discharge Requirem ent (California) W yom ing Environm ental Quality Act W ashington M etals M ining and M illing Act W ater Pollution Control Facility (Oregon) W yom ing D epartm ent of Environm entai Quality Sierra Club v. EPA 18cv3472 NDCA IV Tier 2 ED 002061 00087255-00100 INTRODUCTION The National M ining Association ("NM A") retained Debra W. Struhsacker, Environm ental Perm itting and Governm ent Relations Consultant, and SRK Consulting to prepare this report on the environm ental protection and financial assurance regulations for hardrock m ining in 15 m ining states. The states included in this report are: Alaska, Arizona, California, Colorado, Florida, Idaho, M ichigan, M innesota, M ontana, Nevada, N ew M exico, Oregon, Utah, W ashington, and W yom ing. N M A is subm itting this report to the U.S. Environm ental Protection Agency ("EPA") as part of N M A 's response to EPA 's January 2017 Proposed Rule entitled Financial Responsibility Requirem ents under CERCLA 108(b) for Classes of Facilities in the H ardrock M in in g Industry ("P roposed R u le") 1234. This report focuses on how the environmental protection regulations in the above-listed states w ork in tandem with their financial assurance requirements to minimize the degree and duration of risks associated with potential releases of hazardous substances from hardrock mines. The inform ation presented in this report provides substantial evidence that the environmental protection and FA requirem ents in these states are "consistent with the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substanc Liability es" Ac t p o u f rsuan 1980 t to as am the end e Com d, 42 prehens U .S .C . ive 960 1Eentvsier qo .n m( "eCnEt aRl C R L espon A") se 10 Compe 8(b)(1). nsa tio n and The state profiles presented in Section III of this report provide overwhelm ing evidence that there is no justification for E PA 's Proposed Rule, w hich would im pose an additional and unnecessary layer of financial responsibility on the hardrock m ining industry. As clearly documented in this report, the states' existing environmental protection and FA requirements fully address the Congressional mandate in CERCLA 108(b)(1) to evaluate the need for an EPA financial responsibility program for classes of facilities that pose the "highest level of risk of injury." As explained in the National M ining A ssociation's comments, EPA has incorrectly identified the hardrock mining industry as having risks that fall under Congress' CERCLA 108(b)(1) directive. 1Federal Register Vol. 82, No. 7 ("FR") pp. 3388 - 3512. 2http s://w w w .n a p .edu/catalog/968 2 /h ard ro ck -m in in g-on-federal-lands 3 The B ureau of Land M anagem ent ("BLM ") and the U.S. Forest Service ("Forest Service") 4 E PA 's analysis includes the tables in A ppendix IV in E PA 's N ovem ber 2016 "Com prehensive 1 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00101 FEI.DERALTRHEEGNUALTAITOITONHANELSCFAEOCRRACDHLEAAMRYD1R0O8OF(BCS)KCRIMUELINNECIMENSAGKSATINNUDGDYIMFPINLIDCIANTGISOONNS FTOHRE Responding to a Congressional request, the National Research Council's National Academy of Sciences ("N A S ") published a study in 1999 entitled "H ardrock M ining on F ederal L an d s2" ("NAS Study") that evaluated "the adequacy of the regulatory fram ework for hardrock mining on federal lands." In this study, the NAS: Identified the federal and state statutes and regulations applicable to environmental protection of federal lands in connection with m ining activities; Considered the adequacy of statutes and regulations to prevent undue and unnecessary degradation o f the federal lands; and M ade recom m endations for the coordination of federal and state regulations to ensure environmental protection, increase efficiency, avoid duplication and delay, and identify the m ost cost-effective m anner for implementation. The findings of this N A S Study are relevant to E PA 's January 2017 Proposed Rule for several reasons. First, the NAS Study found that the com bined state and federal regulatory fram ework for m ining effectively protects the environment. Secondly, this 1999 study identified several regulatory gaps that the Federal Land M anagem ent Agencies ("FLM A s")3 subsequently filled, including gaps pertaining to closure and long-term m anagem ent that correspond to several of the CERCLA 108(b) response criteria. Exhibit 1 lists the provisions in the FLM A s' surface m anagem ent regulations governing hardrock mining that address the thirteen CERCLA 108(b) response categories. The FLM A s' actions to fill the gaps identified in the NAS Study are im portant in answering the key question of w hether EPA should have a future role pursuant to CERCLA 108(b) in m anaging an FA program for the hardrock m ining industry. It is clear from the FLM A s' expansion of their FA program s to fill the identified gaps that the FLM As already have demonstrated their ability to modify their requirem ents as may be appropriate to address any identified gaps or inadequacy in their rules. The FLM A s' gap-filling history clearly dem onstrates there is no need for EPA to insert itself and impose a new, duplicative FA program under CERCLA 108(b). In the event the need for future refinem ents to the FLM A s' FA program s becom es evident, the FLM A can use their existing authorities to make these refinements. T he follow ing sections describe the specific N A S Study findings germ ane to the P roposed R ule.23 2http s://w w w .n ap .edu/catalog/9682/hardrock-m inin g -on-federal-lands 3 The B ureau of Land M anagem ent ("BLM ") and the U.S. Forest Service ("Forest Service") 2 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00102 A. Effectiveness of the Regulations The key finding of the NAS Study was that the federal and state laws and regulations for hardrock m ining work together to provide comprehensive environmental protection: "The overall structure of the federal and state laws and regulations that provide m ining-related environmental protection is com plicated but generally effective. The structure reflects regulatory responses to geographical differences in mineral distribution am ong the state, as well as the diversity of site-specific environmental conditions...B LM and Forest Service should continue to base their permitting decisions on the site-specific evaluation process provided by NEPA. The two land m anagem ent agencies should continue to use comprehensive performance-based standards rather than using rigid, technically prescriptive standards. The agencies should regularly update technical and policy guidance documents to clarify how statutes and regulations should be interpreted and enforced." (NAS Study at 5.) Applicability to the Proposed Rule These findings are directly relevant to the Proposed Rule for two reasons. First, although the existing state and federal regulatory regim es may be complex (m eaning there are m ultiple state and federal regulations and regulatory agencies governing environmental protection and FA requirem ents at hardrock mines) they are nonetheless effective and comprehensive. This complexity does not lend itself to a simple survey of requirem ents and is not adequately reflected in E PA 's analysis for the CERCLA 108(b) rulem aking of the status of current regulatory requirem ents4. U nderstanding the com plexity and the interdependent connections betw een the various regulatory program s is essential in understanding the scope of the existing regulatory and FA fram ework for hardrock mines. Secondly, the NAS Study explicitly states that regulatory requirem ents for m ines m ust be based on site-specific conditions and specifically discourages the uniform m ethods EPA has used in the Proposed Rule. EPA 's Proposed Rule takes a one-size-fits-all approach that uses "rigid and technically prescriptive" factors in the response category formulas because the agency determined a site-specific rule would be too hard to implement. In m arked contrast, the States' and the FLM A s' environm ental protection regulations and FA requirem ents are based on sitespecific perform ance criteria. As discussed below, both the States and FLM As have taken the NAS Study site-specific recom m endations to heart by using site-specific criteria. They have also continued to refine their regulatory and FA program s in response to newly identified circum stances since the N A S Study w as published in 1999. F o r exam ple, the F L M A currently*3 4 E PA 's analysis includes the tables in A ppendix IV in E PA 's N ovem ber 2016 "Com prehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (EPA-HQ-SFUND-2015-0781-0144) and the state summaries in the rulem aking docket generally located at (EPA-HQ-SFUND-20150781-XXXX). Neither the tables nor the summaries provide complete or accurate descriptions of the States' regulatory and FA programs. 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00103 hold approxim ately $3.5 billion in FA. Some of this FA corresponds to the gap-filling m easures that BLM and the Forest Service developed in response to the N A S Study. B. Financial Assurance Recommendations The NAS Study found that FA was lacking for small projects affecting five acres or less and recom m ended that: "Financial assurance should be required for reclam ation of disturbances to the environm ent caused by all m ining activities beyond casual use, even if the disturbance is less than five acres." (N A S Study at 8). Applicability to the Proposed Rule In response to this finding, the FLM A now require FA for any disturbance. This is just one example of the continuous im provem ent of the FLM A s' FA programs, demonstrating the ability of the FLM A to modify their FA program s to fill w hat was identified as a gap in 1999. The FLM A 's response underscores the im portance of keeping the FA program with the two land m anagem ent agencies rather than duplicating it with an EPA-managed FA program under CERCLA 108(b). Similarly, if any gaps are identified in the future, the States and FLM A s are capable of filling such gaps as m ay be appropriate. Additional CERCLA 108(b) regulations are not warranted. C. Project Modifications The NAS Study exam ined the FLM A s' existing authorities to require m odifications to plans of operation and concluded: "BLM and the Forest Service should revise their regulations to provide more effective criteria for modification to plans of operations, where necessary, to protect the federal lands." (NAS Study at 8). Applicability to the Proposed Rule This is another exam ple o f how B LM and the Forest Service m odified their regulations to fill this NAS-identified gap. Today, the FLM A have ample regulatory authority to require mine operators to submit modified plans of operation to address any identified issues stemming from m onitoring data results, a project upset, or any other circumstance, and to provide FA to cover the required changes. Thus, the FLM A s' FA requirem ents are not static at any given site, are always subject to agency review, and m ust be updated to keep pace with inflation even if there are no project changes5.4 5 See, for example, 36 CFR 228.13 and Forest Service M anual 2817.24 and 43 CFR 3809.552 4 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00104 D. Closure Plans The NAS Study identified a gap pertaining to the FLM A s' authorities to deal with m ines in tem porary closure and to require interim m anagem ent m easures applicable to tem porary closure: "BLM and the Forest Service should adopt consistent regulations that: a) define the conditions under which m ines will be considered to be tem porarily closed; b) require that interim m anagem ent plans be submitted for such periods; and c) define the conditions under w hich tem porary closure becom es perm anent and all reclam ation and closure requirem ents m ust be com pleted (NAS Study at 8). Applicability to the Proposed Rule Both FLM As added specific requirem ents to their regulations pertaining to tem porary closure, interim m anagem ent plans, final closure, and corresponding FA in response to this N AS Study recommendation. The addition of these requirem ents since 1999 provides "cradle-to-grave" FA for projects on federal lands that specifically address the following CERCLA 108(b) response cost categories: interim operations and m anagem ent ("O& M "); long-term O& M including long term monitoring; and w ater treatm ent for sites where these m easures are necessary to protect the environment and provide adequate FA. E. Post-Closure M anagem ent The NAS Study also identified a gap dealing w ith the FLM A s' post-closure m anagem ent authorities and recommended: "BLM and the Forest Service should plan for and assure the long-term post closure m anagem ent o f m ine sites on federal lands." (NAS Study at 9). Applicability to the Proposed Rule As discussed above, BLM and the Forest Service m odified their regulations to fill gaps identified in the 1999 NAS Study pertaining to long-term, post-closure management. Today, the FLM A can require a trust fund or other source of long-term funds to m onitor and m anage a site following final closure. BLM can require an operator to provide a trust fund pursuant to 43 CFR 3809.552(c): "W hen BLM identifies a need for it, you m ust establish a trust fund or other funding mechanism available to BLM to ensure the continuation of long-term treatm ent to achieve water quality standards and for other long term, post-m ining maintenance requirements. The funding must be adequate to provide for construction, long-term operation, maintenance, or replacem ent of any treatm ent facilities and infrastructure, for as long as the treatm ent and facilities are needed after m ine closure. BLM may identify the need for a trust fund or other funding m echanism during plan review or later."5 Sierra Club v. EPA 18cv3472 NDCA 5 Tier 2 ED 002061 Similarly, the Forest Service m odified M anual 6500 in 2016 to add the authority to require an operator to provide a long-term trust: "Long-term trusts m ust be established...as a financial assurance for activities that are required to prevent post-reclamation damage. Post-reclamation activities may include w ater treatment, dam maintenance, and care and m aintenance of infrastructure." The addition of long-term trust FA requirem ents is another example of how the FLM As eliminated an identified gap, demonstrating why EPA does not need to develop a FA program pursuant to CERCLA 108(b). The FLM As have clear authority and a proven track record in m odifying and expanding their regulatory and FA programs to respond as appropriate to identified gaps. There is no need for EPA to insert itself and develop FA under CERCLA 108(b). In fact doing so would create an unnecessary and duplicative regulatory and FA program. Sierra Club v. EPA 18cv3472 NDCA 6 Tier 2 ED 002061 00087255-00106 II. O V E R V IE W OF STATE REGULATORY PROGRAMS The NAS Study finding that " [t]he overall structure of the federal and state laws and regulations that provide m ining-related environmental protection is com plicated but generally effective" (NAS Study at 5) is applicable to the States' regulatory fram ework as well as to the federal regulations. This com plexity m ust be thoroughly understood in order to evaluate the States' comprehensive and effective environmental regulatory and FA programs. The states' environmental protection regulations and the corresponding FA requirem ents are typically lodged in different parts of each states' laws and regulations. In m ost states, the laws and regulations applicable to hardrock m ining are adm inistered by m ore than one state agency. EPA 's analysis of the states' environmental protection regulations and FA authorities does not adequately capture this complexity. The regulatory and FA fram ew ork governing tailings storage facilities ("TSF") are instructive in understanding the complex but comprehensive nature of many states' regulatory and FA requirements for hardrock m ining because different agencies and regulations govern different parts of the TSF in a num ber of states. For example, in some states the regulatory authority with jurisdiction over water resources administers regulations pertaining to dam design, construction, and operation. These dam safety regulations impose rigorous design standards to prom ote public safety by reducing the risk of dam failure and the potential for the release of tailings and any water or hazardous substances that may be stored in the impoundment. Thus, in the context of the Proposed Rule, the dam safety regulations are very im portant because they m inim ize the potential for a tailings spill and a release of hazardous substances from a TSF. States typically have environm ental regulations based on environm ental protection statutes, which establish m inimum design and containm ent standards for the tailings im poundm ent and any hazardous substances that may be present in the tailings impoundment. These regulations protect groundwater and surface water during operation, reclamation, closure, and post-closure of a TSF. A state's departm ent of environmental protection or environmental quality administers the groundwater protection regulations applicable to a TSF. Finally, a third set of regulations typically governs the reclamation of both the tailings em bankm ent and the impoundment. In some states like Nevada, the regulatory agency charged with environmental protection also has jurisdiction over the reclam ation regulations. In other states, like Arizona or Utah, a third and separate regulatory body w ith jurisdiction over m ining is in charge of the reclam ation regulations. One or m ore agencies adm inister the FA requirements for a TSF. Although the regulations governing environmental protection, reclamation, closure, and FA for a TSF are typically a shared responsibility among two or m ore state agencies, these regulations work as a package. The coordination of these regulatory program s effectively m inim izes the potential risk of a release of hazardous substances from a TSF. By focusing solely on FA requirem ents under state regulations, EPA 's summaries of the states' FA program s do not adequately describe this complexity or fully comprehend how the states' regulatory structures and environmental protection requirem ents are coordinated with its FA program s and the relationship of the environmental protection requirem ents to the am ount of necessary FA. 7 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00107 Because the regulations governing dam safety are a key com ponent of m inimizing the risk of a release of hazardous substances from a TSF, they m ust be considered in evaluating the degree and duration of risk that w ould drive the need for the Proposed Rule. The NAS Study em phasizes that m ining regulations m ust be site specific: "H ardrock mining operations in the United States are regulated by a complex set of federal and state laws and regulations intended to protect the environm ent. ..T he scope and degree o f regulation depends on the type and size of the m ining operation; the kinds of land, water, and biological resources affected; the state in which the operation is located; the organization of the state and local perm itting agencies' and the ways federal and state agencies im plem ent relevant statutes and regulations." (NAS Study at 3.) The Proposed Rule, which is based on a one-size-fits-all approach, conflicts with this finding and recom m endation of the NAS Study. The need for long-term w ater treatm ent illustrates this point. The costs for water treatm ent at a num ber of the m ines in E PA 's in Exhibits B-6, through B-8 of EPA 's Regulatory Im pact Analysis (Docket No. EPA-HQ-SFUND-0781) should be zero and not the values indicated. EPA has incorrectly assum ed that all m ines will require post-closure w ater treatm ent facilities and thus should have FA for long-term operation and m aintenance of these facilities. EPA has apparently overlooked the process water discharge restrictions contained in the Clean W ater A ct ("CW A") at 40 CFR Part 440 Ore M ining and D ressing Point Source Category Effluent Lim itations Guidelines and N ew Source Perform ance Standards (FR Vol 47, No. 233, pp. 54598 - 5462) and more importantly, that any surface w ater discharges so authorized are regulated under site specific CW A permits. M ines in net annual evaporation settings therefore do not typically have water treatm ent facilities - even during operation - and rarely require them during closure and post-closure. In contrast, mines in net annual precipitation settings may need long-term w ater treatm ent facilities that need to be considered in the FA requirem ents. For those facilities at which a discharge is authorized, the operator m ust secure the appropriate discharge perm it from either the EPA or the state regulatory agency with CW A primacy and the discharge must m eet prescribed effluent limitations. Thus the absence of w ater treatm ent facilities at mines in net evaporation locations is not a deficiency; rather it's a regulatory requirem ent. The calculated FA requirem ent described in the Proposed Rule thus m ischaracterizes the need for and purported absence of water treatm ent facilities at many mines." It also appears that EPA may have confused long-term water m anagem ent, which may be required at many sites, with long-term w ater treatm ent that requires im proving w ater quality by operating a w ater treatm ent plant. M any sites require some type of post-closure m onitoring and w ater m anagem ent, which is reflected in the FA for these sites. For example, evaporation cells are commonly used as passive long-term w ater m anagem ent facilities to capture and contain the small volum e of fluids that drain from closed heap leach facilities in Nevada. N evada FA calculations include funds to m onitor and m aintain these cells. These sites do not require operation of a w ater treatm ent plant. Despite this fact, Exhibits B-6 though B-8 in E PA 's Sierra Club v. EPA 18cv3472 NDCA 8 Tier 2 ED 002061 00087255-00108 Regulatory Im pact Analysis incorrectly show sizeable water treatm ent costs for many N evada m ines. Other site-specific characteristics also dictate whether long-term w ater m anagem ent facilities are necessary. For example, open-pit m ines that becom e hydrologic sinks when m ining is completed are not a source of hazardous substances requiring water treatm ent because they provide hydrologic containm ent and do not release hazardous substances to the environment. The onesize-fits-all analysis in EPA 's Regulatory Im pact Analysis is a simplistic approach that fails to consider project- and site-specific conditions that are the key factors in determining mine closure and long-term m aintenance and m onitoring requirements upon which FA should be based. In general, EPA 's analysis of the sufficiency of the states' FA program s has examined the states' FA regulations in a vacuum that fails to consider the interaction betw een each state's environmental protection and FA laws and regulations. Consequently, EPA has overlooked three essential facts: First, the states' environmental protection laws and regulations are designed to prevent environmental degradation due to a release of a hazardous substance and thereby substantially m inimize the degree and duration of risk of releases of hazardous substances; Secondly, the environmental m onitoring systems and reporting requirem ents in state operating permits act as real-time, early-warning systems that provide state regulators and operators with indicators of a possible release of a hazardous substance. If project m onitoring data indicate there may be a release, state regulations compel the operator to investigate the potential release and rem ediate a confirm ed release. The timely corrective dreesgproenes e a n dactthioends utrraigtigoenreodf by m onitoring risk associated data w ith showing a that release. release minimize both In marked contrast to the pre regulation sites where a release may have gone undetected for years, the monitoring systems at today's highly regulated m ining operations provide meaningful information about the perform ance of the site's environm ental controls and reveal if there m ay be a problem that dmuargantiiotund"e) of are nee the lim ds to relea ited a be se t m ("inthvee sdtieggarteeed")s traig and htaw the ay. Thus length of if th tim e odern mines. A dditionally, the states all ere of hav is th e e a rerleelaesaese,("tthhee the authority to revoke or suspend operators' perm its for failure to respond properly to a release. T hird, the costs associated w ith operating and m aintaining the environm ental controls6*9 specified in mine operating perm its are included in the FA. The FA requirem ents extend far beyond physical reclam ation; they include costs to operate and m aintain a project's environmental controls in order to rem ain in compliance with the environmental protection and perform ance standards in the m ine's operating permits. 6 Exam ples of environmental controls includes im perm eable liners, leak detection and recovery systems, surface water and groundwater monitoring, reclam ation covers, surface water m anagem ent structures, and dam safety and m aintenance requirements. 9 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00109 In evaluating the adequacy of the states' FA programs, EPA m ust fully consider how the environmental protection regulations work in concert with the FA requirem ents to define the environm ental controls and m onitoring systems that m ust be included in a site's FA calculations. EPA 's analysis has missed this fundamental point. Section III presents state profiles of the regulatory and FA requirem ents for hardrock m ining and m ineral processing facilities for the following states: A lask a Section III. A. A rizona Section III. B. California Section III. C. Colorado Section III. D. Florida Section III. E. Idaho Section III. F. M ichigan Section III. G. M innesota Section III. H. M ontana Section III. I. Nevada Section III. J. N ew M exico Section III. K. Oregon Section III. L. U tah Section III. M. W ashington Section III. N. W yom ing Section III. O. These profiles discuss how the different parts of the states' environmental protection laws and regulations influence the states' FA programs. The state profiles consist of narratives describing the environmental protection requirements that m inimize the risk of releases of hazardous substances and the integration of each state's environmental protection regulations with its FA programs. Tables listing the laws and/or regulations that establish the environmental protection and FA requirem ents for the thirteen response categories in the CERCLA 108(b) Proposed Rule follow the narratives for each state. The state profiles in Section III provide overwhelm ing evidence that the com bination of the states' existing environmental protection requirements and their FA requirements fully address the m andate in CERCLA 108(b)(1) for classes of facilities to: " ...establish and m aintain evidence of financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatm ent, storage, or disposal of hazardous substances." The evidence presented in this report clearly demonstrates that the states' existing environmental protection regulatory requirem ents effectively minimize the "degree and duration of risk." Therefore there is no justification for EPA to require additional FA to satisfy the directive in CERCLA 108(b)(1). Sierra Club v. EPA 18cv3472 NDCA 10 Tier 2 ED 002061 00087255-00110 EPA 's Proposed Rule and supporting docum entation in the docket for this rulem aking fail to consider the integration of the states' environmental protection regulations with their FA requirem ents and consequently do not accurately describe the breadth and adequacy of the states' existing FA programs. As discussed in Section III, EPA 's state summaries and the tables in Appendix IV, Table C in the N ovem ber 2016 "Com prehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances" (Docket No. EPA -H Q -SFU N D -2015-0781 -0144) are inaccurate and incomplete. Therefore, EPA m ust not rely on these documents in assessing the need for the Proposed Rule. Although not discussed in the state profiles, it is im portant to consider the FLM A 's FA programs, which apply on BLM - and Forest Service-admini stered lands in western states with locatable minerals. Because many m ines in western states operate on federal lands, the FLM A s' environmental protection and FA requirem ents play an im portant role in determ ining FA requirements. For mining and mineral processing operations on federal land, the FLM A 's environmental protection and FA requirements also m inim ize the "degree and duration of risk." In m ost western states, the FLM A s' regulatory and FA requirem ents are coordinated with State regulators through M em oranda o f U nderstanding ("M O U s"). The Forest Service has statew ide and/or project-specific M OUs in Alaska, California, Colorado, Idaho, M ontana, Nevada, New M exico, Oregon, South Dakota, and W ashington. The Forest Service also has M OUs that apply to hardrock leasable m inerals on acquired lands. Similarly, BLM has M OUs w ith the following states: Alaska, California, Colorado, N ew M exico, Nevada, Oregon, Utah, W ashington, and W yoming. Sierra Club v. EPA 18cv3472 NDCA 11 Tier 2 ED 002061 00087255-00111 III. STATE PROFILES A. Alaska As shown in Table A-2 below, Alaska has the statutory and regulatory authorities to oversee mining, reclam ation, closure, and post-closure on state, federal, municipal, and private land and water subject to mining operations. The State of Alaska Departments of Natural Resources (ADNR) and Environmental Conservation (ADEC) im plem ent statutes and regulations that regulated all aspects of mining. FA requirem ents can apply to operations from material sites, small placer mines to large underground and open pit hardrock operations. FA, as required by Alaska Statutes (AS) Section 27.19.040, enables ADNR to establish the am ount of the financial assurance to exceed $750 reflect the reasonable and probable for each acre of mined area, except costs of reclamation. that the $750 an acre Th lim e FA itatio a n dmooeusnnt omt aayppn olyt to the FA am ount required for a lode mine (in place m ineralized rock or other m etallic minerals in highly consolidated m aterial). A m iner m ay satisfy the requirem ent for FA by providing, in a form acceptable to and approved by A D N R in any of the following: 1) a surety bond; 2) a letter of credit; 3) a certificate of deposit; 4) a corporate guarantee that meets the financial tests set in regulation by the com m issioner; 5) paym ents and deposits into the trust fund established in AS 37.14.800; or 6) any other form of financial assurance that meets the financial test or other conditions set in regulation. ADNR Alaska Dam Safety regulations require financial assurance be established for the costs of dam closure and post-closure activities. Specifically, financial assurance m ust be adequate to: Pay for costs of safely breaching the dam at the end of the dam 's service life and restoring the stream channel and reservoir land to natural conditions, or for the costs of perform ing reclam ation and post-closure m onitoring and m aintenance (11 AAC 9 3 .1 7 1 (f)(2 )(C )). Pay for the cost o f post-closure m onitoring, operation, m aintenance and inspection (11 AAC 93.172(a)(6)(C)) if the final configuration of a mine tailings dam constitutes a dam under AS 46.17.900 after m ine closure (11 AAC 93.172(a)(5)(D )) and rem ains subject to the Alaska dam safety regulations The Dam Safety regulations require that applicants obtain approval of the m ethod of demonstrating or providing financial assurance after submitting the preliminary design package and before subm itting the final construction package (11 AAC 93.171(d)). A fter A D N R reviews and approves the type of financial assurance, then the final construction package m ust include a certified cost estim ate and posting o f approved financial assurance (11 AAC 93.171(f)(4)(F)). AS 37.14.800 established a m ine reclam ation trust fund to address agency and public concerns with long-term post-closure reclam ation liabilities associated with some mines. The mine reclam ation trust fund is established as a separate trust fund of the state. The principal and earnings o f the fund are to be held by the state for the purpose of protecting the public interest in reclaim ing m ine sites in the state. The fund is com posed of the m ine reclam ation trust fund 12 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00112 incom e account and the mine reclam ation trust fund operating account. The mine reclam ation trust fund incom e account consists of paym ents and deposits m ade by m iners to satisfy the miners' reclam ation bonding or FA obligation under AS 27.19.040 or AS 27.21.160 and earnings on the incom e account. The mine reclam ation trust fund operating account consists of appropriations by the legislature of the annual balance of the m ine reclam ation trust fund incom e account and any earnings on those appropriations while in the operating account. Before payments are accepted into the mine reclamation trust fund income account for a particular m ining operation, the ADNR and the m iner may execute a memorandum of understanding that outlines a schedule of expected paym ents into the trust fund and the relationship of the paym ents and accumulated earnings in the trust fund to reclam ation obligations of the m iner under AS 27.19.040 or AS 27.21.160. The m em orandum of understanding may also address expected use of the fund under AS 37.14.820. If the m em orandum of understanding addresses investm ent of the fund with respect to payments m ade by the miner, the com m issioner of the D epartm ent of Revenue m ust also sign the memorandum. ADEC, under the authority o f A laska Statute (AS) 46.03.100(f) and 18 A laska A dm inistrative Code (AAC) 60.265, requires proof of financial responsibility to cover the cost of closing a perm itted facility, if m onitoring is required, the cost of post-closure m onitoring if the departm ent determines proof of FA is necessary to protect the public health, safety, or welfare, or the environm ent. Proof o f FA m ay be dem onstrated by: 1) self insurance; 2) insurance, surety; or 3) other guarantee approved by the department to assure compliance with applicable standards and post closure m onitoring requirements. A laska's large-scale exploration and operating hardrock m ines have the FA listed in Table A-1 to cover reclam ation/closure and post-closure obligations. ADEC has the authority under AS 46.03.100 to issue an Integrated W aste M anagem ent Perm it (IW M P) that applies to large industrial operations, including mines, for m anagem ent and disposal authorization covering m ultiple related or unrelated waste m anagem ent or disposal activities to be conducted at a facility, including generation, treatment, storage, and disposal of solid or liquid waste. An IW M P may include the prior authorizations for individual and general perm its and a water-quality-related certification required by 33 U.S.C. 1341 for the discharge of dredged or fill m aterials or of pollutants to surface w aters from point sources. Any m ine related facility that has m aterial (e.g., waste rock, tailings, etc.) that has the potential to adversely affect surface or ground w ater quality can be regulated under the IW M P. The IW M P may require the submission of plans for review and written approval before construction, extension, installation, m odification, operation, or closure of the facility. An ADEC typical perm it coverage for large hardrock gold operations is provided as an exam ple of the comprehensive program in Alaska. Facilities and names are omitted, but similar stipulations apply to all lead, zinc, silver, and gold operations in A laska ADEC Typical Coverage Ore m ined is either processed in the mill or heap leached. A t the mill, higher grade ore is crushed, followed by gravity separation, cyanide leaching with a carbon in-pulp circuit, and gold dore is produced on site. As required to m eet the conditions o f A D E C 's permit, tailings m ay be subject a cyanide detoxification prior to disposal in the Tailings Storage Facility/ Dry Stack 13 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00113 Tailings Facility (TSF). A t the heap leach pad, low er grade run-of-m ine ore is stacked on an impermeable liner, followed by cyanide leaching with a carbon-in-column circuit that involves rinsing ore with a barren cyanide solution, capturing the pregnant solution containing leached gold, and rem oving the gold from solution. A fter heap leach ore is processed, it rem ains in place for perm anent disposal. _In_d__iv_id_u__al_F__A_A__m_o_u_n_t_s fPorroLjTeacartbgsleeinHAAa-llradsrkoac_k_M__i_n_e_a_n_d__E_x_p_lo_r_a_ti_o_n Project Status D p eiH ni.icr) Greens Creek M ine Operating $72,831,187 Surety B onds (2 U SFS; State 1) Red Dog Mine Operating $558,350,000 Letters of Credit (State); Fort Knox M ine Operating $96,645,691 Letter of Credit (State) Kensington M ine Operating $28,727,011 Surety Bonds (USFS) Pogo M ine Operating $71,907,739 Letter of Credit (State) Nixon Fork Niblack Exploration Project True North Rock Creek ("Nanuuq") M ine Operating Approved temporary suspension of operations (Oct. 31,2018) Post-closure Post-closure TOTAL $6,033,000 $1,409,959 $620,336 $30,000 $836,570,923 Surety Bond (BLM) Surety Bond (State) Letter of Credit (State) Letter of Credit (State) A D EC 's typical perm its cover disposal of waste or m onitoring at the following sites: TSF The TSF consists of deposited tailings, decant pond, dam, seepage interception system, and the seepage m onitoring system. The TSF decant pond is located within the tailings deposition area upstream o f the TSF dam. It im pounds all tailings generated by the mill, as w ell as surface runoff and process water. Im poundm ent w ater is not discharged but is recycled to the mill for reuse in the gold ore beneficiation process. Seepage that passes beneath the TSF is captured by pumpback and interceptor systems. The pum p-back system includes a pum p-back sump together with a pumping and piping system designed to return the seepage to the TSF. M ost seepage passing beneath the dam feeds into a large lined sump from which the seepage is pumped back to the decant pond. Any seepage not captured directly by the pump-back system is captured by the interceptor system, which depresses the phreatic surface below the dam. It creates a hydraulic barrier preventing seepage from migrating down-gradient and assuring the TSF must operate as a zero discharge facility. H eap Leach Facility (heap leach pad) Low er grade run-of-m ine ore from the m ain pit is deposited onto the heap leach pad. D rip or sprinkler emitters apply a cyanide containing solution to the material placed on the heap. The 14 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00114 solution is collected and processed in carbon in-pulp columns next to the mill for gold recovery. Inert Solid W aste Landfills These facilities are interm ittent inert solid waste landfills located in waste rock piles, which depending on the geochemical characteristics may be exem pt from Solid W aste Regulations. Non- hazardous incidental solid w aste created from m ine operation is disposed in these cells. Surface W ater M onitoring Sites Surface w ater downgradient of the TSF dam is monitored. Groundw ater M onitoring Sites Groundwater monitoring wells associated with the heap leach pad include the heap underdrain system consisting of three collinear m onitoring w ells in the following locations: the base platform, the bench of the in-heap storage pond embankment, and the crest of the in-heap storage pond embankment, and an upgradient well, W ells downgradient of the TSF dam and several dew atering w ells around the m ain pit. Process W ater M onitoring Sites Process w ater m onitoring associated with the TSF includes the tailings waste slurry, TSF decant, TSF interceptor well system, and seepage pum p-back system. Process w ater monitoring associated with the heap leach pad includes the Process Component M onitoring System (PCM S) and Leachate Collection and Recovery System (LCRS). Permits also cover m onitoring requirements for the main pit and development rock (overburden and waste rock) for characterization of acid rock drainage, m onitoring of the heap leach facility solution, and hazardous chemical storage and containment, reclamation and closure activities of the TSF, inert solid waste landfills, and the heap leach facility, including disposal of wastewater at closure with ADEC approval. ADEC may set or modify perm it conditions based on monitoring results or changes in facility processes according to perm it amendment or m odification procedures. In addition to the stipulations in perm its, the perm ittee m ust adhere to the requirem ents o f 18 A A C 15 A dm inistrative Procedures, 18 A A C 60 Solid W aste M anagem ent Regulations, 18 A A C 70 A laska W ater Quality Standards (AKW QS), and 18 AA C 72.500 - 72.600 N on-D om estic W astewater Disposal. The permittee m ust also adhere to ADEC-approved plans authorized under the permit. W hen the terms of this perm it differ from the terms of the project documents adopted by reference in this section, the term s of this perm it override the term s contained in the project documents. Environmental m anagem ent documents m ust also be updated incorporating any changes necessary to be consistent with the term s of the permit. ADEC- approved plans adopted by reference into perm it m ay include, but are not lim ited to, the follow ing documents: 1) W aste M anagem ent Perm it Application; 2) W ater Resources M anagem ent Plan; 3) Plan of Operations; 4) Reclam ation and Closure Plan; 15 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00115 5) Solid W aste M anagem ent Plan; 6) W aste Rock M anagem ent Plan; 7) M onitoring Plan; 8) Heap Leach Pad Operations & M aintenance M anual; and, 9) TSF Operations & M aintenance M anual; ALASKA SPECIFIC CONDITIONS REGULATED BY ADEC WASTE DISPOSAL FACILITIES All W aste Disposal Facilities identified as having potential adversely affect the environm ental (e.g., human, health, air quality, surface and groundwater, etc.)- W aste disposal sites may include TSF, heap leach pad, inert solid waste landfills, and pit lakes provided that the conditions stipulated in the perm it are satisfied. L im itations A D EC set site specific "Upper Tolerance Limits" for monitoring wells and surface water samples. If any of the upper tolerance limits stipulated are exceeded, then corrective action as designated m ust be implemented. The permittee m ust control and treat onsite surface water, groundwater and seepage as necessary to prevent offsite w ater quality exceedances. Activities at the site which will cause a greater am ount of waste material to be treated and disposed of than initially considered are prohibited w ithout the prior approval by ADEC The following materials m ust not be disposed onsite, unless approved in writing by the ADEC: 1) Treated or untreated process w ater in quantities or concentrations exceeding cyanide and pH limitations stipulated in the permit; 2) Chemical containers (unless triple-rinsed) and discarded, unused chemicals; 3) Discarded, unused chemicals not associated with the beneficiation process; however, discarded, unused chemicals associated with the beneficiation process may be discarded into the TSF as long as they are in concentrations that would not violate the limits stipulated in the permit; a. D ry m ethods m ust be used for initial cleanup o f oil spills in the m aintenance shop. W hen wash w ater is generated at the vehicle m aintenance shop, it m ust be processed through an oil/w ater separator before discharge to the TSF. 4) Contam inated soils, spill boom, liners used for the containm ent of spilled materials, chemicals used in the cleanup of spills or other spill cleanup wastes other than chemicals used in the beneficiation process; 5) Uncom busted household waste; 6) Laboratory wastes other than wash waters, neutralized acids and neutralized bases, however disposal or recycling of refinery slag, fire assay crucibles and cupels through the grinding and leaching circuit is permitted; 16 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00116 7) Untreated sewage solids; 8) Asbestos waste; 9) A cute hazardous wastes, as defined by 18 AA C 60.990(157), including radioactive material, explosives, strong acids and untreated pathogenic waste, however, this prohibition does not preclude disposal of natural m inerals found in m ine rock or residual wastes included as byproducts of the beneficiation process due to recycling of refinery slag, fire assay crucibles and cupels; 10) Fuels, oil, transform ers, paint, or associated equipm ent and packing material, 11) Glycol and solvents; and 12) Batteries. tTohOe ppeerramteittaeeDmamustisospueerda te the TSF by Alaska in conform ance w ith the current Certificate D epartm ent o f N atural R esources (ADNR), ofApproval Division of M ining, Land and W ater, Dam Safety and Construction Unit. Fleap Leach Pad - The following conditions are representative of some of the project-specific perm it stipulations applied to heap leach pads by ADEC. 1) The m axim um tonnage o f m aterial that may be deposited on the heap leach pad is specified 2) The m axim um gallons per m inute of overall leach solution flow rate is stipulated. 3) Surface, groundwater, heap process water, and any other water originating from the heap leach pad m ust meet the following requirements. 4) If W AD cyanide concentration above 10 m g/L is detected in the heap's sumps, then all sump w ater m ust rem ain contained w ithin heap leach system, ADEC m ust be notified within one w orking day of discovery and the frequency and location of m onitoring in the underdrain system m ust be expanded as approved by ADEC. Limits as they apply to the underdrain m onitoring system as specified the permit. 5) If W AD cyanide concentration above 0.2 m g/L is detected in the underdrain system, the permittee must notify ADEC within one working day of discovery. The perm ittee m ust then dem onstrate to the A D EC 's satisfaction that all w ater is directed approved containm ent or appropriate process component. 6) A t closure all w ater draining from heap leach pad m ust com ply w ith the AKWQS. 7) Ponding or pooling o f process solution w ater on the heap leach pad is prohibited. If ponding or pooling of process solution is discovered on the heap leach pad, im m ediate action must be taken to protect wildlife from exposure to the solution. 8) The heap liner may not be punctured before heap closure and w ithout written Departm ent approval. At heap closure, the w ater quality from the heap m ust be evaluated based upon "rebound potential," an increase in cyanide concentration without further addition of cyanide, and may not be drained until projected rebounding concentrations meet AKWQS. 9) CT heertipfeicr amtei t toe e f Ampupsrtoovpael rtaoteOtpheerahteea p a Dl e aa cmh pa iss d u in ed conform by ADN an R, ce D with th ivision e o current f M ining , 17 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00117 Land and Water, Dam Safety and Construction Unit. 10) All w ork associated w ith the construction of the heap, heap liner, and appurtenances m ust comply with the approved plans, drawings and specifications, and for developing the construction completion report. Construction m ust be observed and inspected according to the project construction quality assurance/quality control plan by a qualified engineer according to 18 A A C 72.600 and 72.990(29). Inert Solid W aste Landfills - The following conditions may apply to inert solid waste landfills. D isposal of non-hazardous incidental w astes is allowed, including: 1) settled solids from sumps, ditches, and degritting basins; 2) ash and residue from a SmartAsh cyclonic barrel burner; 3) ash from combustion of scrap wood material; 4) iron (drill steel, balls, em pty cans, etc.); 5) empty plastic and glass containers; 6) inert, non-putrescible, domestic waste; 7) construction debris; 8) tires; 9) spill cleanup debris approved by ADEC; 10) non-tem e plated used oil filters that have been gravity hot-drained; and 11) such other material as would otherwise be disposed of in an inert solid waste landfill facility w ithout special handling. The permittee m ust comply with the provisions in the m ost recent ADEC- approved solid waste managem ent plan, conduct weekly visual inspections to ensure the active landfills are being operated in accordance with the m ost recent ADEC approved solid waste managem ent plan and close the inert solid waste landfill trenches within 60 days after waste is last deposited in that area, using a soil or rock m aterial at least tw o feet thick and graded to prevent w ater from ponding. The permittee m ust not place solid waste in w ater in the inert solid waste landfill facilities, and shall not allow solid waste to w ash or blow away from the facility. ADEC SITE CONSTRUCTION, M AINTENANCE, & OPERATION STIPULATIONS General Changes that may have a significant im pact on mine closure, reclamation, or w ater quality, information on engineering changes to the mill, new waste treatm ent processes, changes to solid waste disposal facilities, changes to the groundwater interception and m onitoring well system, and the addition of new waste streams that discharge to the TSF or pit m ust be submitted to ADEC and approval must be obtained prior to any such changes or discharges. The perm ittee m ust develop the site in accordance with ADEC-approved plans and amendments thereof, which are submitted by the applicant as required by this permit. Pollution prevention concepts shall be incorporated into operations plans for the project. 18 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00118 Any area of open water in the permitted disposal area m ust not becom e an attractive area for waterfowl or shorebirds. Secondary Containment Secondary containm ent of all hazardous substances, as defined at AS 46.03.826(5), m ust be impermeable to those stored hazardous substances. The perm ittee m ust provide and m aintain secondary containm ent for all process piping and chemical m ix tanks containing hazardous or toxic materials. Secondary containm ent is considered to be 110% of the largest tank within a containment area or the total volume of manifolded tanks. The permittee m ust design and install secondary containment structures in a m anner that ensures that solid waste and leachate will not escape from the structures. To prevent such discharges, facilities m ust be m aintained in good w orking condition at all tim es by the perm ittee. N otification The perm ittee shall notify the D epartm ent in w riting at least 15 days before the introduction o f a new chemical into the process or waste treatm ent streams. Safety D ata Sheets on new chemicals m ust be forwarded to ADEC at tim e of notification and m aintained onsite. Introduction of new chemicals into the process requires written Departm ent approval. U nder 18 AAC 72.600, the perm ittee shall subm it engineering plans to ADEC at least 60 days before construction or m odification of an applicable system, and receive Departm ent approval of any changes that will significantly modify the quality or quantity of a discharge, the operation of a waste treatm ent component, or the disposal facilities. The permittee m ust submit to ADEC within 90 days after completing construction of a significant m odification to an existing process component: 1) A s-built drawings o f the process com ponent(s) which show any changes o f those aspects that w ould affect perform ance o f that process com ponent as required in 18 AAC 72.600, 2) A summary of the quality control activities that were carried out during construction, and 3) The revised operating plans that reflect modifications made during construction. Fuel and Hazardous Substances The perm ittee shall design all process piping and chemical m ix tanks to allow for routine inspections for leaks. Process piping outside of the mill building m ust not be buried unless secondary containm ent is used that provides the ability to inspect for leaks. This stipulation does not apply to the recycle water return lines leading from the TSF to the mill. The perm ittee shall m aintain fuel handling and storage facilities in a m anner that will prevent the discharge of hazardous substances. Satellite Pits - Ore from satellite pits may be processed and disposed provided that the following conditions are satisfied, and ADEC determines that there will be insignificant im pact on mine closure, reclamation, and w ater quality. The permittee m ust submit a report 19 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00119 containing each o f the following: 1) A com parison o f the chem istry o f new ore to the chem istry o f currently m ined ore and add any additional constituents found in the new ore to th e analytical profile stipulated in the monitoring plan; 2) A determ ination of the ore ratio (tons of ore being processed from site ore to tons of satellite pit ore) and perform a M eteoric W ater M obility Procedure (ASTM E2242) on mixed ore samples prior to beneficiation. The permittee m ust analyze rinse water and leachate using the profile stipulated in the m onitoring plan. 3) An acid base accounting on mixed ore (ratios) prior to beneficiation. If net neutralization potential (NP) to acid generating potential (AP) is less than 3:1, then a hum idity cell (kinetic) test of adequate duration will be required; leachate analysis will use the profile stipulated in the m onitoring plan. 4) A characterization of the processed tailings liquor (post cyanide detoxification) using the profile stipulated in the monitoring plan; the results must be com pared to the original tailings liquor. 5) The results of a M eteoric W ater M obility Procedure (ASTM E2242) on processed tailings solids (after cyanide detoxification) using the profile stipulated in the m onitoring plan, the results m ust be com pared to the original data. 6) All changes to the beneficiation or treatm ent processes which may affect monitoring, closure, tailings, w ater quality, or any other perm it condition. MONITORING The monitoring plan approved by ADEC, are incorporated into this permit. Future ADECapproved changes to project m onitoring will be included as modifications to the monitoring plan and do not require re-issuance or m odification of the permits. The m onitoring plan shall maintain monitoring procedures to include the following and m ust be updated within 60 days of perm it issuance. 1) V isually m onitor the facilities for signs o f dam age or potential dam age from settlement, ponding, leakage, thermal instability, frost action, erosion, thawing of the waste, or operations at the site. Visual m onitoring shall be w eekly and documented. 2) M onitor surface and groundwater near the site to ensure that AKW QS are not exceeded and that sample results are statistically valid. 3) Required monitoring locations include the following: a) process stream slurry prior to it being discharged to the TSF, b) interceptor water returned to the TSF, any discharge over the spillway at the TSF, c) groundwater observation wells below the intercepthoor system, d) surface w ater at the upper end o f the developed wetlands, e) surface water in upper Victoria Creek, f) groundwater observation wells between the TSF and Victoria Creek, g) wetlands flow immediately prior to entering the freshwater reservoir, h) freshwater reservoir, i) pit lake and contributing waters to the pit lake, 20 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00120 j) heap leach pad discharges, which include heap w ater to the TSF and leak detection m onitoring in the LCRS and PCM S sumps, and k) heap underdrain system consisting of three collinear monitoring wells in the following locations: the base platform (HL-1), the bench of the in- heap storage pond embankment (HL-2), and the crest of the in-heap storage pond embankment (HL-3), and groundwater m onitoring wells including the old batch plant well. To maintain limits established in the permit, continuously m onitor the LCRS including hydraulic head on the secondary liner in the sump, flow from the sump, and the hydraulic head on the prim ary liner in the pregnant solution pond. Com pile m onthly summaries of data including maximums, ranges, and trends, and report according to perm it stipulations. Geochemical m onitoring of overburden, development rock, run-of-mine ore that is placed on the heap leach pad, and tailings samples from the mine is required to ensure that there is low potential for production of leachate that is acidic or contains levels of metals that would contaminate surface or groundwater. In the event that humidity cell (kinetic) tests are performed, ADEC approval is required before term ination of those tests. M onitoring of the tailings prior to placement in the TSF to ensure that the limitations contained in the perm it are met. W ater quality, flow, and managem ent monitoring is required to account for process water discharged to the TSF, process w ater recycled to the mill, w ater entering the pit, w ater entering the interceptor well system, w ater used in the heap leach pad, including the LCRS and each PCM S sump, and w ater levels in the underdrain m onitoring wells. W ildlife monitoring m ust be conducted as required the permit. The perm ittee m ust develop a quality assurance project plan (QAPP) for all m onitoring required by this permit. The QAPP may be contained in an overall m onitoring plan for the entire project. The QAPP, or the QAPP portion of an overall m onitoring plan, m ust be com pleted w ithin 60 days of the effective date of this perm it and m ade available upon request. Any changes made to the existing QAPP shall be com pleted according to the permit. 1) The QAPP m ust be designed to assist in planning for the collection and analysis of water samples in support of the permit and in explaining data anomalies when they occur and the QAPP m ust be formatted as specified in the m ost recent edition of Elements of a Tier 2 W ater Quality M onitoring Quality Assurance Project Plan (QAPP) by ADEC, Division of W ater, W ater Quality Standards, Assessments and Restoration Program. 2) Throughout all sample collection and analysis activities, the perm ittee m ust use chainof-custody procedures described in the m ost recent edition of Elem ents of a Tier 2 W ater Quality M onitoring Quality Assurance Project Plan (QAPP) by ADEC, Division of W ater, W ater Quality Standards, Assessments, and Restoration Program. 3) The perm ittee m ust am end the QAPP w henever there is a m odification in sample collection, sample analysis, or other procedure addressed by the QAPP. 4) A copy or copies of the QAPP m ust be kept onsite and made available to ADEC upon request. The permittee m ust m onitor the TSF and the heap leach pad in conform ance with current 21 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00121 WCeartteirfi,cDataems oSfaAfeptypraonvdalCtoonsOtrpuecrtaiotenaUDniat.m issued by ADNR, Division of Mining, Land and Samples taken as required by the perm it shall be analyzed in conform ance w ith the m ost recent m onitoring plan and QAPP approved by ADEC. 1) A sam ple from any com pliance well or surface w ater com pliance location that detects W AD cyanide shall be reported to the Departm ent as soon as possible, but no later than the end of the next w orking day. Re-sam pling for m easurem ent confirm ation shall be performed as soon as practical. 2) The permittee shall track cells of inert solid waste by surveying and recording the location of each cell and at closure of each cell, recording the total volum e of the cell. A map indicating the locations of all the cells shall be included in the annual report required in section 2.4.4. 3) M aintenance of inspection and sampling logs and procedures for processing, consolidating, and reporting inspection and sampling data shall be in conformance with the m ost recent monitoring plan and QAPP as approved by the Department. 4) Groundwater and surface w ater monitoring and corrective action monitoring shall be in accordance w ith section 2.5, 18 AAC 60 Solid W aste M anagem ent Regulations, and the most recent monitoring plan and QAPP as approved by the Departm ent or modified by am endm ent to this permit. 5) The Departm ent may modify monitoring requirements, including the establishment of additional com pliance points in response to trends showing changes in the concentration of param eters being m onitored. 6) If the permittee monitors any influent, effluent, receiving water, or solid waste characteristic in addition to those identified in this permit, or m ore frequently than required, the permittee shall notify the Departm ent that the additional monitoring has occurred in the next quarterly report after the monitoring has occurred. The results of such m onitoring shall be available for inspection by the D epartm ent at the project site, or other location proposed by the permittee and agreed upon by the department. The permittee shall provide copies of the results to the Departm ent upon request. a) Results detecting W AD cyanide shall be reported in accordance w ith the permit. b) All exceedances of AKW QS shall be reported as stipulated in the permit. REPORTING The perm ittee shall provide the D epartm ent with quarterly m onitoring reports sum m arizing inspection and m onitoring results required in the permit. Reports shall satisfy the following conditions. 1) D ue D ates - Reports for the first three calendar quarters are due w ithin 60 days after the quarter ends, and the report for the fourth calendar quarter shall be submitted by M arch 1st o f the follow ing year. 2) Form - Reports shall be provided in electronic form using com m ercially available software or according to other electronic reporting requirements approved by the Department. Paper copies of the reports are not required unless specifically requested. 3) Content - Reports shall contain a narrative portion discussing data and 22 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00122 inform ation collected during the preceding quarter. 4) Graphing - Reports shall present w ater quality data in graphical form indicating trends as well as the m argin of com pliance w ith limits. a) Graphs of concentration measurem ent versus tim e m ust including the past five years of data, if available, and may contain all historic data. b) The graphs must also include the parameter, units, and applicable perm it lim it or AKWQS. c) M ultiple stations, identified using symbols in a legend, may be included in the same graph. d) Scales shall be proportioned to display the lim it or AKW QS, as indicated by a highlighted line, near the top of the graph or when data exceeds the limit, the m axim um value shall be near the top of the graph. e) Form atting shall allow addition of new data to each graph's cumulative data when producing the next quarterly report. f) For graphical purposes, non-detect values shall be plotted at one half the method detection limit (M DL), and values between the minimum level of quantification (M L) and M DL shall be plotted at the value of the qualified measurement. W hen an exceedance of a AKW QS is discovered at a groundwater or surface water m onitoring location, or if noncom pliance w ith a requirem ent set out in the perm it is discovered, the perm ittee shall verbally notify ADEC no later than the end of the next w orking day after discovery, and shall conduct corrective actions according to perm it stipulations. Annual Report - The fourth calendar quarter report serves as the annual report. The annual report shall: 1) B e subm itted to the A D E C by M arch 1st o f the follow ing year; 2) Contain an electronic copy (preferably Excel) of the water quality data for the reporting year, including the past five years' data, if available, and may contain all historic data in spreadsheet form. W hen a value is less than the M L, it m ust be identified as less than the M L, and the M L must be provided. Non-detect values m ust be identified as less than the M DL or non-detect and the M DL m ust be provided in the electronic water quality data spreadsheets; 3) A ddress the adequacy of the financial responsibility including, but not lim ited to, inflation, significant changes in reclam ation activity costs, concurrent reclamation, expansion or other changes to the operation o f the facility; 4) Be presented at an annual meeting with ADEC and ADNR and open to the public; and 5) Be submitted to ADEC at least two weeks prior to the annual meeting. The permittee shall maintain an updated plan of operations and reclam ation and closure plan, as required by ADNR, showing site use and developm ent plans and provide ADEC with copies of any amendments to that plan of operations affecting the waste disposal operations authorized by the permit. All records and information and reports resulting from the m onitoring activities required by the permit, including but not lim ited to all records of analyses perform ed, calibration and 23 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00123 maintenance of instrumentation, and recordings from continuous monitoring instrumentation, m ust be retained in Alaska for observation by ADEC for a m inimum of five years. Upon request from the ADEC, the perm ittee shall submit certified copies of such records. Any onsite wildlife casualties shall be reported w ithin one working day of discovery to the appropriate state agencies, including the ADEC. Knowingly making a false statement, by the permittee, the operator or other employees, including contractors, on any such report may result in the imposition of criminal penalties as provided under AS 46.03.790. CORRECTIVE ACTIONS The perm ittee shall com ply with 18 AA C 60.815 if the visual m onitoring program discovers damage or potential damage to the waste disposal-related facility that could lead to water quality violations. The perm ittee shall com ply w ith 18 A A C 60.820-860 if a statistically significant increase in a constituent concentration above background water quality in any of the water sampling locations is discovered. Statistical significance shall be determ ined using one of the methods outlined in 18 A A C 60.830(h). The perm ittee shall com ply w ith the notification requirem ents in 18 AA C 60.850(c) upon determ ining a statistically significant increase in a constituent concentration. For a single constituent, when a statistically significant increase in concentration is discovered at a w ater monitoring station or if noncompliance with a requirem ent set out in the perm it is discovered, the perm ittee shall: 1) O rally notify ADEC no later than the end o f the next w orking day. 2) Determine the extent of the exceedance or noncompliance. 3) In consultation with ADEC and documented in writing, im plem ent a plan to determ ine the cause and source of the exceedance or noncompliance. 4) Submit to ADEC, within seven working days after an exceedance or noncompliance is verified by the permittee, a plan for corrective actions to prevent adverse environmental impacts and avoid future exceedances of a similar nature. 5) Im plem ent the corrective action plan as approved by ADEC. SUSPENSION OF OPERATIONS Suspension of operations is defined as a suspension of m ining and m illing/processing activities for more than 90 days but less than three years. The length of tim e for the period of suspension m ay be extended beyond three years by w ritten authorization from ADEC. The perm ittee shall subm it a conceptual suspension of operations plan to ADEC w ithin 90 days of perm it issuance. The perm ittee m ust notify ADEC w ithin three days of suspending operations. The notice shall provide the nature of and reason for the suspension and its anticipated duration. N o later than ten days after operations have been suspended, the perm ittee shall submit a detailed suspension of operations plan that replaces the suspension of operations conceptual plan required by the permit with current inform ation and specific details. The suspension plan shall address the following: 1) Explanation o f w hat w ould reasonably result in resum ing or perm anently 24 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00124 term inating mining or m illing/processing activities; 2) Reclamation or construction activities during the period of temporary suspension; 3) Procedures, methods, and schedule to be implemented for the treatment, disposal, or storage of process water; 4) The control of surface and groundwater drainage to and from the facility and the surrounding area; 5) The control of erosion from the drystack, waste rock disposal areas, mill and camp site, and any other disturbed areas within the facility boundary; 6) The secure storage of chemicals during the period of suspended operations; and 7) Procedures for maintaining and monitoring the TSF dam and water balance. A D EC has 15 days to review and approve or request m odifications to the suspension plan and once a suspension of operations plan has been approved, it becomes enforceable under the conditions o f this perm it and full im plem entation o f the approved suspension plan is required. The plan can be amended by submitting a revised plan to ADEC for approval. D uring suspension of operations, the perm ittee shall: 1) Continue pollution control activities associated with the TSF, heap leach pad, and inert solid waste landfills including, but not lim ited to, dust control, placem ent of interim cover, m aintenance of the drainage diversion structures, m aintenance of all discharge an by d leakage the curre nct oCnetrrotilfisctar utec toufrAe sppa nrodvparlotcoe sOs pe se,raatnedamDaaimn t eannadn ce the of su the spe TSF nsion as pla sp n. e cif ie d 2) Continue m onitoring and reporting activities o f all active portions o f the site as specified by this perm it or the suspension plan. 3) Continue reclamation and corrective action requirements under the reclamation and closure plan in light of the nature of the closure. 4) W ritten Departm ent approval is required before resuming operations after a period of temporary closure. TERMINATION OF MINING & MILLING Termination of m ining and milling/processing activities is defined as the perm anent cessation of those activities. Updated reclamation and monitoring plans m ust be submitted for approval within 90 days after initiating termination of mining and milling/processing. The updated plans must address current conditions at the facility. Updates and changes to those plans must be approved in writing by ADEC. 1) Term ination o f m ining and m illing at the site m ust be im plem ented and com pleted according to the conditions of this perm it and with the reclamation and closure plan approved by ADEC and incorporated by reference into this permit. 2) Closure of the waste disposal facilities will be complete when the following criteria are met. 3) ADEC-approved covers are installed on the TSF, heap leach pad, and inert solid waste landfills and drainage channels are constructed and stable. 4) A stable vegetative cover is established on the waste rock, re-contoured areas, and other 25 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00125 infrastructure or other facilities as prescribed in reclamation and closure plan approved by ADEC determ ines that active w ater treatm ent is no longer required for any water discharged from the facility. Closure must be achieved before terminating any care and maintenance activities required by the perm it and the approved suspension plan if a period of suspended operations imm ediately preceded term ination of mining and milling. The permittee m ust maintain the facility correcting any erosion or settlement of the TSF, heap leach pad, inert solid waste landfills, waste rock disposal sites, and drainage channels that may im pair water quality or otherwise threaten the environment, up until the time that this permit, or any successor permit, is transferred to another entity or term inated by ADEC. Disposal of demolition debris onsite may be approved during closure activities according to a plan approved by ADEC. Post-closure monitoring of ground and surface w ater quality and visual monitoring for settlem ent, seeps, and erosion is required in years 1, 2, 5, 10, 15, 20, and 30 after satisfying the criteria in section 2.7.3. Post-closure m onitoring shall be perform ed according the reclamation and closure plan approved by the Department. This schedule and the param eters monitored may be m odified by the Departm ent based on the monitoring results received. FACILITY AUDIT ADNR and ADEC have perm it stipulations for the large m ining operations to conduct a thirdparty environm ental audit during the final year of the perm it term or sooner if final closure starts during the perm it term . The scope o f the environm ental audit includes com pliance w ith all aspects the IW M P, Plan of Operations, environmental m anagem ent plans incorporated into ADNR and ADEC perm its by reference, other agency perm its e.g., A laska D epartm ent of Fish and G am e Fish Passage and Flabitat Perm it (AS 16.05.841 and AS 16.05.871), and applicable federal agency (U.S. Arm y Corps of Engineers, Bureau of Land M anagem ent, U.S. Forest Service) permits or authorizations. The intent of the environmental audit is to evaluate w hether both operations m anagem ent and perm it administration provide reasonable assurances that the facility and environmental controls are functioning as intended. The environmental audit includes an evaluation of the adequacy of the approved financial assurance. FA is adjusted prior to the perm it renewal, significant m odifications to the operation, and/or recom m endation based on finding from the environm ental audit. Unless the operator can dem onstrate to the satisfaction of ADEC and ADNR that long-term post-closures m onitoring and rem ediation (e. g., w ater treatm ent) will not be required, the operator m ust provide FA to cover those costs. FA am ounts are calculated assum ing that state regulators will have to m anage the reclam ation/closure and post-closure activities using third-party contractor costs. Sierra Club v. EPA 18cv3472 NDCA 26 Tier 2 ED 002061 00087255-00126 CERCLA 108(b) RCeEsRpoCnLseACa 108(b) tegory RoeAfslpNaosanktusaeraDClfeaopRtraeergHstoomaTurryreadcnbEretlosqecuAciv-AM2oallfaieCnsFnkiontnasnvgsiiDernroeAvnpaamlatricstokmnntaennSlttatuAtolefassFakinsahdDaRenpudalerCstammenet S olid/H azardous \S 2 7 U, AS 46.03; W aste Disposal AS 27.19; 18 AAC 60; AS 27.20; 18 A A C 62; AS 38.05; 11 A A C 97; Open Pit AS 27.05; AS 16.05.841; AS 27.19; AS 16.05.871; AS 27.20; AS 38.05.020; AS 46.15; 11 A A C 93; 11 A A C 97; U nderground M ine AS 27.05; AS 46.03; AS 27.19; 18 A A C 70; AS 27.20; AS 38.05.020; 11 A A C 97 Tailings Facility AS 27.05; AS 46.03; AS 16.05.841; AS 27.19; 18 A A C 60 AS 16.05.871; AS 27.20; AS 38.05.020; AS 38.05.255; AS 46.17; 11 A A C 93.171 11 A A C 93.172; 11 A A C 97; W aste Rock AS 27.05; AS 46.03; AS 16.05.841; AS 27.19; 18 A A C 60; AS 16.05.871; AS 27.20; AS 38.05.020; 11 A A C 97; Fleap/Dump Leach AS 27.05; AS 46.03; AS 16.05.841; AS 27.19; 18 A A C 60; AS 16.05.871; AS 27.20; AS 38.05.020; 11 A A C 97; AS 27.05; AS 46.03; AS 16.05.841; Process AS 27.19; 18 AAC 60 AS 16.05.871; P o n d /R eserv o ir AS 27.20; AS 38.05.020; 27 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00127 CERCLA 108(b) RCeEsRpoCnLseACa 108(b) tegory RoeAfslpNaosanktusaeraDClfeaopRtraeergHstoomaTurryreadcnbEretlosqecuAciv-AM2oallfaieCnsLnkiotnnasngvsiiDenrroeAvpnaamlatrisetokmnnateanSlttatuAtolefassl-ak'inashdDaRenpudalerCstammenet \ S 4 o If', AS 46.17; 11 A A C 93; 11 A A C 93.171; 11 A A C 93.172; 11 A A C 97 AS 27.19; AS 46.03; AS 16.05.841; AS 27.20.021; 18 A A C 60; AS 16.05.871; D rainage AS 46.15; 18 A A C 70; 11 A A C 93; 18 AAC 72; 11 A A C 97; AS 46.03; AS 16.05.841; W ater Treatment 18 AAC 60; 18 A A C 70; AS 16.05.871; 18 A A C 72; AS 27.05; AS 46.03; AS 16.05.841; AS 27.19; 18 A A C 60 AS 16.05.871; AS 27.20; Short-Term O&M / AS 38.05.020; M onitoring AS 46.17; 11 A A C 93.171; 11 A A C 93.172; 11 A A C 97; AS 27.05; AS 46.03; AS 16.05.841; AS 27.19; 18 A A C 60 AS 16.05.871; AS 27.20; Interim O&M AS 38.05.020; AS 46.17; 11 A A C 93.171 11 A A C 93.172; 11 A A C 97 AS 27.05; AS 46.03; AS 16.05.841; AS 27.19; 18 A A C 60; AS 16.05.871; AS 27.20; 18 A A C 70; Long-Term O&M / AS 38.05.020; 18 A A C 72; M onitoring AS 46.17; 11 A A C 93.171; 11 A A C 93.172; 11 A A C 97; Slag Pile N /A N /A N /A 28 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00128 B. Arizona As shown in Table B below, the Arizona M ined Land Reclam ation Act (AM LRA), Ariz. Rev. Stat. ("A .R .S.") Ann. 27-901 through 1026, and the A quifer Protection Perm it (APP), Ariz. Rev. Stat. Ann. 49-241 through 252, regulate m ining and FA requirem ents for A rizona hardrock mines and mineral processing facilities. The AM LRA and APP provide FA for each of the thirteen CERCLA 108(b) Response Categories. The Arizona State M ine Inspector administers the AM LRA. The Arizona Departm ent of Environmental Quality ("ADEQ") has jurisdiction over the APP program. Projects located on federal land in Arizona also have to comply with the FLM A s' regulatory and FA requirements, as well as other substantive regulatory requirements administered by ADEQ. The AM LRA applies to any property that is owned, operated, or m anaged by the same person to develop, mine, concentrate, or leach m etalliferous m inerals and all associated recovery activities. The AM LRA also applies to exploration activities outside a m ining operation, including building access roads and drill pads, to determine the presence, location, extent, depth, or grade of m etalliferous minerals. Non-m etals are similarly covered under the separate Aggregate M ined Land Reclam ation A ct (A.R.S. 27-1201, et seq.). The environm ental protection requirem ents under A rizona's APP program m inim ize the potential for a release of hazardous substances. The Arizona APP program protects groundwater quality by preventing releases of hazardous substances to the environm ent by requiring mining operations to be "so designed, constructed and operated as to ensure the greatest degree of discharge reduction achievable through application of the best available demonstrated control technologies, processes, operating methods or other alternatives, including where practicable, a technology perm itting no discharge of pollutants." A.R.S. 49-243 ,B .l. As is the case in many arid western states, groundwater in Arizona is regulated as a potential source o f drinking water. Consequently, drinking w ater protection standards apply to all groundw ater in Arizona. A.R.S. 49-224.B. A rizona's APP program im plem ents this groundwater protection requirem ent for mining and mineral processing operations by ensuring that aquifer w ater quality standards are m et in groundwater at applicable points of compliance ("PO Cs") that are typically groundwater m onitoring wells located immediately downgradient of specific m ining operation facilities. A.R.S. 49-243.B.2. ; A.R.S. 49-244 A quifer water quality standards are established based on EPA 's primary drinking water maximum contaminant levels (M CLs) pursuant to the federal Safe D rinking W ater Act. A.R.S. 49-223.A. The perm its for mining operations require mine operators to collect groundwater m onitoring samples and report the results of the groundw ater m onitoring program on a regular basis. The collection and reporting of groundwater m onitoring data gives Arizona mine operators and regulators real-tim e docum entation of w hether a facility is operating as designed and in com pliance with its operating permits. In the event m onitoring data suggest there may be a release of a hazardous substance, the m onitoring data provide operators and regulators with the necessary inform ation to take appropriate actions. A rizona's regulations authorize regulators to require an operator to investigate a possible release and remediate a docum ented release, thus ensuring that the operator, state regulators, or both manage a release. 29 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00129 In the event an operator fails to respond to a release, the APP program provides FA that the ADEQ can use to rem ediate any releases. A.R.S. 49-243.N; A .A C. R18-9-A203. A rizona's APP program protects the drinking w ater quality of groundw ater in all state aquifers through perm it conditions that regulate and address the discharge or release of pollutants and hazardous substances "directly to an aquifer or the land surface or the vadose zone in such a m anner that there is a reasonable probability that the pollutant will reach the aquifer." A.R.S. 49-201.12. This is accom plished through standard APP conditions that obligate the perm ittee to notify ADEQ and engage in emergency response and corrective actions to address any unauthorized releases of hazardous substances to the environm ent. The Arizona APP program governs any release of a pollutant, w hether on-site or off-site of any m ining operation and applies to releases at any type of facility both directly associated with the m ine site as well as smelters, refineries, stand-alone operations, and other facilities. The types of m ining-related facilities w here releases of pollutants may occur and therefore typically require an individual APP perm it include the following: (1) surface impoundments, including holding, storage, settling, treatm ent or disposal pits, ponds and lagoons; (2) solid waste disposal facilities; (3) injection w ells (e.g., in-situ leaching operations); (4) m ine tailings piles and ponds; and (5) mine leaching operations, and wetlands associated with mine w ater treatment. Under the APP program, Arizona's FA requirements ensure that Arizona regulators have adequate FA to respond to a release if an operator does not or cannot due to bankruptcy or other constraints. The FA covers the response action liabilities for any unauthorized releases if the m ining operation fails to comply with its financial capability requirem ents or files for bankruptcy. The APP establishes very broad requirem ents for providing FA for the entire lifecycle of a m ining operation (e.g., operations, reclam ation, closure, and post-closure). A rizona's APP program requires hardrock m ining operators to dem onstrate "financial capability [for the costs] to construct, operate, close and ensure proper post-closure care of the facility" in order to protect the Arizona taxpayer from bearing the response action liabilities and costs of any releases of hazardous substances to the environm ent during its operation. A.A.C. R18-9-A203(B). Pursuant to this financial capability authority, Arizona APPs routinely contain emergency response and contingency measures, including corrective actions, to address environmental im pacts from unauthorized releases of hazardous substances to the environm ent from an APP-permitted m ining operation. A rizona's APP program also requires that specific facilities at m ining operations (e.g., tailing impoundm ents, leaching facilities, process impoundm ents, etc.) to be designed, constructed, and operated to m eet best available dem onstrated control technology ("BA D C T"), w hich is intended to control potential releases of hazardous substances. A.R.S. 49-243.B .l. The required use of BADCT technology substantially m inim izes the potential risk of a release of hazardous substances during all phases of a m ining operation - from operation to post-closure. In the event of a release, Arizona regulators have the necessary regulatory authority to compel the operator to respond to the release or to use the FA for an agency-led response. Sierra Club v. EPA 18cv3472 NDCA 30 Tier 2 ED 002061 00087255-00130 In addition to the requirem ent to m eet BADCT and to comply with aquifer water quality standards at applicable POCs, the APP program imposes specific closure and post-closure requirem ents to address environmental impacts from releases of hazardous substances once a m ine has been closed. A.R.S. 49-201.5, 49-201.30, & 49-252; A.A.C. R18-9-A209. Pursuant to these requirements, Arizona APPs for m ining operations contain closure and long-term, post closure obligations necessary to ensure that aquifer w ater quality standards are met at applicable POCs and that any appropriate remedial, mitigative, or corrective actions are im plem ented to m eet the closure requirem ents and to address unauthorized releases of hazardous substances. A key elem ent of A rizona's APP program that further reduces the potential for an un-bonded release of hazardous substances is the requirem ent to cover response action liabilities for authorized/perm itted releases of hazardous substances at mining operations. In fact, the FA requirem ent for "closure" and "post-closure m onitoring and maintenance" under the Arizona APP program is defined broadly to include "all actions specified in an aquifer protection perm it ...,as well as elimination, to the greatest degree practicable, of any reasonable probability of further discharge from the facility," and those activities that are necessary to "keep the facility in compliance w ith...the aquifer water quality standards" and to "perform any remedial, mitigative or corrective actions or controls as specified in the aquifer protection perm it." A.R.S. 49201.5 and 49-201.30. Both the AM LRA and APP programs allow various forms of FA including cash (annuities, cash deposits, certificates of deposit, letters of credit and trust funds), surety bonds and insurance, as well as corporate guarantees and self-assurance. A.R.S. 27-99l.B (AM LRA); A.R.S. 49243.N.3 (APP). Both program s require the sufficiency of a project's FA to be review ed every five years. A.R.S. 27-992.D (AM LRA); A.R.S. 49-243.N.4 (APP). A dditionally, depending on the type of FA instrument, the APP requires operators to docum ent as frequently as every two years that the instrum ent is being m aintained in good standing. State regulators have the authority to require an update in response to a project change or upset. FA amounts are calculated assuming that state regulators will have to manage the reclam ation and closure activities and use third-party contractor costs. It is im portant to note that the m aterials EPA com piled pertaining to A rizona's regulatory and FA requirem ents for hardrock m ining and mineral processing facilities are incom plete and fail to provide an accurate and objective discussion of the com prehensive scope of these programs. For example, E PA 's "Summary of A rizona Financial Responsibility Requirem ents" (D ocket No. EPA-HQ-SFUND-2015-0781-2173) does not adequately describe the AM LRA and the APP regulatory and FA program s, w hich are m uch broader than described in E PA 's A rizona regulatory summary. EPA 's discussion omits the salient fact that the APP program is specifically designed to cover the entire lifespan of a mine - from design and operation to reclamation, closure, and post-closure. It also fails to discuss how the APP BADCT requirem ents apply to the design and operation of embankments at TSFs thereby minim izing the potential for a release of hazardous substances from A rizona TSFs. Secondly, A ppendix IV, Table C in E PA 's N ovem ber 2016 "Comprehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (Docket No. EPA-HQ-SFUND-2015-0781-0144), does not accurately described the way in which A rizona's Sierra Club v. EPA 18cv3472 NDCA 31 Tier 2 ED 002061 00087255-00131 laws and regulations interact and are coordinated to provide com prehensive environmental protection and FA. Additionally, it is im portant to note that A D EQ 's "solid waste" and "hazardous waste" regulations apply to the generation and m anagem ent o f waste at mines. ADEQ is authorized to im plem ent the federal "hazardous waste" program in Arizona. 40 C.F.R. 272.151. ADEQ also invested significant effort to develop a "solid waste" general permit that imposes detailed management and disposal requirements for existing and future "solid waste" landfills located at mining facilities in the State. That general permit, discussed at Ariz. Admin. Code ("A .A .C ") R18-13-802, includes siting, operational, monitoring, and notification requirements specifically catered to mining facilities. Arizona's environmental regulatory and FA programs for m ining are an example of a "com plicated but generally effective" regulatory program as described in the NAS Study. E PA 's analysis for this rulemaking of A rizona's regulatory and FA program fails to comprehend either the com plexity or effectiveness of A rizona's m ining regulations and FA requirem ents and is therefore inaccurate and incom plete. A proper evaluation w ould reveal that A rizona's sitespecific environmental protection and FA requirements are comprehensive and far superior to the one-size-fits-all formulas EPA used in the Proposed Rule. There are no gaps in A rizona's program that need to be filled with an EPA-driven FA program pursuant to CERCLA 108(b). Because the APP program explicitly governs "liability for the release of a hazardous substance," the Proposed Rule would completely duplicate Arizona's effective and comprehensive FA requirements. Additionally, because Arizona's program already covers liability for releases of a hazardous substance, the Proposed Rule clearly falls within the scope of the federal preemption provisions in CERCLA 114(d) if EPA prom ulgates federal financial responsibility requirem ents for response action liabilities. Sierra Club v. EPA 18cv3472 NDCA 32 Tier 2 ED 002061 00087255-00132 _C_E__R_C_L__A__1_0_8_(_b_) _R_e_s_p_o_n_se CERC LACal1e0g8o(rbx) Response CAfarotiTrezogaHnobraaleyrSdBEiraq-oinucAkkiv*rMaizaleoninnnditansRgiu_n_leA_s_r(i_z_ion_ns_ua_r_Se_t_Pa_tou_stt_e_Cs_ian_ns_du_r_Re_u_C_lHe_suttons Solid/Hazardous W aste A.R.S. 49-241.B .l & 49-241.B-.2. (surface im poundm ents D isp o sal and any "solid waste disposal facilities" (not including mining overburden and wall rock that has not been and will not be subject to mine leaching operations) are categorically regulated as APP facilities, and are subject to full closure and post-closure requirements under the APP program. A.R.S. 49-721, 49-761; 40 C.F.R. 272.151 (Arizona is authorized to im plem ent the federal "hazardous waste" program and has authority to impose financial assurance for "solid w aste" facilities. For instance, Arizona has developed a "solid waste" perm it specifically regulating solid waste facilities at m ines at A.A.C. R18-13-802 ("Disposal General Permit: Non-M unicipal Solid W aste Landfills at M ining O perations")) Open Pit A.R.S. 49-243.G.1. D em onstration of hydrologic isolation (passive containment) - regulated but not as an APP discharging facility; still subject to applicable closure and post closure m onitoring and m aintenance requirements to ensure m aintenance of passive containm ent W aste Rock For open pits that do not create passive containm ent or are otherwise deemed to have the potential to discharge - same as waste rock CLOSURE AND POSTCLOSURE A.R.S. 49-243.A.8., K.6, and N. (requirem ents for closure strategy or plan and financial assurance) A.R.S. 49-201.5 (clean closure) A.R.S. 49-201.7 (closed facility) A.R.S. 49-201.30 (post closure m onitoring and m aintenance) A.R.S. 49-252 (Requirem ents for clean closure and closure) A.C.C. R18-9-A201.B.5 (cost estim ates for construction, operation, maintenance, closure, and post closure in application) A.C.C. R18-9-A 202.A.10 (closure and post closure strategies and plans in application) A.C.C. R18-9-A203 (financial requirem ents in application and m aintained in permit) 33 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00133 rr.IiC i.A S 108(b) R esponse Arizona Statute and Rules Closure Post Closure t'nations C ategory A.C.C. R18-9-A 209 (closure and post closure plan requirem ents) A.A.C. R 18-9-A 209.C .l.e (Post-closure includes requirem ents for "operation and m aintenance procedures proposed for m aintaining aquifer quality protection devices, such as liners, treatm ent systems, pum p-back systems, surface w ater and storm water m anagem ent systems, and monitoring w ells" CORRECTIVE ACTIONS R18-9-A204 (contingency plan for exceedances or violations of perm it conditions, including em ergency response and corrective actions) R18-9-A205, A206 (m onitoring requirements, including alert levels, discharge limitations, and aquifer quality limits) R18-9-A207 (reporting requirements for perm it exceedances and violations) Heap/Dump Leach Tailings Facility Process Ponds/Reservoir Underground M ine Slag Pile D rainage Interim O&M W ater Treatment Short-Term O&M /M onitoring Long-Term O&M /M onitoring RECLAM ATION The Arizona State M ine Inspector im plem ents a com prehensive system o f m ine land reclam ation. A.R.S. 27901 - 1026 (M ined Land Reclam ation) including 27-991 et seq "Financial A ssurance". Also A.A.C R 1 1-2-801 through 822. A.A.C. R12-5-1805: The Arizona State Land Departm ent implements bonding for surface reclamation for m ining on state trust lands. 43 CFR 3809: bonding for surface reclamation for m ining on lands administered by BLM Same as waste rock Same as waste rock Same as waste rock N ot considered an APP discharging facility (dry no addition of pollutants); discharges may be regulated under CW A. Same as waste rock Same as waste rock Same as waste rock Same as waste rock Same as waste rock. Same as waste rock 34 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00134 C. California Two California state statutes have prim ary jurisdiction over various aspects of hardrock m ines in California: 1) the C alifornia Surface M ining and R eclam ation A ct (" SM A R A "); and 2) the Porter C ologne W ater Q uality Control A ct ("PC W Q C A "). B oth statues include FA requirem ents. The California Departm ent of Conservation, Division of M ine Reclam ation ("DM R") administers SMARA. The State W ater Quality Control Board adm inisters the PCW QCA through nine R egional W ater Q uality C ontrol B oards ("R W Q C B "). G enerally, SM A R A establishes FA requirem ents for the physical reclam ation of all m ine features and facilities. The PCW Q CA requires closure and post-closure FA for mine waste disposal facilities that focuses on the environm ental controls and design features that prevent pollution o f the State's surface w ater and ground water resources. As shown in in Table C, the combination of SM ARA and PCW QCA provides environmental protection and FA for each of the response categories in CERCLA 108(b). The interaction of SM ARA and PCW QCA is another example of a com plicated but effective regulatory fram ework consistent with the NAS Study findings. W orking together, SM ARA and PCW QCA and their implem enting regulations provide com prehensive environmental protection that m inimizes the risk of releases of hazardous substances and FA to provide California state regulators with the resources to respond to a release in the event a mine operator fails to respond properly. Projects located on federal land in California also have to comply with the FLM A s' regulatory and FA requirem ents. The scope of SM ARA is broader than the nam e im plies because the definition of m ined lands "includes the surface, subsurface, and ground water of an area in which surface mining operations will be, are being, or have been conducted, including private ways and roads appurtenant to any such area, land excavations, workings, m ining waste, and areas in which structures, facilities, equipment, machines, tools, or other m aterials or property which result from, or are used in, surface m ining operations are located. SM ARA 2729. Consequently, SM A RA 's reclam ation requirements extend to underground mine features and to groundwater and the prevention of w ater degradation: "Reclam ation means the combined process of land treatm ent that minimizes water degradation, air pollution, damage to aquatic or wildlife habitat, flooding, erosion, and other adverse effects from surface mining operations, including adverse surface effects incidental to underground mines, so that m ined lands are reclaimed to a usable condition that is readily adaptable for alternate land uses and create no danger to public health or safety." SM ARA 2733 M oreover, because m ining w astes are defined as "including the residual of soil, rock, mineral, liquid, vegetation, equipment, machines, tools, or other m aterials or property directly resulting from , or displaced by, surface m ining operations" (SM A RA 273), the A ct broadly applies to all types of m ine w astes including m ine-im pact water. In contrast to the one-size-fits-all approach in the Proposed CERCLA 108(b) Rule, SM ARA emphasizes the importance of site-specific conditions: 35 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00135 "The reclam ation plan shall be applicable to a specific piece of property or properties, shall be based upon the character of the surrounding area and such characteristics of the property as type of overburden, soil stability, topography, geology, climate, stream characteristics, and principal mineral commodities, and shall establish site-specific criteria for evaluating com pliance with the approved reclam ation plan, including topography, revegetation and sediment, and erosion control." SM ARA 2773(a) Similarly, the D epartm ent of Conservation's FA Guidelines7 im plem enting SM ARA emphasizes that FA m ust be based on site-specific factors: "The SMGB (State M ining and Geology Board) recognizes that the amount of financial assurance is based on the size, complexity, environmental setting, and type of operation described in the approved reclam ation plan. The am ount of financial assurance m ust be calculated on a site specific basis that reflects the elem ents in the related site specific reclam ation plan." FA G uidelines at 3. California mine operators m ust provide FA "continuously throughout the life of the mining operation, (including idle periods and extended m onitoring periods), until the reclam ation is com pleted pursuant to the approved reclam ation plan and verified by the lead agency and the Department, and the lead agency, the Department, and any other beneficiary agencies have approved the release of the financial assurances." SM ARA 2770(h), 2773.1(a), and 2773.1(a)(2). The DM R m ust review the am ount of the FA annually and require the operator to make any necessary adjustments. SM ARA requires operators to prepare Interim M anagem ent Plans if a m ining property is idle for one year or m ore and to provide FA for interim management. The Interim M anagem ent FA must be sufficient to reclaim the site in accordance with the agency-approved reclam ation plan. DM R m ust review the sufficiency o f Interim M anagem ent F A on an annual basis. F A G uidelines at 18, SM ARA 2727.1 and 2770(h)(2). The SM ARA requirem ents and D M R Rule are integrated with and cross-referenced to the PCW QCA. See, for example, the D M R Rule 3712 performance standards for tailings impoundm ents and the DM R Rule 3704.1 perform ance standards for pit backfilling, which specifically m ention the PCW QCA. The PCW QCA establishes detailed and stringent requirem ents for the design, operation, and closure of all m ine w aste facilities and also requires FA for m ine w aste m anagem ent facilities. The FA required pursuant to the PCW QCA is separate from and in addition to the FA required under SMARA. The PCW QCA defines m ining waste as follows: "M ining w aste m eans all solid, semisolid, and liquid waste m aterials from the extraction, beneficiation, and processing of ores and minerals. M ining waste 7 http ://w w w .co n serv atio n .ca.g o v /sm gb/G uidelines/D ocum ents/F A G U ID E L IN E S .pd f 36 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00136 includes, but is not lim ited to, soil, waste rock, and overburden, as defined in Section 2732 of the Public Resources Code, and tailings, slag, and other processed waste materials, including cementitious materials that are m anaged at the cem ent m anufacturing facility where the materials were generated. PCW QCA 13050(q)(l). U nder the PCW CQA, m ine operators m ust subm it a Report of W aste D ischarge (i.e., a perm it application) for any proposed facility that could "affect the quality of the waters of the state" to the appropriate RW QCB. The RW QCB issues a permit called a W aste Discharge Requirement ("W D R") that includes FA obligations for the operator. PCW QCA 13260(k) establishes specific information requirem ents for a Report of W aste Discharge for a mine waste facility that include the following: "(1) A report on the physical and chemical characteristics of the waste that could affect its potential to cause pollution or contamination. The report shall include the results of all tests required by regulations adopted by the board, any test adopted by the Departm ent of Toxic Substances Control pursuant to Section 25141 of the Health and Safety Code for extractable, persistent, and bioaccum ulative toxic substances in a waste or other material, and any other tests that the state board or regional board m ay require, including, but not lim ited to, tests needed to determine the acid-generating potential of the mining waste or the extent to which hazardous substances may persist in the waste after disposal. (2) A report that evaluates the potential of the discharge of the m ining waste to produce, over the long term, acid mine drainage, the discharge or leaching of heavy metals, or the release of other hazardous substances." Once an applicant has submitted permit applications to the RW QCB and the DM R, the lead agency m ust prepare an environmental evaluation pursuant to the California Environmental Q uality A ct ("C E Q A "). The county in w hich the proposed m ining operation is located is typically the Lead Agency responsible for preparing the CEQA document. Title 27, Chap M ining W aste ter M 7, ana D ivisio gement n a 2 t Special 2247 T 0 reetastemqe. nt, (" Storage, RWQCB and D isposal U nits, Sub chapter 1, Rule") implements the PCW QCA and governs the issuance of W aste Discharge Requirements. The RW QCB Rule 22490 includes the following facility siting and construction standards and criteria: Siting criteria prohibiting locating facilities near active faults; Flood protection requirements; General containm ent structure standards; General construction and discharge standards; Specifications for the design of synthetic and clay liner systems and leachate collection and removal systems; and Stormwater m anagem ent and control requirements. The RW QCB Rule 22480 defines three groups of m ining wastes: 37 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00137  Group A wastes, which m ust be m anaged as hazardous waste if the Regional Board determines that the m ining waste poses a significant threat to w ater quality; Group B wastes, which consist of or contain non-hazardous soluble pollutants of concentrations which exceed w ater quality objectives for, or could cause degradation of w aters o f the state; and Group C wastes, which are generally benign wastes associated with discharges that would be in com pliance with the applicable w ater quality control plan for w ater quality objectives other than turbidity. The RW QCB Rule 22480(d) requires that mining wastes "shall be treated or neutralized whenever feasible to m inim ize the threat to w ater quality and m inim ize the need to install waste containm ent structures." In determ ining w hether to issue a W D R (i.e., the perm it) for a proposed m ine w aste facility the RW QCB m ust evaluate w hether the facility is designed to m inim ize the potential to pollute or contam inate waters of the state during operation and after closure. The PCW QCA has the following specific directive that focuses on long-term pollution prevention for W DRs for mine waste facilities: "Before a regional board issues or revises waste discharge requirem ents pursuant to Section 13263 for any discharge of m ining waste, the regional board shall first determ ine that the proposed m ining waste discharge is consistent with a waste m anagem ent strategy that prevents the pollution or contam ination of the waters of the state, particularly after closure of any waste m anagem ent unit for mining w aste." PCW Q CA 13262.1 C alifornia's PCW Q CA and its RW QCB Rules include com prehensive environm ental standards and protection requirem ents that m inim ize the potential for releases of hazardous substances both during and after mine operation. The following RW QCB provisions require FA covering the closure and post-closure phases of the m ining lifecycle: Mining Unit Closure Funding -- F or m ining units only, the discharger shall provide for adequate funding to pay for the costs of closure as required by the m ining regulations o f A rticle 1, Sub chapter 1, C hapter 7 o f this division (22470 et seq.). The discharger shall provide assurance o f financial responsibility acceptable to the RW QCB. The RW QCB shall periodically review financial assurances for mining Units and shall modify the financial assurances as necessary to provide continued compliance with this section. RW QCB Rule 22207(b). Mining U n its -- The discharger shall provide for adequate funding to pay for the costs of post closure m aintenance at mining Units, as required by the mining regulations o f A rticle 1, Sub chapter 1, C hapter 7 o f this division (22470 et seq.). 38 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00138 The discharger shall provide assurance of financial responsibility acceptable to the RW QCB. The RW QCB shall periodically review financial assurances for mining Units and shall modify the financial assurances as necessary to provide continued compliance with this section. RW QCB Rule 22212(b). RW QCB Rule 22500 establishes detailed water quality m onitoring requirem ents that specify m onitoring locations and points of compliance for mine waste disposal facilities. The RW QCB m ust develop applicable water quality protection standards and identify concentration limits for constituents of concern in the W DR issued for mine waste facilities. (See RW QCB Rule 20358 through 20430). A site's monitoring program m ust include sampling points to collect m onitoring data from surface waters, unsaturated zones (i.e., soil pore liquid in the vadose zone), and groundwater. The m onitoring requirem ents include response action triggers if monitoring data indicate evidence of a release or a potential release. If the site m onitoring data detect a release to surface waters, ground water, or the unsaturated zone that does not comply with the site's W DR, the operator m ust submit an amended Report of W aste Discharge to the RW QCB with a proposed corrective action program that includes a detailed description of the m easures to be taken to achieve com pliance w ith the applicable w ater quality protection standard(s) in the W D R for the site. The operator m ust continue to im plem ent the corrective action program until the RW QCB concurs that the m onitoring data indicate that the concentration of all constitutes of concern have been reduced to com ply w ith the applicable standards. RW QCB Rule 20425, 20430. The PCW QCA and RW QCB requirem ents go beyond the CERCLA 108(b)(1) statutory directive for EPA to "develop financial responsibility consistent with the degree and duration of risk associated California min w ith e ope the production, tran rators are explicitly sportation, required to sptoreravgeen,toprodlliusptioosna l o o r f c hazardous s ontam inatio ubstan n of w ces." aters o f the state - both during operation and after closure. As listed in Table C, California's detailed and rigorous laws (SM ARA and PCW CQA) and the implementing regulations (DM R Regulations and the RW QCB Rules) address the thirteen CERCLA 108(b) cost categories. W orking in concert, these laws and regulations establish detailed environmental protect standards and requirements that provide comprehensive environmental protection that m inim izes the potential for a release of hazardous substances from California m ining and mineral processing operations. The extensive m onitoring requirem ents in the RW QCB Rule provide contemporaneous warnings of a potential release thus lim iting the degree and duration of a release. Finally, if a release occurs, California regulators have ample authority to use a project's FA to respond to a release in the event the m ine operator fails to do so. There are no gaps in California's regulatory fram ework that need to be filled with a federal FA program under CERCLA 108(b). In light of C alifornia's regulatory fram ew ork and associated FA requirem ents there is no justification for EPA to im pose redundant and unnecessary federal FA under CERCLA 108(b). Sierra Club v. EPA 18cv3472 NDCA 39 Tier 2 ED 002061 00087255-00139 _C_E__R_C_L__A__1_0_8_(_b)_R__e_s_p_o_n_s_e_C_aftToegraobHrleyarCEdq-ruoCcivkaalMliefonirntnsiniiagn_C__a_li_fo_r_n_i_a__S_ta_t_u_t_e_s_a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) California Regulations S olid/H azardous W aste Disposal R W Q C B R ule 22480(b), (c) Open Pit SMARA 2735 D M R Regulation 3704.1 W aste Rock RW QCB Rule 21090(a-c) RW QCB 22207(b) RW QCB 22212(b) RW QCB Rule 22490 D M R Regulation 3704.1 DMR 3712 cross referece Porter Cologne PCW QCA 13260(k)(2) PCW Q CA 13262.1 H eap/D um p/L each R W Q C B R ule 21090(a-c) RW QCB 22207(b) RW QCB 22212(b) RW QCB Rule 22490 D M R Regulation 3704.1 PCW QCA 13260(k)(2) PCW Q CA 13262.1 Tailings Facility RW QCB Rule 21090(a-c) RW QCB 21400(a) RW QCB 22207(b) RW QCB 22212(b) RW QCB Rule 22490 D M R Regulation 3704.1 DMR 3712 cross referece Porter Cologne PCW QCA 13260(k)(2) PCW Q CA 13262.1 Process P o n d /R eserv o ir RW QCB Rule 21090 (a-c) RW QCB 22207(b) RW QCB 22212(b) RW QCB 22490 RW QCB Rule 22490(i) PCW QCA 13260(k)(2) PCW Q CA 13262.1 Underground M ine SMARA 2733 Slag Pile Interim O&M N ot applicable SM ARA Sections 2727.1 and 2770(h)(l)(2)(3)(4) RW QCB Rule 20385 through 20430) Sierra Club v. EPA 18cv3472 NDCA 40 Tier 2 ED 002061 00087255-00140 RCeEsRpoCnLseACat1e0g8o(bry) W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring C alifornia Regulations RW QCB Rule 204030 RW QCB Rule 22480(d) RW QCB Rule 20385 -20430) RW QCB Rule 22470(c)(3) RW QCB Rule 22500 RW QCB Rule 20385 - 20430) SM ARA 2773.1 RW QCB Rule 20950 RW QCB Rule 22470(b) RW QCB Rule 22470(c)(3) RW QCB Rule 22500 RW QCB Rule 22510 RW QCB Rule 22510(f) RW QCB Rule 20385 - 20430 PCW QCA 13260(k)(2) PCW Q CA 13262.1 Sierra Club v. EPA 18cv3472 NDCA 41 Tier 2 ED 002061 00087255-00141 D. Colorado As shown in Table D below, the Colorado Hard Rock, M etal, and Designated M ining Operations rules ("DM O R ules") at 2 Colorado Code Regulations (CCR) 407-1 establish specific requirem ents governing the design, operation, reclamation, closure, and post-closure of Colorado m ining and mineral processing facilities. The DM O Rules im plem ent the Colorado M ined Land Reclam ation Act at Title 34: M ineral Resources, Article 32, Colorado M ined Land Reclam ation Act, Colorado Revised Statute 34-32. The Colorado D epartm ent of Natural Resources/Division of Reclam ation, M ining, and Safety ("D RM S") adm inister these regulations. The Colorado Reclam ation Board ("CRB") oversees the activities of DRMS. The 205-page DM O Rules contain com prehensive mine design, environmental protection, and FA requirements that cover the thirteen CERCLA 108(b) response categories. These rules were enacted in 1977 and have been amended 25 times since then. M any of the amendments were developed in direct response to the problem s encountered at the Summitville M ine. The subsequent changes in the DM O Rule have closed the gaps in Colorado's regulations that led to the inadequate regulatory oversight and FA at Summitville. The substantial changes to the DM O Rules over tim e are an excellent example of how state regulators have the authority and are ideally positioned to amend state regulations to fill identified gaps or shortcomings. In addition to obtaining authorization under the DM O Rules, many Colorado m ines also have to obtain an NPDES permit from the Colorado Departm ent of Public Health and Environm ent ("CD PH E"), W ater Quality Control Division, w hich has prim acy for im plem enting the federal Clean W ater Act. The N PD ES perm itting requirem ent is integrated into the DM O Rules at 6.4.7(5), 6.4.13, and 6.4.21(4)(a). Similarly, Colorado m ine operators m ust obtain the applicable federal air quality permits from CDPHE, Air Pollution Control Division. The air quality perm itting requirem ents are integrated into the D M O at 6.4.13 and 6.4.2l(4)(a). It is necessary to understand the integration and overlap of the DM O rules specific to m ining and the CD PH E's m edia-specific environm ental protection regulations in evaluating the comprehensive environmental protection and financial assurance rules governing Colorado hardrock mines. As is the case in many other states, no single regulation, program, or agency governs m ining in Colorado. The multiple rules and regulatory agencies with jurisdiction over specific activities and facilities at Colorado m ining operations are another example of a complex but effective regulatory structure described in the NAS Study. In addition to the several Colorado state agencies that regulate mining, the FLM A have jurisdiction over Colorado m ines developed on public lands. The DRM S has a M O U with both BLM and the US Forest Service that coordinates the states and the FLM A s' regulatory and FA requirem ents. For m ines on federal lands, the D M O at 1.2.4 requires operators to apply for a DM O perm it in addition to any applicable federal perm its required for the project. The DM O Rule 3, Reclam ation Perform ance Standards, Inspection, M onitoring, and Enforcem ent, establishes reclam ation standards that are designed to achieve the State's environmental protection requirements once mining and mineral processing activities are com pleted. Section 3.1.3 establishes reclam ation tim e lim its stating: "reclam ation shall be carried 42 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00142 to completion." Reclam ation m ust be completed within five years after the reclam ation activities for a given m ine feature start. DM O Rule 3 includes broad environmental protection standards that are directly applicable to several CERCLA 108(b) cost categories as shown in Table D. For example, 3.1.5(5) mandates m anagem ent of "acid forming or toxic producing" m ined m aterials to protect "the drainage system from pollution." This provision, which is applicable to the Open Pits, W aste Rocks, Heaps, Tailings and Ponds CERCLA 108(b) cost categories, means that these features at Colorado m ines m ust not be a source of a release of a hazardous substance. Similarly, 3.1.5(10) and 3.1.5(11) specifically require Colorado m ine operators to handle all m aterials "to prevent any unauthorized release of pollutants to the surface drainage system" and prohibit "unauthorized release of pollutants to groundw ater." Section 3.1.6 of the D RO Rule requires com pliance w ith all applicable federal and Colorado water quality laws and regulations including statewide water quality standards, and applicable federal and Colorado dredge and fill requirements. The DRO Rule also establishes specific groundw ater protection standards that require com pliance w ith all statewide groundw ater quality standards. The D M O Rule at 3. l.7(l)(e)(f) and (g) include specific groundw ater requirem ents for in situ leach m ining operations. Pursuant to DM O Rule 3.1.7(8), Colorado regulators can require a m ine operator to m aintain FA for an extended period of tim e after mine closure if necessary to dem onstrate that "reclam ation has been achieved so that existing and reasonably potential future uses of groundw ater are protected." The inspection and m onitoring provisions in DM O Rule 3.2 give DRM S broad authority to inspect Colorado m ining operations at any tim e and require inspections on a site-specific frequency to ensure com pliance with the site permit, the DM O Rule, and all other applicable Colorado regulations. The enforcem ent authorities in D M O R ule 3.3 provide D RM S w ith the authority to issue cease and desist orders in the event of an uncured violation of the DM O Rule, seek injunctive relief and initiate surety forfeiture proceedings if an operator fails to comply with the DM O Rule, including the mine closure and reclam ation requirements. Consequently, Colorado operators have a strong incentive to com ply w ith the D M O Rule and all perm it conditions and to address any potential problem s identified in project m onitoring data. In this manner, Colorado regulators are authorized to compel an operator to address a potential release of a hazardous substance or to use the project FA to respond to a release if an operator refuses to take appropriate action. The D M O R ule 3.3 enforcem ent provisions thus m ean that C olorado's m ining regulations m inim ize the potential for an un-funded release of hazardous substances from a Colorado mine. In the event of a release, the operator responds to the release or DRM S uses the FA to respond; there is no taxpayer liability for the response. The heart of the DM O Rule 6 application process is the Environm ental Protection Plan (Exhibit U) at DM O Rule 6.4.21, w hich requires detailed inform ation about how a proposed m ining will be designed, built, operated, closed, and reclaim ed in com pliance w ith all relevant environm ental protection standards. The data requirem ents for the Environmental Protection Plan inform how the m ine m ust be designed, operated, closed, and reclaim ed in order to com ply w ith all relevant 43 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00143 environmental protection standards. The resulting closure and reclam ation requirements define the am ount of required FA (DM O Rule at 4.2.1(1)). As detailed in the Exhibit U, Environm ental Protection Plan requirements, an applicant must provide inform ation on leach facilities, heap leach pads, tailings storage or disposal areas, im poundm ents, waste rock piles, tem porary or perm anent stock piles, land application sites, and in situ leach operations or conventional uranium operations.8 Some of the other Environm ental Protection Plan inform ation requirem ents include the following: The types of chem icals and reagents to be used in the mineral processing facilities and how using these chem icals could affect the environm ent ( 6.4.21(5)); Groundwater quality data ( 6.4.21(9)); Engineering designs for containing process solutions, stormwater management, and m anaging surface w ater run-off from the m ine facilities ( 6.4.21(10)); Surface w ater quality and flow data ( 6.4.21(11)); A w ater quality m onitoring plan to docum ent the m ine is operating in com pliance with the Environm ental Protection Plan ( 6.4.21(12)); and W aste characterization data to evaluate the geochemical behavior of the mined materials (6.4.21(14)). It should be noted that Exhibit U 6.4.21 of the DM O Rule em phasizes that an applicant m ust provide site-specific data to satisfy the requirem ents of the Environm ental Protection Plan. This site-specific approach is m arkedly different from the one-size-fits-all m odel advocated in the Proposed Rule. The DM O Rule 4, "Perform ance W arranties and Financial W arranties" establishes detailed requirem ents for the amount of required FA, the types of acceptable FA instruments, and the duration of the FA obligation. In order to be acceptable, DRM S m ust be able to convert the FA instrum ent into cash within 180 days. D M O Rule 4.1.2(8). DM O Rule 4.1(7) requires FA to be " ... m aintained in good standing for the entire life of any perm it issued under the Act and these Rules." This provision gives Colorado regulators the authority to require an operator to m aintain FA for so long as the D RM S deem s a perm it is necessary. Pursuant to this authority, DRM S can require FA to rem ain in place for all phases of the mining life cycle including closure and post-closure corresponding to the interim, short-term, and long-term O& M cost categories in the Proposed Rule. M oreover, m aintaining a perm it in good standing obviously m eans that all of the required environm ental controls and structures remain in place and are properly operated and maintained. This combination of environmental The DM O Rule establishes num erous specific requirem ents for in situ leach m ines and conventional uranium mines. 44 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00144 controls, coupled with the FA to m aintain and operate these controls, m inimizes the likelihood of a release of hazardous substances at Colorado mines. DMO Rule Section 4.2.1 directly ties the am ount of required FA to the Environm ental Protection Plan: "All Financial W arranties shall be set and m aintained at a level which reflects the actual current cost of fulfilling the requirem ents of the Reclam ation Plan; and for Designated M ining Operations, fulfilling the applicable requirem ents of the reclam ation and Environm ental Protection Plans during site closure and reclam ation." (DM O Rule at 4.2.1(1)) Section 4.2.1(2) of the DM O Rule gives DRM S the authority to review the adequacy of the Financial W arranty (i.e., the FA ) and dem and an increase in the required am ount if the Agency determines the current am ount is insufficient to fulfill the requirem ents of the Reclam ation Plan or comply with the Environm ental Protection Plan. The State of Colorado accepts num erous types o f financial instrum ents and establishes detailed provisions in D M O R ule 4.3 through 4.13 pertaining to each FA instrum ent type. The DM O Rule includes detailed inform ation requirements for perm it applications to explore for m inerals and to develop and operate m ining projects in Colorado. Rule 5 pertains to Prospecting O perations (i.e., exploration.) R ule 6.3 applies to sm aller and lim ited im pact m ining operations. R ule 6.4 governs larger operations called "D esignated M ining O perations" . Both Rules 6.3 and 6.4 include num erous inform ation requirem ents that are to be provided as Exhibits to the prospecting or mining application. The exhibits describe the detailed project information, environm ental baseline data, engineering studies, reclam ation plan, and reclam ation cost calculations necessary to obtain a permit. As listed in Table D, Colorado's detailed and rigorous DM O Rule and Dam Safety regulations addresses the thirteen CERCLA 108(b) cost categories. The DM O Rule and the associated DPFIE m edia-specific environm ental regulations and perm it requirem ents provide comprehensive environmental protection that minimizes the potential for a release of hazardous substances from Colorado m ining operations. If the project m onitoring data docum ent that a release has occured, Colorado regulators have access to a project's FA to respond to a release in the event the m ine operator fails to do so. In light of these specific DRO m andates, im posing a new layer of federal regulation pursuant to CERCLA 108(b) would be redundant and therefore unnecessary. Sierra Club v. EPA 18cv3472 NDCA 45 Tier 2 ED 002061 00087255-00145 _C_E__R_C_L__A__10_8_(_b_)_R__e_s_pofnoTsraebHClaeartDde gr-oo cCr ykolEMoqriaundiivnoagl_e_n_t_s_i_n_C__o_lo_r_a_d_o__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) 2 CCCoRlorad4o71R-1e/gDuMlatOionRsule S olid/H azardous DM O Rule 3.1.5(5) W aste Disposai D M O Rule 3.1.13 DM O Rule 3.1.5(11) DM O Rule 3.1.7(1) DM O Rule 3.1.7(2) DM O Rule 3.1.7(3) DM O Rule 6.4.2 l(4)(a) DM O Rule 6.4.21(5) DM O Rule 6.4.21(6) RCRA permit and financial assurance requirements Open Pit D M O Rule 3.1.2 DM O Rule 3.1.5(2) DM O Rule 3.1.5(3) DM O Rule 3.1.5(4) DM O Rule 3.1.5(7) DM O Rule 3.1.5(9) DM O Rule 3.1.6(1) DM O Rule 3.1.7(1) DM O Rule 3.1.7(2) DM O Rule 3.1.7(3) D M O R ule 6.3 Exhibits A - L: Lim ited Im pact O perations D M O Rule 6.4 Exhibits A - U: D esignated M ining Operations DM O Rule 6.4.21- Environmental Protection Plan D M O R ule 6.5 D M O Rule 7.1.4 D M O Rule 7.2.8 W aste Rock D M O Rule 3.1.2 DM O Rule 3.1.5(5) DM O Rule 3.1.5(7) DM O Rule 3.1.5(10) DM O Rule 3.1.5(11) DM O Rule 3.1.6(3) DM O Rule 3.1.7(1) DM O Rule 3.1.7(2) DM O Rule 3.1.7(3) D M O R ule 6.3 Exhibits A - L: Lim ited Im pact O perations D M O Rule 6.4 Exhibits A - U: Designated M ining Operations D M O Rule 6.4.21 - Environm ental Protection Plan D M O R ule 6.5 D M O Rule 7.1.4 D M O Rule 7.2.8 46 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00146 C ER C LA 108(b) Response Category H eap/D um p/L each Tailings Facility Process P o n d /R eserv o ir D M O R ule 7.3.1 C olorado Regulations 2 C C R 471-1/DM O Rule D M O Rule 3.1.2 DM O Rule 3.1.5(5) DM O Rule 3.1.5(10) DM O Rule 3.1.5(11) DM O Rule 3.1.6(3) DM O Rule 3.1.7(1) DM O Rule 3.1.7(2) DM O Rule 3.1.7(3) D M O R ule 6.3 Exhibits A - L: Lim ited Im pact O perations D M O Rule 6.4 Exhibits A - U: Designated M ining Operations D M O Rule 6.4.21 - Environm ental Protection Plan D M O R ule 6.5 D M O Rule 7.1.4 D M O Rule 7.2.8 D M O R ule 7.3.1 D M O Rule 3.1.2 DM O Rule 3.1.5(7) DM O Rule 3.1.5(10) DM O Rule 3.1.5(11) DM O Rule 3.1.6(2) DM O Rule 3.1.7(1) DM O Rule 3.1.7(2) DM O Rule 3.1.7(3) D M O R ule 6.3 Exhibits A - L: Lim ited Im pact O perations D M O Rule 6.4 Exhibits A - U: Designated M ining Operations D M O Rule 6.4.21 - Environm ental Protection Plan D M O R ule 6.5 D M O Rule 7.1.4 D M O Rule 7.2.8 D M O Rule 7.3.1 D M O Rule 3.1.2 DM O Rule 3.1.5(7) DM O Rule 3.1.5(10) DM O Rule 3.1.5(11) DM O Rule 3.1.6(2) DM O Rule 3.1.7(1) DM O Rule 3.1.7(2) DM O Rule 3.1.7(3) D M O R ule 6.3 Exhibits A - L: Lim ited Im pact O perations D M O Rule 6.4 Exhibits A - U: D esignated M ining Operations D M O Rule 6.4.21 - Environm ental Protection Plan D M O Rule 7.1.4 D M O Rule 7.2.8 47 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00147 RCeEsRpoCnLseACat1e0g8o(bry) Underground M ine Slag Pile Interim O&M W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring 2 CCCoRlorad4o71R-1e/gDuMlatOionRsule D M O R ule 7.3.1 D M O Rule 3.1.2 DM O Rule 3.1.5(6) DM O Rule 3.1.5(10) DM O Rule 3.1.5(11) DM O Rule 3.1.6(1) DM O Rule 3.1.7(1) DM O Rule 3.1.7(2) DM O Rule 3.1.7(3) D M O R ule 6.3 Exhibits A - L: Lim ited Im pact O perations D M O Rule 6.4 Exhibits A - U: Designated M ining Operations D M O Rule 6.4.21 - Environm ental Protection Plan D M O Rule 7.1.4 D M O Rule 7.2.8 D M O Rule 3.1.2 DM O Rule 3.1.5(11) DM O Rule 3.1.7(8) D M O Rule 3.2 DMO DMO R u le R u le 4.1(7) 4.1(9) D M O Rule 4.1.1 DM O Rule 4.1.2 D M O Rule 7.2.11 DM O Rule 4.2.1(4) DM O Rule 3.1.7(8) D M O Rule 3.2 DM O Rule 4.1(7) DM O Rule 4.1(9) D M O R ule 4.1.1 DM O Rule 4.1.2 D M O Rule 7.2.11 DM O Rule 3.1.5(9) DM O Rule 3.1.7(8) D M O Rule 3.2 DM O Rule 4.1(7) DM O Rule 4.1(9) DMO DMO R u le R u le 4.1.1 4.1.2 D M O Rule 7.2.11 Sierra Club v. EPA 18cv3472 NDCA 48 Tier 2 ED 002061 00087255-00148 E. Florida The Florida D epartm ent of Environm ental Protection ("FD EP") has extensive regulatory requirements governing both phosphate mines and facilities that manufacture mined phosphate into fertilizer (hereinafter, fertilizer m anufacturing plants). As described in FD E P's August 19, 2016 letter to Ms. Linda Barr and Mr. Barnes Johnson, EPA Office of Resource Conservation and Recovery, FD EP contends that Florida's phosphate m ines and fertilizer m anufacturing plants are not hardrock m ining facilities and should not be subject to CERCLA 108(b). FD EP's August 2016 letter to EPA asserts that EPA has improperly classified Florida's phosphate mines and fertilizer manufacturing plants as hardrock m ining and mineral processing operations. As noted in FD EP's letter, neither Florida's phosphate m ines nor its fertilizer manufacturing plants have attributes typical of hardrock m ining or mineral processing facilities. Thus they should not be considered hardrock m ining operations or subject to the Proposed Rule. FD EP's letter explains that EPA has based its classification of Florida's phosphate m ines as hardrock m ines on an EPA Office of Inspector G eneral's 2004 report that erroneously states Florida's phosphate m ines have the potential to generate acid mine drainage. They do not, and this report is incorrect. Florida's phosphate mines are separate operations and independent of fertilizer m anufacturing plants. The m ines excavate phosphate pebble deposits, which are com prised of sand, clay, and phosphate. The geology and m ineralogy of Florida's phosphate deposits categorically precludes them from becom ing a source of acid mine drainage. Thus, EPA used factually incorrect information to classify Florida phosphate mines as acid-generating hardrock mines and to include them in the Proposed Rule. It is possible that E PA 's 2004 report confused the low -pH (i.e., acidic) process w ater at Florida's phosphate fertilizer m anufacturing plants with clay settling ponds at the phosphate mines. Florida's phosphate fertilizer m anufacturing operations contain and m anage the acidic process water in engineered facilities. These processing operations produce a by-product called phosphogypsum , which is created when sulfuric acid is reacted with phosphate during processing to produce phosphoric acid. An EPA website describes the phosphogypsum by-product as follows and acknowledges that Florida has special closure rules for the facilities known as stacks that manage and contain the phosphogypsum : "Phosphate rock contains the mineral phosphorus, an ingredient used in some fertilizers to help plants grow strong roots. Phosphate rock also contains small amounts of naturally occurring radionuclides, mostly uranium and radium. W hen processing phosphate rock to m ake fertilizer, the phosphorous is rem oved by dissolving the rock in an acidic solution. The waste that is left behind is called phosphogypsum . M ost of the naturally occurring uranium and radium found in phosphate rock end up in this waste. As a result, phosphogypsum has a higher concentration of these naturally occurring radioactive elements. Uranium decays to radium and radium decays to radon, a radioactive gas...Som e states have 49 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00149 wcoomrkpeadniewsithhavEePtAofotloloww rsitpeecriuallersulfeosr tomcalnoasgein(sghupthdooswphno)gaypstsaucmk.thIant wFolonr'itdbae, used any more.v (Italics em phasis added). As discussed below and shown in Table E, Florida has developed specific regulatory programs governing the phosphate m ines and fertilizer m anufacturing plants. Additionally, the federal requirem ents for secondary containm ent and Spill Prevention Control and Counterm easure Plans pursuant to 40 CFR 112 also apply to Florida's fertilizer m anufacturing plants. How ever, it m ust be noted that the inclusion of Florida's phosphate m ines and fertilizer m anufacturing plants in this report in no way suggests that these operations should be considered under the Proposed Rule or that EPA has correctly classified Florida's phosphate mines and fertilizer m anufacturing plants as hardrock m ining and mineral processing facilities. This report includes the Florida environmental protection and FA laws and regulations for completeness sake and to demonstrate that notwithstanding their misclassification, the existing regulatory and FA fram ework for these facilities m inim izes the risk of a release of hazardous substances. Florida's law governing phosphogypsum m anagem ent (Florida Statute Title XXIX, Chapter 403, Part 4154, Environmental Control, Phosphogypsum M anagem ent Program ) establishes extensive environmental protection and FA requirements programs applicable to the phosphate fertilizer m anufacturing plants. Florida Adm inistrative Code ("F.A .C") Chapter 62-673 im plem ents this statute. Florida also has detailed reclam ation and FA regulations for phosphate m ines at F.A.C. Chapter 62-16, as do many counties where the mines are located. Because these phosphate mines produce inert clay and sand waste products that do not resem ble the waste rocks or tailings from hardrock mines, and the definitions of these term s as used in the proposed CERCLA 108(b) FA form ula are not applicable, they will not be discussed further. Table E lists the num erous provisions in the Chapter 62-673 F.A.C. phosphogypsum regulations that m inim ize the risks of a release of a hazardous substance from phosphate fertilizer manufacturing plants. These regulations cover the phosphogypsum stacks used to manage and store the phosphogypsum waste product produced from the phosphate processing operation and the associated water m anagem ent ponds, pipes, ditches, and conveyance systems. Those regulations are detailed and comprehensive, and cover design, construction, operation, closure, and post-closure care standards. The Chapter 62-673 F.A.C. regulations also require long-term m onitoring and long-term care and FA for these activities. The perform ance standard governing phosphogypsum stacks dictates that: "A phosphogypsum stack system shall be designed, constructed, operated, maintained, closed, and m onitored throughout its design period to control the m ovement of waste and waste constituents into the environment so that ground w ater and surface w ater quality standards of Chapters 62-303 and 62-520 F.A.C., will not be violated beyond the applicable zone of discharge specified for the system ." 62-673.340(1) F.A.C.9 9 https://www3.epa.gov/radtown/fertilizer-production.htm l 50 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00150 Surface water m anagem ent at these sites requires them to be "operated to provide for the collection, control, recycling and treatm ent of surface runoff from the site as necessary to m eet the applicable water quality standards of Chapters 62-520 and 62-302 F.A.C." 62-673.340(5) F .A .C . The phosphogypsum m anagem ent regulations at 62-673.340(7) F.A.C. include the following specific provisions governing interim management: "(7) Interim Stack System M anagem ent Plan (ISSM P). The owner or operator of each phosphogypsum stack system shall subm it a w ritten ISSM P to the D epartm ent by July 1st following the effective date of these am endm ents (July 2, 2005). The ISSM P shall provide instructions for two years of operation and m anagem ent of the specific phosphogypsum stack system should a shutdown occur such that no phosphoric acid will be produced at the facility for a two-year period. By July 1 of each following year, the owner or operator shall submit an updated ISSM P, taking into account the process w astewater levels and the existing stack system configuration as of June 1 of that year. The ISSM P shall include: (a) A detailed description of process wastewater m anagem ent procedures that will be im plem ented to insure that the stack system operates in accordance with all applicable D epartm ent perm it conditions and rules. The procedures shall address the actual process w astew ater levels present at the facility as of June 1 of each year and shall assum e that the facility will receive average annual rainfall during the two year planning period; (b) A detailed description of the procedures to be followed for the daily operation and routine m aintenance of the stack system (including required environmental sampling and analyses) as well as for any m aintenance or repairs recom m ended following annual inspections of the system; (c) Identification of all m achinery, equipm ent and m aterials necessary to im plem ent the plan as well as actions that w ould be taken to assure the availability of these item s during the planning period; (d) Identification of the sources of power or fuel necessary to im plem ent the plan as well as the actions that would be taken to assure the availability of power or fuel during the planning period; and (e) Identification of the personnel necessary to im plem ent the plan, including direct labor required for paragraphs (a) and (b) above, and any necessary direct supervisory personnel, as well as the actions that would be taken to assure their availability and any required training of these personnel." These regulations include prescriptive closure plan requirem ents at 62-673.610 F.A.C that mandate a closure design that controls, minimizes, or eliminates the post-closure release to ground w ater or to surface water of phosphogypsum , process waste water, leachate, and contaminated runoff. Closure plans require stacks to be closed with a cover system that m inim izes infitration into the stack and requires little or no long-term maintenance. Process waste water in ponds or ditches m ust be treated. Sludges in ponds m ust be rem oved or treated. Leachate control systems m ust prevent leachate from violating applicable water quqlity standards. Sierra Club v. EPA 18cv3472 NDCA 51 Tier 2 ED 002061 00087255-00151 Section 62-673.630 F.A.C of the phosphogypsum m anagem ent rules establishes long-term care requirem ents that m andate operators "shall be responsible for m onitoring and m aintenance of the facility in accordance with an approved closure plan for 50 years from the date of closing." FDEP has the authority to extend the tim efram e for the long-term m onitoring and maintenance requirem ents if the "closure design or closure operation plan is found to be ineffective." The FA requirem ents at 62-673.640 F.A.C require operators to provide FA before FDEP can issue operating permits and requires FA throughout the lifecycle of the fertilizer m anufacturing plant. The 50-year long-term care FA amount m ust be based on the estimated costs to close the stack and provide for long-term care and water management. Operators m ust submit updated estim ated closure costs on an annual basis to adjust for inflation and any changes in the closure plan. Even if EPA continues to assert that phosphogypsum stacks somehow are a com ponent of hardrock mineral processing facilities subject to the Proposed Rule, the State of Florida has FA requirem ents for these facilities, including provisions for long-term care (i.e., long-term O&M ), that are identical to EPA 's FA long-term care requirements for hazardous waste disposal facilities pursuant to RCRA. Because the FA requirem ents in 62-673.640(5) are consistent with RCRA, there is clearly no need for a duplicative FA requirem ent under CERCLA 108(b). The two EPA documents describing the regulatory requirem ents for Florida's phosphate mines and phosphate fertilizer m anufacturing plants do not describe the comprehensive environmental protection, reclam ation requirements, and FA provisions in Florida's laws and regulations. The docum ent entitled: "Summary of Florida Financial Responsibility Requirem ents" (EPA-HQSFU N D -2015-0781 -2224) focuses m ainly on the physical reclam ation requirem ents applicable to the clay ponds and sand disposal facilities at the phosphate mines. It does not m ention the standards and FA requirements imposed under applicable County codes to the same mine properties, and it only m entions in passing the stringent Chapter 62-673 F.A.C. regulatory program for Florida's phosphogypsum stacks and completely overlooks the incorporation by reference o f the R C R A long-term care FA requirem ents in this chapter. The second docum ent, Table F in A ppendix IV in E PA 's N ovem ber 2016 "Com prehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (EPA-HQ-SFUND-2015-0781-0144), also fails to describe the breadth of Florida's regulations and FA requirem ents for the phosphogypsum stacks. Like EPA 's summary document, Appendix IV/Table F focuses mainly on the reclamation requirements for Florida's phosphate mines and does not include an adequate discussion of the environm ental protection and FA requirem ents for Florida's phosphogypsum stacks. EPA should eliminate Florida's phosphate mines and fertilizer m anufacturing plants from the Proposed Rule because these facilities are not hardrock mines and processing facilities. EPA should sim ilarly elim inate Florida's phosphogypsum stacks from the Proposed Rule for two reasons: 1) they are not hardrock m ineral processing facilities and are erroneously included in the Proposed Rule; and 2) Florida regulates these facilities as hazardous waste disposal operations that are subject to regulations that m irror RCRA requirements, including the m andate for 52 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00152 operators of phosphogypsum stacks to provide FA for long-term care, analogous to the FA requirements under RCRA. Sierra Club v. EPA 18cv3472 NDCA 53 Tier 2 ED 002061 00087255-00153 RCesEpRoCnsLeACa1_Ct0_eE8_g(_Rob_r)C_yL_ A__1_0_8_(_b_)_R__e_spfoonr sHe aECrad- treFoglcookFrriylMdoEariinqdiuanigvR*ae_lge_un_lt_as_t_iino_n_Fs_lo_r_i_d_a__R_u_l_e_s S olid/H azardous F.A.C. 62C -16.005l(9)(c) W aste Disposal F.A.C. 62-730 F.A.C. 62-673.610 F.A.C. 62-673-640(f) as the equivalent o f 40 C.F.R. 264.143(f)(1) and 264.145(f)(1) F.A.C. 62-777 F.A.C. 62-780 Open Pit (mine F.A.C. 62C-16.0051 cuts)* F.A.C. 62C-16.0075 W aste Rock (clay F.A.C. 62C-16.0051 settling ponds and F.A.C. 62C-16.0075 sand disposal F.A.C. 62-673.320 facilities)* F.A.C. 62-673.340(4), (7) F.A.C. 62-673.400 F.A.C. 62-673.600 F.A.C. 62-673.610 Heap/Dum p/Leach Not applicable Tailings Facility (Phosphogypsum Stack)* Process P o n d /R eserv o ir (Phosphogypsum Stack) F.A.C. 62C -16.0051 F.A.C. 62C-16.0075 F.A.C. 62-303 F.A.C. 62-520 F.A.C. 62-672.100- .870 F.A.C. 62-673.320 F.A.C. 62-673.340 F.A.C. 62-673.400 F.A.C. 62-673.600 F.A.C. 62-673.610 F.A.C. 62-673.630 F.A.C. 62.673.640 F.A.C. 62C-16.0051 F.A.C. 62-673.320 F.A.C. 62-673.400 F.A.C. 62-673.600 F.A.C. 62-673.610 Underground M ine N ot applicable Slag Pile Not applicable Interim O&M F.A.C. 62-673.340(7) F.A.C. 62-673.610(7) Sierra Club v. EPA 18cv3472 NDCA 54 Tier 2 ED 002061 00087255-00154 RCesEpRoCnsLeACa1t0e8g(obr)y W ater Treatment Short-term O&M M onitoring Florida Regulations F.A.C. 62C-16.005 l (7)(a) F.A.C. 62-660.400(l)(e)31 F.A.C. 62-671.300 F.A.C. 62-303 F.A.C. 62-520 F.A.C. 62-673.340(5), (6) F.A.C. 62-673.610 F.A.C. 62C-16.0067 F.A.C. 62-673.320(n) F.A.C. 62-673.340(4) Long-term O&M F A C. 62-673.320(3)(n), (4), (5) M onitoring F.A.C. 62-673.340(4) F A C. 62-673.610(3), (4), (6), (7) F.A.C. 62-673.630 F.A.C. 62-673.640 F.A.C. 62-673-640(5) as the equivalent of 40 C.F.R. 264.143(f)(1) and 264.145(f)(1) Note: EPA has improperly classified Florida's phosphate mines and phosphate mineral processing facilities as hardrock m ining and mineral processing facilities Sierra Club v. EPA 18cv3472 NDCA 55 Tier 2 ED 002061 00087255-00155 F. Idaho As shown in Table F below, three regulatory program s and state agencies govern the design, operation, and closure of Idaho mines, and require FA for specific components of Idaho mining and m ineral processing operations. The Idaho D epartm ent of Lands ("ID L") adm inisters the Idaho Adm inistrative Procedures Act ("IDAPA") 20, Title 03, Chapter 02 Rules Governing Exploration, Surface M ining, and Closure of Cyanidation Facilities ("Reclam ation and Closure R u le" ) 10. T he Idaho D epartm ent o f E nvironm ental Q uality ("ID E Q " ) adm inisters the ID A P A 58, T itle 01, C hapter 13 R ules fo r O re P rocessing by C yanidation ("C yanidation P rocessing R u le"). The Idaho Departm ent of W ater Resources ("IDW R") adm inisters the IDAPA 37 Title 03, C hapter 05 M ines T ailings Im poundm ent S tructures R u les.11 In addition to these specific mining-related rules, Idaho m ining and mineral processing facilities m ust com ply w ith Idaho's stringent antidegradation policy at ID A PA 58, Title 01, Chapter 02, Section 051) to protect existing and designated beneficial uses o f surface w aters and "all applicable laws and rules of the state of Idaho" governing Idaho's w ater quality standards, waste water treatm ent requirements, groundwater quality, hazardous and solid waste m anagement, and stream channel protection. (See generally, IDAPA 20.03.02.001.04). IDL m ust deny a Reclam ation and Closure permit application for proposed projects that cannot affirmatively dem onstrate com pliance with Idaho's antidegradation policy protecting beneficial uses of the w aters o f the State. ID A PA 20.03.02.08.07. Idaho's regulatory and FA requirem ents for m ining and m ineral processing apply to all lands in the state regardless of ownership. Operators with projects on public lands m ust obtain permits from IDL, IDEQ, and IDW R and provide these state agencies with FA in addition to securing any necessary permits from the applicable FM LA and satisfying federal FA requirements. In 1996, Idaho developed the Idaho Joint Review Process, which is a structured interactive consultation process between Idaho state agencies and the FLM A. The Idaho Joint Review Process coordinates and facilities the interaction of state and federal laws and regulations governing mineral developm ent proposals on public lands in Idaho. 10 T he Idaho M ining A ssociation has started a dialogue w ith stakeholders about asking Idaho State legislators to am end the Idaho Surface M ining A ct (Idaho Code Chapter 15, Title 47) to extend the application of the Act to the surface effects of underground mines that are not associated with cyanidation mineral processing facilities. U nderground m ines m ust already comply w ith num erous Idaho environmental protection regulations including the antidegradation rules. Tailings im poundm ents associated with underground mining operations m ust comply with the M ine Tailings Im poundm ent Structure Rules. The Cyanidation Processing Rule already applies to a tailings im poundm ent at an underground mine that uses cyanide as the principal leaching chemical in its mineral processing facility. 11 Id ah o 's dam safety rules specific to the design, operation, and F A requirem ents fo r tailings im poundm ents are unusual. M ost states apply their m ore general dam safety regulations to tailings storage facilities and do not have a separate regulation dealing specifically for im poundm ents designed to im pound mine tailings. 56 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00156 The package of regulations for m ining and mineral processing facilities in Idaho provides comprehensive environmental protection and FA for Idaho mines and mineral processing facilities. As shown in Table F below, this regulatory package governs all of the CERCLA 108(b) response categories in the Proposed Rule and gives Idaho regulators the authority to require FA for each category. The Idaho regulatory fram ework applicable to m ining and mineral processing is another example of a "com plicated but generally effective" regulatory fram ew ork described in the NAS Study. This fram ework involves three different state regulatory agencies, interaction of two separate regulatory program s applicable to cyanidation facilities, and numerous portions of Idaho's administrative code governing environmental protection and providing for public health and safety. A distinguishing aspect of Idaho's regulatory program s is the com bination and interaction of the IDA PA 20.03.02 and ID A PA 57.01.13 rules governing cyanidation facilities. W orking as a whole, Idaho's regulations establish comprehensive and stringent environmental protection and FA requirem ents that m inim ize the potential for a release of hazardous substances from an Idaho mine and give Idaho state regulators FA in the event an operator fails to respond to a release. ID L's Reclam ation and Closure Rule establishes detailed information requirements that permit applicants m ust provide to develop and operate a surface mine or mineral processing facility that uses cyanide as a principal processing chemical. ID EQ 's Cyanidation Processing Rule works in tandem with the IDL rules. Together the Reclam ation and Closure Rule and the Cyanidation Processing Rule govern the entire mining and mineral processing life cycle. The Reclam ation and Closure Rules include the follow ing definition of "post closure" : "The period after com pletion of perm anent closure w hen the operator is m onitoring the effectiveness of the perm anent closure activities. Post closure shall last a minimum of twelve (12) months, but may extend until the cyanidation facility is show to be in com pliance with the stated perm anent closure objectives and the requirem ents of the chapter." (IDAPA 20.03.02.001.39) Some of the environmental protection inform ation requirements that applicants for a permit under the Reclam ation and Closure Rule include the follow ing (ID A PA 20.03.02.070 - .071): An estimate of total reclam ation costs in the event the operator fails to im plem ent the perm anent closure plan and assuming a third party under contract to IDL m ust perform the perm anent closure activities; A description of site-specific impacts from acid rock drainage and Best M anagem ent Procedures ("B M Ps") that will be used to m itigate any im pacts from acid rock drainage; The procedures and schedule for neutralizing process waters and stabilizing mined m aterials; An estim ate of the duration of the post-closure period; Sierra Club v. EPA 18cv3472 NDCA 57 Tier 2 ED 002061 00087255-00157  A closure and post-closure w ater m anagem ent plan that is consistent with the Cyanidation Processing Rule; The design and operation of BM Ps during closure and post-closure to provide for water m anagem ent; The design and m aintenance of engineered caps and covers designed by a professional engineer registered in Idaho for cyanidation facilities that m ust be designed to minimize the interaction of m eteoric waters, surface waters, and groundwaters with wastes containing pollutants that are likely to be m obilized and discharged to w aters of the state; Closure and post-closure m onitoring plans for surface water and groundwater to ensure compliance with the perm anent closure plan and the state requirements; and A solid and hazardous waste m anagem ent plan to comply with state and federal laws and regulations governing solid and hazardous federal Resource Conservation and Recovery waste manag Act, 42 U.S.C em . S ent an ection d 6 9 0d1ispeotsseaql .)(i.e. the Applicants for a Reclam ation and Closure permit may be required to pay for an independent third-party to review and verify the accuracy of the perm anent closure cost estimate. ID L's review and approval process for a Reclam ation and Closure perm it is coordinated with ID EQ 's review and approval of the Cyanidation Processing permit. IDEQ is authorized to im pose additional perm anent closure requirem ents in the Cyanidation Permit. Idaho regulators can require an operator to amend a Reclam ation and Closure perm it to respond to new or unanticipated site-specific conditions or if the operator proposes to modify or expand its operation. (IDAPA 20.03.02.090-091, 100). IDEQ can also require an operator to amend the Cyanidation Processing perm it to address unanticipated circumstances. IDL and IDEQ coordinate their authority to require perm it amendments. Operators seeking to close a surface mine and cyanidation processing facilities m ust submit a Perm anent Closure Report that com plies w ith the inform ation requirem ents in ID A PA 20.03.03.111-112. The Perm anent Closure Report m ust docum ent that perm anent closure has resulted in "long-term neutralization of process waters and material stabilization." Operators m ust submit the following documentation: The effectiveness of material stabilization and the w ater m anagem ent plan; The adequacy of the m onitoring plan; The post-closure operation, maintenance, and m onitoring requirements, and the estimated cost to complete these activities; The source control system s (i.e., caps and covers) constructed to eliminate, m itigate, or contain short- and long-term discharge of pollutants from cyanidation facilities; 58 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00158  Ownership and responsibility for the site during the perm anent and post-closure periods; and The future beneficial uses of the land, surface w ater and ground w ater in and adjacent to the closed cyanidation facilities. IDL will disapprove of a Perm anent Closure Report if the applicant cannot dem onstrate com pliance with the above-listed requirem ents. In the event of such disapproval, the operator m ust continue to m anage the closed site in com pliance w ith all of the applicable operating permits including the Reclam ation and Closure Permit, the Cyanidation Processing Permit, and the Tailings Im poundm ent Dam Safety Permit. The operator m ust also continue to m aintain the FA instrum ents it has provided to ID L, ID EQ , and IDWR. Idaho's Surface Reclam ation and Closure regulation establishes specific FA requirem ents for the Reclam ation Plan at ID APA 20.03.02.120, "Perform ance Bond Requirem ents for Surface M ining" and for Cyanidation Facilities at IDAPA 20.03.02.121 "Perform ance Bond Requirem ents for Cyanidation Facilities". IDEQ will not issue a perm it pursuant to Idaho's Cyanidation Processing regulations until an operator has satisfied the FA requirem ents in IDAPA 20.03.02.120-121. The Tailings Im poundm ent Structure Rules establish specific and stringent criteria governing the structural design of the em bankm ent to provide long-term stability (IDAPA 37.03.05.045) that apply to tailings dams built in conjunction with both surface and underground mines. M ine tailings im poundm ents must be certified by IDW R before tailings can be deposited in the im poundm ent and re-certified every two years. U nder the Tailings Im poundm ent Structure Rules at ID APA 37.03.05.040, Idaho operators m ust provide ID W R w ith FA that covers "the active life of the tailings disposal site. ..to provide a means by which the tailings impoundm ent can be placed in a safe m aintenance-free condition if abandoned by the owner w ithout conform ing to an abandonm ent plan approved by the D irector." The bond am ount is subject to review every tw o years (when the structure is recertified) and is adjusted to account for inflation and to reflect current costs. In addition to the environm ental protection and FA requirem ents in Idaho's Reclam ation and Closure Regulations, the ID EQ 's Cyanidation Processing Rule establishes requirem ents for the design, operation, and closure of mineral processing facilities that use cyanide as a primary leaching agent. The Cyanidation Processing Rule ensures that cyanide-bearing process waters are safely contained, controlled and treated. Like the Reclam ation and Closure Regulation, the Cyanidation Processing Rule m andates protection of beneficial uses of waters of the state. The Cyanidation Processing regulatory program requires perm it applicants to provide detailed inform ation about the design of the environmental controls that will be employed to contain and treat all cyanide-bearing process waters. This ID EQ -m anaged program is cross-referenced to and coordinated with the ID L's Reclam ation and Closure program. IDAPA 50.01.13.200 establishes m inimum design and perform ance standards to protect public health and waters of the 59 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00159 state. Although the m inim um design and perform ance standards apply to all cyanidation facilities, IDEQ is authorized to apply m ore stringent site-specific criteria as necessary to m eet the objectives of this regulation. Key components of the engineering design and performance criteria include the following: Design storm event, engineered containm ent criteria, and project water balance that includes snowmelt and contingency plans to manage excess process water; Specifications for the engineered sub-base, primary and secondary synthetic liners, and com pacted clay liners; Redundant power and pum ping capabilities in the event of power failures; Leak detection and collection systems; Procedures for loading ore onto leach pads to m inim ize the potential for damaging the liner; System perform ance m onitoring plans to docum ent the perform ance of the containm ent m easures; Caps and covers to m inim ize infiltration of m eteoric w ater into heaps and tailings im poundm ents; Surface water and groundwater m onitoring and reporting programs; Temporary and seasonal closure plans; and Quality assurance and quality control plans for data collection and analysis. In 2016, the Idaho State Legislature am ended Idaho Code 47-1512 to increase the program m atic upper lim it for the surface m ining perform ance bond from $2,500 per acre to $15,000 per acre. As a practical matter, this lim it functions as a guideline because IDL can determ ine that a higher bonding level is required to address site-specific conditions. In the event IDL requires FA that exceeds the $15,000 per acre calculation, the operator may request a hearing before the Board of Land Com m issioners. Similarly, ID A PA 20.03.02.121 establishes a program m atic ceiling of $5 m illion for the cyanidation perform ance bond. IDL may set a higher site-specific FA am ount if the Agency determ ines that site conditions w arrant a higher level of FA in order to comply with the Reclam ation and Closure rules. Like the surface mining perform ance bond, there is not an upper lim it to the am ount of the cyanidation perform ance bond if site-specific conditions dictate that m ore than $5 m illion in FA is necessary. An operator may request a hearing if IDL requests a higher level of FA for the cyanidation performance bond. In August 2016, Idaho Govenor, Butch Otter, sent EPA Adm inistrator, Gina M cCarthy, a letter in conjunction w ith E PA 's federalism consultation effort for the CERCLA 108(b) rulem aking. Governor O tter's letter em phatically states that a CERCLA 108(b) FA program is unnecessary 60 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00160 in light of Idaho's com prehensive regulatory program for hardrock mining. As stated in the G overnor's letter, a perm anent closure plan and associated bond pursuant to Idaho's Cyanidation Facility regulatory program must also m eet the requirements of the Federal Resource Conservation and Recovery Act, U.S.C. Sections 6901 et seq.; the Idaho H azardous W aste M anagem ent Act, Chapter 44, Title 39, Idaho Code; and the Idaho Solid W aste M anagem ent Act, Chapter 74, Title 39, Idaho Code. Governor O tter's letter documents the success of Idaho's regulatory and FA programs for hardrock mines: "N o hardrock m ine approved since 1986 for which financial assurances were posted has defaulted on the financial assurances such that the M ine was not closed and reclaim ed in accordance with: (1) the reclam ation/closure plan approved by the relevant Federal and/or State agencies; and (2) the financial assurances retained by the agencies." A lthough it is com plex, Idaho's m ulti-agency, m ulti-regulations regulatory fram ew ork for Idaho hardrock mines provides effective and comprehensive environmental protection that determines site-specific FA requirem ents on a project-by-project basis. The three state agencies with jurisdiction over m ining (e.g., DDL, ID EQ , and ID W R ) coordinate and adm inister their regulatory programs in a m anner that eliminates regulatory gaps. This package of environmental protection, regulations, FA requirements, and design and operating requirements for mine tailings impoundm ents provides complete, seamless, and gap-free environmental protection and FA. Consequently, im position of an FA requirement under CERCLA 108(b) would be duplicative and potentially preem pt the Idaho State FA programs. The two EPA documents analyzing Idaho's law and regulations governing hardrock m ining are seriously deficient and do not adequately describe the scope of Idaho's regulatory and FA program s. First, Appendix IV, Table G in E PA 's N ovem ber 2016 "Com prehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (Docket No. EPA -H Q -SFU N D -2015-0781 -0144) omits the Idaho law and regulations governing the design, operation, and closure of mine tailings im poundm ents. It also fails to m ention Idaho's antidegradation requirem ents. Second, the "Summary of Idaho Financial Responsibility Requirem ents (Docket No. EPA-HQ-SFUND2015-0781-2039) com pletely overlooks the IDEQ Ore Processing by Cyanidation Rule, which is an essential com ponent of Idaho's regulatory program that m inimizes the potential risk of releases of hazardous substances. This sum m ary includes irrelevant inform ation about Idaho's rules for placer and dredge mining, which are not subject to the Proposed Rule and does not include the updated $15,000 per acre m odification to the ID L's rules. As stressed in G overnor O tter's A ugust 2016 letter to EPA and shown in Table E below, there is no justification in Idaho for EPA 's proposal to add another layer of FA under CERCLA 108(b). Sierra Club v. EPA 18cv3472 NDCA 61 Tier 2 ED 002061 00087255-00161 _C_E__R_C_L__A__1_0_8(_b_)_R__e_sp__o_n_s_e CfoartTeHgaoabrrleydrFEoq-cukIidvMaahilneonintsg_in__I_d_a_h_o__S_t_at_u_t_e_s_a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) Idaho Regulations Solid/H azardous IDAPA 20.03.02.071 W aste Disposal ID A PA 20.03.02.111 ID A PA 20.03.02.140 IDAPA 58.01.02.051 ID A PA 58.01.05 ID APA 58.01.06 ID APA 58.01.13.100 ID A PA 58.01.13.501 IDAPA 37.03.05.045 Open Pit IDAPA 20.03.02.070 IDAPA 20.03.02.090 IDAPA 20.03.02.091 ID APA 20.03.02.111 IDAPA 20.03.02.120 IDAPA 20.03.02.140 ID A PA 58.01.02.051 W aste Rock IDAPA 20.03.02.070 IDAPA 20.03.02.090 IDAPA 20.03.02.091 IDAPA 20.03.02.111 IDAPA 20.03.02.120 IDAPA 20.03.02.140 ID A PA 58.01.02.051 Heap/Dum p/Leach ID APA 20.03.02.071 IDAPA 20.03.02.080 IDAPA 20.03.02.090 IDAPA 20.03.02.091 IDAPA 20.03.02.111 IDAPA 20.03.02.120 ID APA 20.03.02.121 IDAPA 20.03.02.140 ID APA 58.01.13.100 IDAPA 58.01.13.200 IDAPA 58.01.13.500 ID APA 58.01.13.750 ID A PA 58.01.02.051 Sierra Club v. EPA 18cv3472 NDCA 62 Tier 2 ED 002061 00087255-00162 RCeEsRpoCnLseACat1e0g8o(bry) Tailings Facility Process P o n d /R eserv o ir Underground M ine Slag Pile Interim O&M ID A PA 20.03.02.070 ID APA 20.03.02.071 IDAPA 20.03.02.080 IDAPA 20.03.02.090 ID A PA 20.03.02.091 IDAPA 20.03.02.111 IDAPA 20.03.02.120 ID APA 20.03.02.121 IDAPA 20.03.02.140 ID APA 58.01.13.100 ID APA 58.01.13.200 IDAPA 58.01.13.500 IDAPA 58.01.13.750 ID A PA 58.01.02.051 ID APA 37.03.05.035 ID APA 37.03.05.040 ID APA 37.03.05.045 IDAPA 20.03.02.070 ID APA 20.03.02.071 IDAPA 20.03.02.080 IDAPA 20.03.02.090 ID APA 20.03.02.091 ID APA 20.03.02.111 IDAPA 20.03.02.120 ID APA 20.03.02.121 IDAPA 20.03.02.140 IDAPA 58.01.13.100 ID APA 58.01.13.200 ID APA 58.01.13.500 ID APA 58.01.13.750 ID A PA 58.01.02.051 ID A PA 58.01.02.051 N ot applicable IDAPA 20.03.02.070 ID APA 20.03.02.071 IDAPA 20.03.02.080 IDAPA 20.03.02.090 ID APA 20.03.02.091 ID APA 20.03.02.111 IDAPA 20.03.02.120 ID APA 20.03.02.121 IDAPA 20.03.02.140 IDAPA 20.03.02.150 ID APA 58.01.13.100 Idaho Regulations 63 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00163 RCeEsRpoCnLseACat1e0g8o(bry) W ater Treatment Short-term O&M M onitoring IDAPA 58.01.13.200 IDAPA 58.01.13.501 ID APA 58.01.13.502 ID APA 58.01.13.750 ID A PA 58.01.13.850 IDAPA 58.01.13.900 IDAPA 20.03.02.070 IDAPA 20.03.02.071 ID A PA 20.03.02.080 IDAPA 20.03.02.090 ID APA 20.03.02.091 ID APA 20.03.02.111 IDAPA 20.03.02.112 IDAPA 20.03.02.120 IDAPA 20.03.02.121 IDAPA 20.03.02.140 ID APA 58.01.13.100 ID APA 58.01.13.200 ID A PA 58.01.13.501 IIDD AAPPAA 5588..0011..1133..755002 ID APA 58.01.13.850 ID APA 58.01.13.900 ID A PA 58.01.02.051 IDAPA 20.030.010.39 IDAPA 20.03.02.070 ID APA 20.03.02.071 IDAPA 20.03.02.080 IDAPA 20.03.02.090 ID APA 20.03.02.091 ID APA 20.03.02.111 IDAPA 20.03.02.112 IDAPA 20.03.02.120 IDAPA 20.03.02.121 IDAPA 20.03.02.140 IDAPA 20.03.02.150 ID APA 58.01.13.100 ID APA 58.01.13.200 ID A PA 58.01.13.501 IIDD AAPPAA 5588 ..00 11 ..11 33 ..87 55 00 ID APA 58.01.13.900 Idaho Regulations Sierra Club v. EPA 18cv3472 NDCA 64 Tier 2 ED 002061 00087255-00164 RCeEsRpoCnLsAe Cat1e0g8o(rby) Long-term O&M M onitoring Idaho Regulations ID A PA 20.03.02.001.39 IDAPA 20.03.02.070 ID APA 20.03.02.071 IDAPA 20.03.02.080 ID A PA 20.03.02.090 ID A PA 20.03.02.091 IDAPA 20.03.02.111 IDAPA 20.03.02.112 IDAPA 20.03.02.120 ID APA 20.03.02.121 IDAPA 20.03.02.140 IDAPA 20.03.02.150 ID APA 58.01.13.100 ID APA 58.01.13.200 ID A PA 58.01.13.501 ID APA 58.01.13.750 ID APA 58.01.13.850 ID APA 58.01.13.900 Sierra Club v. EPA 18cv3472 NDCA 65 Tier 2 ED 002061 00087255-00165 G. Michigan M ost of M ichigan's environm ental regulations are included in the Natural Resources and Environm ental Protection Act ("N REPA "), M ichigan Com piled Law s ("M C L") 1994 PA 451, as am ended. M CL Part 632, N onferrous M etals M ining 324.63201 through 324.63223, governs nonferrous, metallic (i.e., hardrock) mining and mineral exploration. Rule 425 101 - 602 implements the Part 632. M CL Part 631 applies to metallic ferrous mining (i.e., iron ore mining). As shown in Table G and discussed below, MCL Part 632 and the Rule 425 include provisions that correspond to the thirteen CERCLA 108(b) response categories, including specific requirements for long-term care. The M ichigan Department of Environmental Quality ("M IDEQ")/0ffice of Oil, Gas, and Minerals ("OOGM ") administers MCL Part 632 and Rule 425. MCL Part 315 establishes dam safety requirements that apply to dams that are over six feet in height and cover more than 5 acres. These dam safety requirements apply to tailings dams for both ferrous and nonferrous mining projects. They would also apply to large above-ground process ponds (i.e., ponds constructed with a 6-ft high or higher ring-dike embankment.) In enacting M CL Part 632 324.63202(c) - (e) M ichigan legislators drew the following distinction between nonferrous, m etallic m ining and m etallic ferrous mining: "(c) Nonferrous m etallic sulfide deposits are different from the iron oxide ore deposits currently being m ined in M ichigan in that the sulfide m inerals may react, when exposed to air and water, to form acid rock drainage. If the mineral products and waste m aterials associated with nonferrous m etallic sulfide m ining operations are not properly managed and controlled, they can cause significant damage to the environm ent, im pact hum an health, and degrade the quality of life of the im pacted com m unity. (d) The special concerns surrounding nonferrous m etallic mineral m ining warrant additional regulatory m easures beyond those applied to the current iron mining operations. (e) Nonferrous metallic mineral mining may be an important contributor to M ichigan's econom ic vitality. The econom ic benefits of nonferrous m etallic mineral mining shall occur only under conditions that assure that the environment, natural resources, and public health and welfare are adequately protected." In order to secure a mining perm it under M CL Part 632 for a hardrock mine in M ichigan, an operator must provide a detailed m ining and reclamation plan that documents the proposed project will m inim ize adverse environmental im pacts including preventing and controlling acidmine drainage. The perm it application m ust also include a contingency plan outlining how the operator would respond to any accidents, failures, or upsets of the project's environmental controls. M IDEQ will not approve a mine perm it application unless the applicant can prove that "the proposed m ining operation will not pollute, im pair, or destroy the air, water, or other natural resources or the public trust in those resources." M CL Part 632 324.62305(11). Sierra Club v. EPA 18cv3472 NDCA 66 Tier 2 ED 002061 00087255-00166 M CL Part 632 requires an operator to reclaim and rem ediate a m ining project and the affected area to achieve a "self-sustaining ecosystem ...that does not require perpetual care following closure." M CL Part 632 324.63209(8), R 425.204(b)(vi). The goal applicable to reclaimed m ines is to return the site and the surrounding area to the "ecological conditions that approximate pre-m ining conditions." Projects with reactive m aterials (defined as including overburden, ore, waste rock, peripheral rock, and tailings) m ust be m anaged to "m inim ize actual and potential adverse im pacts on groundwater and surface water by preventing leaching or runoff of acid-forming waste products and other waste products from the mining process. R 425.409. Facilities with reactive materials m ust be designed with a composite liner system and leachate collection and leak detection systems. During closure, these facilities m ust be covered as soon as practicable to isolate the reactive m aterials from precipitation and air. M CL Part 632 324.63211(1) establishes detailed FA requirements for hardrock m ining and milling operations that require an operator to m aintain FA during mining, reclamation, closure, and for a 20-year long post-closure m onitoring period. The 20-year post-closure monitoring period is stipulated in M CL Part 632 324.63209(6). The M IDEQ has the authority pursuant to M CL Part 632 324.63209(6)(a) to extend the post-closure monitoring period in increm ents of up to 20 years unless "there is no significant potential for w ater contam ination resulting from the m ining operation." The post-closure m onitoring requirem ent in M CL Part 632 law provides FA for long-term m onitoring that is analogous to the CERCLA 108(b) long-term O& M cost category. M ine operators are required to update the FA cost calculation at least as frequently as every three years. R 425.308(1). A lthough M CL Part 632 requires an extended period of post-closure m onitoring, which is typically manner at least 20 years long, that does not require the law perpetual a lso sti care. pSuelea tes M that a project CL Part 632 m ust be reclaim 324.63209(8) ed in and a R 425.204(b)(vi). This prohibition against perpetual care means that mine operators m ust design and operate their facilities with effective m easures to isolate reactive materials. M ichigan mine operators are required to submit an annual m ining and reclam ation report to M ID E Q by M arch 15 o f each year during operation and throughout the 20-year (or longer) post closure m onitoring period to docum ent the facilities are com plying w ith all perm it conditions and requirements. M CL Part 632 324.63213. The annual report m ust include the monitoring results for the preceding year. If the m onitoring results reveal an exceedance in a monitoring parameter, the operator m ust notify M IDEQ immediately: "A perm ittee shall prom ptly notify the departm ent and each emergency m anagem ent coordinator having jurisdiction over the affected area of any incident, act of nature, or exceedance of a perm it standard or condition at a m ining operation that has created, or may create, a threat to the environment, natural resources, or public health and safety." M CL Part 632 324.63213(2). U pon receiving the operator's notification of an incident or exceedance of a perm it standard, M CL Part 632 provides M IDEQ with substantial enforcem ent authorities to require the operator 67 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00167 to im plem ent appropriate response actions to abate or eliminate the exceedance and to correct the violation, to suspend the operating permit, or even to revoke the permit. If an operator fails to take the necessary actions to rem ediate a problem, M IDEQ can "take w hatever action is necessary to curtain and rem ediate any damage to the environm ent and public health resulting from the violation." If M IDEQ remediates the problem, the operator and the surety provider rem ain "jointly and severally liable for all expenses incurred by the departm ent." M C L Part 632 324.63221(5). M CL Part 632 324.63213 provides an excellent example of how state regulators use project m onitoring data to verify a project is com plying with the surface water, groundwater, and other environmental perform ance standards specified in its permits. The M IDEQ and their counterparts in the other m ining states discussed in this report use m onitoring results as a real-tim e indicator of whether there is any indication of a potential release of a hazardous substance and if the environmental controls at a mining operation are functioning properly. If the monitoring results indicate there may be a release, operators are required to investigate to determ ine the extent and nature of the release and to undertake appropriate response measures. As part of the M ichigan mine permitting process, applicants m ust prepare an environmental protection plan and a contingency plan. R 425.201(d), (e). The contingency plan m ust be updated annually and provided in the annual mining and reclam ation report. As specified in R 425.205, the contingency plan m ust include an assessm ent of the risk to the environm ent or public health and safety associated with potential accidents or failures involving the items listed below and the response measures the operator proposes to im plem ent to abate the environmental or public health and safety problem: Release or threat of release of toxic or acid-form ing materials; Storage, transportation, and handling of explosives; Fuel storage and distribution; Fires; W astewater collection and treatm ent system; Settling pond or tailings disposal area em bankm ent failure; Air emissions; Spills of hazardous substances; Power disruption; Unplanned subsidence; and Leaks from containm ent systems for stockpiles or storage or disposal facilities. These very detailed requirem ents for the contingency plan clearly address a broad array of scenarios that could result in a release of a CERCLA hazardous substance. The scope of the FA that operators m ust provide pursuant to R 425.301 includes FA for "rem ediation o f any contam ination o f the air, surface w ater, or groundw ater that is in violation of the m ining permit and for "reasonable contingencies" that an operator would estimate based on the contingency plan. See R. 425.30l(c)(ii) and R. 425.301(c)(iv). M ichigan's FA requirem ents, which require bonding for rem ediation as well as contingencies that include a release of a 68 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00168 hazardous substance, clearly cover the thirteen CERCLA 108(b) response categories as shown in Table G. M ichigan's requirem ents for ferrous m ines under M CL Part 631 are com m ensurate w ith the types of im pacts typically associated with ferrous mines. Consequently, the M CL Part 631 requirem ents are not as detailed or as stringent as the M CL Part 632 requirements for nonferrous m etallic (hardrock) mines. Operators of ferrous mines m ust submit annual reports analogous to the annual report requirem ent for nonferrous m etallic mines. Perm its m ust rem ain in good standing until M IDEQ "determines the m ining activity has not polluted, impaired, or destroyed the air, w ater or other natural resources or the public trust in those resources." M CL Part 631 324.63101c(l)(b). M IDEQ is authorized to issue an im m ediate suspension order "if the department finds there exists an emergency endangering the public health and safety or an im m inent threat to the natural resources of the state." M CL Part 631 324.63103(2). M ichigan regulators are authorized to require FA for ferrous m ining operations if there are concerns about an operator's "financial ability to com ply w ith the rules." M CL Part 631 324.63107. Because ferrous m ines are typically developed in inert rocks that do not produce acid mine drainage, M ichigan legislators have determ ined that FA is not categorically required and th m iant etsh.e Seenev i ro M nme CL ntal Part issue 632 s associated with 324.63202(c). iron Cons ore equ m en ines tly, a th re e mu risk ch o f sim pler a relea th se an of fo a r h hardro azardo ck us substance from the State's iron ore m ines is lower than for nonferrous m etallic mines, which are typically developed in sulfide m inerals that may produce acidic and/or m etals-bearing leachates if not properly managed. EPA 's analysis of M ichigan's laws and regulations governing hardrock m ining in its " Summary of M ichigan Financial Responsibility Requirem ents" in Docket No. EPA -HQ-SFUND-20150781-2041 is seriously deficient because it fails to describe the breadth of M ichigan's FA requirements. For example, there is no discussion of the 20-year (or longer) post-closure m onitoring requirem ent or how that significantly limits the degree and duration of a potential release of a hazardous substance. Similarly, EPA 's summary does not m ention the requirem ent for M ichigan mine operators to restore mined areas to a "self-sustaining ecosystem ...that does not require perpetual care following closure." This very dem anding standard requires operators to use special mine waste handling procedures and state-of-the-art liners and covers to reduce the risk of long-term m anagem ent of acid rock drainage and/or metal leaching. There is virtually zero risk of an un-bonded release of a hazardous substance from a hardrock mine in M ichigan as a result of the state's stringent and comprehensive FA requirements for hardrock m ines and m ineral processing facilities. M ichigan's laws and regulations give M IDEQ the necessary financial resources to respond in the event of a release. Consequently, there is no justification for EPA to impose additional FA pursuant to CERCLA 108(b). EPA 's Proposed Rule is duplicative and unnecessary in M ichigan. Sierra Club v. EPA 18cv3472 NDCA 69 Tier 2 ED 002061 00087255-00169 _C_E__R_C_L__A__1_0_8_(_b)__R_e_s_p_o_n_s_e_C_ aftToeragboHrleayrGEdrq-ouMcikviacMlheniingtiasnnign__M_i_c_h_i_g_a_n_S_t_a_t_u_t_es__a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) Michigan Laws and Regulations S olid/H azardous R 425.203(c)(xvi) W aste Disposal R 425.204(b)(ii) R 425.205(viii) R 425.301 Open Pit R 425.203(c)(iii), R 425.203(c)(v) R 425.203(c)(vii) R 425.203(c)(x) R 425.204(b)(ii) R 425.301 R 425.409 M CL Part 631 324.63101 (ferrous mines) M CL Part 631 324.63103 (ferrous mines) W aste Rock R 425.203(c)(v) R 425.203(c)(xix) R 425.204(b)(iii) R 425.301 R 425.409 M CL Part 631 324.63101 (ferrous mines) M CL Part 631 324.63103 (ferrous mines) Heap/Dump/Leach R 425.203(c)(ii) R 425.203(c)(v) R 425.204(b)(iii) R 425.301 R 425.409 M CL Part 631 324.63101 (ferrous mines) Tailings Facility R 425.203 R 425.203(c)(v) R 425.203(c)(xiii) R 425.203(c)(xix) R 425.204(b)(iii) R 425.205(vi) R 425.301 R 425.409 M CL Part 315 (ferrous and nonferrous mines) M CL Part 631 324.63101 (ferrous mines) M CL Part 631 324.63103 (ferrous mines) Process R 425.203(c)(xiii) P o n d /R eserv o ir R 425.204(b)(iii) R 425.205(vi) R 425.301 70 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00170 RCeEsRpoCnLseACat1e0g8o(bry) Underground M ine Slag Pile Interim O&M W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring Michigan Laws and Regulations R 425.203(c)(viii), (ix), (xi) R 425.204(b)(ii) R 425.205(xi) R 425.301 R 4 2 5 .2 0 4 (b )(iii) R 425.301 M CL Part 632 63209(3) M CL Part 632 324.63209(6) M CL Part 632 324.63211 R 425.205 R 425.301 M CL Part 632 324.63211(2) R 425.203(c)(xxi) R 425.203(c)(xxii) R 425.203(h) R 425.205(v) R 425.301(c)(ii) R 425.409 M CL Part 632 324.63211 M CL Part 632 324.63213 M CL Part 632 324.63215 R 425.203(c)(xxiv) R 425.203(g) R 425.203(m) R 425.204 R 425.301 M CL Part 632 324.63209(6)(a) M CL Part 632 324.63211 M CL Part 632 324.63213 M CL Part 632 324.63215 R 425.203(c)(xxiv) R 425.203 (m) R 425.204(c) R 425.301 Sierra Club v. EPA 18cv3472 NDCA 71 Tier 2 ED 002061 00087255-00171 H. Minnesota As shown in Table H below, activities related to perm itting of m ining operations, assignments, or amendments, are delegated to the M innesota Departm ent of Natural Resources (M NDNR), Division of Lands and M inerals. This includes the entire period of operation from mine planning, construction, operation, and reclam ation through final closure. Perm it requirem ents for ferrous, peat, and nonferrous m ines are described in the M innesota M ineland Reclam ation Rules Chapters 6130, 6131, and 6132, respectively. Both M innesota ferrous and nonferrous metallic mineral leases generally contain conditions and obligations that are specifically designed to m itigate the environmental impacts of exploration and/or mining, through the design, operation, and closure processes, and require FA for specific com ponents of M innesota m ining and mineral processing operations. The M innesota M ineland Reclam ation Act (M M RA) provides regulatory authority for reclam ation of areas subject to mining, such as open pits, waste rock and surface material stockpiles, tailings basins, buildings and equipment, and infrastructure no longer needed for any other use. It also requires revegetation of disturbed ground, and m itigation of im pacted wetlands. These rules were adopted under M N Statute, Chapter 93. Responsibilities of the M innesota M N D N R for m ine perm itting include: Processing Perm it to M ine (PTM ) applications; Issuing of the PTM; Reviewing annual reports and operating plans for conformance to PTM requirements; Reviewing and assessing plans for FA and verifying reclam ation cost estimates; Reviewing and administering perm it am endm ent proposals; Reviewing deactivation and closure plans; Evaluating operations for reclam ation release; and Developing reclam ation rules and amendments, as needed. In addition to its responsibilities regarding the issuance and adm inistration of the PTM (which includes both the m ining and reclam ation permit), the M NDNR conducts an Environmental Review of any proposed m ining project or significant expansion of an existing operation. An initial Environm ental A ssessm ent W orksheet (EAW ) is generally com pleted for all projects and expansions. In m ost cases, a m ore com prehensive Environm ental Im pact Statem ent is subsequently prepared, as stated in M innesota A dm inistrative Rules (M inn. R ), part 4410.4300, subparts 11-12 & M inn. R., part 4410.4400, subparts 8-9. These rules w ere adopted under the M innesota Environm ental Policy A ct (M EPA), M N Statute 116D. Regu prom lations ulgated pertain under ing to M inn. ferrous m R. 6130 eettasleliqc.,mainnde ral inc m lu ining de sp opera ecific tions (ta reclam a conite and iron tion standards f o o res) are r mine- related facilities, including stockpiles, stormwater control features, rock, lean ore, and coarse tailings stockpiles, overburden, tailings basins. The regulations also address standards for revegetation, air quality, and subsidence, along with criteria for release of the permit. W hile not currently required as part of the upfront perm itting of a ferrous m etallic mine in M innesota, at any time during the PTM application process, during the m ining operation, or following the 72 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00172 completion of m ining but prior to the release of the permittee, the M NDNR may require the operator to furnish a perform ance bond (FA) if the agency determ ines that the operator has failed to: Perform any part of a reclamation measure required by the PTM or any amendm ent or modification thereto; Comply with a provision of M inn. R. 6130; Perform any research required, pursuant to M inn. Statutes, sections 93.44 to 93.51; or M ay require the operator to furnish a perform ance bond if there is reasonable doubt that the operator will be financially able to comply with the requirements of the PTM. The absence of mandatory FA for ferrous m etallic mineral projects reflects the inert nature of m ost taconite and iron ore projects. Unlike m etallic non-ferrous mines, which typically involve sulfide m inerals that may generate acidic and m etals-bearing leachate, the hydrogeochem istry of m ost taconite and iron projects is benign. Thus iron ore m ines have a substantially reduced risk of a release of a hazardous substance. Nonetheless, the M N D N R has the discretionary authority to require operators of ferrous mineral m ines to provide FA if there are site characteristics that warrant FA or if regulators have concerns about the financial stability of the operator. Reg M in u n lations per . R. 6132 tea itnsienqg.,t oa no nd nferrous include m etallic specific mineral mining operations reclam ation standards for are promulgated under m ine-related facilities, including reactive mine waste stockpiles, overburden and other storage piles, tailings basins, and heap and dump leaching facilities. The regulations also address standards for revegetation, air quality (dust suppression), subsidence, along with closure and post-closure maintenance requirements. M inn. R. 6132.1200 covers the up-front FA requirements for nonferrous metallic m ining operations as part of the application for a PTM , which docum ents the estim ate of costs necessary to im plem ent the contingency reclam ation plan. This estim ate includes closure and post-closure maintenance activities required if operations cease within the first calendar year. The M NDNR administers the PTM and determines the appropriate amount of FA and financial instrum ents during the perm itting process. The amount and type of financial instrum ents are reviewed annually by the m ining company and the agency, and adjusted, as appropriate. This annual review is beneficial because it allows for adjustm ents to be m ade based on actual, recent operating data, rather than long-term models or predictions. To accom plish the purposes of M inn. R. 6132.0100 to 6132.5300, it is the policy of the M NDNR that m ining be conducted in a m anner that will reduce im pacts to the extent practicable, mitigate unavoidable impacts, and ensure that the m ining area is left in a condition that protects natural resources and m inim izes to the extent practicable the need for maintenance. This shall be accomplished through the use of mining, mine waste management, and passive reclamation methods that m axim ize physical, chemical, and biological stabilization of areas disturbed by mining, as opposed to the use of ongoing active treatm ent technologies. The department recognizes, how ever, that in som e cases, passive treatm ent alone will not entirely m eet all reclam ation goals. In these cases, active treatm ent technologies may be necessary and provisions for continued m aintenance of the treatm ents will be required. Sierra Club v. EPA 18cv3472 NDCA 73 Tier 2 ED 002061 00087255-00173 W ith respect to the m anagem ent of tailings disposal facilities, the M N D N R's Dam Safety Perm it Program regulates the construction and enlargem ent operation, abandonm ent and transfer of ownership. of dams, M inn. R. repa 611 ir, 5.0 3a 0l t0e r aetti osne,q.m, aintenance, establishes m inimum standards and criteria for dam classification and regulation. These regulations cover both initial perm itting and ongoing regulatory oversight. These actions are adm inistered and m onitored by the M N D N R Dam Safety U nit of the Division of Ecological and W ater Resources (EW R ). Unless the [tailings] dam is completely removed, the owner shall perpetually m aintain the dam and appurtenances so as to ensure the integrity of the structure. In addition, the owner/operator will be financially responsible for carrying out the activities required for perpetual maintenance, and that adequate funding will exist. W ith respect to dam s utilized for w aste disposal (i.e., tailings dams), the owner/operator shall prepare and subm it plans for term ination of operations and perpetual maintenance, which will address both an unanticipated or prem ature term ination of operations and for the ultim ate intended term ination of operations. The plans for term ination of operations and perpetual m aintenance shall, at a minim um , address the following issues, where applicable: Perpetual m aintenance and safety of the dam including adequate m onitoring programs; Disposal and treatm ent of ponded and channeled waters; M onitoring and m itigation of surface water and groundwater pollution; Silt, sedim entation, and erosion control; and Vegetation and landscaping. In M innesota, commercial entities that produce any amount of hazardous waste are regulated as hazardous-waste "generators." Treatment, storage, and disposal of hazardous waste is regulated under the Resource Conservation and Recovery Act (RCRA) and M inn. R. 7045. The M innesota Pollution Control Agency (M PCA) regulates and provides assistance to hazardous waste generators, as well as jurisdictional oversight of the following programs: A ir Em issions (PSD, Title V); W ater Discharge (federal NPDES, and state SDS); Stormwater (Construction & Industrial); W etlands Impacts (CW A Section 401 Certification); Solid W aste; and Storage Tanks (AST and UST). Solid waste, as defined by M inn. R. 7035, includes waste m aterials from m ining operations (though no definition of m ining operation is provided). These regulations include design criteria for solid waste land disposal facilities, operational requirements, as well as closure and post closure 7035.26 ac 65 tievti tsieesq. (including post-closure m onitoring and maintenance). W hile established the requirem ents for FA for closure, post-closure M inn. care, R. and corrective action at certain solid waste land disposal facilities (as well as FA instruments that are acceptable), these FA requirem ents appear to be exclusive of m ining operations. Sierra Club v. EPA 18cv3472 NDCA 74 Tier 2 ED 002061 00087255-00174 Appendix IV, Table I in EPA 's Novem ber 2016 "Com prehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (EPA-HQ-SFUND-2015-0781-0144) shows the M innesota regulations applicable to ferrous and nonferrous hardrock mining. This table does not include M innesota's dam safety regulations under M inn. R. 6115, which covers mine waste disposal facilities (i.e., tailings im poundm ents) and fails to acknow ledge the FA requirem ents of m ining operations in the state (both ferrous and nonferrous), including the closure and post-closure O&M requirem ents of FAs. There are no gaps in M innesota's regulatory programs that need to be filled with an EPA -driven FA program pursuant to CERCLA 108(b). Sierra Club v. EPA 18cv3472 NDCA 75 Tier 2 ED 002061 00087255-00175 _C_E__R_C_L__A__1_0_8_(_b)_R__e_sp__o_n_se__C_a tfTeograobHrleyarHEdqr-uoMicvkianlMneneisntsointiang_M__i_n_n_e_so_t_a__S_t_a_tu_t_e_s_a_n_d__R_u__le_s RCeEsRpoCnLseACat1e0g8o(bry) Minnesota Regulations S olid/H azardous M inn. R. 7035 (Solid W aste) W aste Disposal M inn. R. 7045 (Hazardous W aste) Open Pit W aste Rock H eap/D um p/L each Tailings Facility Process P o n d /R eserv o ir Underground M ine Slag Pile Interim O&M W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring M inn. R. 6130.1400 M inn. R. 6130.2900 M inn. R. 6130.3600 M inn. R. 6130.4100 M inn. R. 6132.1100, Subp. 6. M ining and reclam ation plan M inn. R. 6132.2300 M inn. R. 6130.2400 - 6130.2800 (Ferrous) M inn. R. 6130.3600 M inn. R. 6132.2400 M inn. R. 6132.2700 M inn. R. 6130.3600 M inn. R. 6132.2600 M inn. R. 6132.2700 M inn. R. 6115.0300 et seq. M inn. R. 6130.3000 M inn. R. 6130.3600 M inn. R. 6132.2500 M inn. R. 6132.2700 M inn. R. 6132.2600 M inn. R. 6130.4000 (Ferrous - Subsidence) M inn. R. 6132.3000 (Nonferrous - Subsidence) M inn. R. 6130.2100 (general design & construction of stockpiles) M inn. R. 6130.4100, Subp. 2 M M inn. inn. R. R. 6132.3200 61 15.0300 et seq. M inn. R. 6132.0200 (recognized need for possible active treatm ent techniques) M inn. R. 7050 (anti-degradation perform ance standards) M inn. R. 7053 (effluent discharges) M inn. R. 6130.4100, Subp. 2 M inn. R. 6132.3200 M inn. R. 6130.4100, Subp. 2 M M inn. inn. R. R. 6132.3200 61 15.0300 et seq. Sierra Club v. EPA 18cv3472 NDCA 76 Tier 2 ED 002061 00087255-00176 I. Montana A s show n in Table I below , the M ontana M etal M ine R eclam ation A ct ("M M M R A "), M ontana Code Annotated ("M C A ") 82-4-301 through 390 and the im plem enting regulation under M o n tan a's E nvironm ental Q uality rules and regulations at C hapter 24, Sub chapter 1, R ules and Regulations Governing the M ontana H ard Rock M ining and Reclam ation Act, M ontana A dm inistrative Rule (M AR) 17.24.101 through 189 ("M A R 17.24 Rule)" are the principal law and regulations governing the design, operation, closure, and reclam ation of M ontana hard rock m in e s12. The M ontana D epartm ent of Environm ental Quality ("M TD EQ ") adm inisters the M M M RA and the M A R 17.24 Rule as well as all of M ontana's m edia-specific environm ental laws and regulations. The m edia-specific regulations governing air quality, w ater quality, and solid and hazardous waste disposal have a fundamental influence on how M ontana hard rock mines are designed, operated, closed, and reclaimed. The environm ental perform ance standards in the m edia-specific laws and regulations have a direct bearing on FA requirements, which must include the costs for the environm ental controls necessary to com ply w ith M ontana's laws and regulations. In contrast to some western m ining states where more than one regulatory agency has jurisdiction over hard rock mines, the M TDEQ is the principal M ontana state regulatory agency w ith jurisdiction over mining. M TD EQ 's jurisdiction over m ining projects includes dam safety issues pertaining to tailings storage facilities, which is unlike some states where dam safety is regulated by the state's water authorities. The M M M RA and the M A R 17.24 Rule include specific provisions governing tailings im poundm ent design including M CA 82-4-335, 82-4376 and M A R 17.24.168(2)(b). Pursuant to these M M M RA and M A R 17.24 Rule provisions, M TDEQ requires detailed design, operating, and m onitoring plans that must be reviewed by an independent panel of engineers to verify that impoundm ents and m ining-related w ater reservoirs are safe and stable. The M M M RA includes detailed reclam ation requirem ents for specific m ining and mineral processing facilities that must "tak[e] into account the site-specific conditions and circum stances". M AC 82-4-336(1) This emphasis on site-specific conditions stands in marked contrast to the one-size-fits-all CERCLA 108(b) Proposed Rule. The M M M R A 's site-specific approach recognizes the range of site-specific factors that m ust be considered in the design, operation, closure, and reclam ation of mining and m illing facilities: "M ining and exploration for m inerals take place in diverse areas where geological, topographical, climatic, biological, and sociological conditions are significantly different, and the specifications for reclam ation and tailings storage facilities m ust vary accordingly." M CA 82-4-301(3). 12 T he M M M R A and M A R 17.24 R ule also include num erous stringent provisions, including FA requirem ents for mineral exploration projects. 77 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00177 An example of M ontana's site- and facility-specific laws and regulations include the provisions governing open-pit closure requirements. The M M M RA specifies that an open pit in which the floor or walls of the pit expose rocks that are acid generating or leach metals m ust be covered with inert m aterials to m inim ize the form ation of acidic or m etals-bearing leachate. The law also stipulates that water accum ulating in a pit m ay require water treatment. M CA 82-4-336(7). Reclam ation plans for a tailings storage facility must include a post-closure m onitoring plan if applicable. M CA 82-4-336(13). The M A R 17.24 Rule requires detailed groundw ater and surface w ater m onitoring plans for milling facilities. Operators m ust collect groundwater and surface w ater quality data "until continuous com pliance with w ater quality standards is dem onstrated." Operators m ust also provide a contingency plan in case of accidental discharge describing remedial action. M A R 8 17.24.168(l)(b)(xvii). The reclamation plan for a milling facility must include detailed information about groundwater or surface water remediation if necessary: "a description of the m ethods by which surface and ground water will be restored or m aintained to m eet the criteria o f Title 75, chapters 5 and 6, M C A ... including methods to m onitor for accidental discharge of objectionable (potential toxic or acid-producing) materials, plans for detoxification or neutralization of such materials, and remedial action plans for control and m itigation of discharges to surface or ground waters." M AR 17.24.170( l)(d) The explicit provisions in the M A R 17.24 Rule dem anding com pliance with the Clean A ir Act o f M ontana (M CA Title 75, Chapter 2), M ontana's Clean W ater A ct (M C A Title 75, C hapter 5), and M ontana law governing public water supplies, distribution, and treatm ent (M CA Title 75, Chapter 6) are a key element of M ontana's regulatory fram ework for hardrock mining. M AR 17.24.102 (13)(f) specifically defines reclam ation as requiring " ...steps necessary to assure long term com pliance w ith T itle 75 chapters 2 and 5, M C A ." M A R 17.24.140(1) dealing w ith the determ ination of bond am ount states: "T he departm ent shall require subm ission o f bond (sic) in the am ount o f the estimated cost to the departm ent if it had to perform the reclamation, contingency procedures and associated monitoring activities required of an operator subject to bonding requirem ents under the A ct...T his am ount is based on the estim ated cost to the state to ensure com pliance w ith Title 75, chapters 2 and 5, M CA, the Act, the rules adopted thereunder, and the approved permit. The cross-referencing of M ontana's air quality and w ater quality laws and the explicit requirem ent to comply with these m edia-specific environmental statutes provides comprehensive environmental protection and FA requirem ents at M ontana hardrock m ining and milling operations. Sites m ust be in com pliance with the air and w ater quality environmental protection standards before the M TDEQ will release the FA for a m ining project. The air quality and water quality com pliance m andate at M A R 17.24.140(1) gives the M TDEQ broad authority to require an operator to m aintain the FA deem ed necessary to ensure com pliance with M ontana's air and w ater quality protection laws. This authority m eans the tim efram e in which an operator 78 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00178 m ust m aintain FA following mine closure is determ ined on the basis of site-specific monitoring data to indicate w hether that project is in com pliance w ith all applicable air or w ater quality standards. This provides M TDEQ with the authority to require FA for long-term O& M if sitespecific m onitoring data indicate it is necessary. M ontana's laws and regulations governing hardrock m ining are an excellent exam ple of how a state's m edia-specific environm ental protection requirem ents and perform ance standards influence the calculation of the required FA amount. Com pliance with M ontana's Clean W ater Acts, Clean Air Act, and other environmental protection laws define the required outcome for closed and reclaim ed mine sites and in turn determine the necessary FA to ensure that closed and reclaim ed mines achieve this outcome. M A R 17.24.140(l)(d) specifically authorizes M TDEQ to require FA to cover the A gency's costs to manage, operate, and m aintain a site that is tem porarily closed, abandoned, or w here the operator is insolvent. This provision provides M TD EQ w ith sufficient FA resources until the full FA instrum ent can be liquidated and is analogous to the Interim O&M cost category in the Proposed Rule. M A R 17.24.141 requires M TD EQ to review the am ount of FA ("perform ance bond") annually and to conduct a com prehensive bond review at least every five years. M TDEQ is authorized to conduct a com prehensive review of the bond am ount in response to circum stances and to require an increase in FA. Pursuant to M CA 82-4-335, M TDEQ cannot decrease or release a bond without holding a public hearing to give the public an opportunity to provide comments on the proposed FA reduction or release. To satisfy the requirem ents of M A R 17.24.140(1), the bond cost estim ate m ust be based on: Production and productivity data in current machinery production handbooks and publications; The additional estimated costs to M TDEQ which may arise from additional design work, applicable public contracting requirements or the need to bring personnel and equipment to the operating area after its abandonm ent by the operator (i.e., personnel and equipm ent m obilization and dem obilization costs); and Inflation factors. M A R 17.24.128 provides M TDEQ with broad inspection authorities that require a m inim um of annual inspections. M TDEQ m ust inspect the following operations at least three tim es per year: 1) operations that use cyanide or metal leaching solvents or reagents; 2) operations w ith perm its that specify m onitoring requirem ents for potential acid rock drainage; or 3) operations with a perm itted project area that exceeds 1,000 acres. These rigorous inspection requirem ents provide M TDEQ with tim ely inform ation about w hether an operation is com plying with the environmental performance standards and other requirements in its operating permits. In the event these inspections and m onitoring data indicate there may be a problem, M TDEQ can require an increase in the required FA pursuant to M A R 17.24.141. 79 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00179 M CA 82-4-33 8(7)(a) provides M TDEQ with the authority to require operators to amend the reclam ation perm it and augm ent the FA for a project if unanticipated circumstances are discovered that pose a threat to public health and safety or the environment. This reclam ation plan and FA am endm ent provision is triggered if M TDEQ determ ines that a 10 percent or greater increase in the FA is needed to address the newly discovered issues. The Agency m ust suspend a perm it if the operator's bond coverage expires, is canceled, or is insufficient. M A R 17.24.117(l)(c). M TDEQ m ust also suspend a perm it if the operator fails to provide an annual report with the required m onitoring data to determ ine if the m ine is in com pliance with its operating perm it. M A R 17.24.118(14). M TD EQ is authorized to suspend a perm it and forfeit the FA in the event a m ining operation poses an im m inent danger to the public or there is a reasonable expectation that the m ine is expected to cause im m inent environm ental harm to land, air, or w ater resources. M A R 17.24.129, 17.24.132, and 17.24.133. The agency may also suspend a perm it pursuant to M A R 17.24.137 and direct the operator to abate the source of the im m inent danger or environm ental harm. In the event of an "im m inent threat to public health, public safety, or the environm ent" that an operator does not properly abate, M TDEQ may revoke the permit, declare the perm ittee in default, and forfeit a portion of the bond. The am ount of the bond forfeiture is not to exceed $150,000 or 10 percent of the bond, w hichever is less, that is necessary to abate the problem. If this am ount of bond forfeiture is inadequate, M TDEQ may forfeit additional amounts of the bond. M CA 82-4-338(10)(a). Although the primary FA requirem ents for M ontana hardrock mines are the within the M M M A and the M A R 17.24 Rule discussed above, the M ontana Com prehensive Environm ental Cleanup A ct (CECRA) at M CA 35-10-701 through 728 provides some additional FA coverage applicable to parties liable for Superfund cleanup at M ontana hardrock mines (and at other types of facilities). CECRA, which is similar to the federal Superfund (CERCLA), authorizes M TDEQ to investigate and clean up facilities where there are hazardous substances. CECRA also gives M TDEQ the authority to require responsible parties to investigate and pay for the clean up. The rules that im plem ent the CECRA are found at M A R 17.55.102 through 115. CECRA adds another layer of environmental protection and FA on top of the M M M RA because it can be used to fund the cleanup of a release of a hazardous substance at a M ontana mining operation. CECRA compels responsible parties to provide FA for cleanup and remediation activities. Like the federal Superfund, responsible parties under CECRA are jointly and severally liable. Responsible parties can include present owners, past owners and operators, those who arrange for disposal of a hazardous substance, and transporters of hazardous substances. The am ount of required FA under CECRA is "an am ount that the departm ent determ ines will ensure the long-term operation and m aintenance of the remedial action site." M CA 75-10-721(7). Finally, M ontana's Clean W ater Act at M CA 75-5-405 includes voluntary bonding provisions. An applicant for a water quality discharge perm it may "voluntarily file a perform ance bond or other surety" to enable M TDEQ to reclaim any land disturbed by authorized activities. The bond am ount m ust be "sufficient to enable the state to reclaim the land..." M CA 75-5-405. M TDEQ 80 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00180 m ay release the bond or surety if all reclam ation efforts have been satisfactorily com pleted and M TDEQ verifies that pollution of state waters has not occurred. M TDEQ may pursue bond forfeiture if the land is not reclaim ed in a satisfactory m anner to prevent pollution of state waters. In summary, the M M M RA, the M A R 17.24 Rule, CECRA, and the voluntary bonding program under M ontana's Clean W ater A ct provide com prehensive and seam less environm ental protection and FA for M ontana mines. There are no gaps in M ontana's regulatory fram ework that need to be filled with a federal FA program under CERCLA 108(b). EPA 's analysis of M ontana's laws and regulations governing hardrock m ining is incom plete because it does not fully describe how M ontana's Clean W ater A ct and Clean Air Act fundam entally influence FA requirements. EPA 's docum ent entitled: "Summary of M ontana Financial Responsibility Requirem ents" (EPA -H Q -SFU N D -2015-0781-2013) is a simplistic discussion of M ontana's FA requirements that completely overlooks the jurisdiction of M ontana's environm ental protection law s governing air quality, surface w ater quality, groundwater quality, and waste disposal and the interaction of these laws and regulations with the M A R 17.24 Rule. As stated above, M A R 17.24.102 (13)(f) explicitly defines reclam ation as requiring environmental controls to assure long-term compliance with M ontana's environm ental protection statutes. Similarly, A ppendix IV, Table J in E PA 's N ovem ber 2016 "Com prehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (EPA-HQ-SFUND-2015-0781 -0144) fails to describe how the Title 75 Chapters 2, 5, and 6 laws dovetail w ith the M M M A to require that mines be designed, built, operated, and closed to protect the environm ent in a m anner that m inim izes the risk of releases of hazardous substances. EPA 's Table J does not show that the environmental protection regulations define the performance standards that apply during a m ine's entire lifecycle - including closure and post closure and in turn determine the level of necessary FA. The powerful and all-inclusive integration of M ontana's laws and regulations governing environm ental protection and m ining m inim izes the potential for a release of a hazardous substance. These laws and regulations also require com prehensive FA that gives M TDEQ the necessary financial resources to respond in the event of a release. There is no justification for adding another layer of FA under CERCLA 108(b). Sierra Club v. EPA 18cv3472 NDCA 81 Tier 2 ED 002061 00087255-00181 _C_E__R_C_L__A__1_0_8_(b_)_R_e_s_p_o_n_s_e__C aftoeTrgaHobrlayerdEI r-qouMcikvoaMnletiannntisangin__M__o_n_ta_n_a__S_t_a_t_u_te_s__a_n_d_R__u_le_s RCeEsRpoCnLseACat1e0g8o(bry) Montana Law s and Regulations S olid/H azardous M A R 17.24.116(3)(1), (n), (o) W aste Disposal M A R 17.24.168(l)(b)(ix) Open Pit W aste Rock H eap/D um p/L each* Tailings Facility M A R 17.24.117(l)(c) M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M CA 82-4-336(7) M A R 17.24.116(3)(1) M A R 17.24.117(l)(c) M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M A R 17.24.165 M A R 17.24.166 M A R 17.24.167 M A R 17.24.168 M A R 17.24.169 M A R 17.24.116(3)(1) M AR 17.24.117(l)(c) M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M A R 17.24.165 M A R 17.24.166 M A R 17.24.167 M A R 17.24.168 M A R 17.24.169 M A R 17.24.116(3)(1) M A R 17.24.117(l)(c) M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M A R 17.24.165 82 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00182 RCeEsRpoCnLseACat1e0g8o(bry) Process P o n d /R eserv o ir Underground M ine Slag Pile Interim O&M M ontana Laws and Regulations MAR 17.24.166 M A R 17.24.167 M A R 17.24.168 M A R 17.24.169 M CA 82-4-335 M CA 82-4-336(7) M CA 82-4-376 M A R 17.24.116(3)(1) M AR 17.24.117(l)(c) M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M A R 17.24.165 M A R 17.24.166 M A R 17.24.167 M A R 17.24.168 M A R 17.24.169 M A R 17.24.116(3)(1) M A R 17.24.117(l)(c) M AR 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M CA 75-10-1401 through 1411 M A R 17.24.115(l)(n) M AR 17.24.116(3)0) M A R 17.24.117(1 )(c) M A R 17.24.118(4), (8), (9), (10) M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140(l)(d) M A R 17.24.141 M A R 17.24.153 M A R 17.24.168(l)(b)(xvii) M A R 17.24.170(2) M CA 82-4-338(7) M CA 17.55.102 through 115 (CECRA) Sierra Club v. EPA 18cv3472 NDCA 83 Tier 2 ED 002061 00087255-00183 RC'eEsRpoCnLseACat1e0g8o(bry) W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring Montana Laws and R egulations M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M A R 17.24.165(2) M A R 17.24.169(l)(d) Voluntary bonding, Title 75, Chapter 5 M CA 17.55.102 through 115 (CECRA) M A R 17.24.115(l)(n) M A R 17.24.116(3)(1) M A R 17.24.118(4), (8), (9), (10) M A R 17.24.117.120(c), (e) M A R 17.24.121 M A R 17.24.140 M A R 17.24.141 M A R 17.24.153 M A R 17.24.168(l)(b)(xvii) M CA 17.55.102 through 115 (CECRA) M A R 17.24.115(l)(n) M A R 17.24.153 M CA 82-4-336(7) M CA 17.55.102 through 115 (CECRA) Voluntary bonding, Title 75, Chapter 5 M CA 82-4-390 prohibits the use of cyanide at heap leaching or vat leaching mineral processing facilities that were not in operation as of N ovem ber 3, 1998. Sierra Club v. EPA 18cv3472 NDCA 84 Tier 2 ED 002061 00087255-00184 J. Nevada As show n in Table J, three chapters o f N evada's A dm inistrative C ode ("N A C "), chapters N A C 535, NAC 445A, and NAC 519A, govern mine development, operation, and closure. This regulatory package effectively addresses each of the thirteen CERCLA 108(b) response categories in the Proposed Rule. The N A C 519A.010 - N A C 5 19A.445 regulations "Reclam ation of Land Subject to M ining Operations and Exploration Projects - Regulation of M ining Operations and Exploration Projects" establish the FA requirements for N evada mineral exploration and developm ent projects. The NAC 519A regulations w ork hand-in-hand with the NAC 445A.350 - NAC 445A.447, "W ater Controls - M ining Facilities" regulations and the NAC 535.010 - NAC 535.420 "Dam s and other Obstructions" regulations. In order to gain an accurate understanding of how N evada's environm ental regulations for m ining operate, it is essential to consider these three regulations working in concert because the water control and dam safety regulations are the foundation for N evada's FA program. The NAC 445A water pollution control regulations and the NAC 535 dam design and safety regulations establish the design, environm ental protection, and perform ance criteria for all m ine features during the m ining lifecycle (i.e., construction, operation, reclam ation, and closure) and dictate how mine features m ust be designed, reclaimed, and closed in order to protect the environm ent and prevent degradation o f w aters o f the state. The reclam ation and closure designs and requirem ents are the basis for the amount of required FA. The Nevada Division of Environm ental Protection/Bureau of M ining Regulation and Reclam ation ("N D EP") adm inisters the N A C 445A and N A C 519A regulatory program s. The State Engineer's Office/Division of W ater Resources ("N D W R ") adm inisters the NAC 535 dam design and safety program. The multi-agency, m ulti-regulations structure of N evada's regulatory fram ework applicable to m ining-related environmental protection and FA is an excellent example of the "com plicated but effective" and com prehensive regulatory program s described in the NAS Study. The environmental regulations that are the foundation of the NAC 519A reclam ation and closure FA requirem ents span three separate chapters of N evada's administrative code and are administered by two separate regulatory agencies. The three regulatory programs are coordinated and dovetailed so there are no gaps. This integration of the environmental protection and regulatory requirem ents for Nevada mines provides complete, seamless, and gap-free environmental protection and FA. For example, the NAC 535 dam design and safety regulations govern the design and operation of tailings embankments that have a crest height of 20 feet or higher, as m easured from the downstream to the crest, or a crest height of less than 20 feet but im pound m ore than 20 acrefeet. In addition to governing em bankm ents, these regulations also apply to certain large process ponds at mine sites if they exceed the 20 acre-feet storage criterion. The NAC 445A regulations govern the design of a tailings im poundm ent and process ponds and include minimum design criteria to achieve zero-discharge of process solutions to surface waters and m inim um discharge to groundwater. The NAC 445A regulations also govern storm event design requirements, engineering containm ent standards, minimum liner design criteria, closure Sierra Club v. EPA 18cv3472 NDCA 85 Tier 2 ED 002061 00087255-00185 stabilization criteria, temporary and perm anent closure requirements, and operational and post m ining m onitoring requirements. It is im portant to note that NAC 445A.433.1(a) establishes that "In areas where annual evaporation exceeds annual precipitation, a process com ponent m ust achieve zero-discharge." In N evada, w here annual evaporation exceeds annual precipitation, m ines m ust contain all process fluids to comply with the state and federal Clean W ater Act requirem ents pertaining to zero discharge to surface waters. The only allowable discharges are storm water discharges that do not come into contact with process components. The NAC 519A reclam ation regulations govern the reclam ation and closure of both the tailings embankment and the impoundment. The zero-discharge environmental protection requirem ent at NAC 445.A.433.1(a) applies to tailings im poundm ents throughout the life of the impoundment, including closure and post-closure. These requirements drive the closure design for the tailings facility to minimize infiltration of m eteoric waters into the reclaimed tailings im poundm ent with the goal of achieving zero-discharge to surface waters and minimal discharge to groundwater. Thus the interaction of the three Nevada regulatory programs, NAC 535, NAC 445A, and NAC 519A, provides lifecycle environm ental protection during all phases o f a m ining project, including reclamation, closure, and post-closure. This fully integrated gap-free regulatory system applies to all process com ponents at N evada mines. Just as the FLM A modified their FA requirem ents in response to gaps identified in the NAS Study, N evada regulators have continually refined N evada's regulatory and FA program for hardrock mining. N D EP has m odified and augm ented its FA program a couple of tim es since the NAC 519A bonding regulation w ent into effect in 1990, dem onstrating that the state - not EPA is in the best position to enhance its bonding program s if and when circum stances demand additional FA. In response to documented shortfalls in the N evada program that were revealed when a couple of mine operators with reclamation bonds went bankrupt in the late 1990s and early 2000s, NDEP expanded the scope of its FA requirem ents to require bonds that provide state regulators immediate access explained in detail to in funds for Parshley an em ergency d Struhsack e rm(a2n0a0g8e)m, seenet and interim fluid managem Exhibit 2, NDEP developed a ent. num As ber of enhancements to its bonding program including Interim Fluid M anagem ent ("IFM ") and Process Fluid Stabilization ("PFS") cost estim ating tools. NDEP, the FLM A (especially BLM ), and industry representatives worked together to develop the Heap Leach Draindown Estim ator ("H L D E ") and the Process Fluid Cost E stim ator ("PFC E"). N D EP and the FL M A use these tools when calculating the level of FA an operator m ust provide. The resulting m odifications to the N evada FA program significantly increased the am ount of FA that N ev ad a m ine operators have provided as show n in F igure 1. T he substantial increase in N evada's FA program since 2005, from $721 m illion to $2.66 billion, is m ainly due to the addition o f the IFM , PFS, and PFC E as required com ponents in FA am ount calculations. N D E P's developm ent of these gap-filling enhancem ents to its FA requirem ents vividly dem onstrates why it is best to leave any adjustm ents or gap-filling m easures in the hands of state 86 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00186 regulators who have a first-hand knowledge of operations and site conditions in their states. If a currently unanticipated event develops at a N evada mine that points to the need for additional refinem ent and augm entation of N evada's FA program , it is clear that N D EP w ould respond as it has in the past to fill in any identified gap with the objective of producing com prehensive and conservative bonds that consider all likely contingencies based on agency costs to m anage, close, reclaim, and m aintain sites requiring governm ent intervention. Growth of NV Financial Assurance Amounts for Hardrock Mining Operations 2005 - 2016 $ 5,000 $ 2,300 $ 1 ,3 0 0 $ 1,000 Amount {$miinons) $2, 1 7 3 .2 $2,347.6 $2,493.5 $2,655.4 $1,617.8 $1, 865.6 $soo <i0 2000 288? 2000 2000 2010 2011 2012 2013 2014 2013 2010 Figure 1. Cumulative Financial Assurance Held by the State of NV, BLM & USFS Data provided by NV Division of Environmental Protection, 9/12/16 The N D EP uses the Standardized Reclam ation Cost Estim ator (" SRCE software"), w hich N D EP developed working with BLM and industry representatives, to calculate reclam ation costs. The data inputs to SRCE are detailed site-specific factors and engineering cost estimates that result in a comprehensive and conservative Reclamation Cost Estim ate ("RCE") that establishes the required FA amount. FA requirem ents calculated using the SRCE consider all likely contingencies and are based on agency costs to implement, manage, and complete closure and reclam ation of sites in the event governm ent intervention is required. The SRCE software is widely recognized as a state-of-the-art tool for calculating comprehensive and site-specific FA requirements. The FLM As and other states use the SRCE software, or cost estim ating tools sim ilar to the SRCE. In fact, the SRCE is used in m ining jurisdictions around the world. NDEP has a M emorandum of Understanding with the FLM As to jointly administer the Nevada FA program. For projects located on federal land or a com bination of federal and private lands, Sierra Club v. EPA 18cv3472 NDCA 87 Tier 2 ED 002061 00087255-00187 the FLM A that administers the land holds the FA instrument. For projects located solely on private land, NDEP holds the FA. A ppendix IV, Table K in E PA 's N ovem ber 2016 "Com prehensive Report: An O verview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (Docket No. EPA-HQ-SFUND-2015-0781-0144) shows the Nevada regulations applicable to hardrock m ining and mineral processing. This table does not include N evada's dam safety regulations and fails to capture how the different parts of N evada's adm inistrative code w ork in tandem to require that m ines be designed, built, operated, and closed to protect the environm ent and m inim ize the potential for a release of hazardous substances. Table K does not describe how the environmental protection regulations define the performance standards that apply during a m ine's entire lifecycle - including closure and post-closure. As explained above, these environmental performance standards m andate that N evada mines must prevent degradation of w aters of the state at all tim es, and determ ine how m ines m ust be operated, closed and reclaimed and the required FA to achieve this performance standard for the entire life span o f the project. Similarly, EPA 's "Summary of N evada Financial Responsibility Requirem ents" (Docket No. EPA -H Q -SFU N D -2015-0781-2104) is seriously deficient because it doesn't discuss the N A C 445A or the NAC 535 regulations or the state-of-the-art SRCE software that calculates lifecycle FA requirements. Consequently the EPA summary completely omits two of the three essential components of N evada's regulatory fram ework dictating the environmental protection and FA requirem ents and overlooks the widely used SRCE tool, which is recognized worldwide as one of the best m ethodologies for determ ining FA amounts. Given the significant shortcomings in Table K and EPA 's summary, EPA has not fully appreciated the breadth and m erits of N evada's regulatory and FA program s. Consequently, EPA 's analysis for this rulem aking is inaccurate and incomplete. A proper evaluation would reveal that N evada's site-specific environm ental protection and FA requirem ents are com prehensive and far superior to the one-size-fits-all form ulas EPA used in the Proposed Rule. There are no gaps in N evada's program that need to be filled with an EPA-driven FA program pursuant to CERCLA 108(b). Sierra Club v. EPA 18cv3472 NDCA 88 Tier 2 ED 002061 00087255-00188 _C_E__R_C_L__A__1_0_8_(_b_) _R_e_s_p_o_n_sfeoCrTaHatbeagrleodrJryo-cEkNqeMuviaivndailanegn_ts__in__N__ev_a__d_a_'s__R_e_g_u_l_a_ti_o_n_s CERCLA 108(b) Response C ateg o ry NevadaWRoergkuslahteieotnTs aabnsd SR C E Solid/H azardous W aste D isposal N A C 519A.270.14(e) NAC 519A.345.8(a) NAC 445A.424 NAC 459.953471 SRCE W aste Disposal Tab SRCE Landfills Tab Open Pit NAC 519A.345.9 NAC 445A.424 NAC 445A.429 NAC 519A.250 NAC 519A.260 NAC 519.270 NAC 519A.295 SRCE Pits Tab W aste Rock N AC 519A.345.3 NAC 519A.270 NAC 519A.270 (d)(3) NAC 519A.295 NAC 445A.424 N AC 445.433.1 SRCE W aste Rock Dump Tab Heap/Dump Leach NAC 519.345.6 NAC 519A.270 NAC 519A. 270(d)(2) NAC 519A.295 NAC 445A.424 NAC 445A.430 NAC 445A.433.1 NAC 445A.434 NAC 445A.436 NAC 445A.438 NAC 445A.440 NAC 445A.442 SRCE Fleap Leach Tab Fleap Leach Draindown Estim ator Process Fluid Cost Estimator Interim Fluid M anagem ent Tailings Facility NAC 519A.345.4 NAC 519A.345.5 NAC 519A.270 N A C 519A. 270 (d)(1) 89 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00189 CERCLA 108(b) R esponse C ateg o ry Process Pond/Reservoir Underground M ine Slag Pile D rainage Interim O&M N evada Regulations and S R C E W orksheet Tabs NAC 445A.424 NAC 445A.431 NAC 445A.433.1 NAC 445A.437 NAC 445A.438 NAC 445A.442 N A C 5 3 5 .0 1 0 - .420 SRCE Tailings Tab Tailings Draindown Estim ator (in preparation)* Process Fluid Cost Estimator Interim Fluid M anagem ent NAC 519A.345.7 NAC 445A.433.1 NAC 519A.260 NAC 519A.270 NAC 519A. 270 (d)(1), (2) NAC 519A.295 NAC 445A.424 NAC 445A.433.1 NAC 445A.435 NAC 445A.438 NAC 445A.442 NAC 535.010-.420 SRCE Process Ponds Tab Interim Fluid M anagem ent NAC 519A.345.10 NAC 519A.260 NAC 519.270 NAC 519A.295 NAC 445A.424 NAC 445A.433 SRCE Underground Openings Tab N /A - pertains to smelters. There are no N V smelters. NAC 519A.345.7 NAC 519A.260 NAC 519A.270 NAC 519A.295 NAC 445A.424 NAC 445A.433.1 SRCE Sediment and Drainage Control Tab NAC 445A.440 NAC 519A.260 NAC 519A.270.16 NAC 519A.295 90 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00190 CERCLACa1te0g8o(bry) Response N evadaWRoergkuslahteieotnTs aabnsd SR C E NAC 519A.350 NAC 445A.440 SRCE M onitoring Tab SRCE Construction M anagem ent Tab Heap Leach Draindown Estimator Process Fluid Cost Estimator Interim Fluid M anagem ent W ater Treatment NAC 519A.270 NAC 519A.295 NAC 519A.360 This line item is not specifically included in the SRCE, but there is unlim ited potential in the SRCE to include infinite custom ized U ser Tabs specific to site needs or regulatory requirements. Cost calculations are specific to each operation and require custom calculation sheets. Short-Term O&M / NAC 445A.440 M onitoring NAC 519A.270 NAC 519A.295 NAC 519A.350 NAC 519A.360 NAC 445A.440 NAC 445A.442 SRCE M onitoring Tab SRCE Construction M anagem ent Tab Heap Leach Draindown Estimator Process Fluid Cost Estimator Interim Fluid M anagem ent Long-Term O&M/ NAC 445A.440 M onitoring NAC 519A.270 NAC 519A.295 NAC 519A.350 NAC 519A.360 NAC 519A.380 NAC 445A.440 NAC 445A.446 SRCE M onitoring Tab SRCE Construction M anagem ent Tab Heap Leach Draindown Estimator Process Fluid Cost Estimator Interim Fluid M anagem ent * NDEP currently uses the operator's project-specific inform ation to estimate the tailings draindown schedule. The Tailings Draindown Estim ator will provide a m ore standardized approach that uses site-specific data. Sierra Club v. EPA 18cv3472 NDCA 91 Tier 2 ED 002061 00087255-00191 K. New Mexico N ew M exico has two integrated state program s adm inistered by two state agencies that comprehensively regulate hard rock mines and that w ork together to reduce or eliminate the risk that hard-rock m ines will need any future action under CERCLA. The N ew M exico Environm ent Departm ent (NM ED) administers a perm it program for hard rock mines pursuant to the N ew M exico W ater Quality Act (NM W QA) and regulations adopted by the W ater Quality Control C om m ission ("W Q C C "). The W Q C C regulations include standards for surface w ater and ground w ater quality, a perm it program to ensure that discharges to ground water or surface waters meet applicable standards and other requirements, and abatement regulations to ensure cleanup when water quality standards are exceeded. NM ED also adm inisters an air quality program with standards and requirem ents consistent with federal law. The N ew M exico Energy, M inerals and Natural Resources Departm ent (EM NRD), M ining and M inerals Division (M M D) administers the M ining Act Reclam ation Program which im plem ents the requirements of the N ew M exico M ining Act of 1994 (NM M A). which applies to hardrock mines. The following section focuses on M M D 's oversight of the hardrock m ining industry under the N M M A as it pertains to the design, operation, and reclamation of N ew M exico mines. The two programs are integrated, particularly as it relates to com pliance w ith air, w ater quality and other environm ental standards, Financial assurance is required for closure and reclam ation of hard rock m ines under both programs. U nder the NM W Q CA , N M ED D ischarge Perm its are required at all m ine sites that m ay affect groundwater. The purpose of the NM ED Discharge Perm it process is to prevent groundwater pollution, which could result from discharges of effluent or leachate, and to abate any groundwater pollution that occurs at perm itted facilities. The W QCC regulations include ground water quality standards that address various w ater contaminants, including the metals that are m ost com m only associated with releases of hazardous substances to water. 20.6.2.3103 NM AC. The standards are generally consistent with federal primary drinking water standards under the Safe D rinking W ater Act. D ischarge perm its are required for all discharges of effluent or leachate that may move directly or indirectly into groundwater that has an existing concentration of 10,000 m g/L or less of total dissolved solids (TDS). M ill tailings, waste rock stockpiles, leach ore stockpiles, as well as other mine facilities, are regulated under this requirement. A discharge permit may not be issued unless NM ED determines that the discharge will not cause ground w ater quality standards to be exceeded at any place of withdrawal of water for present or reasonably foreseeable future use or resulting in a hazard to public health or undue risk to property. 20.6.2.3109.C NM AC. Consequently, the mine facilities must be designed and demonstrated to protect ground water quality, substantially reducing the risk of any need for a CERCLA action to address releases. The NM W QCA regulations require monitoring, procedures to detect failures in a discharge system, and contingency plan and a closure plan including FA. 20.6.2.3107. A(l l) NM AC. In addition to the state perm it program, under the federal Clean W ater Act, m ines that require discharges of dredged or fill material into w aters o f the U S. are subject to perm it requirem ents under section 404 and m ines w ith discharges to w aters of the U.S. are subject to NPDES perm it requirem ents under section 402, w ith these program s adm inistered by the U.S. Arm y Corps of Engineers and EPA Region 6, subject to state certification of compliance with surface w ater quality standards under section 401. 92 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00192 The recent NM ED "Copper Rules" promulgated in 2013 under 20.6.7 NM AC as part of the NM W QCA, establish strict, consistent, clear, and com prehensive design, operational and closure requirements for protecting the quality of ground water impacted by copper m ining operations in the state. The rules incorporate the requirem ents of discharge perm its issued to m ines under the general discharge permit regulations described above. The Copper Rules apply to copper mine facilities, which are defined as "all areas within which copper m ining and its related activities that may discharge water contaminants occurs and where the discharge will or does take place including, but not limited to open pits; waste rock piles; ore stockpiles; leaching operations; solution extraction and electrowinning plants; ore crushing, ore milling, ore concentrators; tailings impoundments; smelters; pipeline systems, tanks or im poundm ents used to convey or store process water, tailings or impacted stormwater; and truck or equipment washing units." 20.6.7.7.6(13) NM AC. Because the Copper Rule requirements reflect the requirements of discharge perm its issued under the m ore general W QCC rules in 20.6.2 NM AC, the also reflect the permit requirements imposed on other mines. The purpose of 20.6.7 NM AC is to supplem ent the general perm itting requirem ents of 20.6.2.3000 through 20.6.2.3114 NM AC to control discharges of w ater contam inants specific to copper mine facilities and their operations to prevent w ater pollution. The Copper Rules include: New design features for new facilities and the expansion of existing facilities that are specifically intended to protect ground water; N ew criteria for closing a mine, including re-grading land and installing groundcover to m inim ize infiltration of precipitation into and through mined materials that m ight otherwise reach groundwater; N ew engineering design requirements for waste rock, leach stockpiles and impoundments; and Clear and specific design technology requirements for impoundments, tanks and pipelines. In addition to specific design, construction, operating and closure requirements, the Copper Rules contain detailed m onitoring requirem ents requiring m onitoring locations to be placed as close as practicable to each mine unit. If m onitoring detects ground water contam inant levels rising toward ground water quality standards, reporting and contingency plan requirem ents are triggered requiring investigation and corrective action. Contingency plan requirem ents also are triggered by other excursion of perm it requirem ents so that action is taken before there is any release of contam inants to the environment. The Copper Rules also contain specific closure and post-closure requirem ents to ensure protection of ground and surface w ater quality during and after closure and in post-closure. Under the Copper Rules and existing discharge permits, FA is required for the capital costs of constructing necessary w ater treatm ent or other water m anagement facilities at closure and for 100 years of operation of the water m anagem ent system, unless the discharge dem onstrates to the agency's satisfaction that com pliance with standards can be accom plished w ithout treatm ent in a 93 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00193 shorter tim e frame. The NM ED generally defers to the N M M A FA requirements, though it reserves the right to be m ore restrictive and not necessary accept FA instruments that would be allowed under the NM M A. All of the requirem ents of N M W Q A and W QCC Rules are enforceable through adm inistrative com pliance orders, injunctive relief, and civil and criminal penalties.Parts 1-14 of Title 19 N atural Resources and W ildlife, Chapter 10 - Non-Coal M ining of the N ew M exico A dm inistrative Code (19.10 NM A C) establishes the regulatory fram ework to im plem ent the N M M A as directed in N ew M exico Statutes Annotated (NM SA) 69-36-7A. These regulations are designed to ensure proper reclam ation through permitting for operations subject to the NM M A, in accordance with provisions and standards outlined in the NM M A. As discussed below, the NM M A also requires that reclamation plans be designed to m eet applicable environmental standards and requires NM ED, prior to M M D plan approval, to make a determ ination to that effect. For existing mining operations, the NM M A and Rules focus on reclamation, to be proposed and approved through a "closeout plan." The NM M A and Rules criteria for a closeout plan is to dem onstrate that closure will be im plem ented to m eet all applicable environm ental standards as well as to achieve a self-sustaining ecosystem following closure, as well as a post-m ining land use. The self-sustaining ecosystem requirem ent may not apply for certain post-m ining land uses, such as industrial use. For existing m ining operations, the self-sustaining ecosystem requirem ent may be w aived if it would be infeasible to achieve, but applicable environmental standards may not be waived. The closeout plan m ust consider site-specific characteristics including land disturbance from previous m ining operations, m ining methods used, geology, hydrology and climatology in designing reclam ation to m eet these criteria. Expansions of existing mining operations m ust be permitted through a m ining permit m odification or revision and are required to m eet the following requirements, in addition to m eeting applicable environmental standards: Signs, Markers and Safeguarding: M easures w ill be taken, to safeguard the public from unauthorized entry into shafts, adits, and tunnels and to prevent falls from highwalls or pit edges. W ild life Protection: M easures shall be taken to m inim ize adverse im pacts on w ildlife and im portant habitat. Cultural Resources: C ultural resources listed on or eligible for listing on the N ational Register of Flistoric Places or the State Register of Cultural Properties, and any cemeteries or burial grounds shall be protected until clearance has been granted by the State Historic Preservation Office or other appropriate authority. Hydrologic Balance: O perations shall be planned and conducted to m inim ize negative impact to the hydrologic balance in both the perm it and potentially affected areas. Stream Diversions: W hen stream s are to be diverted, the stream channel diversion shall be designed, constructed, and removed in accordance with specific design parameters. Sierra Club v. EPA 18cv3472 NDCA 94 Tier 2 ED 002061 00087255-00194  Impoundments: If im poundm ents are required they shall be designed, constructed and m aintained to m inim ize adverse impacts to the hydrologic balance and adjoining property and to assure the safety o f the public. Minimization of Mass: M ovem ent A ll m an-m ade piles such as w aste dum ps, topsoil stockpiles and ore piles shall be constructed and m aintained to minim ize m ass movement. Riparian and Wetland Areas: D isturbance to riparian and w etland areas shall be m inim ized during mining. Adverse effects to riparian and wetland areas shall be m itigated during reclamation unless the mitigation conflicts with the approved post m ining land use. Roads: R oads shall be constructed and m aintained to control erosion. Subsidence Control: U nderground and in situ solution m ining activities shall be planned and conducted, to the extent technologically and economically feasible, to prevent subsidence which may cause material damage to structures or property not owned by the operator. Explosives: B lasting shall be conducted to prevent injury to persons or dam age to property not owned by the operator. Fly rock shall be confined to the perm it area. The Director may require a detailed blasting plan, pre-blast surveys or specify blast design limits to control possible adverse effects to structures. In addition, the perm it area shall be stabilized, to the extent practicable, to m inim ize future impact to the environment and protect air and w ater resources. Final slopes and drainage configurations m ust be compatible with a self-sustaining, ecosystem or approved post-mining land use. Reclam ation of disturbed lands m ust result in a condition that controls erosion; and, to obtain the release of FA, revegetated lands m ust m eet specific standards, as outlined in 19.10.5.508(E) NM AC. The applicant for a m ining perm it shall provide a FA proposal to the M M D following the agency's determ ination that the perm it application is approvable, but prior to the perm it issuance. An applicant's FA proposal m ust be based upon estim ates for a third-party contractor to com plete reclam ation work. The perm it shall not be issued until receipt of the approved financial assurance by the MMD. To ensure that compliance with environmental standards are fully addressed, before M M D can issue any perm it under the NM M A the NM ED Secretary m ust issue a written determination stating that the M M D m ining application has dem onstrated that the proposed activities to be authorized are expected to achieve com pliance w ith all applicable air, w ater quality, and other environm ental standards if carried out as described in the closeout plan. This determ ination shall address applicable standards for air, surface w ater and groundw ater protection enforced by the NMED. Sierra Club v. EPA 18cv3472 NDCA 95 Tier 2 ED 002061 00087255-00195 N ew mining operations require a detailed environmental assessment, including collection of baseline environm ental data, before an application for a perm it as a new m ining operation can be submitted. The perm it application m ust dem onstrate that the mine will be designed, constructed and operated to m eet the standards described above, including a reclam ation plan to achieve all applicable environmental standards and to m eet the self-sustaining ecosystem /post m ining land use requirement. Financial assurance must be provided based on the cost of a third-party to im plem ent the reclam ation plan. In addition, all other local, state and federal perm it requirem ents and regulations m ust be satisfied, including the air quality and w ater quality discharge perm it requirements described above. NM M A requirements, including perm it requirements, are enforceable through a variety of mechanisms. These include notices of violation, cessation orders requiring cessation of mining, injunctive relief, and civil and criminal penalties.The Hazardous W aste Bureau (HW B) of the N ew M exico Environm ent Departm ent (NM ED) has the responsibility for the regulation of hazardous wastes. The HW B receives its statutory authority from the N ew M exico Hazardous W aste Act and, as the state program authorized to im plem ent the federal program, from the Solid W aste amend D isp o sal ed 42 U.S Act, .C. 6 9a0s1 a emt esneqd.e d by the Resource C o n serv atio n and Recovery Act (RCRA), as The docum ent in the docket for the Proposed Rule entitled "Summary of N ew M exico Financial Responsibility Requirem ents" (Docket No. EPA-HQ-SFUND-2015-0781-2105) does not accurately describe the breadth of N ew M exico's regulatory and FA requirem ents for hardrock mines because it incorrectly suggests that the NM W QA financial assurance requirements are minimal. EPA 's summary fails to discuss how the NM M A, as adm inistered by M M D, and the NM W QA, as administered by NM ED, work together to provide comprehensive environmental protection to m inim ize the potential for releases of hazardous substances. Additionally, the FA requirem ents in the NM M A and N M W QA w ork in tandem. For example, the N M M A explicitly requires m ine operators to comply with environm ental laws, including water quality standards and requirements, but defers decisions on those issues to the NM ED in its adm inistration and enforcem ent of the NM W QCA. Similarly, the N M W QA contains general FA requirements. Because of the overlap between the N M W QCA closure and the NM M A reclam ation requirements, the FA details are for the m ost part delegated to the M M D pursuant to the NM M A regulations. The coordination of the two regulatory and FA programs between M M D and NM ED provides a system of checks and balances that requires NM ED to certify that the N M M A perm it is expected to result in compliance with water quality and other applicable environmental standards and requirements. As shown in Table K, N ew M exico's laws and regulations governing hardrock mining cover the thirteen CERCLA 108(b) response categories and minim ize the potential for a release of hazardous substances from hardrock mines. In the event of a release, M M D and N M ED can use a project's FA to rem ediate a release if the operator fails to respond properly. Consequently, E PA 's Proposed Rule duplicates the States' program and is therefore unnecessary. Sierra Club v. EPA 18cv3472 NDCA 96 Tier 2 ED 002061 00087255-00196 _C_E__R_C_L__A__1_0_8_(_b_) R__e_s_p_o_n_s_e_C__atTefogarbolrHey aKErqd- urNoivceakwleMMntiensxiinincgoN__e_w__M__ex_i_c_o__S_ta_t_u_t_e_s_a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) New Mexico Regulations S olid/H azardous W aste Disposal Environmental Improvement Act New M exico Hazardous W aste Act 20.4.1-20.4.3 NM AC Protection of W ater Q u ality Open Pit N M Stat. 74-6-1 through 17 (W QA) 20.6.2 NM AC (W QA) 20.6.7 NM AC (Copper Rules) 20.6.4 NM AC surface w ater quality standards NM M A 69-36-11 19.10.3.304 NM AC 19.10.5.506 NM AC 19.10.5.507 NM AC 19.10.5.508 NM AC W aste Rock 19.10.6.602 NM AC 20.6.2 NM AC (W QA) 20.6.7.24 NM AC 20.6.7.33 NM AC N M M A 69-3 6-11 19.10.5.506 NM AC 19.10.5.507 NM AC 19.10.6.602 NM AC 20.6.2 NM AC (W QA) 20.6.7.21 NM AC 20.6.7.33 NM AC H eap/D um p/L each Tailings Facility NM M A 69-36-7 19.10.5.502 NM AC 19.10.5.508 NM AC 20.6.2 NM AC (W QA) 19.10.6.602 NM AC 20.6.7.20 NM AC 20.6.7.33 NM AC NM M A 69-36-5 19.10.6.602 NM AC 20.6.2 NM AC (W QA) 20.6.7.22 NM AC 20.6.7.33 NM AC Process P o n d /R eserv o ir NM M A 69-36-5 19.10.6.602 NM AC 20.6.2 NM AC (W QA) 20.6.7.33 NM AC Sierra Club v. EPA 18cv3472 NDCA 97 Tier 2 ED 002061 00087255-00197 RCeEsRpoCnLseACat1e0g8o(bry) Underground M ine Slag Pile Interim O&M W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring New M exico Regulations 19.10.5.508 NM AC 20.6.2 NM AC (W QA) 20.6.7.25 NM AC 20.6.7.33 NM AC 19.10.5.502 NM AC 19.10.5.508 NM AC 20.6.2 NM AC (W QA) 19.10.6.602 NM AC 20.6.7.22 NM AC 19.10.12.1205 NM AC 20.6.2 NM AC (W QA) 20.6.7.33 NM AC 19.10.6.602 NM AC 19.10.1 NMSA 2.1205 1978, N MAC 7461 etseq. 20.6.2 NM AC (W QA) 20.6.7.33 NM AC 19.10.6.602 NM AC 19.10.12.1205 NM AC 20.6.2 NM AC (W QA) 20.6.7.33 NM AC 19.10.6.602 NM AC 19.10.12.1205 NM AC 20.6.2 NM AC (W QA) 20.6.7.35 NM AC Sierra Club v. EPA 18cv3472 NDCA 98 Tier 2 ED 002061 00087255-00198 L. Oregon Two Oregon state regulatory agencies have prim ary jurisdiction over mining: 1) the Oregon D epartm ent o f G eology and M ineral Industries ("D O G A M I"); and 2) the O regon D epartm ent o f Environm ental Q uality (" O D E Q "). D O G A M I adm inisters the D ivision 37 C onsolidated Perm itting of M ining Operations regulations at Oregon A dm inistrative Rule ("O A R") 632037-0005 et seq. The D ivision 37 Rule governs all hardrock m ining operations except for placer m ines and mining projects with mineral processing facilities that only use gravity separation. The Division 37 Rule specifies FA requirements. ODEQ administers the Division 43 Chemical M ining Rules at OAR 3340-043-0000 et seq. The Division 43 Rule establishes stringent design, operating and closure rules for mineral processing facilities that use "cyanide or other toxic chemicals" to extract metals or metal-bearing minerals from the ore and which produce waste or wastewaters containing toxic m aterials." OAR 340-037-0000(1). As shown in Table L, the com bination of the DOGAM I Division 37 and ODEQ Division 43 rules provide comprehensive environmental protection that minimizes the potential for a release of a hazardous substance from an Oregon hardrock m ining operation and provide FA in the event there is a release. In fact, D O G A M I's Division 37 regulations include the requirem ent to provide FA for a "credible accident" which may include a release of a hazardous substance: "Credible Accident means an unplanned discharge of ore processing solutions, ore processing solution contam inated water, or chemicals from a mine facility into surface water, ground water, soil, overburden, or living resources in sufficient quantity to im pair the pre-m ine quality o f the receiving w ater, soil, overburden, or living resources, or that would exceed the discharge lim itations of the Departm ent of Environm ental Quality. A credible accident may also include but is not lim ited to the following types of accidents: fires, unplanned detonation of explosives, equipm ent failures, fuel spills and accidents resulting from hum an errors." OAR 632-037-0010(8) The Division 37 FA requirem ents include the following bonding m andate for a credible accident: "A reclam ation bond or alternative security acceptable to the D epartm ent shall be posted before the start of any construction, excavation or other ground disturbing activity associated with mining operations, other than baseline data collection. "Alternative security" shall include certificates of deposit or irrevocable letters of credit issued by a federally-insured bank. The purpose of the financial security shall be to allow the D epartm ent to m eet the requirem ents of the reclam ation and closure plan and to provide protection of surface and subsurface resources. The am ount of the financial security shall be calculated on the basis of the estimated actual cost of reclamation and closure and shall not be limited. The calculation shall also consider environmental protection costs based on the credible accident analysis and the factors listed in section (6) of this rule." OAR 623-037-0135(1) Sierra Club v. EPA 18cv3472 NDCA 99 Tier 2 ED 002061 00087255-00199 It should be noted that OAR 632-037-0135(1) explicitly establishes that there is no upper ceiling or lim it to the am ount of required FA for Oregon hardrock mines. Consequently, DOGAM I has considerable discretionary authority in setting FA amounts to cover both physical reclam ation and to respond to a credible accident involving a release of a hazardous substance. The Division 37 regulations also include a very stringent global environmental protection "Undam aged Ecosystem " standard that requires mine operators to reclaim a mine in a m anner that virtually eliminates m ost impacts by "establishm ent of a self-sustaining ecosystem, comparable to undam aged ecosystems in the area of the m ine" OAR 632-037-010(28). The Division 37 regulations define "undam aged ecosystem " as follows: "Undam aged Ecosystem m eans an ecosystem that is com parable in utility and stability to the ecosystem surrounding the mine and/or the pre-mine ecosystem, and that retains the principal ecological characteristics reasonably expected to exist under local, climatic, geological, soil, hydrological and biological conditions." OAR 632-037-0010(31). Interpreted in the context o f CERCLA 108(b), the requirem ent to reclaim a site and m itigate all impacts to comply with the undam aged ecosystem environmental performance standards means that an operator m ust respond to any release of a hazardous substance. Failure to respond to a release or to achieve this standard would be a perm it violation that could trigger perm it revocation and bond forfeiture. The Division 37 rules include specific reclam ation and mine closure standards at OAR 632037-0130 that require operators to use "the best, available, practicable and necessary technology to ensure compliance with environmental standards." The requirements explicitly include post closure m onitoring to ensure "compliance with decom m issioning perform ance standards." The post-closure m onitoring data are used to determ ine an operator's com pliance with the undam aged ecosystem standard. The Division 37 rules require DOGAM I to review the sufficiency of the reclam ation costs annually. Operators m ust increase their bonds if D O G A M I finds that a higher bonding level is necessary. If an operator fails to provide the additional FA, D O G A M I m ust suspend all perm its for the project. OAR 632-037-135. In establishing the required FA amount, DOGAM I m ust consider the costs to address the following factors as listed in OAR 632-037-135(6): (a) The reclam ation estimate submitted by the applicant as part of the consolidated application; (b) The im pact analysis, including the credible accident analysis; (c) Supervision; (d) M obilization; (e) Costs of equipment; (f) Costs of labor; (g) Rem oval or disposition of debris, junk, equipment, structures, foundations and unwanted chemicals; 100 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00200 (h) Reduction or stabilization of hazards such as in-water slopes, highwalls, and landslides or other mass failure; (i) Disposition of oversize, rejects, scalpings and overburden; (j) Backfilling, contouring or regrading and topsoil replacem ent; (k) Draining, establishm ent of drainage and erosion control; (l) Soil tests; (m) Seedbed preparation, seeding, m ulching, fertilizing, netting, tackifiers or other stabilizing agents; (n) Tree and shrub planting; (o) Fencing; (p) Liability insurance; (q) Long-term stabilization, control, containm ent or disposition of waste solids and liquids; (r) Final engineering design; (s) Costs of remedial m easure identified to clean up releases of contaminants associated with mining, processing or beneficiation that are reasonably likely to cause a threat to public health, safety or the environment; (t) The estim ated cost of detoxification or disposal of ore processing solutions and solution contaminated ore so as to meet the standards for reclam ation approved for the operation in the operating perm it issued by the Departm ent and the standards established in ORS 517.952 to 517.989 and these rules; (u) The estim ated cost of restoration of contam inated soil, surface and ground water or living resources w ithin the standards established in ORS 517.952 to 517.989 and these rules should an accident occur at the site; (v) The estim ated cost of rem oval and/or disposal of chem icals used on site; (w) The spill prevention plan; (x) Estim ated Departm ent-contracted service expenses including but not lim ited to supervision, mobilization, labor and equipm ent needs of the departm ent for decontamination and restoration should the Departm ent be required to perform such restoration. Oregon's reclam ation requirem ents clearly are not restricted to physical reclam ation of surface disturbance because they require FA for a credible accident, release, or spill. They also include many environmental response requirem ents including the costs to remediate releases of contam inants (i.e., releases of CERCLA hazardous substances), detoxify and dispose of wastes, and rem ediate contam inated soil, surface water, and groundwater. FA m ust include the environmental controls, mitigation, and reclam ation m easures necessary to comply with the OAR 632-037-135(6) requirements. OAR 632-037-135(10) establishes that DOGAM I may require FA or an annuity for post-reclam ation m onitoring and care. DOGAM I coordinates its adm inistration of the Division 37 Rule with D EQ 's administration of the Division 43 Chemical M ining Rule. The Division 43 Rule cross-references the Division 37 rule in establishing FA requirem ents and includes a specific section pertaining to an operator's assum ption of liability: Sierra Club v. EPA 18cv3472 NDCA 101 Tier 2 ED 002061 00087255-00201 "The Reclam ation Bond or alternative security required by ORS 517.987 and O AR 632-037-0135 for a chem ical m ining facility is intended to provide adequate resources to cover the costs of reclam ation and a credible accident. The am ount of security required is to be determ ined at the tim e perm its are issued and adjusted as necessary during site operations..." OAR 340-043-0025(l)(h) " ...the D epartm ent shall require, prior to issuing or renewing a perm it for a chemical m ining facility, and as a condition of the permit, that those persons or entities who control the perm ittee assume liability for environmental injuries, remediation expenses, and penalties." OAR 340-043-0025(2) The ODEQ chemical m ining Division 43 perm it is either a National Pollutant Discharge Elim ination System ("NPDES") perm it if the project involves a point-source discharge to surface waters or a W ater Pollution Control Facility ("W PCF") permit if there is no discharge. The Division 43 rule establishes stringent and prescriptive requirements including the follow ing: Liner system designs and specifications; Leak detection and leak collection systems; Tailings detoxification or neutralization requirements; Design, construction, and operation of heap leach facilities; Disposal of mill tailings; Disposal or storage of waste rocks, low-grade ore, and other m ined materials; Closure of heap leach pads and tailings disposal facilities; Post closure monitoring; W astewater disposal and treatment; and Closure of open-pit mines; The focus of the D ivision 43 facilities design, operation, and closure requirem ents is to prevent releases of hazardous substances at each of the listed mine components. O regon's Division 37 and D ivision 43 stringent regulatory fram ew ork for hardrock m ines clearly makes the Proposed Rule duplicative and unnecessary. The environmental performance standards in Oregon's Division 37 and Division 43 rules, which include the extremely rigorous undam aged ecosystem standard, significantly m inim ize the likelihood of a release of a hazardous substance from an Oregon hardrock mine. The credible accident FA provision in D O G A M Fs Division 37 Rule give DO G A M I resources to respond to a release of a hazardous substance in the event an operator fails to rem ediate the release. Although the regulatory and FA program s in other m ining states give state regulators broad authority to use FA instrum ents to respond to an environm ental problem if an operator fails to do so, O regon's credible accident FA requirem ent is unique because it is an explicit FA requirem ent that specifically deals with a hypothetical release of a hazardous substance. Sierra Club v. EPA 18cv3472 NDCA 102 Tier 2 ED 002061 00087255-00202 There are no gaps in Oregon's environmental protection and FA requirem ents for hardrock mines. These regulations m inim ize the risk of a release of hazardous substances. Consequently, there is no justification for adding a superfluous layer of EPA-adm inistered FA for hardrock mines in Oregon. The document in the docket for the Proposed Rule entitled "Summary of Oregon Financial Responsibility Requirem ents" (Docket No. EPA-HQ-SFUND-2015-0781-2107) does not accurately describe the breadth of O regon's regulatory and FA requirem ents for hardrock mines. EPA 's summary omits any discussion of O D EQ 's role and the Division 43 chemical mining rules. It also fails to recognize the im portance of the credible accident or undam aged ecosystem provisions in the Division 37 Rule. Consequently, EPA has completely overlooked key elements of O regon's regulatory and FA requirem ents for hardrock mines. EPA m ust not rely on this summary in evaluating the sufficiency of O regon's regulatory and FA program in m inim izing the risks associated with a release of a hazardous substance from an Oregon m ining operation. Sierra Club v. EPA 18cv3472 NDCA 103 Tier 2 ED 002061 00087255-00203 _C_E__R_C_L__A__1_0_8_(b_)__R_e_s_p_o_n_s_e_CfaotTregaHobarlerydLEroq-cuOkivrMaelgeinonintnsgi_n_O__r_e_g_o_n_S__ta_t_u_t_e_s_a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) Oregon R egu latio n s S olid/H azardous OAR 632-037-135(6) W aste Disposal OAR 340-043-0060 Open Pit W aste Rock H eap/D um p/L each Tailings Facility Process P o n d /R eserv o ir Underground M ine OAR 632-037-0130(8), (10), (13) OAR 632-037-135(6) OAR 340-043-0030(2)(h) OAR 340-043-0030(2)(j) OAR 340-043-0080(4) OAR 340-043-0180 OAR 340-043 -003 0(2)(h) OAR 632-037-135(6) OAR 340-043-0030(2)(j) OAR 340-043-0100 OAR 340-043-0140 OAR 632-037-135(6) OAR 340-043-0000(2)(a), (c) OAR 340-043-0025(l)(h), (i) OAR 340-043 -003 0(2)(h) OAR 340-043-0030(2)0) OAR 340-043-0080(5) OAR 340-043-0100 O A R 340-043-0125 (1 - 4), (8), (9), (10), (11) OAR 340-043-0150 OAR 632-037-135(6) OAR 340-043-0000(2)(a), (b), (c) OAR 340-043-0000(2)(b) O AR 340-043-0025(l)(h), (i) OAR 340-043 -003 0(2)(h) OAR 340-043-0030(2)(j) OAR 340-043-0080(5) OAR 340-043-0100 OAR 340-043-0130 OAR 340-043-0150 ORS 540 350-390 OAR 632-037-135(6) OAR 340-043-0000(2)(a), (c) O AR 340-043-0025(l)(h), (i) OAR 340-043-0080(5) OAR 340-043-0125(1), (2), (3),(5), (6), (7) OAR 340-043-0150 OAR 632-037-135(6) 104 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00204 RCeEsRpoCnLseACat1e0g8o(bry) Slag Pile Interim O&M W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring O reg o n Regulations Not applicable OAR 632-037-0135(1) OAR 632-037-135(6) O AR 340-043-0025(l)(h), (i) OAR 340-043-0025(2) OAR 340-043-0040(2)(f) OAR 340-043-0050(3) OAR 340-043-0150 OAR 340-043-0160 OAR 632-037-135(6) OAR 340-043-0040(2)(c), (d) OAR 340-043-0170 OAR 340-043-0180(2) OAR 623-037-0135(1) OAR 632-037-135(6) O AR 340-043-0025(l)(h), (i) OAR 340-043-0025(2) OAR 340-043-0040(2)(f) OAR 340-043-0050(3) OAR 623-037-0135(1) OAR 632-037-135(6) OAR 632-037-0130(3) OAR 632-037-0135(10) OAR 632-037-0140(5) O AR 340-043-0025(l)(h), (i) OAR 340-043-0025(2) OAR 340-043-0040(2)(f) OAR 340-043-0150 Sierra Club v. EPA 18cv3472 NDCA 105 Tier 2 ED 002061 00087255-00205 M . U tah As shown in Table M below, the Utah laws and regulations that principally govern specific aspects of the design, operation, reclamation, closure, and post-closure of Utah m ining and mineral processing facilities include the following: Utah Code Title 40, M ines and M ining - Chapter 8, Utah M ined Land Reclam ation Act (" U M L R A "). R ule ("R ") 647 im plem ents this law; Utah Code Title 19, the Environm ental Quality title. Several chapters of this title are applicable to mining: Chapter 01 - General Provisions; Chapter 02 - A ir Conservation Act; Chapter 03 - Radiation Control Act; Chapter 04 - Safe Drinking W ater Act; Chapter 05 - W ater Quality Act; Chapter 06 - Hazardous Substances, and Chapter 08 - Voluntary Cleanup Program s. N um erous rules im plem ent title 19, w ith R317-6, Ground W ater Quality Protection, and R317-8 Utah Pollutant Discharge Elim ination System (UPDES) being two of the m ost important rules; and Utah Code Title 73, Chapter 5a, which pertains to dam safety. There are three principle rules that im plem ent this title: R655-10, Dam Safety Classifications, Approval Procedures and Independent Reviews, R655-11, Requirem ents for the Design, Construction and Abandonm ent of Dams, and R655-12, Requirem ents for Operational Dams. The Utah D epartm ent of Environm ental Quality ("U D EQ ") adm inisters U tah's Environm ental Quality Code according to environmental m edia through the following Divisions: Air Quality, Drinking W ater, Environmental Response and Remediation, W aste M anagem ent and Radiation Control, and W ater Quality. The Utah D epartm ent of Natural Resources - Oil Gas and M ining ("DOGM ") administers the UM LRA. The Utah Departm ent of Natural Resources - Division of W ater Rights ("U D N R-W aRi") adm inisters U tah's dam safety code and regulatory program. A M emorandum of Understanding between UDEQ and DOGM explains the cooperative and collaborative approach between the agencies to im plem ent the complementary regulations that share a common objective to protect human health and the environment. The UM LRA mined land reclamation requirements address both landscape restoration and environm ental protection during and after mining. The U M LRA and its im plem enting regulations reflect the following objectives: Return the land, concurrently with m ining or within a reasonable amount of time thereafter, to a stable ecological condition com patible with past, present, and probable future local land uses; M inim ize or prevent present and future on-site or off-site environmental degradation caused by m ining operations to the ecologic and hydrologic regimes and to meet other pertinent state and federal regulations regarding air and w ater quality standards and health and safety criteria; and Sierra Club v. EPA 18cv3472 NDCA 106 Tier 2 ED 002061 00087255-00206  M inim ize or prevent future hazards to public safety and welfare. The UM LRA establishes design and operating criteria for m ining facilities. M ining authorizations under the UM LRA require DOGM coordination with DEQ to ensure that the m ining facility has obtained from DEQ all perm its and approvals required by Title 19 and im plem enting regulations. U tah's Title 19 environm ental protection code thus form s the basis for the environmental controls and m itigation measures that govern mine design, operation, and closure. W orking together with the Permittee, the UM LRA and Rule 647, the dam safety regulations, and U D EQ 's environmental protection regulations govern the m anagem ent of hazardous substances during all phases o f the m ining lifecycle - from operation to closure and post-closure at all U tah m ines and m ineral processing facilities and protect hum an health and the environm ent by controlling the release or threat of release of such hazardous substances. The UM LRA, the Title 19 environm ental protection laws, and the U D W R dam safety regulations resu the lt in Prop a reg osed ulator Rule. y pack U tah aFgAe that req covers the uirem ents, th in i rteen conc CER ert w CL ith A T 108(b) itle 19 e response nvironm e categ ntal c ories ontro in ls, m itigation measures, and environmental performance requirements, present appropriate environm ental m anagem ent during all phases of the m ining lifecycle. The following are examples of some of the environmental performance standards in Rule 647 with which m ines and mineral processing facilities must comply: A ll deleterious or potentially deleterious m aterial13 shall be safely rem oved from the site or kept in an isolated condition such that adverse environmental effects are eliminated or controlled. (R 647-4-107.4 and R 647-4-111.4). O perations shall be conducted in a m anner such that sedim ent from disturbed areas is adequately controlled. (R647-4-107.3) W ater im pounding structures shall be reclaim ed so as to be self-draining and m echanically stable unless shown to have sound hydrologic design and to be beneficial to the post-mining land use. Operations m ust m inim ize hazards to the public safety during operation (R 647-4-107.1) and during reclam ation (R 647-4-111.1 and R 647-1-111.6) U D O G M 's perm it application for large mines, known as the Notice of Intention, requires detailed inform ation about the design, engineering, construction, operation, reclamation, closure, and post-closure o f a proposed m ining project. M ines also require m ultiple U D EQ Title 19 permits that include specific environmental performance standards. The divisions that im plem ent U D EQ 's perm itting requirem ents require permit applicants to provide extensive environmental oc13hpe"emDraietciloaelntesroitrooupsahiyMr,siacwtaealrtieacrlo,sn"wdimetiaoethannesrs hydrologic systems. R647-1-106 inoeratrhmthei,crswoobialissoteloogroircwaailntetprrroodtchueacstesdeasr,emwadtheeitrcrihiamlsewnoetxuaplldotsoleidktehlbeyy bpimrootidanuincoger 107 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00207 baseline data and design inform ation on the proposed environmental controls that will be em ployed to achieve com pliance w ith the Title 19 requirem ents. Rule 647 specifies that bond amounts shall be: "based upon (a) the technical details of the approved m ining and reclam ation plan, (b) the proposed post mining land use, and (c) projected third-party engineering and administrative costs to cover Division expenses incurred under a bond forfeiture circumstance." Throughout a project's life span, the required am ount of FA includes estim ated closure costs. Flowever, tow ards the end of the active m ining phase of a project, U D O G M m ay require m ore detailed closure and post-closure plans and FA that is based on these m ore detailed plans. Once a mine is approved and in operation, both U DOGM and UDEQ have the authority to compel rem ediation if the site m onitoring data indicate the project is not perform ing as authorized. Operators have a strong incentive to remain in compliance with their operating permits to avoid regulatory sanctions that can include an order to cease mining. In the event an operator fails to address a problem, state regulators can use the operators' FA to rem ediate the site. U tah's Groundwater Quality Protection Program in Utah Adm inistrative Code, ("UAC") Title R317, requires a groundwater discharge perm it from UDEQ, that is applicable to num erous m ining features including waste rock storage facilities, m ining and m illing operations, heap leach facilities, pits, ponds, and lagoons. M ining facilities may not discharge contam inants that cause groundwater to exceed an applicable groundwater quality standard. If the background concentration of the groundw ater at a site exceeds an applicable w ater quality standard for one or m ore parameter, the facility may not cause an increase over the background concentrations. One of the stated objectives of the Utah legislature in the UM LRA, Section 40-8-12, is to m inim ize or prevent future hazards to public safety and welfare. This mandate, along with the coordinated oversight m em orialized in the M OU, provides Utah regulators with clear authority to protect water, air, and environm ental resources through appropriate and applicable m itigation and control measures, which in some instances may include long-term w ater quality treatment. Another im portant aspect of U tah's regulatory and FA fram ework is state regulators' authority to require operators to m aintain FA throughout the entire mining life cycle to m inim ize the likelihood for a situation to develop that results in an un-bonded release of a hazardous substance. This requirem ent also provides UDOGM , at any time, an opportunity to update operating permits and adjust FA as may be appropriate in response to changing site- and project-specific factors: " ...the Division may review the permit and require updated information and modifications when warranted." (R647-4-102). Additionally, UDOGM will not close project permits or relinquish a project's FA until they are assured that there is a reasonable likelihood that the closed and reclaim ed project will not cause a future violation of an operating-phase perm it condition (which effectively includes the release of CERCLA hazardous substances). Both the am ount of and the duration of the required FA that an operator m ust provide to UDOGM are coordinated as appropriate with the UDEQ permits for the project. Sierra Club v. EPA 18cv3472 NDCA 108 Tier 2 ED 002061 00087255-00208 As shown in Table M below, U tah's Title 19 Code establishes fees for hazardous and nonhazardous solid waste disposal (UAC 19-1-108, 19-6-118, and 19-6-119) that DEQ regulators can use to respond to issues. The solid waste disposal fee does not apply to Bevill-exem pt mine wastes such as waste rocks and tailings. Utah mines on BLM -adm inistered lands m ust also comply with that agency's 43 CFR 3809 surface m anagement regulations governing metallic minerals and the 43 CFR Part 3500 regulations applicable to leasing and bonding of phosphate and solid m inerals other than coal and oil shale. Similarly, U tah m ines on National Forest System Lands m ust com ply w ith the Forest Service's 36 CFR 228A regulations. BLM and Utah state regulators coordinate their mine regulatory and FA program s u n d er the term s o f a M O U . A s show n in E x h ib it 1, B L M 's and the Forest Service's regulations provide com prehensive FA for each of the CERCLA 108(b) response categories. The two EPA documents in the docket for this rulemaking, Appendix IV, Table N in EPA 's Novem ber 2016 "Comprehensive Report: An Overview of Practices at Hardrock M ining and M ineral Processing Facilities and Related Releases of CERCLA Hazardous Substances" (Docket No. EPA-H Q -SFU N D -2015-0781-0144), and Utah Summary of Financial Responsibility Requirements (Docket No. H Q -SFU N D -2015-0781-2109) are deficient because they omit key details about U tah's regulatory fram ew ork for hardrock m ining and m ineral processing facilities. For exam ple, E PA 's Table N om its U tah's dam safety regulations. This table also fails to capture how the different parts of U tah's regulations w ork together to require that m ines be designed, built, operated, and closed to protect the environm ent and m inim ize the potential for releases of hazardous substances. E PA 's Table N and its U tah summary overlook how the Title 19 laws and im plem enting environm ental protection regulations w ork in tandem w ith U tah's FA requirem ents. The environmental protection regulations define the performance standards that apply during a m ine's entire lifecycle and determ ine the am ount o f required FA to achieve com pliance with all environmental perform ance standards. Because EPA 's analysis for Utah fails to understand the interaction of the three parts of U tah's code that govern U tah's regulatory and FA requirem ents for hardrock m ines and mineral processing facilities, they present a very superficial picture of U tah's programs. Both of EPA 's docum ents com pletely overlook the U D N R -W aR i's dam safety regulations, w hich are an essential com ponent of U tah's regulatory program to m inim ize the potential for a release of hazardous substances from tailings storage facilities and other mine facilities that are regulated as dams. E PA 's sum m ary incorrectly states that UDOGM cannot require an adjustm ent of a project's FA m ore frequently than every five years. As described above, D O G M 's regulations allow m ore frequent revisions under appropriate circumstances. E PA 's sum m ary oversim plifies U D O G M 's policy to accept FA calculation based on the M inerals Regulatory Program 's average dollars per acre reclam ation costs. The average costs per acre pertain only to basic backfilling, grading, and revegetation tasks at small m ines and nothing 109 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00209 more. Other reclam ation activities, such as the disposal of deleterious materials, portal closure, and demolition, are addressed on a site-specific basis and added as separate line items to the cost estimate. Com paring reclam ation costs to other sites involves evaluating num erous com plex site factors. An operator m ust consider a broad range of site characteristics including the nature of the mined materials and the acid forming potential or any toxic characteristics of the project waste rocks and spent ore (see R647-4-106.4). Therefore, the com parison to other sites is not a simplistic acre-for-acre calculation. Given the shortcom ings in EPA 's Table N and its Utah State summary, EPA has not accurately described the way in w hich U tah's laws and regulations interact to provide com prehensive environm ental protection and FA. U tah's environm ental regulatory and FA fram ew ork for m ining is another exam ple of a "com plicated but generally effective" regulatory program as described in the NAS Study. E PA 's analysis for this rulem aking of U tah's regulatory and FA program s is inaccurate and incomplete. A proper evaluation would reveal that U tah's sitespecific environmental protection and FA requirements are comprehensive and far superior to the one-size-fits-all form ulas EPA used in the Proposed Rule. U tah's program adequately protects the environment through the prevention of releases and imposes sufficient FA requirements on Utah m ining operations. Therefore, an EPA-driven FA program pursuant to CERCLA 108(b) is unnecessary. Sierra Club v. EPA 18cv3472 NDCA 110 Tier 2 ED 002061 00087255-00210 _C_E__R_C_L__A__1_0_8_(b_)__R_e_s_p_o_n_s_e CfoartTeHagbaorlredyrMEocq-kuUiMvtaailnheinntgs_i_n_U__t_a_h_S_t_a_t_u_t_es__a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) Utah Law s and Regulations S olid/H azardous R 647-4-107.4 W aste Disposal R 6 4 7 -4 -1 0 9 .5 R 647-4-110.4 R 647-4-111.4 R 6 4 7 -4 -1 13 UAC Title 19-1-108 UAC Title 19-6-102 UAC Title 19-6-118 UAC Title 19-6-320 R 315-268 Open Pit R 6 4 7 -4 -1 0 5 .3 R 647-4-106.3 R 647-4-107.1 R 647-4-109.1 R 647-4-109.4 R 6 4 7 -4 -1 0 9 .5 R 647-4-110.2 R 647-4-110.4 R 647-4-111.1 R 647-4-111.4 R 647-4-111.7 R 6 4 7 -4 -1 13 W aste Rock R 647-4-106.3 R 647-4-106.4 R 647-4-106.9 R 647-4-107.4 R 647-4-107.3 R 647-4-109.1 R 647-4-109.4 R 6 4 7 -4 -1 0 9 .5 R 647-4-110.2 R 647-4-110.4 R 647-4-111.4 R 647-4-111.6 R 6 4 7 -4 -1 13 H eap/D um p/Leach R 647-4-106.3 R 647-4-106.4 R 647-4-106.9 R 647-4-107.4 R 647-4-109.1 R 647-4-109.4 111 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00211 RCeEsRpoCnLseACat1e0g8o(bry) Tailings Facility Process P o n d /R eserv o ir Underground M ine Slag Pile Interim O&M Utah Laws and Regulations R 6 4 7 -4 -1 0 9 .5 R 647-4-110.2 R 647-4-110.4 R 647-4-111.4 R 6 4 7 -4 -1 13 R 6 4 7 -4 -1 0 5 .3 R 647-4-106.3 R 647-4-106.4 R 647-4-106.9 R 647-4-107.4 R 647-4-109.1 R 647-4-109.4 R 6 4 7 -4 -1 0 9 .5 R 647-4-110.2 R 647-4-110.4 R 647-4-111.4 R 647-4-111.9 R 6 4 7 -4 -1 13 R313-24 (Uranium M ills and M ill Tailings) UAC Title 73, Chapter 5a, R655-10 R655-11 R655-12 R 6 4 7 -4 -1 0 5 .3 R 647-4-106.3 R 647-4-107.4 R 647-4-109.1 R 647-4-109.5 R 647-4-110.2 R 647-4-111.4 R 647-4-111.9 R 6 4 7 -4 -1 13 R 647-4-107.1.11 R 647-4-109.1 R 6 4 7 -4 -1 0 9 .5 R 647-4-110.2 R 647-4-111.1.11 R 6 4 7 -4 -1 13 R 315-266 UAC Title 19-6-108 UAC Title 19-6-109 R 647-4-109.1 R 6 4 7 -4 -1 0 9 .5 112 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00212 RCeEsRpoCnLseACat1e0g8o(bry) W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring Utah Laws and Regulations R 317-6-1 R 317-6-6 R317-8 UAC Title 19-5-22 UAC Title 19-5-107 R 647-4-109.1 R 6 4 7 -4 -1 0 9 .5 R 647-4-109.1 R 6 4 7 -4 -1 0 9 .5 Sierra Club v. EPA 18cv3472 NDCA 113 Tier 2 ED 002061 00087255-00213 N. Washington Two W ashington State regulatory agencies have principal jurisdiction over hardrock mining, the W ashington D epartm ent of N atural Resources ("W D N R") and the W ashington D epartm ent of Ecology ("W D O E "). These agencies im plem ent a regulatory fram ew ork that provides comprehensive environmental protection that minimizes the risk of a release of hazardous substances from W ashington hardrock mines. The W ashington State regulations also provide W ashington State regulators with FA to address a release if an operator fails to respond properly. As shown in Table N below, the regulatory fram ework for hardrock m ining and mineral processing in W ashington addresses all of the CERCLA 108(b) response categories in the Proposed Rule. The W D N R is the primary state regulatory agency that adm inisters the W ashington M etals M ining and M illing A ct ("W M M M A "), Revised Code of W ashington ("R C W ") Chapter 78.56 .010 - 902. Flowever, the W DOE and other W ashington state regulatory agencies also play a key role in implem enting the W M M A. The W M M M A requires W DOE to prepare an Environm ental Im pact Statement pursuant to the State Environm ental Policy A ct ("SEPA") to provide a detailed evaluation of the environmental impacts of a proposed m ining and milling operation. RCW 43.21C.031. As part of the mine permitting process, a company must provide information to W DNR and W DOE about its past environmental perform ance track record in W ashington and in other states and disclose the following information: Any past or present bankruptcies involving the applicant or its subsidiaries; W hether the applicant has ever abandoned a site that required state or federal regulators to rem ediate the site pursuant to state remedial cleanup program s or CERCLA; and If the applicant has ever forfeited a FA instrum ent due to noncompliance with reclam ation or remediation requirements. This inform ation is m ade available to the public. It is highly unlikely that a perm it applicant with a blem ished environm ental track record would be successful in securing operating perm its in W ashington given the num erous opportunities the public has to com m ent upon and influence the potential issuance of perm its for a proposed m ining operation. In addition to the W M M M A, num erous other W ashington state laws have specific requirem ents for hardrock m ining and m ineral processing operations. For example, W ashington's W ater Pollution Control Act governing discharges to surface water and NPDES permits under RCW Chapter 09.48.260 requires W D O E to inspect hardrock mining projects at least quarterly (RCW Chapter 90.48.090). The Pollution Disclosure A ct of 1971 requires m ine operators to submit annual w ater quality and air quality discharge reports. (RCW Chapter 90.52). RCW Chapter 90.52.040 "requires w astes to be provided w ith all known, available, and reasonable m ethods of treatm ent prior to their discharge or entry into waters of the state." The W ashington state regulations pertaining to hazardous waste require W DOE to inspect metals mining and milling operations quarterly (RCW Chapter 70.105.310). 114 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00214 Washington also has specific dam safety requirements applicable to tailings storage facilities: "A metals mining and m illing operation regulated under chapter 232, Laws of 1994 is subject to additional dam safety inspection requirem ents due to the special hazards associated with failure of a tailings pond impoundment. The department shall inspect these im poundm ents at least quarterly during the project's operation and at least annually thereafter for the postclosure m onitoring period in order to ensure the safety of the dam or controlling works. The departm ent shall conduct additional inspections as needed during the construction phase of the mining operation in order to ensure the safe construction of the tailings impoundm ent." RCW Chapter 90.03.350. The W M M M A includes stringent m itigation standards that require operators to avoid adverse impacts wherever possible to m inim ize adverse impacts by limiting the scope of a proposed action and by using appropriate technology to reduce adverse impacts or restore the affected environment. If adverse impacts are unavoidable and cannot be reduced or restored, operators m ust rectify the adverse impact by repairing, rehabilitating, or restoring the affected environment RCW 78.56.020(6). M itigation also requires m onitoring of an adverse im pact in order to take appropriate corrective measures. In order to comply with RCW Chapter 78.56.100, tailings disposal facilities m ust be designed and operated to "prevent the release of pollution." Operators are required to use "all known available and reasonable technology to lim it the concentration of potentially toxic m aterials in the tailings facility." RCW Chapter 78.56.100(1 )(a) establishes the following stringent long term , post-closure requirem ents for tailings and w aste rock (i.e., "m ine tailings") storage facilities: (iii) The toxicity of mine or mill tailings and the potential for long-term releases of regulated substances from m ine or mill tailings shall be reduced to the greatest extent practicable through stabilization, removal, or reuse of the substances; and (iv) The closure of the tailings facility shall provide for isolation or containm ent of potentially toxic m aterials and shall be designed to prevent future release of regulated substances contained in the im poundm ent. A dditionally, W ashington's regulations require W D O E to perform a detailed technical investigation that considers numerous site-specific criteria to determine the preferred location for the tailings disposal facility to "incorporate the requirem ents of all know n available and reasonable m ethods in order to m aintain the highest possible standards to insure the purity o f all waters of the state." RCW Chapter 78.56.090. This site selection report m ust evaluate the feasibility of reclaim ing and stabilizing the tailings facility and is typically coordinated with the Environmental Im pact Statement required under SEPA. Sierra Club v. EPA 18cv3472 NDCA 115 Tier 2 ED 002061 00087255-00215 RCW Chapter 78.56.100(b) requires applicants to develop a waste rock m anagem ent plan that both W DOE and W DNR must approve. The waste rock m anagement plan must emphasize pollution prevention and include, at a minimum, the following: (i) An accurate identification of the acid generating properties of the waste rock; (ii) A strategy for encapsulating potentially toxic m aterials from the environm ent to prevent the release of heavy m etals and acid drainage; and (iii) A plan for reclaim ing and closing waste rock sites w hich m inim izes infiltration of precipitation and runoff into the waste rock and which is designed to prevent future releases of regulated substances contained w ithin the waste rock. RCW Chapter 56.110 prohibits W D O E from issuing any of the necessary permits for a m ine or m illing facility until the operator has provided an acceptable "perform ance security" (i.e., FA) to W DOE. The perform ance security m ust be conditions on "the faithful perform ance of the applicant or operator in m eeting the following obligations: (ii) Com pliance with the environm ental protection laws of the state of W ashington administered by the departm ent of ecology, or perm it conditions adm inistered by the departm ent of ecology, associated with the construction, operation, and closure pertaining to metals m ining and milling operations, and with the related environmental protection ordinances and permit conditions established by local government when requested by local government; (iv) Postclosure environmental m onitoring as determ ined by the departm ent of ecology; and (v) Provision of sufficient funding as determined by the departm ent of ecology for cleanup of potential problem s revealed during or after closure. RCW 78.56.110(2) The requirem ent that an applicant m ust provide satisfactory FA before W DOE can issue any of the necessary perm its for the operation applies to the NPDES (RCW Chapter 90.48.260), air quality, hazardous waste, dam safety permits, and other W DOE-adm inistered environmental protection permits. As a practical m atter, this requirem ent m eans all W D O E-issued perm its functionally have FA because the environm ental controls necessary to satisfy the conditions in these permits determ ines the FA amount. RCW Chapter 78.56.110(4) gives W DOE the authority to increase (or decrease) the am ount of required FA "at any tim e to compensate for any alteration in the operation that affects meeting the obligations in subsection (2)." W DOE is required to review the adequacy of the FA at least every two years. The operator has liability for the FA until W DOE deems the operation has met all the requirem ents in its perm it obligations. If an operator fails to fulfill its com pliance obligations, including perform ing any necessary reclam ation or remediation, W DOE is authorized to forfeit the FA and perform the remediation. 116 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00216 In the event the am ount of FA is insufficient, the W ashington state attorney general m ay initiate legal action in the W ashington superior court to recover the rem aining costs from the operator. RCW Chapter 78.56.120. RCW Chapter 56.78.160 perm anently prohibits in situ m ining in W ashington. The requirem ents of RCW Chapter 78.56 apply to m illing facilities like the Kettle R iver M ill in Ferry County, W ashington, that are not adjacent to a mine. Local governm ents also have a role in the perm itting process for W ashington mine and milling operations. W D O E m ust coordinate w ith local governm ent "to the fullest extent practicable" in preparing the SEPA environm ental im pact statement. RCW Chapter 78.56.050. Additionally, local governm ents are involved in the issuance of other W DOE permits including the NPDES, air quality, and hazardous waste permits. The W DNR and W DOE regulatory framework for W ashington hardrock mines provides comprehensive environmental protection that minimizes the risk of a release of hazardous substances. It also provides W D O E with FA to respond to a release in the event an operator fails to do so. As shown in Table N below, the W ashington state law s governing m ining and m illing and the other permitting requirements applicable to mining and m illing cover the thirteen CERCLA 108(b) response categories. Consequently, there is no justification for EPA to im pose an EPA-adm inistered FA program pursuant to CERCLA 108(b) for hardrock m ines in W ashington. The docum ent in the docket for the Proposed Rule entitled " Summary of W ashington Financial Responsibility Requirem ents" (Docket No. EPA -H Q -SFU N D -2015-0781-2110) does not fully discuss the detailed requirements of the W M M M A. Consequently, it overlooks the scope of W ashington's FA requirem ents, w hich functionally extends to all W D O E-issued project perm its and the extraordinarily stringent statutory environmental protection requirem ents that mandate pollution prevention from tailings and waste rock disposal facilities. These pollution prevention statutory requirem ents categorically prohibit the release of hazardous substances from W ashington m ining and m illing facilities and provide W ashington state regulators with powerful regulatory and enforcement tools to prevent releases and FA to respond to an unauthorized release. Sierra Club v. EPA 18cv3472 NDCA 117 Tier 2 ED 002061 00087255-00217 _C_E__R_C_L__A__1_0_8_(_b_) _R_e_s_p_o_n_s_e_C__atTfeogarobrHleyaNErdq-ruWoivcaakslehMnintinsgitinongnW__a_s_h_i_n_g_t_o_n_S__ta_t_u_t_e_s_a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) Washington Regulations S olid/H azardous RCW 79.95C.200 W aste Disposal RCW 70.105.310 RCW 78.56.100 RCW 78.56.150 Open Pit RCW 78.44.031(11) RCW 78.44.141(4)(g) RCW 78.56.110(2) W aste Rock RCW 78.44.031(11) RCW 78.44.141(4)(g) RCW 78.56.100 (l)(a),(b) RCW 78.56.110(2)(c) Heap/Dum p/Leach RCW 78.44.031(11) RCW 78.44.141(4)(g) RCW 78.56.110(2)(c) Tailings Facility RCW 78.44.031(11) RCW 78.44.141(4)(g) RCW 78.44.141(6) RCW 78.56.090 RCW 78.56.100 RCW 78.56.110(2)(c) RCW 78.56.150 RCW Chapter 90.03.350 Process RCW 78.44.031(11) P o n d /R eserv o ir RCW 78.44.141(6) RCW 78.56.110(2)(c) RCW 78.56.150 U nderground M ine RCW 78.44.031(11) RCW 78.44.280 RCW 78.56.110(2)(c) Slag Pile Not applicable Interim O&M RCW 78.56.020(6) RCW 78.56.100 W ater Treatment RCW 78.56.020(6) RCW 78.56.110(2)(d) RCW 90.48.090 RCW 90.52.040 Short-term O&M RCW 78.56.020(6) M onitoring RCW 78.56.100 RCW 90.03.350 RCW 90.48.090 118 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00218 RCeEsRpoCnLsAe Cat1e0g8o(bry) Long-term O&M M onitoring W ashington Regulations RCW 78.56.020(6) RCW 78.56.100 RCW 78.56.110(2)(c) RCW 78.56.110(5) Sierra Club v. EPA 18cv3472 NDCA 119 Tier 2 ED 002061 00087255-00219 O. W yom ing As shown in Table O below, the W yom ing Environm ental Quality A ct ("W EQ A "), W yo. Stat. 35-11-401 through 436 regulates air, water, and land quality, including rem ediation of contam inated sites. W EQ A and its im plem enting regulations include specific environm ental protection mandates and broad FA authority for W yom ing hardrock m ining operations that cover the thirteen CERCLA 108(b) cost categories in the Proposed Rule. W EQA Article 4, Land Quality, which deals specifically with mining, is cross-referenced to other relevant W EQA articles including A ir Quality (Article 2), W ater Quality (A rticle 3), and Solid W aste M anagem ent (A rticle 5). The W yom ing Departm ent of Environmental Quality ("W YDEQ") administers W EQA. The Land Quality Division ("LQD") of W YDEQ has principal regulatory jurisdiction over W yom ing m ining projects and issues licenses and perm its for all non-coal m ine production (i.e., hardrock m ining) in W yoming. Other W YDEQ divisions have specific permitting authorities applicable to some m ining projects. For example, the W ater Quality Division issues surface water discharge (W YPDES) permits in conjunction with W yom ing mining projects The purpose o f W E Q A is: " ...to enable the state to prevent, reduce and elim inate pollution; to preserve, and enhance the air, w ater and reclaim the land of W yom ing; to plan the developm ent, use, reclam ation, preservation and enhancem ent of the air, land and water resources of the state; to preserve and exercise the prim ary responsibilities and rights of the state of W yom ing; to retain for the state the control over its air, land and w ater and to secure cooperation betw een agencies of the state, agencies of other states, interstate agencies, and the federal governm ent in carrying out these objectives." W yo. Stat. 35-11-102. In addition to this universally applicable environmental protection requirement, W EQA includes the following provision that specifically mandates that mining operations m ust prevent pollution of w aters of the state: "Prevention of pollution of w aters of the state from m ining operations, substantial erosion, sedimentation, landslides, accumulation and discharge of acid water, and flooding, both during and after m ining and reclam ation;" W yo. Stat. 35-11402(a)(iv) In order to remain in compliance with an operating permit, the operator m ust adhere to numerous environmental protection mandates including the following specific requirem ents for operators to prevent releases o f pollutants (e.g., hazardous substances): "Cover, bury, impound, contain or otherwise dispose of toxic acid forming, or radioactive material or any material determined by the adm inistrator to be hazardous to health and safety, or which constitutes a threat of pollution to surface or subsurface w ater as may be required in the approved reclam ation plan;" W yo. Stat. 35-11-415(b)(iv) Sierra Club v. EPA 18cv3472 NDCA 120 Tier 2 ED 002061 00087255-00220 "Prevent, throughout the m ining and reclam ation operation, and for a period of five (5) years after the operation has been terminated, pollution of surface and subsurface waters on the land affected by the institution of plantings and revegetation, the construction of drainage systems and treatm ent facilities including settling ponds and the casing, sealing of boreholes, shafts, and wells so that no pollution is allowed to drain untreated into surface or subsurface w ater in accordance with state or federal w ater quality standards, w hichever are higher, as m ay be required in the approved reclam ation plan;" W yo. Stat. 35-11415(b)(viii) Elsewhere, W EQA authorizes W YDEQ to require an operator to m aintain a perm it and FA for at least five years after partial bond release. W yo. Stat. 35-1 l-417(e). W EQA also includes num erous requirements dealing specifically with in-situ m ining at Wyo. Stat. 35-11-426 through 430. In situ m ining is a com m only used m ining technique for extracting uranium in W yoming. M any other m ining states do not have specific requirem ents for in situ m ining because there are no in situ m ining operations and little likelihood of future in situ m ining. The FA requirem ents in W EQ A are very broad and extend to all W yom ing projects that require a W YDEQ perm it to operate. This com prehensive bonding mandate is defined in term s of com pliance w ith all applicable laws and regulations, w hich includes m ine land reclam ation but is m uch broader than that: "The purpose of any bond required to be filed with the adm inistrator by the operator shall be to assure that the operator shall faithfully perform all requirem ents of this act and com ply w ith all rules and regulations of the board m ade in accordance with the provisions of this act." W yo. Stat. 35-11-417(a) The explicit directive at W yo. Stat. 35-11-417(a), w hich defines bonding requirem ents in the context of environmental compliance, clearly means that W yom ing's FA requirements for hardrock mines go far beyond bonding for the physical reclam ation of surface disturbance at a m ine pursuant to the site reclam ation plan. Rather, W EQA requires FA for the environmental controls at a W yom ing m ine that are necessary to ensure com pliance w ith the air, water, solid waste, and other environmental protection m andates in W EQA. The requirem ent for operators to provide a bond to "perform all requirem ents of this act and com ply w ith all rules and regulations" includes bonding for the release of hazardous substances. This seamless interaction between the W EQA environmental protection requirem ents and the state's FA requirem ent address the CERCLA 108(b) cost categories and m ake the Proposed Rule unnecessary in W yom ing. The environm ental protection m andates in W EQA substantially m inim ize the potential for a release of hazardous substances at a W yom ing mine. In the event a release occurs and the operator fails to respond appropriately, W YDEQ has the necessary FA to respond to the release. Sierra Club v. EPA 18cv3472 NDCA 121 Tier 2 ED 002061 00087255-00221 W EQ A specifically establishes FA requirem ents for rem ediation activities at m ine sites. For example, W EQA m andates operators of in situ m ines to provide initial bonds that include, among other things, the cost of "restoring, any groundwater disturbed by in situ m ining during the first year of operation under each perm it." W yo. Stat. 35-1 l-417(c)(i). W EQ A defines reclam ation to include groundw ater restoration, W yo. Stat. 35-11-103(f)(vi), and defines "groundwater restoration" to mean: " ...the condition achieved w hen the quality of all groundw ater affected by the injection of recovery fluids is returned to a quality of use equal to or better than, and consistent with the uses for which the w ater was suitable prior to the operation by employing the best practicable technology." W yo. Stat. 35-11-103(f)(iii). W EQ A W yo. Stat. 35-11 -417(c)(i) requires W yom ing m ine operators to establish an initial bond that includes an "amount equal to the estimated cost of reclaim ing the affected land disturbed and restoring, as defined in W .S. 35-11-103(f)(iii), any groundw ater disturbed by in situ mining during the first year of operation under each perm it." M ine operators m ust subsequently provide annual reports pursuant to W yo. Stat 35-11-411 and renewal bonding to include "the amount equal to the estimated cost of reclaiming the land to be disturbed during that renewal period, and the estimated cost of completing reclam ation of unreleased lands and groundw ater disturbed during prior periods of tim e." W yo. Stat. 35-11417(c)(ii). An increase in the am ount of land or groundwater to be disturbed triggers a concom itant increase in the am ount of required FA. W yo. Stat. 35-11-417(1). The LQD m ust inspect an operation follow ing receipt of the Annual Report. W yo. Stat. 35-11411(c). Following the inspection, LQD will determ ine the am ount of the required renewal bond. W yo. Stat. 35-11-411(d). W yom ing regulators thus have the authority to dem and an increase in the bond am ount to fit site-specific conditions described in the annual report (which m ust include m onitoring data) and the annual site inspection. W EQ A provides for partial release of the FA when reclamation is com pleted but gives W YDEQ the authority to require bonding indefinitely (i.e., long-term bonding) if necessary based on sitespecific conditions to ensure restoration of groundw ater quality: "W hen the reclam ation plan for any affected land has been completed, the adm inistrator may recom m end to the director the release of up to seventy-five percent (75% ) of the bond required for that affected land. The rem aining portion of the bond shall be not less than ten thousand dollars ($10,000.00), and shall be held for a period of at least five (5) years after the date of reduction to assure proper revegetation and restoration of groundw ater." W yo. Stat. 35-1 l-417(e). W YDEQ m ust forfeit a bond if it is determ ined that an operator has caused "any violation of this act." Pursuant to the bond forfeiture procedures, the W yom ing Attorney General m ust provide the operator with w ritten notice o f the violation and pending bond forfeiture and the operator is offered an opportunity to present its case at a hearing. W yo. Stat 35-11-421. If there is inadequate FA to address the violation (including a release of a hazardous substance), the 122 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00222 Attorney General shall bring suit against the operator to recover the reclam ation costs. W yo. Stat. 35-11-422. EPA 's "Summary of W yom ing Financial Responsibility Requirem ents" included in the docket for the Proposed Rule (D ocket No. EPA -H Q -SFU N D -2015-0781-2111) is an incom plete and sim plistic description of W yom ing's regulatory and FA requirem ents to m inim ize releases of hazardous substances from hardrock m ining operations. EPA 's summary fails to discuss how W EQ A at W yo. Stat. 35-11-417(a) explicitly ties FA requirem ents to the State's environm ental protection mandates. Consequently, W yom ing has com prehensive FA requirem ents that cover the thirteen CERCLA 108(b) cost categories in the proposed rule. EPA 's summary incorrectly states: "N either the W EQ A nor its regulations address w hether long term water treatm ent is a cost that m ust be included in calculating financial responsibility am ounts." To the contrary, W yo. Stat. 35-11-415(b)(viii) clearly includes w ater treatm ent as one of several post-reclam ation environmental control m easures that may be required to maintain compliance with W EQA. M oreover, other provisions of W EQA in Article 3 (W ater Quality) require compliance with W yom ing's w ater quality standards for surface water and groundwater. For example the W YDEQ/Division of W ater Quality's rules at W yom ing Administrative Rule ("W A R") Chapter 8 4(a)(iv) include standards to protect groundwater quality "from pollution which may result from surface m ining operations." As illustrated in Table O, W EQA and its im plem enting regulations establish requirem ents to m inim ize the release from all of the m ine facilities included in E PA 's CERCLA 108(b) response categories and provide associated FA pursuant to W yo. Stat 35-11-417(a). Im position of a federal FA program under CERCLA 108(b) would be duplicative and is therefore unnecessary to m inim ize the degree and duration of risk of a release of a hazardous substance from a W yom ing hardrock mine. Sierra Club v. EPA 18cv3472 NDCA 123 Tier 2 ED 002061 00087255-00223 _C_E__R_C_L__A__1_0_8_(_b)__R_e_s_p_o_n_s_e_C_aftToeragboHlreayrOEdqr-ouWcivkayMloemnintisinngign_W__y_o_m__i_n_g_S__ta_t_u_t_e_s_a_n_d__R_u_l_e_s RCeEsRpoCnLseACat1e0g8o(bry) Wyoming Law s and Regulations* S olid/H azardous W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W aste Disposal W yo. Stat 35-11-417(a) W A R 2 2(b)(iii) W AR 3 2(c)(v) W AR 9 2(e)(n)(r) W AR 9 3(a) W AR 9 3(c)(i)(B)(C)(H) W A R 9 10 W A R 9 13 Open Pit W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W AR 1 3(a) W AR 3 2(b)(ii)(iii) W A R 3 2(k)(ii)(A)(IV) W A R 3 2(1) W AR 8 4(a) W A R 9 3(c)(1)(C) W A R 9 10 WAR 9 13 W aste Rock W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W AR 1 3(a) W AR 2 2(b)(iii) W AR 3 2(c)(iv)(E) W AR 3 2(k)(ii)(A)(IY) W A R 3 2(1) W AR 8 4(a) W AR 9 2(r) WAR 9 3(c)(1)(C) W AR 9 4(a) W A R 9 10 W A R 9 13 Heap/D um p/Leach W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W AR 1 3(a) W AR 3 2(h)(i)(ii) W AR 3 2(k)(ii)(A)(IV) W A R 3 2(1) W AR 8 4(a) W AR 9 2(y) WAR 9 3(c)(1)(C) 124 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00224 RCeEsRpoCnLseACat1e0g8o(bry) Tailings Facility Process P o n d /R eserv o ir Underground M ine W yom ing Laws and Regulations* W W W AR AR AR 9 9 9 4(a) 1130 W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat. 35-11-407 W yo. Stat 35-11-417(a) W AR 1 3(a) W AR 3 2(g) W AR 3 2(h)(i)(ii) W AR 3 2(k)(ii)(A)(IV) W A R 3 2(1) W AR 8 4(a) W AR 9 2(r) W AR 9 2(y) W AR 9 3(c)(i)(C) W AR 9 4(a) W A R 9 10 WAR 9 13 W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W AR 1 3(a) W AR 3 2(h)(i)(ii) W AR 3 2(k)(ii)(A)(IV) W A R 3 2(1) W AR 8 4(a) W AR 9 2(y) W AR 9 3(c)(i)(C) W AR 9 4(a) W A R 9 10 W A R 9 13 W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W AR 1 3(a) W AR 3 2(k)(ii)(A)(IV) W A R 3 2(1) W AR 4 2(a) W AR 9 3(a) W AR 8 4(a) W AR 9 3(c)(i)(C) W AR 9 4(a) W A R 9 10 W A R 9 13 Sierra Club v. EPA 18cv3472 NDCA 125 Tier 2 ED 002061 00087255-00225 RC'eEsRpoCnLseACat1e0g8o(bry) Slag Pile Interim O&M W ater Treatment Short-term O&M M onitoring Long-term O&M M onitoring W y o m in g Laws and R egulations* W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W AR 1 3(a) W AR 8 4(a) W AR 9 2(e)(r) W A R 9 10 W A R 9 13 W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W AR 3 2(k)(ii)(C) W AR 3 2(g) W AR 9 3(a) W A R 9 3(c)(i)(C) W A R 9 10(a)(b) W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat. 35-11-415(b)(viii) W yo. Stat. 35-11-417(a) W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W A R 9 10(a) W A R 9 10(b)(i)-(v) W Y Environm ental Quality Act: W yo. Stat. 35-11-401 through 436 W yo. Stat 35-11-417(a) W yo. Stat. 35-11-417(e) W A R 9 10(a) W A R 9 10(b)(iii) * Notes: W AR Chapters 1 through 4 refer to the W YDEQ/Land Quality Division Rules W A R Chapters 8, 9, and 14 refer to the W Y D EQ /W ater Quality D ivision Rules Sierra Club v. EPA 18cv3472 NDCA 126 Tier 2 ED 002061 00087255-00226 CERCLA 108(b) ResponsReeCgualtaetgioornysEEfXoqHruHIivBaaIrlTednr1tosckinMthieniBnLg M's and Forest Service's Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00227 CERCLA 108(b) RSeesrpvoincsees'CRautelegEsoxfrohyribEHiqtau1ridv arolecnktsMininBinLgM's and the Forest CERCRCaesLtepAgoon1rsy0e8(b) BL43MCRFeRgul3a8t0io9ns F3Ro6reCegsuFtlRaSteiro2vn2isc8e Solid/H azardous 3 809.420(b)(6) 228.8 (b) W aste Disposal 3 8 0 9 .4 2 1 1 228.8 (c) 228.8 (g)(3) 228.13 Open Pit 3809.401 (b)(2)(i), (ii) 3 809.40 l(b)(3)(iii) 3 8 0 9 .4 2 1 1 228.8 (b) 228.8 (g)(1) 228.8 (g)(2) 228.8 (g)(3) 228.8 (g)(4) 228.13 W aste Rock Heap/Dump Leach 3809.401 (b)(2)(i), (ii) 3809.420(a)(2), (4), (5), (6) 3 809.420(b)(2), 3(i) (A-D), (43)8, 0(59).4, 2(71)1, (11X0, (), (i) 3809.5926 3809.5957 3809.401 (b)(2)(i), (ii) 3809.420(a)(2), (4), (5), (6) 3809.420(b) 3(i) (A-D), (4), (5), (7), (11X0, (), (i), (12)(ivii) 3 8 0 9 .4 2 1 1 3809.43 l(c)(l-7 )4 3809.592s 3809.5957 228.8 (b) 228.8 (c) 228.8 (d) 228.8 (e) 228.8 (g)(1) 228.8 (g)(2) 228.8 (g)(3) 228.8 (g)(4) 228.13 228.8 (a) 228.8 (b) 228.8 (c) 228.8 (d) 228.8 (e) 228.8 (g)(1) 228.8 (g)(2) 228.8 (g)(3) 228.8 (g)(4) 228.13 Tailings Facility 3809.401 (b)(2)(i), (ii) 3809.420(a)(2), (4), (5), (6) 3809.420(b) 3(i) (A-D), (4), (5), (7), (11X0, (), (i), (12)(ivii) 3 8 0 9 .4 2 1 1 3809.43 l(c)(l-7) 4 3809.5926 228.8 (a) 228.8 (b) 228.8 (c) 228.8 (d) 228.8 (e) 228.8 (g)(1) 228.8 (g)(2) 228.8 (g)(3) 128 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00228 CERCLA 108(b) RSeesrpvoincsees'CRautelegEsoxfrohyribEHiqtau1ridv arolecnktsMininBinLgM's and the Forest CERCRCaesLtepAgoon1rsy0e8(b) BL43MCRFeRgul3a8t0io9ns F3Ro6reCegsuFtlRaSteiro2vn2isc8e 3809.595v 228.8 (g)(4) 228.13 Process 3809.401 (b)(2)(i), (ii) 228.8 (b) P o n d /R eserv o ir 3809.420(a)(2), (4), (5), (6) 228.8 (e) 3809.420(b) 3(i) (A-D), (4), 228.8 (g)(2) (5), (7), (11X0, 0 0 , (HO, (12)0vii) 228.8 (g)(5) 228.13 3 8 0 9 .4 2 1 1 3809.43 l(c)(l-7) 4 3809.5926 3809.5957 U nderground M ine 3809.5 228.8 (all) 3 8 0 9 .4 2 1 1 228.13 3809.43 l(c)(l-7) 4 3809.5926 3809.5957 Slag Pile N /A - pertains to smelters N /A - pertains to sm elters D rain ag e 3809.5, 3809.420(b)(l l)(i, ii, 228.8 (b) iii), 3809.431(c)(1) 228.8 (f)( 1-4) 3809.421' 228.8 (g)(1) 3809.43 l(c)(l-7) 4 228.8 (g)(2) 3809.5926 228.8 (g)(3) 3809.5957 228.13 Interim O&M W ater Treatment 3809.116 3 809.401(b)(5) 3809.421' 3809.4232 3809.424(a), (b )3 3809.431(a) 4 3809.5926 3809.5957 3809.5988 3809.421' 3809.424(a), (b )3 3809.431(a), (c)(3)4 3 8 0 9 .5 5 2 (c )5 228.8 (all) 228.10 228.13 228.8 (b) 228.8 (c) 228.8 (g)(1) 228.8 (g)(2) 129 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00229 CERCLA 108(b) RSeesrpvoincsees'CRautelegEsoxfrohyribEHiqtau1ridv arolecnktsMininBinLgM's and the Forest CERCRCaesLtepAgoon1rsy0e8(b) BL43MCRFeRgul3a8t0io9ns F3Ro6reCegsuFtlRaSteiro2vn2isc8e 3809.5926 228.8 (g)(3) 3809.5957 228.13 3809.598s Short-Term O&M / 3809.116 228.8 (all) M onitoring 3809.421' 228.10 3809.4232 228.13 3809.424(a), (b )3 3809.5926 3809.5957 3809.5988 Long-Term O&M / 3809.116 228.8 (all) M onitoring 3809.421' 228.10 3809.4232 228.13 3809.424(a), (b )3 3 8 0 9 .5 5 2 (c )5 3809.5926 3809.5957 3809.598s 3809.421 Enforcem ent of perform ance standards: Failure of the operator to prevent unnecessary or undue degradation or to complete reclamation to the standards described in this subpart may cause the operator to be subject to enforcem ent as described in 3809.600 through 3809.605 o f this subpart. 2 3809,423, Flow long does my plan of operations rem ain in effect? Your plan of operations remains in effect as long as you are conducting operations, unless BLM suspends or revokes your plan of operations for failure to comply with this subpart. 3 3809.424(a) W hat are my obligations if I stop conducting operations? (i) You m ust follow your approved interim m anagem ent plan subm itted under 3809.401 (b)(5); (ii) You m ust subm it a m odification to your interim m anagem ent plan to BLM within 30 calendar days if it does not cover the circum stances o f your tem porary closure per 3809.431(a); (iii) Y ou m ust take all necessary actions to assure that unnecessary or undue degradation does not occur; and (iv) You m ust maintain an adequate financial guarantee. The BLM will require you to take all necessary actions to assure that unnecessary or undue degradation does not occur, including requiring you, after an extended period of non-operation for other than seasonal operations, to rem ove all structures, equipm ent, and other facilities and reclaim the project area. B LM m ay initiate forfeiture under 3809.595. If the am ount o f the financial guarantee is inadequate to cover the costs of reclamation, BLM may complete the reclamation, and the operator and all other responsible persons are liable for the costs o f such reclam ation. See 3809.336(a) for indicators of abandonment. 130 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00230 3809.424 (b) Your reclam ation and closure obligations continue until satisfied. 4 3809.431 W hen m ust I m odify my plan of operations? (a) Before m aking any changes to the operations described in your approved plan of operations; (b) W hen BLM requires you to do so to prevent unnecessary or undue degradation; and (c) Before final closure, to address impacts from unanticipated events or conditions or newly discovered circumstances or information, including the following: (1) D evelopm ent of acid or toxic drainage; (2) Loss of surface springs or water supplies; (3) The need for long-term w ater treatm ent and site m aintenance; (4) Repair of reclam ation failures; (5) Plans for assuring the adequacy of containm ent structures and the integrity of closed waste units; (6) Providing for post-closure m anagem ent; and (7) Elim inating hazards to public safety. 3 3809.552(c) W hat m ust my individual financial guarantee cover? W hen BLM identifies a need for it, you m ust establish a trust fund or other funding m echanism available to BLM to ensure the continuation of long-term treatm ent to achieve water quality standards and for other long term, post-m ining m aintenance requirements. The funding m ust be adequate to provide for construction, long-term operation, maintenance, or replacem ent of any treatm ent facilities and infrastructure, for as long as the treatm ent and facilities are needed after mine closure. BLM may identify the need for a trust fund or other funding m echanism during plan review or later. 6 3809.592 D oes release o f my financial guarantee relieve m e o f all responsibility for m y project area? (a) Release of your financial guarantee under this subpart does not release you (the mining claimant or operator) from responsibility for reclamation of your operations should reclamation fail to m eet the standards of this subpart. (b) Any release of your financial guarantee under this subpart does not release or waive any claim BLM or other persons may have against any person under the Com prehensive Eetnsveiqr onm ., or enta und l e Resp r any onse, other Compensation and applicable statutes Liability Act of or regulations. 1980, as amended, 42 U .S .C . 9601 7 3809,595 W hen may BLM initiate forfeiture of my financial guarantee? BLM m ay initiate forfeiture of all or part of your financial guarantee for any project area or portion of a project area if- (a) You (the operator or mining claimant) refuse or are unable to conduct reclamation as provided in the reclamation m easures incorporated into your notice or approved plan of operations or the regulations in this subpart; (b) You fail to m eet the term s of your notice or your approved plan of operations; or (c) You default on any of the conditions under which you obtained the financial guarantee. 8 3809.598. W hat if the am ount forfeited will not cover the cost of reclam ation? If the am ount forfeited is insufficient to pay for the full cost of reclam ation, the operators and m ining claim ants are liable for the rem aining costs as set forth in 3 8 0 9 .1169. B L M m ay complete or authorize completion of reclam ation of the area covered by the financial guarantee and m ay recover from responsible persons all costs of reclam ation in excess of the am ount forfeited. Sierra Club v. EPA 18cv3472 NDCA 131 Tier 2 ED 002061 00087255-00231 9 3809.116. As a mining claim ant or operator, w hat are my responsibilities under this subpart for my project area? (a) M ining claimants and operators (if other than the m ining claimant) are liable for obligations under this subpart that accrue while they hold their interests. (b) Relinquishment, forfeiture, or abandonm ent of a m ining claim does not relieve a mining claim ant's or operator's responsibility under this subpart for obligations that accrued or conditions that were created while the m ining claimant or operator was responsible for operations conducted on that mining claim or in the project area. (c) Transfer o f a m ining claim or operation does not relieve a m ining claim ant's or operator's responsibility under this subpart for obligations that accrued or conditions that were created while the mining claimant or operator was responsible for operations conducted on that mining claim or in the project area until- (1) BLM receives documentation that a transferee accepts responsibility for the transferor's previously accrued obligations, and (2) BLM accepts an adequate replacem ent financial guarantee adequate to cover such previously accrued obligations and the transferee's new obligations. Sierra Club v. EPA 18cv3472 NDCA 132 Tier 2 ED 002061 00087255-00232 EXHIBIT 2 The Evolution of FedHearradl raoncdkNEexvpaldoaraStitoanteaRnedcMlaminaintigonPrBoojencdtisng Requirements for Jeffrey Y. Parshley and Debra W. Struhsacker January 2008 Sierra Club v. EPA 18cv3472 NDCA 133 Tier 2 ED 002061 00087255-00233 4 18 I Oar mememM p am i services spam ie giobe 1 N Post S I, Ste 22 I Spokane, MS20i~070S m es .24.1158 | Rws , 2 3 .1 2 4 1 Emails f Wefc www.nwMM.osg THE EVOLUTION OF FEDERAL AND NEVADA STATE RECLAMATION BONDING REQUIREMENTS FOR HARDROCK EXPLORATION AND MINING PROJECTS: A Case History Documenting How Federal and State Regulators Used Existing Regulatory Authorities to Respond to Shortcomings in the Reclamation Bonding Program Prepared by: Jeffrey V. Parshley Principal Geologist SRK Consulting Reno, NV 775/828-6800 And Debra W. Struhsacker Environmental Perm itting & Government Relations Consultant Reno, NV 775/826-3800 January 2008 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00234 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00235 Introduction and Executive Summary This Northwest Mining Association (NWMA) white paper documents the evolution of the federal and the Nevada state bonding requirements for hardrock exploration and mining projects. Although this white paper focuses primarily on Nevada -the state with the most exploration and mining activity on federal land and the hub o f the U.S. gold mining industry - other western states have sim ilar regulatory programs and reclam ation bonding requirem ents for hardrock mineral activities. K ey findings in this w hite paper include: The N evada mining industry and state and federal regulators recently w orked together to update and refine bonding requirements. o The resulting m odifications to the N evada bonding program reflect a collaborative effort to develop com prehensive and conservative bonds that consider all likely contingencies based on agency costs to implement, manage, and complete reclam ation o f sites requiring governm ental intervention. Existing m ining federal clearly and N evada state laws and regulations provided the necessary authority and gfolevxeirbniilnitgy hardrock exploration for regulators to m and ake changes in response to the problem s encountered during agency reclam ation of several bankruptcy sites. o Federal and Nevada regulators - w ith the mining industry's full participation and concurrence - have significantly im proved and expanded reclam ation bonding requirem ents in the last few years based on the lessons learned at the bankruptcy sites. Existing federal and N evada state laws and regulations include comprehensive environm ental protection and reclam ation bonding requirem ents for hardrock mines. o These laws and regulations already give regulators the necessary tools to protect the environment, to ensure proper reclam ation, and to deal effectively with problems, gaps, or unforeseen situations should they develop in the future. The recent changes that federal and N evada regulators m ade to the bonding program clearly dem onstrate that the current federal and state regulations work well. The sw eeping changes to the nation's en v ironm ental and regulatory program s governing hardrock m ining that are included in the H ouse M ining Law bill (H.R. 2262) are not needed. o The environm ental provisions in H.R. 2262 are solutions in search o f a problem w hich seek to fix a system that is w orking w ell and does not need "fixing." Historical Overview of Federal and Nevada Reclamation Bonding Programs The U.S. Forest Service Has Required Reclam ation Bonds Since 1974 The U.S. Forest Service (USES) has had bonding requirem ents for m ineral projects on N ational Forest System lands dating back to 1974. The U S F S 's bonding program is included in Section 13 o f the U SFS's surface m anagem ent regulations at 36 C.F.R. Part 228 Subpart A ("the 228A regulations" .) In contrast to the original version o f the B ureau o f Land M anagem ent's (B L M 's) 1 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00236 regulations, which did not require bonds for small projects, the USFS regulations have always given District Rangers the discretionary authority to require a reclamation bond for any mineral activity that requires a Plan of Operations. Therefore, since 1974 when the 228A regulations went into effect, the USFS has almost always required a bond for all exploration road building, trenching, and drilling projects and for all major mineral projects on National Forest System lands. Like the BLM bonding program described below, w hen calculating bonds for operations on National Forest System lands, the agency assumes it will perform the reclamation work using governm ent contracting procedures. B L M H as Required Bonds Since 1981 Since 1981, companies conducting exploration or mining activities affecting more than five acres o f B L M -adm inistered public lands have had to secure BLM's approval of a Plan of Operations that includes a Reclamation Plan and a reclamation cost estimate, and have also had to provide BLM with a reclamation bond. This bonding requirement is part of BLM 's Surface Management tRhuelerse qfourirHe da rbd or oncdk Minerals at reflects the 4a3ssCum.Fp.Rti.onS utbhpaat rtB3L8M09 ("the - not 3809 regulations.") The amount of the company - will perform the reclamation using third-party contractors in accordance with government contracting procedures. This means the reclamation cost estimate is calculated using D avis-B acon wage rates and includes governm ent adm inistration fees and other charges related to B L M 's m anagem ent o f the reclam ation effort. NT hoeticoer-ilgeivneall p1r9o8je1ctvsetrhsaiot ndiostfutrhbeed3f8e0w9erretghualnatfiiovnes adcirdesnooft pinucblluicdelana db. oAnsdidnigscruesqsueidrebmeleonwt ,foinr 2001 BLM expanded its bonding program to include Notice-level projects. During the early years (1981 to 1990) o f the 3809 regulations and BLM 's bonding program, reclam ation cost estimates were typically based on a uniform reclam ation cost per acre factor that w as sim ply m ultiplied by the am ount o f surface disturbance at a site. A lthough this approach simplified the preparation and review o f bond cost estim ates, it also increased the risk o f inaccurate cost estimates. In the early 1990s, reclam ation plans becam e considerably m ore detailed and were designed based on site specific conditions. This produced more detailed and realistic reclam ation cost estimates. N evada's State Bonding Regulations Started in 1990 N ev ad a's regulations for "R eclam ation o f Land Subject to M ining O perations or Exploration Projects" (NAC 519A) becam e effective in O ctober 1990. The N evada m ining industry supported the developm ent o f these regulations and the authorizing statute (NRS 519A). The N evada regulations include stringent requirem ents for reclam ation plans and reclam ation bond cost estim ates for projects on public, state, and private lands. Therefore, with the advent o f the N A C 519A regulations, all N evada mines and exploration projects affecting m ore than five acres - regardless of land status - require a reclam ation bond. The Nevada Division of Environm ental Protection/Bureau o f M ining Regulation and Reclam ation (NDEP) manages the N evada reclam ation bonding program cooperatively w ith B LM and the U SFS under the terms o f an interagency M emorandum of Understanding. B L M Expanded the 3809 B onding Program In 2001 By the late 1990s, all Plans o f O perations had an accom panying detailed reclam ation plan and cost estim ate upon which the reclam ation bond was based. But exploration projects that Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00237 disturbed fewer than five acres were still operating under a Notice without a reclamation bond on BLM -adm inistered lands. In 1999, the National Research Council (NRC) published a study entitled "Hardrock Mining on Federal Lands," One of the recommendations from the N R C study was that BLM should require a bond for all surface disturbing activities, including Notice-level exploration projects affecting fewer than five acres. The mining industry supported this finding and encouraged BLM to m odify the 3809 regulations to expand the bonding requirem ents to include Notice-level exploration projects. In 2001, BLM implemented a new bonding requirem ent for Notice-level projects, U SFS Updates its Bonding G uidance in 2004 B y the 21st century, the U S F S , B L M and state agencies h ad acquired significant experience in reclaim ing and closing abandoned and bankrupt m ine sites. In order to docum ent this knowledge and experience, and to ensure that reclam ation bonds are adequate to fund reclam ation and closure, the USFS issued a docum ent entitled "Training Guide for Reclam ation Bond Estim ation and A dm inistration" in A pril 2004. This Guide is designed to be used in estim ating new bonds and updating existing bonds for projects on N ational Forest System lands. Agency Reclamation of Several Bankrupt Cites Revealed the Need for Expanded Bonding Requirements By the late 1990s, the industry had closed a num ber o f m odem mine sites using the techniques com m only included in BLM and N evada State reclam ation plans o f that era. However, NDEP and the federal land m anagem ent agencies (i.e., B L M and the USFS) had closed and reclaim ed only a few sites using funds from reclam ation bonds. In the late 1990s - early 2000s timeframe, historically low metal prices forced a few companies to declare bankruptcy. These bankruptcies tested the scope and efficacy o f the federal and state reclam ation bonding program s - program s that were supposed to provide regulators with suf the ficient financial federal agencies resou used rces the to rec reclam laim ation abando bonds ne to dcloo sr ebaanndk rupt mines. reclaim the How bank ever, rupt s as N ites, DE pro P and gram w ide deficiencies and inefficiencies becam e readily apparent. This led to the realization that the bonds for nearly all of the bankrupt sites were inadequate for NDEP, BLM , and the USFS to im plem ent and com plete the approved reclam ation plans. The N evada m ining industry, N D EP, and federal regulators readily agreed that this situation was unacceptable and that changes in the bonding requirem ents were needed. W orking cooperatively over the next few years, the industry' and state and federal regulators identified the specific deficiencies and found solutions to address each one to ensure that adequate funding w ould be im m ediately available to state and federal agencies should any other bankruptcies occur. This cooperative effort between the mining industry and regulatory agencies in N evada has resulted in a program that is em braced as being fair, defensible, and accurate. A ll parties recognize this program may result in som ewhat conservative cost estimates. However, the shared com m itm ent to capitalize upon the lessons learned from responding to unexpected situations at the bankrupt sites and to m odify the bonding program to elim inate the shortfalls that w ere due to these unexpected situations m akes a conservative approach essential. The resulting bonding program provides com prehensive cost estimates that consider all likely contingencies. 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00238 Similar industry-agency collaboration recently occurred in Montana where the Montana Mining Association and the Montana Department of Environmental Quality worked together to update Montana's bonding requirements. This cooperative effort resulted in a bill, IIB 460, which Montana Governor Brian Schweitzer recently signed into law to amend the Montana Metal Mine Reclamation statue to provide for temporary bonding in unanticipated circumstances. The Cooperative industry - Agency Review Revamped the Bonding Program to Address all Identified Shortcomings The following closure and re are clam the atio m ajor n bond issu ing es req identified uirem ents . du T rin he g the review identified sh and ortco revam m ings ping w ere orfecthtiefiemd ine as described below: IiandgceelnnutcdiyfeideadsisnuSmhthoeertrpceorsempvoiinnogusi:sbSiclooitmsyt efeostrtyipmcleoassteionsf.gcBoaesmtcsaiunwsehe sitcihthee whaodulndobt ebeinencuardreeqdusahtoeluyldanatirceipguatlaedtoroyr agencies' and industry's experience w ith m ine closure at that tim e w as based on planned and orderly closure perform ed by the m ine owner, some costs associated w ith governm ent management and the tim ing o f mine closure had not been anticipated. For example, some sites required immediate m anagem ent of process solutions to ensure that the environm ent w as protected, but the process o f obtaining the m oney from the bonds often took several m onths, during which tim e bond funds to m anage the site w ere not available. Other emergency funding program s were used to cover this deficiency at that time. ItdceymnoepcssviutlclafreaoremlirncetgamhnratbaeetandafnaunSkgndroinudlmugpsttacitiowhynne.ot:eNusnilTotdaehwnebcinaeeNclclleiuombvndaomdidnniatedgidsoaimnaclsltai.enpllcirynuoglcaaevtisenasdidlfualinusbtilrdteyhsef,sofesrottartuseaipteopaefnmrNdiaoenfvduaanogdedafmesmidexnuamtstpoainrntotchgalsurnadyumensdtihettoeer Indoetnrteifflieedct Sthheoratgceonmciinesg': cToshtes thoocuornlytreaqctuitphme wenotrkrattoesthuirseddpianrttihese. bond cost estimates did The equipment rates used in the bonds were based on a num ber o f sources and varied widely from site to site. psIcemirqonounpgfitlelpreesamm-scsieethoonninrfttatewlrdrsaoetnSuaetnolsadldulaotrrnineaodlgtnyeu:suwlalAwottiroemkrsrsmaethtieamnellivyloreswesdttqeoiaugcrpiikappditrmneeoddgepnartgthirnafaootuteurmpt-4hb0eecerohvlemooonufcpraortshlpispoteeieuodqrgnuhwsoipfetimoteNkeipsenrovothnavidsgtiuhadhpielsypmrtluyeiinepanirellniisskgo'teifmlcijynoohbdtnho.utuahstrtlyrlayy, IbdeetnhteifiseadmSehtyoprtecsoomfineqgu: iSpommeentoufstehde fboornrdesclaamssuatmioend. that the Because equipment some o f the at the equipm site ent would used at m ine sites is larger than the equipm ent a reclam ation contractor would typically have available, this assum ption was inappropriate and produced inaccurate reclam ation cost estim ates. fIaionmvrdapurilleseatcmrblyaleemnr fetarepotdrimoe nsSeocbnloout anntittodirvnacec:ostsoaAtrsnsndtooatrnhtehdegarustluasepmqt opuarliislpelmrrsewevnoiinter.kwNienedgvathgderaot yuappneds claoimnmdiptseridizseetshdeoofeefqquNuipiepmvmaedennatt crmheoianidciinelgys Sierra Club v. EPA 18cv3472 NDCA 4 Tier 2 ED 002061 00087255-00239 Iddifefnetrief ni etd eSqhuoiprmtceonmtinvga:riTedhecpornosdiduecrtaivbiltyy i(nqusaonmteityofofthweorbkonpdercfoosrtmeesdtimpeartehso. uBre)cuasuesde for the productivity o f reclam ation equipm ent has a direct impact on the tim e required to perform the reclam ation activities, it also affects the cost estimate. pIraahdameudpenapdtbpvdperierllrteipoeismhsomuaheinicbgneen,hlhdnteielstdbtydsehyeodeepcatuxdhainrScpuacaoceatsellorevsuineeetctsqsrihnooutauercnrgcuier:phceecdmotcrNaisnteoatisteanonnrvfntaegfaq.ccepdotfuoraaosiorptcfsdmtmcdoutoeayircnnnptstadiitinvcbiwmtgiaaitoleisalenreiynnsessudu.futssdaoThesechtdoptfriuiuyrsinnroledeivestdrhixsdbbep'eteeeowhlridtaeecseesnvanftedleeacsdbrnnuuonstrdlooieabUkttrise.hlSe,tidhept.yefarnobretaesgarnegtisrhnndueeeedtlcaecalportaooinrmcnnrosogyaidnstautmisaecoecgnacnrtenecivvnpywuai.tctatoeiiilveIdresnekss,, mIdaennatigfeiemdenSthworetrceoimncinong:sisTtehnetlycocsatlscufloarteda.ndT h timing e time r of equ process fluid ired to stabilize stabilization and a site for long-term passive m anagem ent is directly related to the tim e needed to reduce the inventory of any rem aining process fluids and ensure that the reclam ation plan will lim it the am ount of water that must be m anaged in a passive m anagem ent system. Estimating a short- and long-term water balance for a site requires a com bination o f science, engineering and experience. The industry has spent considerable effort globally in recent years to better understand this process for sites in closure. M ost im portantly, it is recognized that although com m on approaches can be applied, each site is different and requires detailed analysis to define the param eters that w ill affect closure costs. IwebmfeifteophnrletmdmreeienfqininumteieurddemdbSyotdolfeuesmtdiigoaennnra:aclgSrelitataaennrndidyaamsraoadnlnudaatipgsopeintrmesoeardnecatmhtaaeagsirneeaniqnncugdieiorsteonado-nsltisdotetsphatraatottceplueorsrseeulgyruseiel.tasettiomsrpyaetcaeigfitehcnecditaeitmsaeahloaannvgde wIdeernetifnieodt Sahlworatycsomaindegq: uTahtee. estimate The re of both long-term quirem ents and pe site riod management and monitoring required for long-term site m anagem ent and monitoring are highly site-specific. However, the same approach used to bring consistency to the calculation o f process fluid stabilization can be used to determ ine w hat, if any, long-term m anagem ent and m onitoring is required. gaImnrtutrhmeulenealeqieoncpnrdudewedlaeiersrlgwmtNaieaenmniimeiDlnendnleseEttnbyneefrPetmtdoest.fhqrtupSaoauInirontrmiredlriewuceiittqnhntamyiiuilelogpmleisnfirneddcuo:etaaimrscctaSlatlabfaiy.3strooteee0ebtr-sThq-as,yuihpslefeiioetexsrarondceuprrigmwfeosm-ihtcneictleotfonleurtwsnthdmtsnviue.tadamodnn-rsNruityieiedyctneseephuvgbdeanafypmtunkdoeannsdaarpidoidnt'posdeewiard,nmeognW,sgeaofibogmucnaumnrhttsteueuetlnrrorrsmsateetnPtqoagebasuosrieentestlirelrdtuiarenioretmfbfmiegpnotiqeeluloeniunnatenliyatcdrisCuetteeaoodomswftrre.noiyitendlhtrnlrgeaott.ldsogols.eeinOtterMnegeenfrc-tgosbmteieuuennarisrli,snmaeteoethidirttosaihtinonhvtaineegesst Icdosetnteifsiteimd aStheso.rtTcohme icnogs:t Some miscellaneous costs were not for removal o f small infrastructure adequately (e.g. pow er captured in some lines, substations, pipelines, etc.) w ere not included or underestim ated. O ther m iscellaneous costs such as fence 5 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00240 removal or installation, hazardous waste removal, construction or removal of erosion and sediment controls were inconsistently addressed. Im plem ente ecaocohp esritaet.ive d ly Solution: develope N d e a vada chec kml iisnt i nogf minidscuesltlraynpeeorusso nconsetls a t n h d a t the mu re st g b u e l actoonrsyidaegreendcfioe rs IthdeenstiitfeisedwSahs oorfttceonmeixncgl:uTdehde coorsitntaodmeqoubailtiezley aensdtimdeamteodb. iTlihzee (mob/demob) equipment from cost to move equipment to and from a site being reclaim ed w ill be added by a contractor to the overall cost o f reclam ation. A lthough this cost prim arily included the direct costs to transport equipm ent and m aterials to the site, some contractors also include other costs in this line item. Idawtbrmeoaettnhprieledlireermirddmns-ieg,nepfnigeapnturoetetihrydddteeatSbrlcboyianollneauseststpsipiomaononsrcaw:tsueleelrTrrp.wrheaeOodarrtasnkhtptodieeenrtclgsriicaanfgoinnecmrisoitipmtauteoerpmomryntsas.ftncahtodhcesialtlnostietcssicaheueslocshutsrwalaadrensyrbsteeephqoeiaurnedticpsdcltmuoeadmdbeenlpidttsaohtinonmiNeateshennvewtdaamefdrnraooedbmc/urdoestecnehmlteaoaomfcsbiotatefectdfioiobctsnoeyt Identified Shortcoming: Out of date costs were used in some bond cost estimates. A lthough N evada's regulations require that bond costs be updated every three years, the hourly rates often change annually based on economic conditions. Although m ost annual variations are generally sm all, cost estimates should be based on current rates. IramencdplalemmmaaetteniortineadlbSroaontldeustciooesnat:cehNstyDimeEaarPteasan.nddpfeodsterthael rceugrurleanttorryataesgeonnciaespuubpldiacteweebqusiiptme feonrt, ulsaeboinr Sierra Club v. EPA 18cv3472 NDCA 6 Tier 2 ED 002061 00087255-00241 Appendix B Review of Cost Estimate Formula for EPA's CERCLA 108(b) Proposed Rule Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00242 Review of Cost Estimate Formula for EPA's CERCLA 108(b) Proposed Rule Report Prepared for National Mining Association Report Prepared by SRK Consulting (U.S.), Inc. 503400.010 July 11,2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00243 Review of Cost Estimate Formula for EPA's CERCLA 108(b) Proposed Rule National Mining Association 101 Constitution Ave. NW, Suite 500 East Washington, D C. 20001 SRK Consulting (U.S.), Inc. 5250 Neil Road Suite 300 Reno, NV 89502 e-mail: reno@srk.com website: www.srk.com Tel: (775) 828-6800 Fax: (775) 828-6820 SRK Project Number 503400.010 July 2017 Authors: Jeffrey V. Parshley, P.G., C.P.G., C.E.M. Group Chairman and Corporate Consultant and John H. Pfahl Principal Consultant Peer Reviewed by: Mark Willow Principal Consultant Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00244 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page i Table of Contents List of Abbreviations.................................................................................................................................................iii 1 Introduction................................................................................................................... 1 2 EPA Has Not Demonstrated a Need for the Proposed Rule.....................................1 2.1 Incorrect Assumption 1: There are shortcomings in the existing federal and state programs that regulate the design, operation, closure, and post-closure management of mines............................... 2 2.2 Incorrect Assumption 2: Mine operators are not complying with existing regulations or using corporate resources to remediate an identified release of a hazardous substance............................. 4 2.3 Incorrect Assumption 3: A CERCLA response fundamentally differs in some way from closure or reclamation, for which existing operations already post financial assurance.........................................4 2.4 Incorrect Assumption 4: Regulatory agencies that are currently responsible for overseeing existing closure and reclamation requirements do not have the necessary enforcement tools or are not competently enforcing the current regulations.............................................................................................6 3 EPA's generic formulaic approach is fundamentally flawed.................................... 7 7 3.1 EPA's rejection of a site-specific approach is arbitrary and indefensible.............................................. 4 EPA's formula is fatally flawed.....................................................................................9 4.1 Flaws in the Data Collection......................................................................................................................... 9 4.2 EPA ignored zero cost source control data points...................................................................................10 4.3 EPA fails to address the probability of occurrence and assumes that all facilities will require CERCLA responses in the future................................................................................................................ 10 4.4 Correlation is not causation......................................................................................................................... 11 4.5 EPA used skewed data sets and smear factors...................................................................................... 13 4.5.1 Outliers............................................................................................................................................... 13 4.5.2 Smear factors.................................................................................................................................... 14 4.5.3 Source controls................................................................................................................................. 15 17 4.5.4 Cumulative impact............................................................................................................................. 4.6 Validation of response costs calculated by EPA's formulas.................................................................. 19 4.7 Natural Resource Damages......................................................................................................................... 19 5 Reduction criteria and methodology are fundamentally flawed.............................23 5.1 No scientific basis for reduction criteria..................................................................................................... 23 5.2 Contradictions with state regulations......................................................................................................... 24 5.3 EPA's reductions overlap with existing regulatory programs................................................................. 26 5.4 Subjective reductions....................................................................................................................................27 5.5 Inflexible criteria.............................................................................................................................................29 5.6 Validation of the model and reductions...................................................................................................... 30 5.7 AII-or-Nothing Approach................................................................................................................................30 5.8 Reductions Summary.................................................................................................................................... 32 6 Conclusions................................................................................................................. 32 JVP/JHP EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00245 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page ii List of Tables Table 4-1: Formula multipliers for all response categories..................................................................................... 18 Table 5-1: Comparison of Estimated FR and FA Costs..........................................................................................31 Table A-6-1: Selected site-specific criteria used in risk-based management and closure planning...................1 List of Figures Figure 4-1: Comparison of Open Pit source estimates and formula estimates (with and without sm ear).......15 Figure 4-2: Comparison of Open Pit source estimates and full formula estimates.............................................17 Appendices Appendix A: Key documents reviewed Appendix B: Example of some site-specific factors that are considered in risk-based management and closure of mine sites Appendix C: Authors' Credentials JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx Tier 2 July 2017 ED 002061 00087255-00246 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page iii List of Abbreviations BLM - Bureau of Land Management CERCLA -- Comprehensive Environmental Response, Compensation, and Liability Act EPA - United States Environmental Protection Agency FA - financial assurance as defined by state and federal land management regulations FLMA - federal land management agency (e.g. BLM, Forest Service) FR - financial responsibility as defined in E P A p ro p o s e d ru le F in a n c ia l R e s p o n s ib ility R e q u ire m e n ts U n d e r C E R C L A 1 08(b ) fo r C lasses o f F acilities in the H ard ro c k M ining Industry HRM - hard rock mining NAS - National Academy of Sciences NCP - National Contingency Plan NRC - National Research Council NRC Study - H a rd ro c k M in in g on F e d e r a l L a n d s by National Research Council/National Academy of Sciences NRD - natural resource damages RIA -- regulatory impact analysis SBA - Small Business Administration JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx Tier 2 July 2017 ED 002061 00087255-00247 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 1 1 Introduction The National Mining Association (NMA) has engaged SRK Consulting (U.S.), Inc. (SRK) to review the United States Environmental Protection Agency's (EPA) draft rule that proposes to "c re a te a n e w P a rt in th e C E R C L A reg u latio ns to req u ire finan cial responsibility [F R ] u n d e r C E R C L A 108(b ), define requirem ents for dem onstration o f financial responsibility, define requirem ents for m a in ten an ce o f finan cial responsibility instrum ents, a n d establish criteria for o w n ers a n d o perato rs to b e re le a s e d from fin a n c ia l re s p o n s ib ility re q u ire m e n ts . " 1 (Proposed Rule), and its supporting docket. This review examined both the basis for and details of EPA's proposed methodology for calculating response costs to support financial assurance estimates. The key documents reviewed for this work are listed in Appendix A. Financial responsibility (FR) are the "fu n ds n e c e s s a ry to a d d re s s th e C E R C L A liab ilities a t [m in e ] facilities, thus p reven tin g o w n ers o r operators from shifting the burden o f clean u p to o th er parties, in clud ing th e ta x p a y e r.,r2 In other words, FR as defined in the Proposed Rule is the estimated cost of expected response actions necessary to reduce or eliminate the degree and duration of risk from the release or potential release of a hazardous substance as defined in CERCLA. Financial assurance (FA) is the estimated cost of all actions necessary to implement a site-specific reclamation and closure plan, which likewise reduce the degree and duration of a release or potential release. FA is required for all hard rock mining (HRM) facilities under existing federal and state regulatory programs. For the purpose of this report these two cost estimates are considered distinct and are referred to as FR and FA, respectively. 2 EPA has not demonstrated a need for the Proposed Rule EPA provides two key reasons to justify the need for the Proposed Rule. The first is that there are unfunded liabilities related to Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) response costs for which the government (i.e., the taxpayer) could potentially be responsible. The second reason is that the implementation of the Proposed Rule will "p ro vid e an incentive for im plem entation o f sound practices a t h ardrock m ining facilities an d th ereb y d ecrease th e n e e d fo r fu tu re C E R C L A action s. "123 EPA's assertion that there are unfunded liabilities requires that at least one of the four following scenarios exists: 1. There are shortcomings in the existing federal and state programs that regulate the design, operation, closure, and post-closure management of HRM facilities around the country. 2. Mine operators are not complying with existing regulations or using corporate resources to remediate an identified release of a hazardous substance. 3. CERCLA response actions fundamentally differ in some way from those used in closure or reclamation, for which existing mining operations already post FA. 4. Regulatory agencies, both state and federal, that are currently responsible for overseeing existing closure and reclamation requirements at HRM facilities do not have the necessary 182 Fed. Reg at 3388 (Jan. 11, 2017) 2 Ibid. 3 Ibid. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx Sierra Club v. EPA 18cv3472 NDCA Tier 2 July 2017 ED 002061 00087255-00248 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 2 enforcement tools or are not competently enforcing their own promulgated regulations, thus creating situations into which EPA must engage and enforce. From a thorough review of the Proposed Rule, and the supporting information provided in the docket (Appendix A), it is SRK's professional opinion that EPA has not demonstrated that any of the aforementioned scenarios exist at any currently operating hard rock mine or existing regulatory program across the country, and therefore cannot provide a reasonable justification for the Proposed Rule. Additional discussion of SRK's position is provided in Sections 2 .1 ,2 .2 and 0. Regarding EPA's second justification for the Proposed Rule, in that it will incentivize "sound" practices at hard rock mining facilities, SRK cannot find and does not believe there is any reasonable support for this assertion. First, hard rock mines that operate in today's regulatory environment are already operated in a "sound" manner.45Historical operating practices that led to the need for largescale CERCLA type responses in the past (e.g., direct disposal of tailings into streams, uncontrolled infiltration/discharge of mine impacted water, discharge of mine waste into dumps or impoundments without mitigating potential release mechanisms, etc.) are no longer utilized by the modem mining industry or compliant with current state and federal regulatory requirements. The mining industry routinely designs modern mining operations using detailed scientific and engineering investigations such as groundwater and surface water modeling, environmental risk assessments, and stability analyses which contribute to sound design and operating practices intended to protect human health and the environment. Risks are further reduced at currently operating HRM sites using technologies such secondary containment systems, seepage collection systems, surface water management systems, liners, and active monitoring systems to reduce or eliminate the risk of a release. In the event that a release or potential release is identified through installed monitoring systems, remedial actions are immediately implemented as required by regulatory programs using technologies such as interceptor wells, cutoff walls, hydraulic capture zones, etc. Finally, EPA's Proposed Rule does not contribute any additional reclamation, closure or any other type of action that is not already in use, where appropriate, by the industry (see Section 2.2). 2.1 Incorrect Assumption 1: There are shortcomings in the existing federal and state programs that regulate the design, operation, closure, and post-closure management of mines. EPA specifically mentions the potential for inadequacies in existing mining programs when discussing its rejection of an alternative approach to calculating the CERCLA 108(b) cost estimate in the Proposed Rule: " This could integrate CERCLA 108(b) requirem ents into the existing Federai and state financial responsibility requirem ents appiicabie a t hardrock m ining faciiities, and aiiow fo r m ore consistency am ong financial responsibility requirem ents nationaiiy, as the C ER C LA 108(h) a m o u n t w ould in concept, fill in a n y gaps EPA identified und e r .:5 other program s However, EPA does not provide a single example of any inadequacies in the FA provisions of any existing federal or state regulatory program. Furthermore, current mining regulatory programs 4 Struhsacker D. and SRK Consulting, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017. 5 82 Fed. Reg at 3401 (Jan. 11, 2017) JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00249 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 3 administered by federal land management agencies (FLMAs) and state agencies are specifically designed to minimize the risk of a release of a hazardous or deleterious substance that could affect human health or the environment.67 Monitoring required by current regulatory programs is an essential component that provides early warning of a release or potential release, thereby reducing the degree and duration of any detected release or eliminating that release altogether. If there is a release at a regulated HRM site, the degree and duration is minimized by appropriate response actions and operators are compelled to implement those actions at their own cost, eliminating taxpayer liability.8 These existing regulatory programs address the design, construction, operation, closure and post closure phases of the mining life cycle. The programs are designed to protect the environment and have been constantly evolving to address new information, and have been updated regularly to address any shortcomings, as they are identified. Closure and reclamation plans required by these programs must demonstrate that they will minimize any risks associated with physical safety hazards and the potential for the release of hazardous substances. All of these programs require adequate FA to ensure that the government can properly close the site in the event of a bond forfeiture. Responding to a Congressional request, the National Research Council/National Academy of Sciences ("NRC/NAS") published a study in 1999 entitled "Hardrock Mining on Federal Lands" ("NRC Study") that evaluated "the adequacy of the regulatory framework for hard rock mining on federal lands."9 This study concluded that: "The overall structure o f the federal and state laws and regulations that provide m ining- related environm ental protection is com plicated but generally effective. The structure reflects regulatory responses to geographical differences in m ineral distribution am ong the states, as well as the diversity o f site-specific environm ental conditions...B LM and Forest Service should continue to base their perm itting decisions on the site-specific evaluation process provided by NEPA. The two land m anagem ent agencies should continue to use com prehensive perform ance-based standards rather than using rigid, technically prescriptive standards. The agencies should regularly update technical and Error/ p o iicy guidance docum ents to clarify b o w statutes a n d regulations should be interpreted and enforced." {NRC Study at B o o km a rk n o t defined..) EPA also says that it would be difficult to create a FR instrument that would only address inadequacies identified in the engineering requirements. In doing so, the EPA acknowledges that using a site-specific approach to determine costs would demonstrate significant overlaps with existing regulatory programs.10 If the proposed rule significantly overlaps existing programs, then the rule duplicates existing programs and is therefore unnecessary. In SRK's opinion, EPA has failed to identify any shortcomings in the existing regulatory framework and has not demonstrated a need for further FA. 6 The U.S. Bureau of Land Management ("BLM") and the U.S. Forest Service ("Forest Service"). 7 Struhsacker D. and SRK Consulting, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017. 8 Struhsacker D. and SRK Consulting, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017. 9 https://www.nap.edu/catalog/9682/hardrock-mining-on-federal-lands 10 82 Fed. Reg. at 3401. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00250 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 4 2.2 Incorrect Assumption 2: Mine operators are not complying with existing regulations or using corporate resources to remediate an identified release of a hazardous substance. Although EPA asserts "that despite changes in regulations and practices, the release o f CERCLA hazardous substances as a result o f mining and mineral processing activities is an ongoing issue across varying industry management practices"11, it ignores the fact that required compliance with current mining regulatory programs significantly reduces the potential for a release and in the event of a release those programs compel operators to utilize corporate resources, not taxpayer funds to remediate any release and modify any procedures or designs that led to the release.12 Based on anecdotal evidence, the EPA further asserts that "[i]n addition to mining and processing activities, operator bankruptcy and abandonment were also associated with releases", particularly "for smaller mining companies with relatively limited resources. "13This assertion fails to address the significant changes made to federal regulatory and state programs following a number of bankruptcies that occurred in the late 1990s and early 2000s.14 Some of the changes in regulatory programs include the 2000 update to the BLM "3809" regulations: "B L M has de cid e d th a t to p ro te c t a n d restore the e nvironm en t a n d to lim it ta xp a ye r liability, financial guarantees for reclam ation should be required at 160 percent o f the estim ated cost for B LM fo have the reclam ation w ork perform ed. This includes any costs that m ay be necessary fo r long-term w afer treatm ent or site care and m a intenan ce." 15 The USDA Forest Service's development of new bonding guidelines in 200416to address reclamation plan and FA deficiencies that lead to underfunded abandoned sites on National Forest lands is another important example. This evolution of regulatory programs is not strictly limited to the FLMAs. The state of Nevada, along with the FLMAs, worked cooperatively with the mining industry to develop the Standardize Reclamation Cost Estimator (SRCE) to ensure that FA estimates for all HRM sites in Nevada will include all closure and post-closure activities necessary to protect human health and the environment.17 Compliance with these regulations is obligatory. 2.3 Incorrect Assumption 3: A CERCLA response fundamentally differs in some way from closure or reclamation, for which existing operations already post financial assurance. EPA asserts that the FR associated with the Proposed Rule is intended to cover actions that are different from closure or reclamation activities performed under and covered by FA as part of current regulatory programs. However, for the Proposed Rule and its supporting documentation, EPA fails to 11 Comprehensive Report: An Overview of Practices at Hard rock Mining and Mineral Processing Facilities and Related Releases of CERCLA Hazardous Substances - Final Report, pg. 5. 12 Struhsacker D., and SRK Consulting, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017 13 Ibid. pg. 8. 14 J Parshley & D. Struhsacker, The Evolution of Federal and Nevada State Reclamation Bonding Requirements for Hardrock Exploration and Mining Project"; White Paper for the Northwest Mining Association for submission to U.S. Congress, January 2008. 15 https://www.blm,gov/nhp/news/regulatory/3809-Final/3809f/3809f_1 .html 16 Reclamation Bond Estimation and Administration for Mineral Plans of Operation authorized and administered under 36 CFR 228A, 2004 17 J Parshley et. al., "An evolution of the methods for and purposes of mine closure cost estimating", in Mine Closure 2009 - A.B. Fourie, M. Tibbett, September 2009 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00251 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 5 identify a single material CERCLA-related response action that is not already incorporated into existing closure and reclamation plans, when applicable. Furthermore, EPA undercuts its own position through the use of closure and reclamation costs to develop the CERCLA 108(b) FR estimates and the inclusion of reductions in the Proposed Rule. EPA selected public information from reclamation and closure plans "to accumulate as much recent, high quality cost information for currently-operating hardrock mining facilities as possible."18 EPA selected these sources for use in its formula development because it could link remedy types implemented at some CERCLA HRM facilities to the reclamation and closure actions contained in the source documents.19 Therefore, in spite of EPA's contention that "CERCLA 108(b) financial responsibility is inherently different from financial responsibility that complements reclamation and closure programs"20, it acknowledges that reclamation and closure plans do contemplate the types of actions necessary to minimize the degree and duration of risk of a hazardous substance that would be applied under CERCLA. EPA states that calculation of site-specific cost estimates would require an evaluation of each facility to determine appropriate engineering controls21 and that such an effort "would present a significant regulatory burden on the Agency".22 However, EPA has based its formula on "current engineering cost estimates o f similar activities"23 obtained from mine closure and reclamation cost estimates prepared under the authority of other federal and state regulatory programs. By selecting these sources, EPA acknowledges that those programs already require an adequate evaluation of appropriate engineering controls needed to reduce the degree and duration of risk associated with the release or potential release of a hazardous substance during operation, closure and post closure phases of mining operations. Therefore, the existing regulatory programs do address the actions contemplated by EPA in the Proposed Rule. If not, then use of those costs would be inappropriate in the development of the formula. This review of the Proposed Rule discusses EPA's reduction concept in detail in Section 5. However, the concept of Reductions, which is intended to reduce the amount of FR required under CERCLA 108(b) to take into account existing FA required by federal and state regulatory programs, is an implicit acknowledgment by the EPA that existing FA does cover actions that CERCLA 108(b) is also intended to address. Therefore, although EPA states that FR under CERCLA 108(b) is "inherently different from FA required by other regulatory agencies,24 it is clear that EPA believes that a comprehensive closure plan will reduce the degree and duration of risk to the point that a CERCLA response is greatly reduced or highly unlikely and additional bonding pursuant to CERCLA 108(b) is not required [i.e., full compliance with CERCLA 108(b) reductions will reduce CERCLA 108(b) bonding to $550,000 (HHRA component)]. Furthermore, EPA's proposed reductions do not require any risk mitigation measures or provide any guidelines that do not already exist in some form in the existing closure programs. Therefore, EPA has implicitly acknowledged that existing closure and reclamation plans fully overlap with the Proposed Rule and, further, it has acknowledged that the costs that are utilized in the programs are reliable and of a high quality. With existing closure and reclamation plans fully 18 82 Fed. Reg. at 3462. 19 Ibid. 20 82 Fed. Reg. at 3430. 21 82 Fed. Reg. at 3401. 22 82 Fed. Reg. at 3400. 23 CERCLA 108(b) Financial Responsibility Formula for Hardrock Mining Facilities - Background Document, pg. 3-1. 24 82 Fed. Reg. at 3430 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00252 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 6 overlapping with CERCLA 108(b), and the cost estimates in those plans being of a high quality, SRK sees no justification for the addition of CERCLA 108(b) FR. 2.4 Incorrect Assumption 4: Regulatory agencies that are currently responsible for overseeing existing closure and reclamation requirements do not have the necessary enforcement tools or are not competently enforcing the current regulations. As discussed in Sections 2.1 and 2.2, existing regulatory programs fully overlap with CERCLA 108(b), the FA cost estimates in those programs are reliable and high quality, and there are no identified shortcomings in the existing regulatory programs. As such, the only remaining reason that EPA could justify a need for additional FR under CERCLA 108(b) is if the agencies themselves are not properly implementing the existing regulatory programs, or that the personnel within those state and federal agencies are not sufficiently competent to enforce their own regulations. EPA does not assert that existing mining regulatory programs are improperly implemented or enforced. Furthermore, in rejecting the closure plan approach, EPA stated that: "EPA has p o licy concerns about overseeing o th e r F e d e ra l a n d state p ro g ra m s ' financial responsibility requirem ents for adequacy, given other authorities' expertise with m ining regulation, "2526789 The existing regulations provide the tools necessary to identify a release or potential release at currently operating HRM sites.2627 These include regular inspections, frequent monitoring and annual reporting. In the event that a release or potential release is identified, a number of options for enforcement by federal and state agencies including notices, fines, consent decrees and even cease-and-desist orders. Although rarely needed because most operators voluntarily comply with all applicable regulations, the regulating agencies have not hesitated to use whatever enforcement tool is most appropriate for a particular circumstance. Mining operations on National Forest land are regulated under 36 CFR 228A, which includes site-specific requirements for environmental protection and bonding.2829 In 2004, the Forest Service prepared training guidance for site-specific estimation and administration of bonds for mining of projects on National Forest lands.30 Mining operations conducted on lands managed by the BLM are regulated under 43 CFR 3809, which likewise require site-specific measures to protect the environment and a site-specific closure cost estimate to ensure compliance with approved closure plans.31 Most of the states in which mining occurs have promulgated regulations that site-specific protect the environment and require operators to site-specific calculate and post FA instruments as noted in the 1999 NRC study.32 Some states, such as Nevada have developed detailed guidance and tools to assist operators in preparing management plans and cost estimates. Some of these tools developed by FMLAs and state 25 82 Fed. Reg. at 3401 26 https://www.nap.edu/cataloq/9682/hardrock-mining-on-federal-lands 27 Struhsacker D., and SRK Consulting, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017 28 36 CFR 228.8 29 36 CFR 228.13 30 USDA Forest Service, Training Guide for Reclamation Bond Estimation and Administration for Mineral Plans of Operation authorized and administered under 36 CFR 228A USDA - Forest Service, April 2004 31 43 3809.401 32 https://www.nap.edu/catalog/9682/hardrock-mining-on-federal-lands JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00253 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 7 regulatory agencies, such as the NV Standardized Reclamation Cost Estimator, have been so successful they have been adopted for use in other states. 3 EPA's generic formulaic approach is fundamentally flawed In addition to failing to demonstrate the purpose and need for the Proposed Rule, SRK believes that the proposed approach to estimating FR is fundamentally flawed. From a conceptual standpoint, EPA's reliance upon a generic, one-size-fits-all formulaic approach based on limited input variables and using statistical manipulation to estimate FR costs is a highly inaccurate, outdated and overall erroneous approach. The assumption that one formula can produce valid estimates of the cost of response actions for any facility type on any hard rock mine site is unreasonable. This generic approach does not consider critical, site-specific conditions that can profoundly affect the cost of such actions.33 For example, sites located in semi-arid environments will have a number of lower cost options available for management of solutions at the site. Likewise, the presence or absence of acid generating rock at a site can have a significant impact on site objectives, and therefore, the actions taken to achieve those objectives. In contrast, the federal and state regulatory agencies began requiring site-specific closure and reclamation costs to estimate FA obligations nearly 30 years ago, after abandoning the overly simplistic formulaic approach previously used. The change was based upon actual experience with mine design, operations and closure, which showed that the simplistic approach would not provide accurate cost estimates, sometimes seriously underestimating closure and reclamation costs. For example, prior to 1989, mine sites in Nevada were only required to post FA of $2,500/acre, an arbitrary amount that subsequent experience by the agencies and the mining industry was shown to be wholly inadequate.34 Although some international jurisdictions still use this type of overly simplistic method for FA estimates, jurisdictions with mature mining industries and advanced regulatory programs have abandoned, or are abandoning this approach in favor of requiring site-specific closure cost estimates. For example, in Australia, long considered a leader in mine closure regulation, the states of Queensland and New South Wales abandoned a simplistic cost estimating approach based on acreage in favor of site-specific, full value closure cost estimates. In 2011, the government of Chile modified their mining law to require site-specific FA based on all closure costs during the life of the mine (LOM) and all post closure costs.35 The government of Kazakhstan is currently changing their existing fee-based system based on operational costs in favor of site-specific FA cost estimates during revision of their mining law. 3.1 EPA's rejection of a site-specific approach is arbitrary and indefensible While EPA acknowledges that a site-specific approach "is the most precise approach o f the three approaches considered by EPA,''36 it abandoned this approach in favor of their simplistic formulaic approach because the site-specific approach "is the most resource intensive to implement." Existing regulatory programs managed by FLMAs and state agencies already require that mine operators prepare detailed site-specific management plans, including reclamation and closure plans 33 https://www.nap.edu/catalog/9682/hardrock-mining-on-federal-lands 34 Although some states still use cost/acre as a regulatory guideline, those regulations require consideration of other site-specific factors and regulators have the discretion to consider other factors, and may increase the total bond above the guideline, if needed. 35 Ley Num 20.551, "Regula El Cierre De Faenas e Instalaciones Mineras" (November 11, 2011), Article 50 (Chile). 36 82 Fed. Reg at 3460 (Jan. 11, 2017) JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00254 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 8 that do exactly that: identify the site-specific conditions that could affect the risk of a release or potential release.37 Each closure and reclamation plan must include measures to minimize or eliminate these risks and provide FA to implement those measures in the event of FA forfeiture. Each plan is site-specific and designed to protect human health and the environment during and after closure. Plans are intended to cover all actions associated with proper closure of the site, including any post-closure activities such as water management and site maintenance. The accompanying FA must provide sufficient funds for the administering agency to implement the entire reclamation and closure plan as approved, including government administration costs, contingencies, engineering costs and in accordance with government contracting rules. The requirements for closure and reclamation plans and FA cost estimates are described various regulations such as Nevada's NAC 445A and NAC 519A and in detail in a number of guidance documents prepared by regulating agencies such as the Forest Service.38 These plans and FA estimates are prepared by industry and undergo rigorous review by FLMAs and/or state regulatory agencies and are submitted for public comment, including in some cases, public hearing. Although EPA contends that it is rejecting a site-specific approach to estimate FR, it uses the site-specific FA costs presented in these plans and other regulatory documents as the basis for its simplistic formulas to calculate FR costs. Clearly, the current regulatory programs already perform site-specific assessment of risks and require and provide FA for all actions necessary to reduce the degree and duration of risk associated with the release or potential release from HRM sites.39 EPA also claims that a site-specific cost estimate could not be determined until after a release or threatened release has been identified, and a process similar to the National Contingency Plan (NCP) is applied to identify the remedy.40 Yet, such a statement completely contradicts the process that EPA dictates for releasing owners and operators from the FR requirements. To obtain a release from FR, EPA requires the owner or operator of a site to submit "evidence that demonstrates that the degree and duration o f risk associated with production, transportation, treatment, storage and disposal o f hazardous substances is minimal".4'1However, EPA does not identify nationwide criteria for this demonstration, and instead proposes a site-specific evaluation of facility risk to determine whether an owner or operator warrants release from the obligation.42 If it is possible for EPA to determine risk without identifying a release or threatened release in order to approve an operator's request for release from FR requirements, then it should be possible for EPA to determine, on a site-by-site basis, the appropriate amount of FR in the first place. In fact, EPA supports site-specific release evaluations based on the agency's "substantial experience making individualized determinations o f site risk, as this practice is consistent with EPA's practice under the Superfund program, for example, in selecting remedies under the NCP."43 Because the reclamation and closure plans required by existing regulatory programs, and used by EPA as a basis for their simplistic formulae, are based on site-specific risks, each plan contains riskbased closure approaches that EPA acknowledges are similar to response actions historically 37 Struhsacker D., and SRK Consulting, Review of State Financial Responsibility Requirements for Flardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017 38 LJSDA Forest Service, Reclamation Bond Estimation and Administration for Mineral Plans of Operation authorized and administered under 36 CFR 228A, 2004 39 Struhsacker D., and SRK Consulting, Review of State Financial Responsibility Requirements for Flardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017 40 82 Fed. Reg. at 3460 41 Proposed 320.27(a). 42 82 Fed. Reg. at 3415. 43 82 Fed. Reg. at 3415. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00255 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 9 required at HRM CERCLA sites. Therefore, the actions included in the reclamation and closure plans and FA provided should be sufficient to eliminate the need for CERCLA 108(b) FR. Examples include placement of covers on mine waste facilities or capture and management of seepage from the site. To abandon a site-specific analysis at the first step in the process because it would burden the agency's resources is arbitrary and indefensible. This is particularly concerning considering EPA reserves the right to apply site-specific risk evaluations to increase an owner or operator's FR obligation.44 As discussed above, existing federal and state mining, reclamation, and closure programs have successfully accomplished the same site-specific risk evaluation over the last 30 years, and those programs have been appropriately updated to improve the accuracy of the risk assessments and FA calculations. EPA states it has the expertise, yet abandons it altogether at the most important step in the process - determining the amount potentially required in the event of a release from a regulated facility. 4 EPA's formula is fatally flawed Even if EPA were to choose to continue with this fundamentally flawed, overly simplistic approach, the data and statistical manipulation it utilizes also contains serious flaws, which amplify the limitations of and errors in the agency's analysis. These fatal flaws preclude adoption of the Proposed Rule. 4.1 Flaws in the data collection As noted by Commenter 4 in the combined review document45 there are indications in the dataset collected by EPA that those persons collecting and collating the data had a limited understanding of mine reclamation and closure. While the universe of sites from which EPA collected data covered most types of mining operations and commodity types, the focus on a limited number of criteria to which EPA intended to correlate costs indicates a significant lack of understanding of the variables that contribute to mine closure planning and costs. There were also errors noted by Commenter 4 in the numbers presented in the EPA dataset when compared to the source documentation. For some operations, site-specific facility configurations, such as the construction of visual barrier waste rock berm at Rosemont was mis-categorized by EPA as a pit closure activity rather than a waste rock dump construction.46 EPA's response to Commenter 4 with respect to this miscategorization was that EPA was trying to represent the intent of the regressions rather than represent what the facilities actually were.47 Further, EPA indicated they were relying on reduction criteria to account for the differences in calculated costs. EPA's response is untenable in that they admit their use of the data was incorrect, but assert an equally flawed process (see below) would address any discrepancies. Some of the source data used by EPA are now obsolete. Typically, most regulatory programs require periodic updates, at least every five years, and Nevada requires cost estimate updates at least every three years. Furthermore, operations commonly submit modifications to plans, which also triggers an update of FA calculations. Because regular updates to the site-specific cost estimates 44 82 Fed. Reg. at 3461. 45 Hardrock Mining Peer Review - Combined Documents, MDB, Inc., November 23, 2016 46 Response to Peer Review Comments: CERCLA 108(b) Financial Responsibility Formula for Hardrock Mining Facilities Background Document, pg. 2-9 47 Response to Peer Review Comments: CERCLA 108(b) Financial Responsibility Formula for Hardrock Mining Facilities Background Document, pg. 2-11 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00256 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 10 required by FLMAs and state agencies are the norm, more recent site-specific data is available, but not used by EPA and only 16% of the sites used source data that are less than five years old. While the use of out of date plans by itself is not likely to materially change the outcome of the analyses performed by EPA, it provides additional doubt as to the reliability of EPA's data and associated analyses. It is possible that the errors in data collection were not attributable to those collecting the data, but to those directing the effort. During the Environmental Roundtable hosted by the Small Business Administration on February 3, 2017, when questioned on whether EPA had validated its formula against the original cost data, EPA stated that their formula was not meant to reflect costs associated with closure and reclamation (the same actions linked by the EPA to CERCLA remedy types for each response category). Instead, EPA stated that the purpose of the formula was to produce an aggregate cost that was of similar magnitude to those costs incurred at pre-regulation CERCLA HRM sites "such as Summitville". This suggests that EPA had a pre-determined result in mind. If, in fact, the outcome was pre-determined, then the process was not only biased, but also performed in an unscientific manner and is therefore arbitrary and capricious. 4.2 EPA ignored zero cost data points One of the most serious flaws in the EPA's approach is the exclusion of zero-cost data points. EPA's formulas assume that if a specific site feature is present, it will always require EPA's full suite of closure actions, such as water treatment and source controls. Therefore, when EPA developed its formulas based on its closure plan database, it assumed that where a specific response was not included (e.g., water treatment), the cost was overlooked or missing. In those cases, EPA did not include that data point in the analysis. In fact, there are numerous sites where many of the response actions that EPA is trying to cost are simply not required due to site-specific factors. Therefore, the cost for those response components for those sites is in fact zero. Because EPA is not accounting for the probability of occurrence for any specific type of response cost, and instead assumes that every site receives the full suite of costs, EPA's formulas fail to consider the possibility that the response cost could be much lower than the formula estimate or even zero. In developing the components of the formula, EPA should have entered a zero cost for these categories on a site-specific basis instead of including cost calculations for these response categories when no response, and therefore zero cost, are necessary. This error results in heavily biased data sets, which is especially apparent in the water treatment, source control and natural resource damages data sets. 4.3 EPA fails to address the probability of occurrence and assumes that all facilities will require CERCLA responses in the future As discussed in Section 4.2, the EPA formulas assume that all response categories will be required at all sites under a CERCLA response action. This contradicts its own data used to create the formulas and actions implemented at CERCLA HRM sites. EPA provided no evidence in the Administrative Record for the Proposed Rule to support this assumption. Nor has the EPA provided an example of a CERCLA HRM site that required response actions for every site feature. EPA even explicitly acknowledges the improved performance of the HRM industry in the rule: "The Agency recognizes, however, that past operating procedures, before the advent o f environm ental iaws, were likely in m any cases to give rise to environm ental JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx Tier 2 July 2017 ED 002061 00087255-00257 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula problem s that current regulations and m odern operating practices can prevent or m inim ize. "48 Page 11 Nonetheless, EPA has ignored its own comments, the NRC Study, and the industry's recent track record and does not take into account the very low probability that a modern mine will require a CERCLA response. Required monitoring programs provide early detection and responses to any release or potential release minimize the degree and duration of risk. These current requirements and practices ensure that releases at currently operating mines do not go undetected for years as they did at many legacy sites. Even if a mine were to require a CERCLA response, the response would likely be limited to a specific problem or problems (e.g., a waste rock dump or tailings pond), and not every single feature on the site as EPA has assumed in preparing its FR formulas. At each site referenced by EPA in support of the proposed rule, EPA identified a specific release or media issue. For example, at Buckhorn Mine EPA cites water management as the concern while at Jerritt Canyon EPA notes seepage from tailings impoundments as the issue.49 EPA notes leach pad releases from the Goldstrike and Florida Canyon mines and tailings impoundment releases from the Robinson Operation.50 In each of these cases, the releases occurred at one primary mine component. Moreover, each of these release examples was regulated by the relevant state agency to obtain compliance (i.e. did not require a CERCLA response). Identifying and mitigating the risks associated with these types of issues is precisely what the current regulatory programs are intended to accomplish through design and implementation of mine operating and closure plans, and accompanying FA requirement. EPA has provided no analysis that shows the probability of occurrence of any CERCLA response that justifies its Proposed Rule or its flawed and biased FR formulas. 4.4 Correlation is not causation Numerous variables must be considered to prepare an accurate closure and reclamation cost estimate for any mine facility or site. The same is true in determining appropriate levels, if any, of FR under EPA's program. EPA has incorrectly reduced this complexity to three variables (area, net precipitation, and flow) with only one (area) being used to determine the cost for most of the response categories. EPA's justification for this decision is that there is a correlation between cost and acreage. However, the correlation factors for all of the response categories, except water treatment, are very poor to moderate, with R-Square values between 0.16 and 0.65.51'52 EPA inexplicably, however, concludes that simply because some correlation exists, causation is probable. This is referred to as a questionable cause logical fallacy.53 This type of fallacy can occur when the reasoning behind the conclusion is based on an inadequate understanding of the variables being used or the existence of other factors that could significantly influence the relevant variables. EPA's highest correlation factor in the regression analyses provided to support the cost formulas occurs for the water treatment unit. This unit has an R-Square value of 0.91, which suggests a 48 82 Fed. Reg. at 3461. 49 82 Fed. Reg. at 3471. 50 82 Fed. Reg. at 3474. 51 The R2value is a measure of the correlation between two variables. An R2value of 1 means that 100% of the change in the dependent variable can be attributed to change in the independent variable. Therefore, an R2 of 1 means perfect correlation, 0 means no correlation. 52 CERCLA 108(b) Financial Responsibility Formula for Hard rock Mining Facilities - Background Document, Appendix J. 53 http://www.txstate.edu/philosophy/resources/fallacy-definitions/Questionable-Cause.html JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00258 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 12 strong correlation (and likely causation). However, EPA's regression of water treatment cost to flow rate is misleading, as flow rate is not the actual variable that is used to calculate the water treatment cost (it is an intermediate step). The actual variables that go into the calculation of water treatment are Total Disturbed Area, Underground Flow and In-Situ Leach Flow.54 EPA's regression analysis, and other statistical tests, completely ignore these three variables, which makes the regression of water treatment cost to flow meaningless and misleading. For the analysis to have any meaning, the regression must test the correlation between water treatment cost and the three variables driving this cost. EPA does not present any results of statistical tests for these variables. EPA's belief that accurate FR costs can be based on a single factor is a serious oversimplification of what is required to properly estimate FR costs. Based on SRK's experience with developing closure and reclamation plans, these costs (or similar response actions) must be based on numerous, sitespecific factors, not a single, relatively generic input. For example, costs associated with closure and reclamation of a heap leach facility depend on area, heap height, total quantity of ore, grain size distribution, clay content and mineralogy, mineral geochemistry, leach solution chemistry, groundwater chemistry, material stacking methods, particle size segregation in the heap, solution application schedules, annual precipitation, annual evaporation, precipitation patterns, sublimation, wind velocities and directions, and a number of other factors. A partial list of factors typically considered by SRK in developing risk-based management plans, including reclamation and closure plans, is attached in Appendix B. All of these factors are directly related to potential risk from a particular facility. Similarly, costs for all of the other 10 response categories should be determined by numerous factors, not one. EPA's simplistic assumption that a single variable can be used to determine FR for the response categories demonstrates a serious lack of understanding of mine closure and reclamation. First, risk of a release cannot be accurately assessed based on a single factor. Second, mine closure and reclamation programs reduce the same risks that EPA seeks to reduce with the CERCLA 108(b) rulemaking. This lack of understanding on the part of EPA could be due, in part, to the complexity of the interrelated regulations used to regulate the mining industry, as pointed out by the NRC Study (NRC Study at Error! Bookmark not defined.). This complexity does not lend itself to a simple survey of requirements and is not adequately reflected in EPA's analysis for the CERCLA 108(b) rulemaking of the status of current regulatory requirements.55 Understanding the complexity and the interdependent connections between the various regulatory programs is essential in understanding the scope of the existing regulatory and FA framework for hard rock mines. EPA's lack of understanding was pointed out by Commenter4": "/ am also not confident that those collecting the primary data from the source documents correctly understood the information in the documents or mine reclamation in general"56. 54 Note that EPA has not provided a definition for flow from in situ recovery operations. There are a number of flow rates (e.g. average flow from recovery wells, peak flow from recovery wells, average flow from injection wells, peak flow from injection wells, average restoration flow, peak restoration flow, bleed flows, etc.) that can be calculated at in situ operations and these flow rates vary significantly which means FR estimates will vary significantly without definition. Further, as EPA has not provided any of its source data related to in situ operations, SRK has not been able to review this aspect of EPA's formula in any way. 55 Struhsacker & SRK, Review of State Financial Responsibility Requirements for Hard rock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, June 2017 56 Response to Peer Review Comments: CERCLA 108(b) Financial Responsibility Formula for Hard rock Mining Facilities Background Document, pg. 2-9 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00259 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 13 Although the existing state and federal regulatory regimes may be complex (meaning there are multiple state and federal regulations and regulatory agencies governing environmental protection and FA requirements at hard rock mines) they are nonetheless effective and comprehensive.57 The NRC Study finding that "[t]he overall structure o f the federal and state laws and regulations that provide mining-related environmental protection is complicated but generally effective"58 is applicable to the states' regulatory framework as well as to federal regulations. This complexity and how the multiple regulations work together must be thoroughly understood in order to evaluate the states' comprehensive and effective regulatory and FA programs. 4.5 EPA used skewed data sets and smear factors The overly simplistic FR formulas that EPA has developed for CERCLA 108(b) do a very poor job of predicting reliable cost estimates because they are not based on realistic or plausible scenarios for today's operating HRM facilities (i.e., the formulas have very poor precision) and duplicate the FA already held by these facilities. The formulas are also highly inaccurate because they produce significantly overinflated estimates. This is due to a combination of three factors: The treatment of outlier data points; EPA's use of smear factors; and EPA's handling of source control contributions. The resulting highly biased formula outputs is consistent with EPA's comment during the February 3, 2017 SBA Environmental Roundtable that it was not trying to recreate closure and reclamation costs representative of mines subject to current regulatory requirements, but instead, was attempting to generate a total FR cost similar to costs experienced at past CERCLA HRM sites (e.g., Summitville). This also strongly supports the assertion in Section 4.1 that the development of the formulas was biased to achieve a particular predetermined result, and is, on that basis alone, arbitrary and capricious. 4.5.1 Outliers For almost every response category that EPA includes in its formula development, there are obvious outlier results that reside at the extreme upper range of the data sets EPA utilized. Typically, a mild outlier is defined as a data point that is greater than the third quartile plus 1.5 times the interquartile ("IQ") range (the difference between the first and third quartile of a data set) and an extreme outlier is greater than the third quartile plus 3.0 times the IQ range.59 Nine of the eleven data sets (Interim O&M and Long Term O&M are the two exclusions) have outlier data points in the extreme range.60 Most of these data points are well outside the extreme threshold, in most instances they range from the third quartile plus 5x - 10x the IQ range, and two are approximately 20x the IQ range (compared to the extreme definition of 3x). The inclusion of these data points significantly skews the regression analysis for EPA's formulas to the high side. For example, the open pit data set includes six extreme outliers. Excluding just a 57 Struhsacker & SRK, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, June 2017 58 https://www.nap.edu/catalog/9682/hardrock-mining-on-federal-lands 59 NIST/SEMATECH e-Hand book of Statistical Methods, http://www.itl.nist.gov/div898/handbook/, accessed April 2017. 60 Data from the spreadsheet " Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00260 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 14 single point (which has a value of the third quartile plus 21,8x the interquartile range), would reduce the average open pit reclamation cost in the source data by 33% 61 and excluding all of the extreme outlier data would reduce the average cost by 82%.62 This means that by including the single most extreme data point, the average of the source data is 50% higher than if it were excluded. Including all six outliers means the average of the source data is 450% higher than if they were excluded. Notably, while EPA has chosen to include the outliers in its regression analysis for each of the site features, for its Natural Resource Damages data set it performs an outlier test and chooses to exclude the extreme outliers.63 This exclusion of outliers in the NRD data set results in a higher NRD multiple (and therefore higher FR cost estimate) and the inclusion of outliers in the site feature analysis also results in higher FR cost estimates. This lack of consistency in methodology calls into question EPA's understanding of the statistics it is utilizing or suggests that there was a purposeful bias in how it used the data to reach a predetermined outcome of the largest possible FR cost estimate possible. The presence of these outlier data points means that the result of a generic formulaic approach will either: 1) generally be in the range of the majority of the data points, but significantly underestimate the handful of outlier data points, or, 2) be in the range of the outliers, but severely overestimate the majority of the data. EPA has apparently chosen to select the method that results in a severe overestimation of the majority of data points in an attempt to reach the extreme level of the few outliers. This approach, in the context of CERCLA 108(b), is highly arbitrary, unreasonable, and unjustifiable, as it creates a significant and unrealistic cost burden on the majority of operations. This skewed nature of the data strongly supports the critique that the use of a simplistic formula based on the average of all sites cannot reasonably estimate realistic CERCLA response costs at HRM sites operating under current regulatory programs and that FR or FA costs should be calculated through a site-specific approach, as is already in place with existing regulatory programs. 4.5.2 Smear factors EPA has incorporated smear factors into its analysis that are meant to account for the potential that there were excluded data points at the extreme of the range of the data set (i.e. EPA assumes that the data have a lognormal distribution and data points even higher than those included in the analysis are present). However, EPA has failed to identify what these data points might be, has provided no justification for this assumption, and its inclusion appears to be another statistical manipulation of the data set to skew the formula output to be as high as possible. These smear factors range from a low of 1.16 (water treatment) to a high of 9.56 (drainage). Effectively, this means that costs based on a simple regression of the data are being increased by a minimum of 16% (in the instance of water treatment) to a maximum of 856% (in the instance of drainage) by the smear factors. Using the example of the open pit costs, the addition of the smear factor increases the average estimate an additional 407% (smear factor of 5.07) and results in the formula predicting costs that 61 Calculated using spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". Comparison of average of "Adjusted Source Document Estimate $/acre" for Open Pit with and without S iteJD 46. 62 Calculated using spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". Comparison of average of "Adjusted Source Document Estimate $/acre" for Open Pit with and without S iteJD 26, 28, 37, 44, 46 and 59. 63 CERCLA 108(b) Financial Responsibility Formula for Hard rock Mining Facilities - Background Document, pg. 5-6 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00261 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 15 are approximately 640% higher than the source data, on average, for the 31 data points that do not classify as extreme outliers (Figure 4 -1 ).64 $180,000 $160,000 $140,000 $ 120,000 $ 100,000 $80,000 $60,000 $40,000 $ 20,000 $0 Z/ * * / > y Si Adjusted Source Document Estimate $/acre Formula Calculated Amount W/O Smear 8 Formula Calculated Amount with Smear $/Acre Figure 4-1: Comparison of Open Pit source estimates and formula estimates (with and without smear)65 The addition of smear factors to the formulas further amplifies the imbalance between the extreme overestimation of the majority of the closure costs in an attempt to bring the average estimate as close to the extreme upper data points as possible. For example, when comparing to the source data, for open pits the inclusion of the smear factor in EPA's formula significantly over-predicts every cost except the most extreme (Phoenix), which it significantly under-predicts (Figure 4-1).66 4.5.3 Source controls EPA's analysis for Open Pit, Waste Rock, Heap Leach and Tailings included costs for source controls, whether the source data included source controls or not. EPA describes source controls as closure activities meant to reduce seepage, such as amendments or synthetic barriers, but SRK 64 Calculated using spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". Comparison of average of "Adjusted Source Document Estimate $/acre" and "Formula Calculated Amount with Smear $/Acre for Open Pit" without S iteJD 26, 28, 37, 44, 46 and 59. 86 Does not include Source Control. Data from " Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQSFUND-2015-0781-2088)" 66 Ibid. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00262 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 16 could not locate a formal definition in the Proposed Rule or supporting docket, which makes it very difficult to evaluate EPA's actual methodology. For example, open pit backfill could be classified as a source control method, yet it has been excluded from this category without explanation. This significantly skews the base Open Pit formula (excluding source control) because of two data points that include what should be considered source control (i.e. they include pit backfill). EPA then applies the source control multiple on top of this skewed data, which effectively is double counting source controls. EPA does not provide any sort of formal criteria for an action to classify as source control. This is a critical omission as EPA's application of source control costs has a significant impact on the formula outputs and overall FR estimates. EPA appears to have performed a regression on source control separately from the rest of the costs for those site features, and likely planned to estimate source control costs separately. However, in the Proposed Rule, EPA appears to have arbitrarily decided that source controls would be required at every site, for four of the site features (Open Pit, Waste Rock, Heap Leach and Tailings) and has applied the additional source control cost distribution at all sites. EPA provides no justification for this assumption, and this appears to be another example of the misuse of data to reach a predetermined outcome. Although EPA's analysis of source controls is not adequately described, and therefore cannot be fully reviewed, it appears that EPA applied a regression of source control costs that was developed only for sites that included source controls (i.e., zero costs associated with source controls were not included in the regression). This is another example of EPA failing to account for the probability of occurrence, which, for source control, only ranges between 7% -1 6 % for these four site features67, while still excluding zero cost data points. This also means that only a handful of data points (as source controls are typically not necessary) are driving a significant portion of the actual cost calculation, further weakening any statistical basis for EPA's calculations. The addition of source controls at all sites significantly inflates the cost estimates (Figure 4-2) as the sites with source controls are typically extreme outlier data points. However, instead of simply skewing the average upward (with additional skew added through smear factors), the EPA has effectively created a large multiplier effect by also excluding the zero data points and may even be double counting costs (the description of EPA's actual analysis is not adequate to assess if EPA appropriately excluded source control estimates from sites where they already exist prior to adding source control costs on top of the other costs). Therefore, the impact of the arbitrary inclusion of source controls for all sites has resulted in estimated costs where source controls are not required being shifted upwards by 1,900% (i.e., 19 times) for Open Pits, as an example.68 67 Percentage of sites flagged as requiring source controls in spreadsheet " Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-0781 -2088)" for Open Pit, Waste Rock, Heap Leach and Tailings 68 Calculated using spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". Average of the multiple derived by dividing " Formula w/smear and source control $/acre" by "Formula Calculated Amount with Smear $/Acre for Open Pit" for every site in the data set. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00263 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula $180,000 $160,000 $140,000 $ 120,000 $ 100,000 $80,000 $60,000 $40,000 $ 20,000 Page 17 Figure 4-2: Comparison of Open Pit source estimates and full formula estimates69 4.5.4 Cumulative impact of outliers, smear factors and source controls Because of the compounding effects of the presence of extreme outliers, the inappropriate calculation of smear factors, and the mishandling of source control data, EPA has generated formulas that calculate FR costs that are significantly higher than the original FA estimates for closure actions that they are based on and which EPA has linked to remedy types that had been implemented at HRM CERCLA sites. While there are other flaws in EPA's methodology in developing formulas supporting FR amounts (which also serve to inflate the calculated FR amount), the impact isolated to the outliers, smear factors and source control is so severe that the predicted costs are often multiple orders of magnitude higher than the original source data it is derived from, simply by the way these three factors are handled by EPA.70 Even excluding all other flaws in EPA's methodology, these three factors result in a formula-predicted cost that has no resemblance whatsoever to the original data from which it is derived. It is clear that EPA's inappropriate statistical manipulation produces highly inflated and unrealistic results rather than accurately predicting the costs to perform the remedial actions. For example, the 69 Data from "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-0781-2088)" 70 As presented in the spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-20150781-2088)" JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00264 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 18 formula calculated Open Pit costs are on average 32,300% higher (i.e., 323 times higher) than the original source costs they are derived from71, with the most significantly over-predicted cost +3,000 times its original cost estimate (i.e., over-predicted by more than 300,000%).7273In fact, for the Open Pit category, EPA's formula output results in an estimated cost that is higher than the original cost estimate, which it is supposed to represent, for every single site in the data set, including the most extreme outlier (see Figure 4-2). This overestimation of the data is not limited to the Open Pit response cost category. A comparison of original source data to the final EPA formula estimate for all site features is provided in Table 4-1. EPA provides no rational justification to support these significantly overinflated estimates. The consistent skew to the data strongly suggests EPA's formulas are biased and intentionally designed to produce unrealistically high outcomes. Because of the highly variable site-specific conditions, there will always be sites for which a generic formulaic approach will incorrectly estimate the cost of appropriate actions. Therefore, SRK believes that existing, site-specific reclamation and closure FA required by existing mining regulatory programs, provides a more appropriate and justifiable approach to ensuring that sufficient funds are available to cover the cost of actions needed to minimize the degree and duration of risk from the release or potential release of hazardous substances at regulated mining operations. Table 4-1: Formula multipliers for all response categories73 Open Pit Waste Rock Heap Leach Tailings Process Pond UG Mine Drainage Short Term O&M Long Term O&M Interim O&M Water Treatment 323x 17x 25x 12x 3x 5x 54x 5x 3x 2x 3x 71 Calculated using spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". Average of the multiple derived by dividing " Formula w/smear and source control $/acre" by "Adjusted Source Document Estimate $/acre" for every site in the data set. 72 Calculated using spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". Multiple derived by dividing " Formula w/smear and source control $/acre" by "Adjusted Source Document Estimate $/acre" for S iteJD 29. 73 Calculated using spreadsheet "Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-07812088)". Average of the multiple derived by dividing " Formula w/smear and source control $/acre" by "Adjusted Source Document Estimate $/acre" for every site in the data set for each site feature. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00265 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 19 4.6 Validation of response costs calculated by EPA's formulas EPA has not performed any validation of the costs estimated via their formulas against the costs estimated for closure and reclamation. EPA peer reviewers were not provided the results of the 49 sites used by EPA in the Regulatory Impact Assessment (RIA) for review. When questioned about validation of the formula during the Environmental Roundtable hosted by the Small Business Administration on February 3, 2017, EPA responded that they had only validated the statistical regressions and had not validated the formula results against the closure and reclamation costs. Their reasoning was twofold. First, they stated that the requirements of CERCLA 108(b) are completely different from the requirements under federal and state mining programs for mine closure and reclamation. This is not correct, as discussed in detail in Section 2.2. Second, they stated that they were not trying to compare the numbers for each response category with the reclamation and closure costs, but only to produce a total response cost that reflects what "felt right" based on their experience with HRM CERCLA sites, "such as Summitville". Since nearly all of the existing HRM CERCLA sites are legacy sites operated prior to current environmental laws and mining regulatory and FA programs, such a goal will produce cost estimates that do not reflect the designed, engineered, controlled, and regulated modern mining operations and the resultant reduction in liabilities associated with these current mining operations. Furthermore, this ignores the numerous federal and state regulatory programs that significantly reduce the degree and duration of risk of a release. 4.7 Natural Resource Damages As highlighted throughout this review, while EPA's formulaic approach to development of response cost estimates has significant flaws, its approach to the Natural Resource Damages (NRD) multiplier is even more fundamentally flawed. This is because EPA's development of estimates of potential NRD cost associated with HRM sites uses a completely different approach than used for all of the other response cost categories. The most important differences follow: EPA did not perform a statistical analysis in support of its assertion that NRD costs are related to response costs, EPA excluded data points it wrongly considered to be outliers, and EPA utilized cost data from legacy mining and processing sites with CERCLA responses. Even with these deviations in methodology, EPA still used some of the flawed methodology pervasive in its other formulas, the most notably the exclusion of zero data points from its analysis. The common theme in all of these analytical flaws is that they bias the resulting calculations high (i.e. increase the calculated FR). This bias, which is consistent with the results for other aspects of the formula, suggests the selected approach was intended to increase the calculated FR amount. 4.7.1 No statistical analysis in support of assertion that NRD costs are related to response costs In justifying the appropriateness of tying potential NRD costs to the magnitude of response costs, EPA provides a reference to the Regulatory Impact Analysis from EPA's 2015 RCRA Final Rule Regulating Coal Combustion Residual (CCR) Landfills and Surface Impoundments At Coal-Fired JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00266 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 20 Electric Utility Power Plants (EPA-HQ-RCRA-2009-0640-12034).74 In referencing this document, EPA includes the statement "As with that previous study, the natural resource damages and response costs are uncertain, but EPA found that a similar relationship between damages and costs was presented. "75 SRK reviewed the document referenced by EPA to attempt to check EPA's analysis on the relationship between CERCLA response costs and associated NRD costs. When reviewing the referenced document, SRK was not able to identify any statistical analysis that demonstrates NRD costs are a function of response costs. In addition, the analysis itself is a poor comparison to this Proposed Rule as it is specific to the NRD costs associated with the release of coal combustible residuals (CCR) from an impoundment (i.e. a very specific type of response). Given that potential releases associated with HRM sites are highly variable (e.g. sources, pathways for release, contaminants, etc.), the comparison to an analysis supporting a very specific type of release for a specific contaminant is not valid. One valuable point that can be taken from this CCR document is that EPA acknowledges the importance of calculating the probability of occurrence of a release and incorporates it into its formula to estimate NRD costs associated with CCR impoundments76, which SRK believes should have been included in the HRM Proposed Rule as well (see Section 4.3). As a test, SRK examined the data EPA utilized in developing its multiplier for the Proposed Rule (Table 5-4 from U.S. EPA, CERCLA 108(b) Financial Responsibility Formula for Hard rock Mining Facilities - Background Document, pg. 5-4) to assess any correlation between actual response costs and NRD costs. SRK's examination determined that there is not even a weak correlation. SRK has plotted this data in Figures 4-3 and 4-4.77 As can be seen in these figures, there is no visible correlation and the actual correlation coefficients are 0.0012 and 0.047, neither of which demonstrate any statistical correlation. Therefore, EPA's assertion that NRD costs are a function of response costs is not valid and the application of NRD costs as a multiplier on top of CERCLA response costs is not appropriate. EPA has asked the question of whether it is more appropriate to use a mean or median from its data set, but in reality, EPA should not be using a multiplier at all. " From U.S. EPA, CERCLA 108(b) Financial Responsibility Formula for Hardrock Mining Facilities - Background Document, pg. xiv. 75 Ibid. 76 "U s in g th e m e th o d o lo g y fo r re m e d ia tio n costs, fo r e a ch y e a r o f th e a n a lysis, th is R IA c a lc u la te s e x p e c te d N R D c o s ts a s th e su m o f the p ro b a b ility o f an im p ou n d m e nt b e in g active a n d e xp e rie n cin g a relea se (i.e., a cco u ntin g fo r the e ffects o f s tru ctu ra l in te g rity re q u ire m e n ts ) m u ltip lie d b y its a s s ig n e d p o te n tia l N R D cost. " From the Regulatory Impact Analysis from EPA's 2015 RCRA Final Rule Regulating Coal Combustion Residual (CCR) Landfills and Surface Impoundments At Coal-Fired Electric Utility Power Plants, pg 5-18 77 Note that this figure excludes data points EPA has excluded as outlier data. SRK does not agree with this exclusion. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00267 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula $5,000,000,000 $4,500,000,000 . $4,000,000,000 $3,500,000,000 $3,000,000,000 o Ct/iL $2,500,000,000 <21 $ 2,000,000,000 $1,500,000,000 1 $ 1,000,000,000 $500,000,000 $0 IIK.if.c.....................TM............................ .................. R2-0.0012.... $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 NRD Cost Page 21 $ 100,000,000 Figure 4-3: CERCLA Response Cost Versus NRD Cost78 $300,000,000 . $250,000,000 5 $200,000,000 Co S $150,000.000 < ^LuU $100,000,000 t- $50,000,000 R2 - 0.0479 * $0 $0 $20,000,000 $40,000,000 $60,000,000 NRD Cost $80,000,000 $100,000,000 Figure 4-4: CERCLA Response Cost Versus NRD Cost - Outlier Response Costs Excluded79 78 Data from Table 5-4 of U.S. EPA, CERCLA 108(b) Financial Responsibility Formula for Hardrock Mining Facilities - Background Document, pg. 5-4 79 Data from Table 5-4 of U.S. EPA, CERCLA 108(b) Financial Responsibility Formula for Hardrock Mining Facilities - Background Document, pg. 5-4 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00268 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 22 4.7.2 EPA excluded data points it wrongly considers to be outliers EPA started with a data set that included 24 HRM sites with both CERCLA and NRD related costs. However, EPA decided to eliminate four of the mining sites from the sample of 24 due to an assessment that they were outlier data points: "These sites have response costs greater than two interquartile ranges above the third quartile cost, and are thus considered statistical outliers that are not likely to be representative o f response costs at other sites. "80 This is a notable departure from EPA's handling of other aspects of formula development where it included all data, including outliers that had an even more extreme deviation from the interquartile range than those excluded for NRD (see Section 4.5.1). EPA provides no explanation of why it believes these data points are not representative of actual response costs that may be encountered in HRM facilities. These excluded response costs range between $814 million and $4.5 billion. In the RIA for the Proposed Rule81, EPA calculates total response costs, prior to any multipliers, to range well above $500 million and when including the appropriate regional adjustment multiplier, multiple facilities have a response cost in excess of $800 million suggesting that in fact, these response costs are not outliers. The exclusion of these sites is critical as they have NRD costs that are a relatively small percentage of response costs. Inclusion of these four data points reduces the mean of the data set from 13.4% to 2.6% and the median from 3.8% to 2.5%. 4.7.3 EPA utilizes data from legacy CERCLA sites in its analysis In contrast to the response category cost development where EPA based its regression analysis on data from closure and reclamation from currently operating or proposed mining operations, for the NRD calculation, EPA based its analysis on CERCLA response costs from legacy sites. This data set is biased and not representative of potential future NRD costs as it reflects response costs related to practices that are no longer utilized in the industry. Monitoring programs required by current regulatory programs substantially limit the degree and duration of releases from HRM mine sites, thereby limiting the likelihood of NRD. Furthermore, current mining regulations are specifically designed to require development of reclamation and closure plans that will protect the environment and provide site-specific FA that can be used to address any issues that develop during or after closure. Therefore, the potential for NRD at currently operating or future sites is much lower than from the HRM CERCLA sites used to develop the NRD component of the Proposed Rule. In fact, in the CCR document that EPA references for its justification for utilizing a multiplier for NRD, EPA makes the following statement: "However, some of the 137 cases described by Israel (2006; 2013) affect resources that are unlikely to be affected by impoundment releases considered for this analysis, or result from substantively different circumstances. EPA received comments on the proposed Steam Electric ELG analysis noting significant differences between NRD resulting from impoundment releases and those assessed for legacy pollution such as 80 U.S. EPA, CERCLA 108(b) Financial Responsibility Formula for Hardrock Mining Facilities - Background Document, pg. 5-6 81 Exhibit B-7 of the Regulatory Impact Analysis of Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule, pg B-15 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00269 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund) sites. "82 Page 23 The last sentence is an acknowledgment by EPA that there is a significant difference in NRD associated with legacy CERCLA sites and current sites for which it is trying to develop a cost estimate for CCR impoundment releases. In the instance of the calculation of the NRD multiplier for the Proposed Rule for HRM sites, EPA includes these legacy CERCLA sites in its analysis, which is inconsistent with the method EPA used for the CCR impoundments. Therefore, EPA's development of the NRD multiplier utilizing legacy sites is flawed and should be rejected. 5 Reduction criteria and methodology are fundamentally flawed The Proposed Rule includes provisions to reduce FR amount based on "risk-reducing practices, including controls established in compliance with Federal and state reclamation and closure programs."83 Furthermore, although EPA states that FR under CERCLA 108(b) is "inherently different" from FA required by other regulatory agencies,84 EPA's approach to reductions emphasizes the significant overlap between the proposed CERCLA 108(b) rule and existing state and federal closure programs. EPA is thus making a distinction without a difference between the existing state and federal programs and the Propose Rule. 5.1 No scientific basis for reduction criteria EPA provides no scientific rationale for its selection of reduction criteria. The agency's "Technical Support Document"85 lists selected reduction criteria and compares the criteria to a number of what it deems to be "best management practices." These "best management practices" are excerpted from various regulatory requirements from other authorities that are responsible for mining (BLM, Forest Service, State of New Mexico, State of Alaska, etc.), industry guidelines (Global Acid Drainage Guide, conference presentations, etc.), and other government publications. EPA has not provided any rationale for its selection of individual criteria for comparison or why other criteria are ignored. It appears that EPA excerpted portions of the New Mexico regulations, in preference to other state regulations without explanation. It is particularly surprising that EPA appears to have overlooked Nevada, which is known to have an excellent regulatory program for mining and is often used as a basis for regulations cited in other jurisdictions including foreign countries.86 Furthermore, the selection of criteria from portions of state regulations such as those from New Mexico, a semi-arid locale may result in reduction criteria that are inappropriate in other states such as Alaska, Minnesota, or Idaho where even general environmental conditions are different. EPA does not attempt to comprehensively compile recommendations for comparison. Instead the agency appears to arbitrarily select criteria without providing any justification. In addition, even within regulations that are quoted, EPA has ignored a significant portion of the actual language and only included small excerpts. The method that EPA has used to develop the reduction criteria is illogical, poorly substantiated, and completely arbitrary. 82 U.S. ERA, "Appendices For Regulatory Impact Analysis For EPA's 2015 RCRA Final Rule For Coal Combustion Residual (CCR) Landfills & Surface Impoundments at Electric Utility Plants", pg 313 83 82 Fed. Reg. at 3391 84 82 Fed. Reg. at 3430 85 U.S. EPA, "Technical Support Document: CERCLA 108(b) Hardrock Mining Rule Financial Responsibility Reductions" (Nov. 30, 2016) (EPA-HQ-SFUND-2015-0781-2038) (hereinafter "Reductions Technical Support Document"). 86 NOM-155-SEMARNAT-2007, Mexican regulations on mine closure. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00270 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 24 As an example, EPA has generally utilized 200 years for the design life for its reduction criteria as well as the period for Long Term O&M and Water Treatment. A 200-year design life is well outside of the industry norm and none of EPA's typically referenced regulatory requirements include or even recommend a 200-year design life. However, EPA appears to be relying on a conference paper as a reference for the 200-year period as a "best management practice" to justify this number while excluding all other industry regulations.87 EPA provides no basis for the 200-year Long Term O&M and Water Treatment requirements. It arbitrarily sets the duration at 200 years without any justification as to why it was selected. In reality, the required duration should be based on a sitespecific, risk-based analysis, not a one-size-fits-all time frame selected without rationale by EPA. Such a requirement could be deemed arbitrary and capricious. EPA also uses a 200-year interval for stormwater calculations in the reductions for new mines. This interval exceeds almost all industry standards. In this case, EPA does not have a third party "best management practice" to reference and simply states it was selected based on, "The 200-year interval storm event for new mines as a similarly conservative approach based on the consideration o f climate change and other factors. "88 Oddly, EPA has stated that for existing mines, a 100-year interval is appropriate as a conservative number based on current "best management practices".89 It is unclear why, if the 100-year return interval is already admittedly "conservative" and meets "best management practices" at existing mines, an even more conservative 200-year return interval is necessary at new mines, all of which may be operated at the same time in the future. As a third example, EPA cites verbatim a portion of the State of New Mexico's guidance for waste rock stability: "Closure o f all critical structures a ta copper mine facility shall be designed fo ra long term static factor o f safety o f 1.5 or greater and non-critical structures shall be designed for a long term static factor o f safety o f 1.3 or greater".90 The units being closed shall also be designed for a factor o f safety o f 1.1 or greater under pseudostatic analysis. A stability analysis shall be conducted for the unit and shall include evaluation for static and seismic induced liquefaction. "91 EPA does not explain why it believes this requirement is most appropriate or why it has only selected this requirement from New Mexico's regulations and not others. It also does not explain why this specific quote is so critical to its reductions concept while ignoring much of the remaining New Mexico rule. The three examples provided above are presented for discussion and are not a comprehensive listing of reductions taken from existing regulatory criteria without rationale provided. 5.2 Contradictions with state regulations EPA's inconstant use of regulations for the reduction criteria is an exercise in selective omission in which EPA has inappropriately excluded relevant portions of other equally valid regulations, thus misrepresenting the full scope of the relevant regulations. In some instances, EPA's reduction criteria directly contradict state regulations. For example, in order to meet EPA's reduction criteria for Waste Rock, an operator must provide for "a cover system of, at a minimum, a store and release 87 Mark J. Logsdon, "What Does `Perpetual' Management and Treatment Mean? Toward a Framework for Determining an Appropriate Period-of-Performance for Management of Reactive, Sulfide-Bearing Mine Wastes," presented at the International Mine Water Association 2013 Annual Conference, Golden, Colorado, August 6-9, 2013, p. 56. 88 Reductions Technical Support Document at 16. 89 Ibid. / pg. 16 90 NMAC 20.6.7.33 91 Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule: Financial Responsibility Reductions Technical Support Document / pg. 13 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00271 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 25 earthen cover system with a thickness o f at least 12 inches".92 However, in New Mexico, state regulation provides for an exception to this requirement: "A t existing copper mine facilities, the waste rock and leach stockpile outslopes within an open pit surface drainage area are not required to be graded and covered.'93 Therefore, EPA is effectively imposing requirements that contradict the regulations that the State of New Mexico has determined are in the best interest of the state. This preemption of state regulations by EPA serves no rational purpose and usurps each state's authority to regulate mining activity within its borders. It also fails to take into account climatological, geological or other factors that were considered in each state's development of its mining and environmental laws. EPA's approach is arbitrary and without rational basis documented in the Administrative Record. Another example can be seen in the reduction that appears for Open Pits requiring the following: a a "W here pond in g w ill occur, pla n to regrade the b ottom surface d uring closure to stable configuration that prevents ponding and prom otes the conveyance o f surface w a te r o ff the u n it..."94 A gain, N e w M exico acknow ledges th a t site -sp e cific conditions m ay ju stify an exception: "The operator m ay propose for departm ent approval o f a grading plan that allows ponding as an appropriate p a ri o f closure provided additional "95 g ro u n d w ater protection m easures, such as synthetic lin e r system s, are inclu d e d as p a n o f the design. Again, EPA is imposing an arbitrary requirement as a reduction criterion without considering the need for, or existence of exceptions under state law. An operation in compliance with the New Mexico state regulations may not meet EPA reduction criteria that do not consider state mining rules. As a third example, EPA requires the use of a liner on a heap leach facility. While the use of a liner is not a requirement in all jurisdictions, even for jurisdictions that do specify the use of a liner, there is typically language that allows exceptions (again from New Mexico): "At a minimum, the following requirements shall be met in designing leach stockpiles at copper mine facilities unless the applicant or permittee can demonstrate that an alternate design will provide an equal or greater level of containment".96 A fourth example of only appropriating a portion of a regulation, again from New Mexico for open pits, relates to treatment of pit lake water. The New Mexico regulation specifically excludes pits from treatment requirements if they are hydraulic sinks. It also does not require mining companies to treat water for contaminants that are not originated from the mining activity: "Open pits in which the evaporation from the surface o f an open pit water body is predicted to exceed the water inflow shall be considered to be a hydrologic evaporative sink. If an open pit is determined to be a hydrologic evaporative sink, the standards o f 20.6.2.3103 NMAC do not apply within the area o f open pit hydrologic containment. This is limited to contaminants associated with standard copper mining practices and found to be present within the open pit, or that can be generated from the natural 92 Ibid. / pg. 5 93 NMAC 20.6.7.33 94 94 Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule: Financial Responsibility Reductions Technical Support Document / pg. 16 95 NMAC 20.6.7.33 96 NMAC 20.6.7.20 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00272 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 26 materials present in the open pit through degradation, oxidation, decay or other expected process."97 However, EPA reduction criterion states: ``W here a p it lake w ill form, o r where m eteoric w a te r w ill perco la te through the p it ro c k into groundw ater below, and the p it lake o r any discharges will not m eet w ater quality standards, a plan [is required] for the minimization, prevention, o r collection and treatm ent o f p it lakes, discharges, and/or seepage, based on site hydrology, w ater quality characterization information, and p it lake ecological risk assessm ent in fo rm a tio n ".98 EPA again fails to recognize these important state law exceptions and is effectively requiring treatment of any pit lake that does not meet undefined water quality standards regardless of what state regulations require. EPA's criterion also ignores the likely impacts to groundwater resources from a pit lake, which in the case of hydrologic sinks, are negligible. 5.3 EPA's reductions overlap with existing regulatory programs As discussed in Section 2.2, there is substantial overlap between CERCLA 108(b) and existing regulatory programs. This section focuses on the inferior nature of the Proposed Rule, when compared to the regulatory programs with which it overlaps, and provides further support that there is no reasonable justification for the addition of CERCLA 108(b) based FR, when existing regulatory programs are better supported by science and benefit from decades of improvements through experience. Existing mining regulatory programs can include hundreds of pages of detailed requirements and recommendations, which are then implemented through approved site-specific plans. EPA has proposed approximately 10 pages of reduction criteria, which are largely the same few recommendations repeated multiple times for each site feature. It is highly implausible to believe that these few arbitrary, generic, and often highly subjective requirements will provide any additional protection to human health and the environment not already covered by existing regulations. EPA's repetition of the same criteria for the different site features also calls into question EPA's understanding of mining and actual closure requirements. For example, for a number of site features, there is a requirement for regrading of the surface to prevent ponding and promote surface water conveyance off the unit. While this may be reasonable under many circumstances for features such as Waste Rock, this requirement is also listed for the Open Pit category. This application to open pits is nonsensical; by nature, almost all open pits are hydraulic sinks and it is impossible for water to be conveyed out of them to prevent ponding without pumping, which is completely impractical. Additionally, for pits with pit walls that expose acid generating rocks, inundation and ponding to submerge these pit walls is necessary mitigation to minimize acid generation. Another example is the requirement to complete a stability analysis to evaluate seismically induced liquefaction for open pits. Seismically induced liquefaction is an analysis that may be appropriate for tailings, but has no applicability to open pit slopes comprised of solid rock. Current closure and reclamation plans typically require multiple years of investigation and engineering work to be developed with the intent of mitigating risk to human health and the 97 NMAC 20.6.7.33 98 Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule: Financial Responsibility Reductions Technical Support Document / pg. 25 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00273 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 27 environment. These plans are then reviewed by applicable (and experienced) regulatory authorities prior to final approval. Any identified deficiencies are addressed through the review process, which in most states includes public comment and may include a public hearing. EPA's generic, simplistic formula with no scientific basis and equally general and simplistic reductions to that formula are grossly inferior to the requirements of existing mining regulatory programs." If CERCLA 108(b) is implemented as proposed, mining companies will be incentivized to modify their reclamation and closure plans to ensure they meet these arbitrary reduction criteria to minimize the incremental and significant financial burden on the operation. This will focus closure plan development on a limited number of specific types of activities arbitrarily mandated by EPA rather than focusing on risk-based, site-specific measures developed from sound science and engineering. Mine operators will be caught between the CERCLA reduction criteria (at least some of which will make no sense at particular mines) and applicable, but potentially inconsistent state laws, mine plans, and reclamation plans. This will also create an outcome that is in opposition to EPA's proposed intent in that CERCLA 108(b) closure plans will be less likely to ensure mitigation of the degree and duration of risk to human health and the environment compared to the closure plans developed in compliance with current state and federal requirements. EPA's arbitrary methodology will be fraught with unintended adverse consequences. 5.4 Subjective reductions Many of the reductions in the Proposed Rule are poorly defined and therefore highly subjective and unclear. While these criteria allow for proper scientific and engineering judgment for implementation, the lack of a formal approval process will create significant uncertainty as to whether the proposed standards have been met and will leave both operators and the EPA exposed to significant potential litigation. For example, EPA has established the following criteria for Waste Rock (where the EPA provides most of its justification in its Technical Support Document): "A management plan that demonstrates geochemically active materials will effectively be avoided"100 - this is also applicable to Heap Leach, Open Pit and Underground categories. EPA has not defined what "geochemically active materials" or "effectively avoided" mean. The issue is not the presence of the geochemically active material, but the potential risk that it might pose to the environment. Current regulatory programs require operators to identify any materials that will be mined or exposed during mining, determine the potential environmental risks associated with those materials by appropriate scientific methods, and implement measures to mitigate or eliminate those risks. For example, Nevada regulations require that all mines are designed, constructed, operated, and closed in such a way that "waters of the state" will not be degraded. Other federal and state regulatory programs have similar requirements. "Requirements for concurrent or sequential reclamation o f mined areas as they become available prior to final cessation o f operations and closure."m Again, this is a recurring requirement on multiple features. What criteria will be used to determine areas are "available" for concurrent reclamation? What happens if an operator believes that it is not possible to concurrently reclaim portions of the operation prior to closure, but EPA or another party910 99 Struhsacker D. and SRK Consulting, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017. 100 Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule: Financial Responsibility Reductions Technical Support Document / pg. 5 101 Ibid. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00274 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 28 disagrees? Will EPA audit individual operations and make its own assessment of whether it is possible? This is already a requirement under most regulatory programs, and determined by agreement between the operator and the regulatory agency. "Requirements to provide for a stabiiity analysis to be conducted for the unit as part o f the original design and as part o f mine modifications during the active life o f the mine."w2 If a stability analysis was not completed as part of the original design (i.e., existing operation), but was added at a later date, is it still possible to meet this standard? What type of stability analysis? Geotechnical, geochemical? In quoting the various regulatory requirements and industry guidelines, it appears that EPA is mixing multiple concepts for waste rock stability, which creates significant uncertainty as to the purpose and specific requirement for this reduction. For Open Pits, Heap Leach and Tailings, EPA requires a stability analysis be conducted including an evaluation for static and seismic induced liquefaction. It is not clear how an analysis of the potential for seismic induced liquefaction, a phenomenon that is only possible with fine grained, unconsolidated materials, is relevant to open pits (solid rock) or heap leach facilities (large particle sizes). For a tailings dam, long-term mass stability would be an appropriate objective, but in the long-term, slope failures of some type will occur in portions of nearly every open pit. Is the purpose of the analysis simply to look at the type of potential failure and likelihood overtime or is there some intent to try to prevent failures? For Water Treatment, in its formulaic approach to developing bonding amounts, EPA has assumed that long-term water treatment is required for all operations. However, this assumption is not defensible or reasonable based on empirical data. Because of this incorrect assumption, it is not clear from the Water Treatment reduction standard if operations that do not require long term water treatment will be able to achieve the reduction. There are numerous examples of closure plans in semi-arid environments, such as Nevada, where water treatment is not needed and closure of most facilities can be achieved through use of engineered, zero-discharge passive management systems. These methods have been employed successfully for nearly 30 years. This is reflected in the original dataset used by EPA to create their simplistic formula, where many of the sites in Nevada and other southwestern states did not include costs for water treatment in their FA. The lack of water treatment costs for these sites was not an omission in the closure and reclamation plans, but the result of good, proven closure practice. Apparently, those collecting and analyzing the data for EPA did not understand reclamation and closure practices well enough to discern the difference between good practice and omissions. EPA's water treatment reduction requires "...a conceptual engineering document that describes the processes and methods that are expected to be used for long-term management or treatment o f seepage and includes an analysis o f the expected operational life o f each long-term water management or water treatment system, including collection/interceptor systems, until each system is no longer needed to protect water quality and applicable standards are met. "10203104 Although this standard assumes that water treatment will be needed on all sites, it also provides for cessation of treatment when it is no longer needed to protect water quality and applicable standards are met. How the need for this requirement is determined and under what conditions water treatment will no longer be required is entirely unclear. Furthermore, to obtain the reduction, a facility must have a "plan for closure, water management and water treatment' 102 Ibid. 103 Ibid. /p g . 79 104 Ibid. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00275 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 29 that includes significant detail around operating conditions and capital requirements. Obviously, this type of plan will not exist if water treatment is not required. It is ludicrous to require operators to develop a plan that covers operation of a hypothetical and unnecessary treatment plant to meet this standard. Rather, EPA's water treatment criterion should first establish whether water treatment is necessary at all. EPA also repeatedly refers either to meeting "applicable water quality standards" or in some instances just "water quality standards". However, it does not define which standards these may be or how applicable standards will be selected. Applicable water quality standards should be tied directly to the state operating permits. These and similar subjective, vague reduction requirements are only some of the examples of the arbitrary FR reduction criteria EPA would incorporate into the rule. The net result will be that EPA's grossly overinflated FR requirements will likely remain in place year after year at covered sites, whether or not risks have been effectively addressed, because the FR release standards are too subjective to prove compliance. 5.5 Inflexible criteria In contrast to the multitude of poorly defined and subjective reduction criteria, EPA has also selected highly prescriptive criteria for other conditions. Again, there is no justification as to why these specific criteria were chosen relative to other industry criteria. The prescriptive criteria are better defined (i.e. it will be clearer that an operation is in compliance); however, they also will cause significant practical problems. This is because the highly prescriptive criteria establish many instances where activities such as water treatment, liners and covers will have to be specified in a closure plan for no reason other than EPA's new regulations require them (i.e. from a risk management perspective, they are not necessary). For many site features, the following requirement is proposed: "...at a minimum, a store and release earthen cover system with a thickness o f at least 12 inches..."105While cover systems are common in mine reclamation and closure, they are not always the most appropriate or applicable design (e.g., highly arid conditions where seepage is not a problem and vegetation cannot be established to stabilize a cover). However, EPA's proposed regulations do not provide for site-specific flexibility to select the most appropriate method of closure and dictate that a cover must be used. EPA also repeatedly uses the following: "(A) implementation o f an engineered cover system designed to achieve at least a 95 percent reduction in annual net-percolation based on the long term average and reduce seepage discharges to meet applicable water quality standards; (B) a capture and treatment system designed to achieve at least a 95 percent capture efficiency and meet applicable water quality standards; or combination o f an engineered cover system and a capture and treatment system to achieve at least a 95 percent reduction in discharged load and meet applicable water quality standards, or (C) a solution containment system to assure seepage flows are collected, contained, conveyed, and treated to achieve at least a 95 percent reduction to meet applicable water quality standards. " The selection of 95 percent reductions in net percolation, capture efficiency, reduction in discharged load and treatment efficiency is completely arbitrary. In many instances, this may not be possible and in other instances, there is no scientific or risk based justification to target 95% reduction is not required to achieve 105 Ibid. /pg s. 6, 49, 63 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00276 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 30 acceptably low risk levels (e.g. a 10% reduction may be adequate to meet all standards and risk based criteria or conversely 98% reduction may be required). In Nevada, where vapotranspiration exceeds precipitation, facility water management systems must generally be zero-discharge systems - throughout operations. There, neither complex, engineered cover systems nor capture and treatment systems are typically used. These types of determinations need to be made on a site-by-site basis that takes into account actual site-specific conditions and existing, applicable state and federal laws. 5.6 Validation of the model and reductions EPA's reduction methodology highlights how far its formula-based calculation of FR is from reality. For one operation, ID#2601916, based on the results of the RIA, EPA determined that its existing closure plan meets all reduction requirements and therefore the CERCLA 108(b) bonding requirement would be $550,000 (health assessment only).106 EPA's formula-based calculation of FR for the site is $331 million107, prior to the application of multipliers for NRD and Regional Adjustment. Its full EPA calculated FR amount, inclusive of the health assessment and both multipliers, but prior to reductions is $605 million. Its actual estimated closure cost, developed by the operator in support of existing FA, is $35 million, based on the document Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-0781-2088). Therefore, an estimated $35 million in actual closure activity fully reduced the degree and duration of risk while EPA's FR formula calculates the need for almost 20 times that amount of bonding. Table 5-1 shows similar results for all sites evaluated in the RIA (the example above is Site 38). Where EPA determined a site met the proposed reduction categories, and therefore some level of reductions are appropriate, a comparison of the formulaic calculated FR amount to the actual cost estimate, supporting existing FA, consistently shows EPA's formulaic costs approaching an order of magnitude higher than actual estimates (which EPA has deemed to fully reduce to the degree and duration of risk due to the compliance with reduction criteria, per Exhibit B-8 of the RIA). 5.7 All-or-nothing approach EPA's all-or-nothing approach to reductions also defies logic. If a mining company meets 99 percent of the reduction criteria, but fails to meet a single aspect of those criteria (which may be entirely irrelevant for that specific circumstance), the mining company cannot benefit from any actions taken or proposed to reduce the degree and duration of risk. In reality, typical reclamation and closure measures can significantly affect closure performance and, therefore, degree and duration of risk. Any measures employed to reduce risk should likewise reduce the FR obligations. 106 Regulatory Impact Analysis of Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hard rock Mining Industry Proposed Rule (the "RIA"), Exhibit B-9 107 Regulatory Impact Analysis of Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hard rock Mining Industry Proposed Rule (the "RIA"), Exhibit B-7 JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00277 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 31 Table 5-1: Comparison of Estimated FR and FA Costs EP Site ^ irrom RIAj i 2 3 4 5 6 7 3 9 10 11 12 14 16 17 18 19 20 21 22 23 24 25 28 29 30 31 32 33 .34 35 .36 37 38 39 40 41 43 44 45 46 47 Mate f '+ v - r + v - r ! Alaska Alaska ! Alaska Alaska : Alaska Arizona : Arizona Arizona : Arizona Arizona ; Arizona Arizona ; California California ! Colorado Colorado ! Idaho Idaho ! Idaho Minnesota ! Minnesota Minnesota ! Minnesota Montana : Montana Nevada : Nevada Nevada : Nevada Nevada ; Nevada Nevada ! Nevada Nevada ! Nevada Nevada ! Nevada New Mexico ! New Mexico South Carolina ! Utah Nebraska EPA FR Formula 1no EPA Projected Amount'1'' Approved FA Amount"8 ERA Projected Reduction f Approved FA $953,962,768 $907,528,595 $27,673,595 3,279% $144,450,064 $129,740,607 i $12,533,589 i 1,035% $113,514,544 $108,305,429 i $7,627,898 i 1,420% $71,202,736 $60,212,324 i $1,134,719 i 5,306% .......$199,535,248 T ......$192,259]945 " " ......$33]104,578 F ...... 581%.... T $971,413,894 F $301,181,022 F $9,968,962 3,021% .......$163,847,134 T ......$105,64l]309 " "' ....... $l]216,913" " ..... 8,681%... "I" $820,116,748 F $110,091,414 F $8,065] 180 1,365% $604,279,126 T $245,882]225 I $140,499,602 175% "F" $476,008,984 $377,544,759 $16,309]650 2,315% $268,279,462 $190,765,810 i $9,843,499 i 1,938% $910,927,468 $195,694,319 i $3,786,966 i 5,168% $103,943,584 $66,247,148 i $1,058,466 i 6,259% $80,660,296 $61,673,303 $1,538,756 i 4,008% $238,308,976 "F"......$207,701,503 F ...... $31,408]873 " "'.......661%.... ] $589,558,672 $542,192,858 F $113,625,314 477% .......$144,087,184 F ......$125,663,729 F ...... $42,790]19 5"".......294%.... T $55,907,344 F $292,359,952 T $103,807,504 $43,620]844 $252,746,225 F $49,644]979 F $3,582,987 F $30,674,519 I $816,579 1,217% 824% 6,080% $615,141,712 $409,720,362 i $13,406,751 i 3,056% $333,755,488 $257,035,998 i $3,244,982 i 7,921% $17,696,080 T $48,885,616 $9,011,733 i F $46,314,830 $5,689,408 i $5,500,713 158% 842% ........... $174,133,'648']" ..........$158,212]442 " "' ..........$2S]056,259 1 .......... 564%....... T $796,572,640 F $722,959,141 $45,971,063 1,573% $113,563,306 ] $100,782]999 F $12]l50,792 829% "F" $693,600,904 $10,408,996 ] F $611,470,066 F $9,109,175 $97,479]893 $524,955 627% 1,735% $910,681,390 $864,396,538 i $20,731,752 i 4,169% $525,997,972 $501,022,167 i $10,047,890 i 4,986% $379,025,902 $357,352,006 i $17,989,928 i 1,986% $530,197,174 $498,483,293 $32,144,530 1,551% F $605,052,514 $604,502,514 F $34,208,230 1,767% F ........... $179,837,668 ............$89,848,452 F .......... $24,399]l39 " " ........... 368%....... F $661,467,880 $627,458,793 $37,656,153 ] 1,666% $181,298,260 F F $168]048,137 $8,025/417 2,094% $798,624,046 F $761,719]351 I $167]526,076 455% $681,328,756 F F $653]759,482 $122,314]ll8 534% $192,048,580 $149,592,031 i $33,887,100 i 441% $179,951,068 $161,664,770 i $3,166,340 i 5,106% $178,441,714 $6,071,945 i $1,238,602 i 490% 108 Includes multipliers for NRD and Regional Adjustment. Formula results from EPA 2016, "Regulatory Impact Analysis of Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hard rock Mining Industry Proposed Rule", Exhibit B-7 109 Based on EPA calculated FR formula amount (no reductions) minus EPA's estimate of FR including reductions. Data from EPA 2016, "Regulatory Impact Analysis of Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule", Exhibit B-7 and Exhibit B-9. 110 FA amount approved by relevant regulatory body supporting current FA. Data from " Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-2015-0781-2088)" JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00278 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 32 5.8 Reductions summary SRK agrees with EPA's basic premise, integral to its reduction strategy, namely that existing state and federal regulations and FA requirements are effective at reducing the degree and duration of risk related to mine closure to the point that additional CERCLA 108(b) FR is not required. Yet, because the EPA methodology is based on a poor understanding and misapplication of existing state and federal regulatory programs, the outcome is vague, arbitrary, inconsistent with existing laws, and will take years to implement. 6 Conclusions EPA's approach to FR cost estimation in the proposed CERCLA 108 (b) rule is full of circular reasoning, inconsistencies, internal contradictions, unsupported assumptions vague criteria, and grossly inflated risk calculations. The basic premise that there is a need for the Proposed Rule is countered by EPA's own methodology. EPA utilized existing mine reclamation and closure costs to provide the basis for its Proposed Rule. The stated reason that EPA selected these sources is that the actions required for mine reclamation and closure are similar to response actions implemented at HRM CERCLA sites. This directly contradicts EPA's contention that the requirements of CERCLA 108(b) are functionally different from closure and reclamation requirements covered by existing regulatory programs. In reviewing EPA's approach, it is clear that EPA either does not understand how existing regulatory programs reduce the degree and duration of risk associated with HRM sites, or is simply secondguessing state and federal regulators, the experts at regulating risk from the HRM industry, and substituting its inferior risk calculating formula for tested and proven regulatory programs. Either way, EPA's approach is wrong. Since the actions normally required for mine operations, reclamation and closure under existing regulatory programs are the same as those implemented by EPA on HRM CERCLA sites111, there is no justification for the EPA to implement the duplicative program EPA would create under the Proposed Rule. EPA ignores the industry best practice of calculating site-specific FA costs in favor of overly simplistic formulas based on statistical manipulation of misunderstood and misinterpreted data simply because using site-specific, best practices "would present a significant regulatory burden on the Agency".112 The fact that the site-specific approach has been used for nearly three decades in existing state and federal regulatory programs contradicts this contention, especially since the work has largely already been done as evidenced by the source data used by the EPA to create their formulas. It appears that EPA's formula was designed to replicate the costs incurred in remediating the most expensive legacy Superfund sites. This premise is inapplicable at highly regulated modern mines where the environmental controls make remediation on the scale of a Superfund cleanup highly unlikely. During the February 3, 2017, Environmental Roundtable hosted by the Small Business Administration, EPA stated that the purpose of the formula was to produce a total site response cost similar to costs incurred at pre-regulation CERCLA HRM sites "such as Summitville." EPA's pursuit of this predetermined outcome is neither necessary nor appropriate. 111 Struhsacker D. and SRK Consulting, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017. 112 82 Fed. Reg. at 3401. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00279 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Page 33 In creating an overly simplistic, one-size-fits-all formula based on a flawed interpretation of the source data and statistical manipulation of these data, EPA has created formulas that reproduce the costs associated with extreme outliers. Application of these outliers to all sites would place an unnecessary and unreasonable burden on the majority of mine sites. EPA's Proposed Rule is premised on the idea that all currently operating and future mine sites will result in conditions experienced at historic, pre-regulation HRM CERCLA sites, which ignores all of the required environmental protection measures and monitoring, reporting, and inspection requirements in current federal and state environmental and mining laws and regulatory programs.113 Furthermore, EPA's failure to consider the probability of occurrence in its analyses results in an unsupportable and entirely unrealistic conclusion that all sites will require remedies for every response category. This is not consistent with historic HRM CERCLA sites where not all mine features are universally present and not all remedies are required. EPA's response to many of the concerns raised during various meetings are that reductions will allow most operators to reduce their FR through implementation of controls required under other regulatory programs and providing FA for those controls. If the controls required by and FA provided under current regulatory programs can reduce the FR amount to zero, then the current programs are the functional equivalent of the Proposed Rule and the Proposed Rule is unnecessary and duplicative. The bottom line is that EPA used unsupportable assumptions, oversimplification, misuse of source data, and statistical manipulation to develop the Proposed Rule. The Proposed Rule is not based in sound science or engineering principles and therefore does not withstand scrutiny. The Proposed Rule ignores the current state of practices in the HRM industry and the effectiveness of the existing federal and state regulatory programs. SRK believes this Proposed Rule is unnecessary and would place an unreasonable burden on an already highly regulated industry without the benefit of reducing any significant risks not already addressed by existing regulatory programs. Prepared by A Z -'5: A JeffreyV. Parshley, P.G., C.P.G., C.E.M. Group Chairman and Corporate Consultant and John H. Pfahl M.S. Principal Consultant 113 Struhsacker D. and SRK Consulting, Review of State Financial Responsibility Requirements for Hard rock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, July 2017. JVP/JHP EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00280 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Reviewed by 'Mg yf- Project Reviewer Mark A. Willow, MSc. C.E.M., SME-RM Principal Environmental Scientist Page 34 JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formu!a-Cntique_503400_010_JVP_20170711_FNL.docx Tier 2 July 2017 ED 002061 00087255-00281 Appendix A Appendix A: Key Information Examined During Review Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00282 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Appendix A - Key Information Examined During Review Appendix A Information Cited in Footnotes BLM "3809" (43 CFR 3809) mining regulations, https://www.blm.gov/nhp/news/regulatory/3809Final/3809f/3809f 1.html Ley Num 20.551, "Regula El Cierre De Faenas e Instalaciones Mineras" (November 11,2011), Article 50 (Chile). Logsdon, Mark J., "What Does `Perpetual' Management and Treatment Mean? Toward a Framework for Determining an Appropriate Period-of-Performance for Management of Reactive, Sulfide-Bearing Mine Wastes," presented at the International Mine Water Association 2013 Annual Conference, Golden, Colorado, August 6-9, 2013, p. 56. National Research Council/National Academy of Sciences (NRC/NAS), "Hardrock Mining on Federal Lands. https://www.nap.edu/catalog/9682/hardrock-mining-on-federal-lands, 1999. New Mexico Environment Department (NMED), New Mexico Administrative Code, TITLE 20 Environmental Protection, Chapter 6 Water Quality, Part 7 Ground Water Protection - Supplemental Permitting Requirements for Copper Mine Facilities, December 1,2013. NIST/SEMATECH e-Handbook of Statistical Methods, http://www.itl.nist.gov/div898/handbook/, accessed April 2017. NOM-155-SEMARNAT-2007, Mexican regulations on mine closure. Parshley J. & Struhsacker D., The Evolution of Federal and Nevada State Reclamation Bonding Requirements for Hardrock Exploration and Mining Project"; White Paper for the Northwest Mining Association for submission to U.S. Congress, January 2008. Parshley J. et. al., "An evolution of the methods for and purposes of mine closure cost estimating", in Mine Closure 2009 - A.B. Fourie, M. Tibbett, September 2009 Struhsacker & SRK, Review of State Financial Responsibility Requirements for Hardrock Mines and the Response Categories in EPA's CERCLA 108(b) Proposed Rule, June 2017 http://www.txstate.edu/philosophv/resources/fallacy-definitions/Questionable-Cause.html LJSDA FS mining regulations (36 CFR 228A). https://www.fs.fed.us/emc/nepa/oqed/includes/leasinq regs 36cfr228.pdf USDA FS, Reclamation Bond Estimation and Administration for Mineral Plans of Operation authorized and administered under 36 CFR 228A, 2004 U.S. Small Business Administration, Final Report of the Small Business Advocacy Review Panel on EPA's Planned Proposed Rule Financial Responsibility Requirements For the Hardrock Mining Industry under CERCLA 108(b), December 1,2016 JVP/JHP EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00283 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Appendix A U.S. EPA, Expanded Appendix B - CERCLA HRM Facilities Est. Response Costs (EPA-HQ-SFUND-20150781-2088) U.S. EPA, Financial Responsibility Requirements Under CERCLA 108(b) for Classes of Facilities in the Hard rock Mining Industry. 82 Fed. Reg at 3388-3512 (Jan. 11,2017) U.S. EPA, EPA-HQ -SFUND-2015-0781-0144, Comprehensive Report: An Overview of Practices at Hard rock Mining and Mineral Processing Facilities and Related Releases of CERCLA Hazardous Substances Final Report, November 30, 2016. U.S. EPA, Response to Peer Review Comments: CERCLA 108(b) Financial Responsibility Formula for Hard rock Mining Facilities Background Document - Draft, December 2016 U.S. EPA, Regulatory Impact Analysis of Financial Responsibility Requirements under CERCLA 108(b) for Classes of Facilities in the Hard rock Mining Industry Proposed Rule, December 1,2016. U.S. EPA, Hard rock Mining Peer Review - Combined Documents, MDB, Inc., November 23, 2016 U.S. EPA, CERCLA 108(b) Financial Responsibility Formula for Hard rock Mining Facilities - Background Document U.S. EPA, Regulatory Impact Analysis from EPA's 2015 RCRA Final Rule Regulating Coal Combustion Residual (CCR) Landfills and Surface Impoundments At Coal-Fired Electric Utility Power Plants (EPAHQ-RCRA-2009-0640-12034) U.S. EPA, "Appendices For Regulatory Impact Analysis For EPA's 2015 RCRA Final Rule For Coal Combustion Residual (CCR) Landfills & Surface Impoundments at Electric Utility Plants" U.S. EPA, "Technical Support Document: CERCLA 108(b) Hardrock Mining Rule Financial Responsibility Reductions" (Nov. 30, 2016) (EPA-HQ-SFUND-2015-0781-2038) Others n o t directly referenced: MEMORANDUM OF UNDERSTANDING for Mining and Mineral Related Activities Within the State of Nevada Among: Nevada Department of Conservation and Natural Resource Division of Environmental Protection; and USDA, Forest Service Humboldt-Toiyabe National Forest; and USDA, Forest Service Inyo National Forest; and U.S. Department of the Interior Bureau of Land Management, Nevada, December 2013. NDEP BMRR, Nevada Administrative Code (NAC) Water Pollution Control Regulations for Mining Facilities (NAC 445A.350-447), https://www. leg .state.nv. us/NAC/NAC-445A.html NDEP BMRR, Nevada Administrative Code (NAC) Reclamation of Land Subject to Mining Operations or Exploration Projects - Regulation of Mining Operations and Exploration Projects (NAC 519a), https://www.leg.state.nv. us/NAC/N AC-519A.htm I NDEP BMRR, Preparation Requirements and Guidelines for Permanent Closure Plans and Final Closure Reports. JVP/JHP EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00284 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula NDEP BMRR, Guidance Document Preparation of Operating Plans for Mining Facilities Appendix A NDEP BMRR, Policy and Procedures for Regulation Branch Inspections NDEP BMRR, ATTACHMENT A for Mining Operations Documentation of Reclamation Activities for Surety Release Nevada Standardized Reclamation Cost Estimator (SRCE) Model, http://www.nvbond.org USDI-BLM (Nevada State Office), BLM Nevada 3809 Reclamation Bonding Guidelines, May 2005 USDI-BLM (Nevada State Office), Nevada Bureau of Land Management Rock Characterization and Water Resources Analysis Guidance for Mining Activities, January 8, 2010. U.S. EPA, Office of Land and Emergency Management, Memorandum to the Record: Releases from Hardrock Mining Facilities, November 2016 U.S. EPA, Benefit and Cost Analysis for the Proposed Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category, April 2013 U.S. EPA, Supporting statement for EPA Information Collection Request Number 2554.01 Reporting and Recordkeeping Requirements for EPA's Financial Responsibility Requirements Under CERCLA 108(B) for Classes of Facilities in the Hardrock Mining Industry Proposed Rule, December 1,2016 U.S. EPA, EPA-HQ-SFUND-2015-0781-0497.pdf, Memo: Releases from Hardrock Mining Facilities, November 22, 2016. U.S., EPA, EPA-HQ-SFUND-2015-0781-2104, Summary of Nevada Financial Responsibility Requirements. JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx Tier 2 July 2017 ED 002061 00087255-00285 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Appendix B Appendix B: Example of some site-specific factors that are considered in risk-based management and closure of mine sites JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx Tier 2 July 2017 ED 002061 00087255-00286 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Appendix B Table A-6-1: Selected site-specific criteria used in risk-based management and closure planning distance to nearest population land use status topography drainage patterns distance to the nearest surface water body depth to groundwater physical and chemical characteristics of underlying geologic materials direction and speed of groundwater flow existing and potential future uses of water resources baseline surface water and groundwater quality special biological considerations wetlands special habitats characterization of native flora and fauna annual precipitation average amount pattern quantity as snow sublimation snowmelt (timing, duration) evaporation quantity distribution through the year wind direction velocity temperature annual temperatures diurnal variations JVP/JHP EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00287 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Appendix B number of days below freezing number of days of sunshine radiant energy mining and mineral processing methodology construction methods used in facility construction surface area of the facility height of the facility total volume of the facility detailed geochemical characterization of all mine waste distribution and location of geochemical materials exposed in the final pit walls or underground workings geotechnical conditions of pit walls and underground workings physical properties of mine waste materials grain size distribution density shear strength compaction characteristics hydraulic properties of possible cover materials geochemical properties of possible cover materials JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx Tier 2 July 2017 ED 002061 00087255-00288 Appendix C Appendix C: Authors' Credentials Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00289 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Authors' Credentials Appendix C Jeffrey V. Parshley, PG, CPG, NV-CEM Jeff Parshley is a Corporate Consultant with more than 35 years of environmental and closure experience in the mining industry including closure planning and closure cost estimates, environmental management planning, and environmental auditing. In addition to planning and analysis work for mines, he has also been involved in the management of several abandoned mines and implementation of actual closure works at several mines in the western United States. In 2014 Jeff was awarded the SME/AIME Environmental Conservation Distinguished Service Award for his work on the development of the Standardized Reclamation Cost Estimator (SRCE). His work on closure projects over the last 10 years has included development and use of facilitated workshop techniques as part of the stakeholder engagement process for mine closure planning. He has worked with legal and policy aspects of mining projects since his early career, regularly works on World Bank and IFC compliance projects and is also one of SRK's most experienced mine closure strategists and regulatory specialists. Through the World Bank, he has been advising the government of the Republic of Kazakhstan on mine closure and financial assurance aspects of their new mining law. He has contributed to the development of several regulatory guidelines for mine closure and closure cost estimating and assisted a number of clients develop corporate standards and guidance documents for closure planning, implementation and cost estimating. Jeff is a regular mine closure and closure cost estimating instructor for in-house workshops conducted for a number of mining companies and several U.S. government agencies. He developed numerous closure plans and cost models and taught related courses for clients, mining industry groups and regulatory agencies. He has worked on more than 100 international mine closure. In the early 2000s the mining industry and regulators in the State of Nevada joined to investigate the concept of a standardized approach to reclamation cost estimating which ultimately resulted in the creation of the SRCE model. Jeff was the principal creator and driver of this public domain software. Since the original release in 2004, Jeff has continued to volunteer his time to expand the capabilities of the model. In 2009, Jeff released an international version that is now being used by the industry globally in more than 30 countries. Since developing the original version of SRCE he has developed several derivative versions that combine financial security estimates with Life-of-Mine closure cost estimates and Asset Retirement Obligation cost estimates. John H. Pfahl John Pfahl is a mining engineer with over 15 years of global experience in the mining industry. He is a Corporate Advisory Consultant with SRK. Mr. Pfahl has expertise in strategic planning, business improvement, investment analysis, risk analysis, capital markets and project valuation in the mining field. His background activities include project and investment management, strategic evaluations, technical and commercial due diligence, technical studies, financial modeling, structuring and negotiating terms in mergers and acquisitions, mine planning and project finance for projects ranging from exploration through production and across a broad spectrum of commodities. Mark A. Willow, M.Sc., NV-CEM, SME-RM Mr. Willow is a Certified Environmental Manager (CEM) in the State of Nevada, with over 20 years of environmental experience related to the mining industry. Mr. Willow has a Bachelor's degree in JVP/JHP EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx July 2017 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00290 SRK Consulting Review of EPA's CERCLA 108(b) Cost Estimate Formula Appendix C Fisheries and Wildlife Management from the University of Missouri and a Master's degree in Environmental Science and Engineering from the Colorado School of Mines. As a CEM, Mr. Willow has been certified by the State of Nevada to officially handle matters concerning: the management of hazardous waste; the investigation of a release or potential release of a hazardous substance; the sampling of any media to determine the release of a hazardous substance; the response to a release or cleanup of a hazardous substance; or the of remediation soil or water contaminated with a hazardous substance. Mark routinely provides environmental due diligence and Qualified Persons evaluations of developmental phase and operational phase mines throughout the world, including small gold and copper mining projects in Panama and Senegal (West Africa), open pit and underground coal mines in Russia, large copper mines and processing facilities in Mexico, gold mining in the Philippines, and a mining/coking operations in China. This international experience crosses over to include the participation in the development and preparation of PEA, PFS, and BFS documents for such projects as: the Elk Creek Niobium Project PEA in Nebraska; the Paul Isnard Project PEA and BFS in French Guiana; the Miraflores Open Pit/Underground, Gold Project PEA and FS in Columbia, the Trinidad Project PEA in Mexico, and the Boa Esperanga Copper Project BFS in Brazil. For many of these projects, the documentation was required to be Nl 43-101 compliant, as well as in line with the Equator Principles. Mark's technical experience includes extensive site characterization and baseline data collection projects. Internationally, Mark has overseen the work scope implementation and provided senior review of local consultants performing baseline biological/ecological characterization for a number of projects, including the Reko Diq Project in Pakistan, Los Filos Project in Mexico, the Kazan Trona Project in Turkey, the Bellavista Gold Project in Costa Rica, the Pueblo Viejo Project in the Dominican Republic, and the Glamis San Martin Project in Honduras. Most of these projects involved the biodiversity impact analyses of sensitive aquatic and terrestrial wildlife habitat from both the existing and proposed mining operations. Mark draws upon this diverse background for his knowledge and experience as a human health and ecological risk assessor with respect to analyzing potential environmental impacts. JVP/JHP Sierra Club v. EPA 18cv3472 NDCA EPA-Formula-Critique_503400_010_JVP_20170711_.FNL.docx Tier 2 July 2017 ED 002061 00087255-00291 SS Specialization Expertise Employment 1988 - Present 1985 -1988 1981-1985 Publications Languages Resume Jeff Parshley, P.G. SRK Group Chairman and Corporate Consultant Profession Education Registrations/ Affiliations Corporate Consultant Dartmouth College, Hanover, NH, B.A. Geology, 1980 Registered Professional Geologist: Idaho, Oregon, California, Wyoming, Washington, Utah, Texas; AIPG Certified Professional Geologist; Nevada Certified Environmental Manager; Nevada Mining Association; California Mining Association; Northwest Mining Association; Society for Mining Metallurgy and Exploration; Geological Society of Nevada; 2011 Northwest Mining Association Presidents Award; 2014 AIME/SME Environmental Conservation Distinguished Service Award Mine closure and remediation, mine environmental studies, mine permitting, and environmental geochemistry Mr. Parshley has more than 35 years of project experience throughout the North America, Latin America, Australia, Asia, Europe and Africa, which includes mine permitting, environmental audits, feasibility and due diligence studies, mine closure design and permitting, liability assessments, reclamation and closure cost estimating, pit lake studies, mine waste studies and environmental geology. He has considerable experience in the permitting and closure of gold heap leach operations in the western U.S. and has lectured in the U.S., Latin America, Europe, Australia and Africa on mine closure planning and design. He regularly heads multi-disciplinary teams on projects ranging from environmental liability assessments to permitting to mine closure. He is currently carrying out a number of mine permitting, remediation and environmental geochemistry projects, a large underground mine expansion and several permanent mine closures. SRK Consulting (U.S.) Inc., Reno, Nevada. Group Chairman and Corporate Consultant Ore Deposits Research Group, Chevron Oil Field Research Company. Research Geologist Chevron Resources Company, Exploration Geologist Numerous publications on mine environmental issues, environmental geology and mine closure English JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00292 SRK Consulting Page 2 Jeff Parshley, P.G. Corporate Consultant Publications 1. "Attractive nuisances and wicked solutions"; in Mine Closure 2016 - A.B. Fourie, M. Tibbett (eds); JV Parshley and CS MacCallum; March 2016. 2. "2026 - The future environmental management and closure"; J.V. Parshley; Keynote Presentation, Prospectors and Developers Association of Candada Annual Meeting; March 2016. 3. "The Impact of Social Context on Mine Closure"; International Geological Correlation Program (UNESCO/IUGS/IGCP), Closing Workshop of IGCP/SIDA Projects 594 and 606; J.V. Parshley, B. Liber, H. VanVIanderen; May 2014. 4. "Mine Closure state of the practice in the world and where is it headed?"; EXPOSIBRAM 2013, Belo Horizonte, Brazil; JV Parshley; September 2013. 5. "The evolution of cyanide heap leach closure methods" in Mine Closure 2012 - A.B. Fourie, M. Tibbett (eds); J.V. Parshley, M.A. Willow, R.J. Bowell; September 2012. 6. "The types, uses and methods of mine closure cost estimates"; EXPOSIBRAM 2009, Belo Horizonte, Brazil; JV Parshley; September 2009. 7. "An evolution of the methods for and purposes of mine closure cost estimating"; in Mine Closure 2009 - A.B. Fourie, M. Tibbett (eds); J.V. Parshley, W. Baumann, D Blaxland; September 2009 8. "Geochemical evaluation of heap rinsing of the Gold Acres Heap, Cortez joint venture, Nevada"; Minerals Engineering; R.J. Bowell, J.V. Parshley, B. Upton, G. Zhan; Minerals Engineering, Vol. 22, Issue 5; April 2009 9. "The Evolution of Federal and Nevada State Reclamation Bonding Requirements for Hardrock Exploration and Mining Project"; White Paper for the Northwest Mining Association for submission to U.S. Congress; J. Parshley, D. Struhsacker; January 2008. 10. "Reclamation and Closure of Summer Camp Pit Lake, Nevada: A Case Study"; 7th ICARD; J. Parshley, R. Bowell, J. Ackerman; March 2006. 11. "Reclamation and Closure Assessment for the Summer Camp Pit Lake, Getchell Mine, Nevada"; EPA Pit Lakes 2004 Conference; J.V. Parshley, R.J. Bowell, J.B. Ackerman; November 2004. 12. "Control of pit-lake water chemistry by secondary minerals, Summer Camp pit, Getchell mine, Nevada"; Chemical Geology, R.J. Bowell, J.V. Parshley; June 2004. 13. "The Limnology of Summer Camp Pit Lake: A Case Study"; Mine Water and the Environment, Journal of the International Mine Water Association (IMWA); L. Fillipek, J.V. Parshley, R.J. Bowell. December, 2003. 14. "Lessons Learned from the Closure of the Yankee Heap Leach Pad, Bald Mountain Mine, Nevada: Prediction of Heap Flows and Chemistry During Long-Term Drainage"; Mining Life Cycle Center/UNR Heap Closure Workshop; J. V. Parshley, R. Buffington, M. Rykaart; March, 2003 15. "Water Management for Heap Leach Closure"; in "Water Management at Mines, Mills and Wasterock/Tailings Facilities - Planning for Construction, Operations and Closure"; Short Course for Tailings and Mine Waste 2002, Fort Collins, Colorado, January 27, 2002. J.V. Parshley. 16. "Pit Lake Characterization"; in "Water Management at Mines, Mills and Wasterock/Tailings Facilities - Planning for Construction, Operations and Closure"; Short Course for Tailings and Mine Waste 2002, Fort Collins, Colorado, January 27, 2002. J.V. Parshley. 17. "Mine Site Water Management"; in "Water Management at Mines, Mills and Wasterock/Tailings Facilities - Planning for Construction, Operations and Closure"; Short Course for Tailings and Mine Waste 2002, Fort Collins, Colorado, January 27, 2002. D.L. Bentel, J.V. Parshley. 18. "Water Management During Mine Closure"; in Rocky Mountain Mineral Law Institute, Proceedings of "Water Quality and Wetlands - Regulation & Management in the Development of Natural Resources" (RMMLF) Denver, Colorado January 24-25, 2002. L. A. Kirschner, J. V. Parshley 19. "Heap Leach Closure"; J.V. Parshley; United States Department of Agriculture, Forest Service, Advanced Mineral Training; September 2001. 20. "Mine Closure Auditing"; J.V. Parshley; United States Department of Agriculture, Forest Service, Advanced Mineral Training; September 2001. 21. "Environmental Geochemistry of Heap Leach Closure"; J.V. Parshley, R.J. Bowell; The 20th International Geochemical Exploration Symposium (IGES); May 2001. 22. "Wasterock Characterization and Management: A Case Study from New Mexico"; R.J. Bowell, J.V. Parshley; The 20th International Geochemical Exploration Symposium (IGES); May 2001. 23. "Arsenic Cycles in a Mining Environment"; R.J. Bowell, J.V. Parshley; U.S. EPA Workshop on Managing Arsenic Risks to the Environment: Characterization of Waste, Chemistry, and Treatment and Disposal; May 1-3, 2001; Sponsored by U.S. EPA Office of Research and Development. JP/AO SRKUS_Parshley_Resume_January_2017.docx October 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00293 SRK Consulting Page 3 Jeff Parshley, P.G. Corporate Consultant 24. "Long Term Prediction of Heap Draindown Chemistry"; J.V. Parshley, R.J. Bowell; University of Nevada Mining Lifecycle Center, Heap Closure Seminar Series; April 2001. 25. "Comparison of Heap Draindown from Closed Mines"; J.V. Parshley; University of Nevada Mining Lifecycle Center, Heap Closure Seminar Series; February 2001. 26. "Geochemical Predictions of Metal Leaching and Acid Generation: Geologic Controls and Baseline Assessment"; in Cluer, J.K., Price, J.G., Struhsacker, E.M., Hardyman, R.F., and Morris, C.L., eds., Geology and Ore Deposits 2000: The Great Basin and Beyond: Geological Society of Nevada; Symposium Proceedings, Reno/Sparks, May 2000, p. 799-823. R.J. Bowell, S.B. Rees, J.V. Parshley; 2000. 27. "The Ten Mile Mining District, Winnemucca, Nevada: Geology, Mineralogy and Supergene Gold Enrichment"; in Cluer, J.K., Price, J.G., Struhsacker, E.M., Hardyman, R.F., and Morris, C.L., eds., Geology and Ore Deposits 2000: The Great Basin and Beyond: Geological Society of Nevada; Symposium Proceedings, Reno/Sparks, May 2000, p. 799-823. R.J. Bowell, M.P. Hunerlach, J. Parshley, S. Sears; 2000. 28. "Geochemical Evolution of Pit Lake Water Chemistry: A Case Study From The Getchell Mine, Nevada, USA"; J.V.Parshley, R.J.Bowell, L.Fillipek, J.Barta, W.Mansanares; 2000; EPA Pit Lake Conference. 29. "Operational and Design Considerations to Facilitate Mine Closure"; J. Parshley, D. Bentel; 1999; SEM Annual Meeting. 30. "Design and Operational Practice to Aid Closure of Heap Leach Facilities"; J. Parshley, D. Bentel, D. Ortman; 1999; Proceedings of Nevada Mining Association Heap Leach Closure Seminar. 31. "Geologic Controls on Pit Lake Chemistry: Implications for the Assessment of Water Quality in Inactive Open Pits"; R.J. Bowell, J. Barta, M. Gringrich, W. Mansanares, and J. Parshley; 1998; International Mine Water Association Symposium Proceedings. 32. "Closure and Reclamation Success at Echo Bay's Borealis Mine"; S. Botts, D. Bentel, J. Parshley; 1995, Nevada Mining Association Mine Closure Conference. 33. "Application of Mine Planning and Modeling Tools to the Development of Mine Waste Management Plans"; J. Parshley; 1994; SME Annual Meeting. 34. "An Integrated Approach to Mine Design for Construction, Permitting and Closure"; J. Parshley; 1993; paper presented to members of the Chemical Lime Industry. 35. "Design and Permitting for Underground Stratigraphic Deposits - A Case Study"; J. Parshley; 1991; paper presented to Gemcom Users Group, Vancouver, B.C. JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00294 SRK Consulting Page 4 Jeff Parshley, P.G. Corporate Consultant Key Experience: Mine Closure and Closure Cost Estimating Mr. Parshley has worked on numerous mine closure projects in the Americas and Europe for more than 25 years. His work varies from mine closure planning and cost estimating to directing closure design and implementation teams. He is the primary author of the Nevada Standardized Closure Cost Estimator (SRCE) model developed as a joint project of the Nevada mining industry, the U.S. Bureau of Land Management (BLM) and the Nevada Division of Environmental Protection (NDEP) to standardize closure cost estimating procedures. Continuing work on the SRCE has included and international version and a proprietary derivative version being used by SRK and a major client for the calculation of closure cost estimates for long term planning and financial reporting He regularly lectures to industry, government agencies and international organizations on mine closure issues. Recent project experience includes: Kumtor Gold Mine, Kyrgyzstan Developed closure plan update for the second highest gold mine in the world (4300 m). Included closure planning, social closure planning, evaluation of stability of geotechnical structures, closure cover design, revision of closure design criteria, surface water management, facilitating a closure risk assessment workshop, and preparation of closure costs. Maricunga Mine, Chile Developed updated closure plan for highest gold mine in the world (4500 m). Included detailed assessment of closure cover alternatives, high altitude conditions, snow accumulation, environmental impacts to sensitive wetlands, geochemistry of mine wastes, and closure costs. Included development of detailed schedule for closure of the heap leach pad. Pontifica Universidad Catolica de Valparaiso International instructor on closure costs for graduate program in mine closure entitled: Postitulo Cierre de Faenas Minerari World Bank, Kazakhstan Comparative analysis of financial mechanisms for environmental and social sustainability of mine sites after closure in Kazakhstan. Recommendations for revision to mining law to conform with good international practice on mine closure planning and financial assurance for social and technical closure. Vale, Brazil Expert advice on the development of and integrated land use planning, stakeholder, closure strategy, closure plan system for large mining company. Rio Tinto - Kennecott Utah Copper Corporation, Utah Third-party review of closure plan and supporting technical documentation for large copper mine and processing facilities. Suralco, Suriname Integrated land use planning, stakeholder, closure strategy, closure risk assessment, and closure plan development for country-wide bauxite mine closure initiative including five pilot sites Udokan Mine Closure Plan, Russia Closure strategy workshops, risk assessment, closure plan development, closure cost estimate for FS and ESIA for large, open pit copper mine in Far East Russia Kettle River Mine Closure Planning, Washington Closure strategy workshops for open pit and underground pit copper mine in Washington, USA JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00295 SRK Consulting Page 5 Jeff Parshley, P.G. Corporate Consultant Tonkolili Mine Closure Cost Estimate, Sierra Leone Closure strategy review and ARO cost estimate for iron ore mine in Sierra Leone Rosbery Mine Closure Cost Estimate, Australia Closure strategy review and cost estimate for gold mine in Tasmania, Australia Qopler Mine Closure Plan, Turkey Closure plan development, closure cost estimate for FS, open pit gold mine in Turkey Oksiit Mine Closure Plan, Turkey Closure plan development, closure cost estimate for PEA, open pit gold mine in Turkey Long Canyon Mine Closure Plan, Nevada Closure plan development for open pit gold mine in Nevada, USA Hemerdon Tungsten Mine, England Closure plan development, closure cost estimate for permitting, open pit tungsten mine in Cornwall Lumwana Mine Closure Plan, Zambia Closure strategy workshops, risk assessment, closure plan development, closure cost estimate for large, open pit copper mine Jabal Sayed Mine Closure Plan, Saudi Arabia Closure plan and cost estimate development underground copper mine Polyus Gold Operational Closure Plans (5 sites), Russia Closure plan audits, closure plan and cost estimate for 4 operating gold mines and one greenfield project in Siberia ENRC, Kazakhstan Audited closure and post-closure liability estimates for financial reporting as part of IPO. Santa Fe/Calvada Mine, Nevada Closure plan audit Development of new closure plan to address unresolved issues Closure Plan and Cost Estimates (4 sites), Tanzania Closure plan and cost estimate development for two open pit and two underground gold mines Developed to meet new regulatory requirements and corporate standards Pueblo Viejo Mine Closure Plan, Dominican Republic Closure plan development for large open pit gold mine redevelopment project Closure strategy development for historic mining disturbances associated with major redevelopment of a gold mine Cerro Casale Mine Closure Plan, Chile Mine closure planning and cost estimate for prefeasibility study, feasibility study and ESIA for the greenfield coppergold project near Copiapo Chile Hycroft Mine Closure and Reclamation Plans, Nevada Mine closure and reclamation plan and cost estimate for redevelopment of existing gold mine in northwest Nevada Fedorovo Platinum Mine Closure Plan, Russia Mine closure planning and cost estimate for feasibility study and ESIA for the Fedorovo greenfield project in the southern Kola Peninsula, Russia JP/AO SRKUS_Parshley_Resume__January_.2017.docx October 2016 Sierra Club v. 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Corporate Consultant Reko Diq Copper/Gold, Pakistan Mine closure planning and cost estimate for feasibility study and ESIA for the greenfield copper-gold project in northwest Pakistan The site is located in the desert region of Baluchistan Sedibelo Platinum Mine Closure Plan, South Africa Mine closure planning and cost estimate for the Sedibelo greenfield platinum project in South Africa The site is located in the Bushveld Complex and immediately adjacent to the Pilanesburg National Game Park Qayeli Bakir iuletmeleri A.U./Inmet Mining, Qayeli, Turkey Developed updated, comprehensive mine closure plan and cost estimate for the Qayeli and Cerattepe underground massive sulfide mines including the mines, concentrating plant, loading/unloading facilities, and marine port Donlin Creek, Alaska Mine closure plan and cost estimate for the Donlin Creek gold project in Alaska for use in the Prefeasibility and Feasibility study Barrick Australia Pacific, Australia Performed closure plan risk assessments for 14 mine sites in Australia and PNG Prepared detailed closure cost estimates for each mine site Developed proprietary cost estimating model for ARO calculations Assisted with development of corporate closure plan format guidelines Confidential Client, Kazakhstan Audited clients closure cost estimates to determine compliance with international industry standards, Kazakh law and international financial reporting requirements for AROs Confidential Client, North America Prepared conceptual plan for prefeasibility and feasibility studies on remote mine site Prepared detailed closure cost estimate suitable for prefeasibility and feasibility studies Barrick North America, Various Sites, Western USA Prepared detailed ARO closure cost estimates for each mine site Barrick North America, Puffy Lake, Manitoba, Canada Development of a detailed closure cost estimate for historic mining site Pueblo Viejo, GODR, Dominican Republic Reviewed proposed closure approach Updated closure cost estimate for four separate scenarios Standard Mine, Jipangu Inc., Nevada, USA Updated closure plan to incorporate mine expansion Prepared detailed closure cost estimate including long-term water management Hycroft Mine, Allied Nevada, Nevada, USA Performed closure plan risk assessments for modern gold mine Assisted client in permitting closure plan and new mine expansion Prepared detailed closure cost estimate including long-term water management Cortez Mine, Barrick Cortez JV, Nevada, USA Developed detailed closure plan including evaluation of alternative closure methods JP/AO SRKUS_Parshley_Resume__January_.2017.docx October 2016 Sierra Club v. 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Corporate Consultant Prepared detailed closure cost estimate including long-term water management Prepared closure plan documents for regulatory submittal Nevada Mining Association (in cooperation with NDEP and BLM), Nevada, USA Development of a standardized closure cost estimating spreadsheet model to be used by all mines in Nevada for regulatory closure cost estimates CR Briggs Mine, Canyon Resources, California, USA Developed conceptual and detailed closure strategy including evaluation of alternative closure methods Final design and permitting Yanacocha Mine - Minera Yanacocha SRK, Peru, SA Detailed closure strategy including evaluation of alternative closure methods Closure cost estimate based on detailed closure strategy Quiruvilca Mine - Pan American Silver, Peru, SA Detailed closure strategy including evaluation of alternative closure methods Closure cost estimate based on detailed closure strategy Morococha Mine - Pan American Silver, Peru, SA Assessment of closure liabilities and preliminary closure plan Closure cost estimate Elder Creek Mine - Bureau of Land Management/U.S. Army Corps of Engineers Mine waste characterization and geochemistry Heap characterization Site-wide closure design and costing Detailed closure design and construction management Gooseberry Mine - Bureau of Land Management Mine waste characterization and geochemistry Heap leach closure design and costing Detailed closure design and construction management Yankee Mine - Placer Dome (U.S.) Inc., Nevada, USA Closure of heap leach pad Silvermines District - Department of Marine and Natural Resources, Republic of Ireland Geochemical studies (ARD), closure liability assessment and planning of historic mining district Bulyanhulu Mine - Kahama Mining Corporation Limited (Barrick), Tanzania Closure plan and cost development for new gold mine Los Pelambres - Minera Los Pelambres, Chile Closure planning for three large tailings impoundment's during original design Evaluation of alternatives for construction, operational and closure cost considerations BHP Robinson - BHP-Billiton, Nevada, USA Closure studies, mine waste characterization, pit lake studies, closure planning and cost estimation JP/AO Sierra Club v. 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Corporate Consultant Borealis Mine - Echo Bay Mining Company, Nevada, USA Closure planning and implementation of three large heap leach pads, four open pits (one pit lake) and waste rock dumps Atlanta Gold Project - Twin Mining Corporation, Idaho, USA Development of closure plan for heap leach pads, waste rock dump and pit lake Brewery Creek - Viceroy Gold Corporation, Yukon Territories, Canada Closure planning of heap leach pad in sub arctic environment Getchell Mine - Getchell Gold Corporation (Placer Dome), Nevada, USA Pit lake studies, geochemistry, closure design and cost estimation for open-pit/underground mine with waste rock dumps, pit lakes, heap leach pad and tailings impoundment Pipeline Mine - Cortez Joint Venture (Placer Dome), Nevada, USA Closure planning and cost estimating for large open-pit gold mining operation Leviathan Mine - ARCO, California, USA Closure site assessment and options analysis for historic mine with waste rock dumps and open pit. Marquez Mine - Keys pan Energy Corporation, New Mexico, USA Closure planning, permitting and implementation for underground uranium mine and process facilities Toiyabe Mine - Cortez Joint Venture (Placer Dome), Nevada, USA Closure design, cost estimating and implementation for two heap leach pads, waste rock dumps and open pits Tonkin Springs Mine - Nevada Contact, Nevada, USA Closure options study, ARD geochemistry, pit lake study, permitting, cost estimating, closure plan implementation Griffon Mine - U.S. Forest Service - Alta Gold Company Bankruptcy, Nevada, USA Closure design, management and implementation of heap leach pad, open pits, process facilities and waste rock dumps Tonopah Mine - Equatorial Minerals, Inc., Equatorial Minerals, Inc. Waste rock dump characterization (ARD) and pit lake study for closure design and costing Mineral Ridge - St. Paul/USF&G Insurance Company (Bankruptcy), Nevada, USA Closure liability audit, detailed closure design and cost estimation for heap leach pad, waste rock dumps and open pits Pinos Altos Mine - Cyprus Metals Corporation, New Mexico, USA Closure design, permitting and implementation of underground copper mine and tailings impoundment Copper Flat Mine - Alta Gold Company, New Mexico, USA Technical studies, closure design, closure permitting and cost estimation for pit lake, ARD waste rock and tailings impoundment Conquista Uranium Mine, Conoco, Texas Strategic planning for final closure of uranium mine and mill and future transfer of site to U.S. Department of Energy Camden Titanium Sands Project, Mineral Recovery Systems, Tennessee Designed mine closure for grassroots titanium sands operation in western Tennessee, including stormwater controls, wetland mitigation and closure cost estimating JP/AO SRKUS_Parshley_Resume__January_.2017.docx October 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00299 SRK Consulting Page 9 Jeff Parshley, P.G. Corporate Consultant Yerington Mine, Nevada Division of Environmental Protection, USA Mine closure management including operational solution management, hazardous waste assessment, water balance studies, passive closure management design and closure cost estimating JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00300 SRK Consulting Page 10 Jeff Parshley, P.G. Corporate Consultant Key Experience: Mine Permitting and Mine Environmental Studies Mr. Parshley has worked on mine permitting and mine environmental study projects throughout the western U.S. since the mid-1980's. This work has included preparation of Plans of Operation, Reclamation Plans, NEPA documents, Groundwater Protection Permits, NDPES permits, 404 Permits, closure plans and numerous environmental studies prepared as part of or in support of various permit applications. He regularly heads multidisciplinary teams preparing a wide variety of environmental and planning documents for mining projects in the western U.S. He is also one of SRK's most experienced environmental auditors for due diligence and environmental liability audits in North and South America. He has worked for mining companies, government agencies, financial institutions, and insurance companies. Recent project experience includes: Long Canyon, Nevada, USA SRK is preparing specialist technical studies in preparation for permitting of a greenfield gold mine Preparing closure plan and cost estimate for feasibility study Lumwana Mine, Zambia SRK conducted specialist environmental studies in preparation for development of an ESIA Studies will be summarized for inclusion in the project prefeasibility study Pueblo Viejo, PVDC (Barrick), Dominican Republic SRK oversaw the baseline studies, stakeholder consultation and EIA development for a new power plant and transmission line for the Pueblo Viejo gold mine in the DR. Both national and international (IFCAA/orld Bank) standards were met on a short schedule through use of rapid assessment techniques Yerington Mine, Singatse Peak Services, Nevada, USA SRK is assisting SPS in their efforts to evaluate future mineral potential of a previously abandoned mining property in western Nevada. SRK has conducted environmental studies, prepared exploration permit applications, developed engineering and water management plans, and evaluated the economic potential of the site. Complicating this project is the fact that the USEPA has ongoing CERCLA actions as the result of a previous operator. This has required coordination between the client and both state and federal regulators. Reko Diq Copper/Gold, Tethyan Copper (Barrick/ Antofagasta JV), Pakistan SRK conducted specialist environmental studies, prepared the ESIA and closure plan, and assisted in the preparation of the feasibility study for Tethyan Copper's large greenfield copper gold project in northwest Pakistan Fedorovo Platinum Mine Closure Plan, Russia SRK oversaw the preparation of the ESIA, OVOS (Russian requirement), specialist environmental studies, closure plan, and assisted in the preparation of the feasibility study for Barrick's greenfield platinum project in the southern Kola Peninsula, Russia Mt. Hope, General Moly Inc., Nevada, USA SRK conducted geochemical and mine waste studies in support of permitting and environmental analysis documents for a very large, greenfield molybdenum mine in north-central Nevada. The work included a geological and geochemical assessment of future mine waste, geochemical characterization of tailings, pit wall geochemistry, preparation of a waste rock management plan and completion of a pit lake study to assess the future pit lake chemistry Round Mountain Mine, Round Mountain Gold Corporation, Nevada, USA SRK assisted RMGC in updating various mine permitting documents including completion of several environmental studies. This work included a waste rock and heap leach charactization program, closure cover design modeling, an update to the waste rock management plan, ore stockpile characterization and completion of a new Water Pollution Control Permit application including all accompanying operating and environmental management plans JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00301 SRK Consulting Page 11 Jeff Parshley, P.G. Corporate Consultant Cortez Hills Plan of Operations, Cortez Joint Venture, Nevada, USA SRK was contracted to prepare the Plan of Operation for the Cortez Hills Modification to the Pipeline Plan of Operations. Jeff Parshley is the Project Principal for this project and responsible for quality assurance/quality control of technical deliverables, and overall successful execution of the project Coeur Rochester Expansion EIS, BLM/Coeur d'Alene Mines Corporation, Nevada, USA SRK is preparing the EIS for a final mine expansion and closure of the Coeur Rochester mine in Nevada. The work has included compilation of work baseline prepared by others, preparation of project alternatives, assessment of potential environmental impacts from the various alternatives Los Filos Gold Mine, Mexico SRK was contracted to prepare the ESIA in conformance with Mexican regulations and international standards. The work included baseline studies, impact analysis, public consultation, closure planning, development of environmental management plans and environmental liability cost estimation Millennium Expansion SEIS, Glamis Gold Mining Company, Nevada, USA SRK was contracted to prepare the third-party Supplemental EIS for the Millennium Expansion Project at the Marigold Mine. Jeff Parshley was the Project Principal for this project and was responsible for quality assurance/quality control of technical deliverables, and overall successful execution of the project. Jeff assisted the Project Manager with the evaluation of the Project compliance with regulatory requirements and the procedural requirements of NEPA. In addition to his role as Project Principal, Mr. Parshley was also responsible for technical sections regarding Geology and Minerals, Water Quality and Quantity, and the assessment of the heap closure and reclamation AMAX Gold Company, Hayden Hill Mine, Susanville, California. Jeffs primary responsibilities were review of project geology and the proposed mining operations with respect to environmental impacts and assist the project manager in coordinating Reno project personnel. A number of design alternatives for the mining operations were proposed requiring assessment of both environmental and operational impacts. The dump design, haul road placement and pit reclamation alternatives were reviewed in detail to determine the impact on geologic and economic resources and reclamation. These assessments were incorporated into the EIR/EIS and the Reclamation Plan. Jeff was also responsible for the assessment of areal disturbance to local resources by the project Getchell Mine Plan of Operation, Reclamation Plan, EAs, Water Pollution Control Permit, Getchell Gold Inc., Nevada, USA Detailed permitting for expansions and closure of the historic, operating and future facilities at the Getchell Mine began in 1995. Since that time, SRK has been working on permitting efforts and related technical studies to support the permitting efforts. SRK's work has involved geochemical and geologic studies, geotechnical investigations, detailed engineering designs, ecological risk assessment, phytotoxicity studies, permitting, and NEPA analyses Tenmile Plan of Operation, Reclamation Plan and EA, Chemical Lime Company, Idaho, USA Jeff was responsible for managing the mine design and permitting for a high grade limestone mine under development near Soda Springs, Idaho. Cold winter conditions at the site were a major consideration for the design, scheduling and environmental analysis of the project. Jeffs technical responsibilities on the projects were: review of existing geologic data, evaluation of the environmental impacts from various mine designs, and preparation of the reclamation plan This work led to a mine design which has minimized the environmental impacts without sacrificing the economic viability of the project. As a result, the project was permitting in six months, the reclamation plan was accepted as initially submitted, the mine opened on schedule and the design work was completed within budget. Jeff also provided liaison with the Idaho Department of Lands, Idaho Fish and Game, Department of Environmental Quality and the BLM during the NEPA process Cricket Mountain Plan of Operation, Reclamation Plan and EA, Graymont, Utah, USA SRK assisted Greymont on two separate mine expansion projects or the Cricket Mountain limestone mine in central Utah. During this work SRK prepared a number of planning and state and federal permitting documents. SRK's work included reclamation design, plan modifications, NPDES stormwater permitting and EA preparation. In the role of JP/AO SRKUS_Parshley_Resume_January_2017.docx October 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00302 SRK Consulting Page 12 Jeff Parshley, P.G. Corporate Consultant prime environmental contractor for the operator, SRK was responsible for subcontractor work including biological, cultural and socioeconomic studies Toiyabe Mine, Cortez Joint Venture (Placer Dome), Nevada, USA SRK, under Jeffs oversight, conducted the investigation, site characterization, closure design, permitting cost estimating and construction for two heap leach pads, waste rock dumps and open pits. This also included preparing closure permit documentation and a new NEPA analysis of the closure plan Tonkin Springs Mine, Nevada Contact, Nevada, USA Over a period of three years, SRK conducted a number of environmental studies, designed and implemented mitigation for a number of environmental concerns, and prepared updated permit documents for all of the major permits for the Tonkin Springs Mine. When SRK first became involved none of the project disturbance was reclaimed, the site water balance was unmanageable, stormwater plans were inadequate, and a number of permits had lapsed or expired. SRK conducted a number of critical technical studies on an accelerated schedule and provided the client and regulators with recommendations on all of the key issues ahead of the project schedule. As the client implemented the recommended actions, most of the key environmental concerns were mitigated within one year. SRK's work include, a hydrogeology study, reclamation planning, closure options study, ARD studies, water balance, geochemistry, pit lake study, closure permitting, cost estimating, exploration permitting, and NEPA analysis Yankee Mine, Placer Dome (U.S.) Inc., Nevada, USA SRK prepared the detailed closure design, permit documents and the EA for the closure of Yankee heap leach pad at Bald Mountain Mine in northern Nevada. The primary concerns were the characterization of mine waste, geochemical behaviour of the heap leach pad, hydrogeology and groundwater quality, long-term ecological impacts and phytotoxicity. SRK also prepared the EA for the closure design for the BLM, Ely Field Office Pinos Altos Mine, Cyprus Metals Corporation, New Mexico, USA Closure design, permitting and implementation of underground copper mine and tailings impoundment The Cyprus Pinos Altos Mine ceased operations in 1995. The underground mine and associated tailings impoundment required closure under the new regulations in New Mexico. The underground mine was sealed and the support facilities removed. The tailings impoundment, located near a leased mill facility 60 miles from the mine, will be closed once the proposed closure design has been approved by the regulatory agencies. Jeff managed the technical team responsible for developing final closure plans and post-closure environmental management plans for both sites. His specific duties included agency and client liaison, and primary authorship of the closure and environmental management plans Copper Flat Mine, Alta Gold Company, New Mexico, USA Technical studies, closure design, closure permitting and cost estimation for pit lake, ARD waste rock and tailings impoundment. Jeff was responsible for assisting Alta through the Federal and State permitting process. This project will be the first major new mine permitted under New Mexico's new Mining Act. The environmental issues of concern are groundwater and surface water protection, ARD potential, post-mining pit water chemistry, tailings seepage, wildlife habitat and reclamation. SRK's technical work on the project includes hydrology, hydrogeochemistry, mine waste and tailings engineering, dump design, and reclamation and closure planning Pipeline Project, Cortez Gold Mines, Nevada, USA Cortez Gold Mines expanded the Pipeline Mine to include new gold reserves discovered south of the Pipeline deposit. SRK was retained to develop the plan of operations and reclamation plan for permitting the expansion with the BLM and Mining Regulation Bureau of the NDEP. Jeffs work as project manager and primary author has included development of the operating and reclamation plan, agency liaison, senior review and coordination with the third-party EIS contractor. Since the completion of the South Pipeline permitting, several modifications to the Plan of Operation have been prepared by SRK along with several Supplemental EAs Northumberland Mine, Western States Minerals Corporation, Nevada, USA The Northumberland Mine was required to revise and existing reclamation plan to comply with new Nevada regulations. The work was performed on a compressed schedule and required Jeff to review operational records and numerous previous environmental documents. The regulatory climate on the project required extensive knowledge of the project and regulations, and considerable liaison skills. Despite the demanding project schedule and JP/AO SRKUS_Parshley_Resume__January_.2017.docx October 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00303 SRK Consulting Page 13 Jeff Parshley, P.G. Corporate Consultant atmosphere, Jeff was able to lead a team which provided the client with a plan which skilfully delineated their regulatory obligations The reclamation plan included stability analysis of angle of repose waste rock dumps and heap leach pads, provisions for future mining potential, stabilization of a failing waste rock dump, and revegetation of waste rock dumps without topsoil. Jeff acted as primary author and managed a team of fifteen technical specialists in preparing the reclamation plan in four weeks. This plan was later used to revise the operating plan required by the Forest Service Confidential Study, Pennsylvania, U.S. Jeff managed a team of technical specialists in reviewing the available data and permitting constraints for the expansion of a large silica deposit. The goal of the project of was to determine the existence of possible fatal flaws, either technical or regulatory which would preclude the development of a profitable mine expansion. The work included review of geologic data, sand quality data, slope stability studies, acid generating and metal leaching potential, preliminary wetlands evaluation, operational methods and alternatives, and applicable regulations for operation and closure Cosgrave Project, Chemstar Lime Company, Nevada, USA Jeff was responsible for managing development of the mine plan and reclamation plan used during the NEPA process. The mine design was optimized to maximize the reserves utilizing economic optimization, blending strategies, and strategic sequencing while minimizing the impacts of permitting and reclamation. As co-author of the Plan of Operation and Reclamation Plan, Jeff was responsible for determining the effects of the mine design on the geologic resources and the environment. He also reviewed the proposed plan and evaluated the impacts of different alternatives on the environment. Several recommendations were made which eliminated or reduced the environmental impacts while increasing the profitability of the project. The proposed 12 mile haul road accessing the property required additional permitting through the Army Corps of Engineers, Nevada Department of Transportation, and the Nevada Division of Environmental Protection. Jeffs liaison work with the BLM and State was critical to developing an operating plan and reclamation plan which fulfilled the objectives of both the regulatory agencies and the project proponent. The reclamation plan was the first one approved for a mining operation under the Nevada NAC 519A regulations Mule Canyon Mine, Gold Fields Mining Company, Nevada, USA A multi-disciplinary SRK team, under the project management of Jeff, was selected to redesign the reclamation plan for Gold Fields' Mule Canyon Mine to comply with Nevada and BLM regulations after the NEPA ID team raised issues regarding the proposed design. This work required the development and permitting of a new reclamation plan which involved: a complete redesign of the mine waste handling plan; an evaluation of operational methods and reclamation alternatives; a review of the existing data for slope stability, acid generating potential, revegetation potential; and participation in regular meetings with the NEPA ID team Zaca Mine, Western States Minerals Corporation, California, USA SRK assisted Western States in evaluating the environmental impacts and permit requirements for the Zaca Mine project in Alpine County, California. Jeff was responsible for managing a diverse team of specialists in the evaluation of key issues such as acid generation, reclamation and heap leach pad closure in the context of required Federal, state and local permits. Permitting compliance and regulatory liaison work has included meetings and correspondence with the U.S.F.S., Lahontan RWQCB staff, and other state and local agencies JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00304 SRK Consulting Page 14 Jeff Parshley, P.G. Corporate Consultant Key Experience: Due Diligence and Environmental Liability Audits Mr. Parshley had conducted due diligence and environmental liability audits on numerous mines in North America. He has worked for financial institutions, corporate clients, insurance companies and government agencies. Mr. Parshley has conducted liability audits on metal mines numerous industrial mineral properties. He has worked on large due diligence teams providing valuation assessments for large corporate mergers. He recently headed the team that evaluated 13 of the Alta Gold sites during bankruptcy proceedings. Recent project experience includes: Confidential Client, Underground Copper Mine Redevelopment, Nambia Review of applicable environmental regulations Review of all technical, regulatory and monitoring documents for the site Risk assessment of all permitting and closure aspects for site development. Confidential Client, Western U.S. Oversaw environmental liability review sof three closed mine sites in three western states Included review of permitting conditions, evaluation of future permitting liabilities Review of site closure actions and future closure costs SUEK Coal Due Diligence, SUEK Coal Company, Siberia, Russia Oversaw team of six environmental specialists preparing environmental and closure portions of due diligence audit for 39 active coal mines in southwest Siberia Review of Russian environmental regulations and corporate environmental policies Review of all technical, regulatory and monitoring documents for the site Confidential Client, Latin America Oversaw a team of six professionals conducting environmental and closure portions of due diligence audit for several active base metal mines and mineral processing facilities in Latin America Review of applicable environmental regulations and corporate environmental policies Review of all technical, regulatory and monitoring documents for the sites SUEK Coal Due Diligence, SUEK Coal Company, Siberia, Russia Conducted environmental and closure portions of due diligence audit for five active coal mines in southwest Siberia Review of Russian environmental regulations and corporate environmental policies Review of all technical, regulatory and monitoring documents for the site Hycroft Mine Environmental & Closure Due Diligence Audit, Canyon Resources Conducted environmental and closure portions of due diligence audit for northern Nevada gold mine Review of all technical, regulatory and monitoring documents for the site Conducted confirmation sampling program for ground and surface water Closure cost estimating was a key component of the work performed as part of a due diligence Copper Mine Due Diligence Audit, Confidential Client, Mexico Oversaw the environmental portion and prepared the closure portions of due diligence audit for a small underground copper mine in northern Mexico. Work included review of site reports and key environmental documents and assessment of reasonable closure costs. Environmental Due Diligence Audit, Confidential Client, Brazil Conducted environmental and closure portions of due diligence audit for two active and two planned mining operations in western Brazil. Work included two weeks of site visits and audits, review of all technical, regulatory and monitoring documents for the four sites. Two were copper-gold deposits and two were gold cyanide leach projects. Closure cost estimating was a key component of the work performed as part of a due diligence for an investment banking consortium JP/AO SRKUS_Parshley_Resume_January_2017.docx October 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00305 SRK Consulting Page 15 Jeff Parshley, P.G. Corporate Consultant Morococha Mine Due Diligence Audit, Pan American Silver, Peru Conducted environmental and closure portions of due diligence audit for portions of the Morococha mining district in Peru. Work included definition of conceptual closure options for all facilities, closure cost estimating and evaluation of long-term water treatment requirements Standard Mine Prefeasibility Study, Apollo Gold, Inc., Nevada USA Prepared the environmental, permitting and closure portions of a prefeasibility study for Apollo Gold's Standard Mine in northern Nevada. The work included schedule and cost estimating for permitting, environmental studies, environmental management and closure Closure Liability Audit, Confidential Client, USA Prepared assessment of closure risks and costs at mine site in northern Nevada. Reviewed closure designs, monitoring data to determine current conditions, and evaluated future permitting requirements. Final product was a closure risk assessment with associated cost analysis Closure Liability Assessment, Various Properties, Confidential Client, USA Conducted assessment of closure liabilities at four gold mines in the western U.S. Reviewed compliance history, local regulations, closure plans and closure costs Due Diligence Audit, Confidential Client, USA Prepared environmental portion of due diligence audit for major gold company merger. Work included review of all permitting requirements, environmental management systems, compliance, future permitting plans, closure designs and costs Environmental Liability Audit, Confidential Client, USA Prepared assessment of long-term risks and financial liabilities of tailings facility at mine site in northern Nevada. Evaluated long-term risks and costs Mineral Ridge - St. Paul/USF&G Insurance Company (Bankruptcy), Nevada, USA Closure liability audit, detailed closure design and cost estimation for heap leach pad, waste rock dumps and open pits Environmental Liability Audit, Confidential Client, USA Prepared assessment of long-term risks and financial liabilities at mine site in northern Nevada. Evaluated current conditions, future permitting requirements, compliance history, and closure plans and costs GoldCo Merger Due Diligence Study Assessed the environmental issues at two properties in Mexico. The local regulations, permits, operating plans and closure designs were reviewed in detail. Based on this review Jeff prepared a report addressing the current status, and present and future liabilities associated with permitting, environmental issues and mine closure Environmental Liability Audit, Confidential Client, USA Prepared assessment environmental liabilities at mineral processing and mine waste disposal facilities in northern Nevada. Evaluated future permitting requirements, compliance history, and closure plans and costs Anglo Gold Corporation, Due Diligence Study Reviewed the environmental compliance, permitting status, and environmental feasibility of the U.S. properties, Jerritt Canyon (Nevada) and Cripple Creek (Colorado). The work included a thorough review of all historical environmental records for the site, an assessment of the current status of all environmental permits, an evaluation of likely future requirements, and a review of the closure plans and cost estimates. The resulting evaluations were included in the cash flow evaluation and final Competent Persons Report for the shareholders Alta Gold Bankruptcy, Frontier Insurance Company Assessed closure and environmental liabilities associated with 9 bankrupt properties. The work included review of current environmental condition of the sites, preparation of preliminary closure plans for cost estimating and JP/AO SRKUS_Parshley_Resume__January_.2017.docx October 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00306 SRK Consulting Page 16 Jeff Parshley, P.G. Corporate Consultant assessment of long-term risks Alta Gold Bankruptcy, AIG Insurance Company Determined the environmental and closure liabilities for two operating properties and several exploration properties in northern Nevada following the bankruptcy of Alta Gold JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00307 SRK Consulting Page 17 Jeff Parshley, P.G. Corporate Consultant Key Experience: Industrial Minerals Mr. Parshley is one of SRK's most experienced consultants to our industrial minerals clients. He has worked on permitting, mine design, environmental study and mine closure projects for industrial minerals projects throughout North America. His industrial minerals project experience includes work on silica sand, specialty clay, limestone, feldspar, aggregate, cement, titanium sands and gypsum projects. Recent project experience includes: Crystal Pass Cement Company, Crystal Pass Project, Clark County, Nevada, U.S. SRK is assisting Crystal Pass Cement Company with permitting and environmental studies for a large cement quarry operation near Las Vegas, Nevada. The project will be the largest cement operation in the area and is being developed in critical habitat of the desert tortoise. The project is being developed on both public lands and Native American Tribal Lands. Jeff is the Project Principal for the project and responsible for developing the permitting strategy, closure plans, and agency negotiations U.S. Silica Company, Berkeley Mine, Berkeley Springs, West Virginia, U.S. The Berkeley Mine is one of the oldest major silica mines in the United States and one of U.S. Silica's original operations. Following a review of the status of current operation, SRK prepared a new mine plan for the operation in 1995. Critical to the long term future of the operation was the development of a mine plan which incorporated a variety of environmental and production goals. Jeff managed a team of senior engineers and scientists to develop the required mine plan and ensure compliance with all environmental regulations and goals. This project was performed on a very tight schedule and budget Chemstar Lime Company, Tenmile Mine, Soda Springs, Idaho, U.S. Jeff was responsible for managing the mine design and permitting for a high grade limestone mine under development near Soda Springs. Near-arctic winter conditions at the site were a major consideration for the design, scheduling and environmental analysis of the project. Jeffs technical responsibilities on the projects were: review of existing geologic data, geologic interpretation; assessment of project on geologic resources; and review of all statistical and geostatistical models. This work led to a mine design which has minimized the environmental impacts without sacrificing the economic viability of the project. As a result, the project was permitting in six months, the reclamation plan was accepted as initially submitted, the mine opened on schedule and the design work was completed within budget. Jeff also provided liaison with the Idaho Department of Lands, Idaho Fish and Game, Department of Environmental Quality and the BLM during the NEPA process and authored the Reclamation Plan Mineral Recovery Systems, Inc., Camden, Tennessee, Pilot Plant, Benton County, Tennessee, U.S. This proposed heavy mineral sands mine near Camden Benton County, Tennessee will be operated by Mineral Recovery Systems, Inc.. SRK assisted MRS with the location and design of a pilot tailings impoundment, wetlands delineation, environmental studies, discharge and reclamation permitting, and wetlands restoration and mitigation. Jeff was responsible for all of the environmental and permitting work for the project U.S. Silica Company, Confidential Study, U.S. Jeff managed a team of technical specialists in reviewing the available data and permitting constraints for the expansion of a large silica deposit. The goal of the project of was to determine the existence of possible fatal flaws, either technical or regulatory which would preclude the development of a profitable mine expansion. The work included review of geologic data, sand quality data, slope stability studies, acid generating and metal leaching potential, preliminary wetlands evaluation, operational methods and alternatives, and applicable regulations for operation and closure Chemstar Lime Company, Cosgrave Project, Winnemucca, Nevada. Jeff was responsible for managing development of the mine plan and reclamation plan used during the NEPA process. The mine design was optimized to maximize the reserves utilizing economic optimization, blending strategies, and strategic sequencing while minimizing the impacts of permitting and reclamation. As co-author of the Plan of Operation and Reclamation Plan, Jeff was responsible for determining the effects of the mine design on the geologic resources and the environment. He also reviewed the proposed plan and evaluated the impacts of different alternatives on the environment. Several recommendations were made which eliminated or reduced the environmental impacts while increasing the profitability of the project. The proposed 12 mile haul road accessing the property required additional permitting through the Army Corps of Engineers, Nevada Department of Transportation, and the Nevada Division of Environmental Protection. Jeff's liaison work with the BLM and State was critical to JP/AO SRKUS_Parshley_Resume__January_.2017.docx October 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00308 SRK Consulting Page 18 Jeff Parshley, P.G. Corporate Consultant developing an operating plan and reclamation plan which fulfilled the objectives of both the regulatory agencies and the project proponent. The reclamation plan was the first one approved for a mining operation under the Nevada NAC 519A regulations Floridin Company, IMV Mine, Amargosa Valley, Nevada. The IMV clay mine and plant is located in the Amargosa Valley approximately 80 miles west of Las Vegas along the Nevada/California border. SRK was hired to prepare required permitting documents and complete supporting technical studies for the project. The Plan of Operations/Reclamation Plan addressed the processing facilities and four separate mining operations, three in Nevada and one in California. SRK prepared an Environmental Assessment for the Nevada Operations and a NEPA/CEQA Environmental Impact Report for the California pit. Technical support work included preparation of a water balance, an evaluation of potential impacts to ground water, recommend modifications to the waste water design and operating procedures, and a discharge permit application. Jeff managed all aspects of the project including collection of baseline data to engineering. The impacts from and to the desert climate and fauna were critical to the identification of required permits and mitigation Graymont Western U.S., Inc (formerly Continental Lime Company), Pilot Quarry, Wendover, Nevada. Graymont's Pilot Quarry is located west of Wendover, Nevada. The operation has been expanding since 1993. SRK has acted as the primary consultant on mine design and permitting for the operation since that time. The work has included reclamation planning and permitting, NEPA analyses, mine facility design and regulatory liaison Graymont Western U.S., Inc (formerly Continental Lime Company), Closure Audit of Canadian Operations, Various Locations, Canada. SRK reviewed the closure plan for all of Graymont's Canadian operations to provide Graymont with a technical assessment of the closure plans and projected costs for each operation. Jeff led an SRK team that compared each site closure plan with current closure technologies and industry standard closure costs. The results of the studies were used for corporate accounting and closure budget accruals Graymont Western U.S., Inc (formerly Continental Lime Company), Cricket Mountain Quarry, Delta, Utah. Graymont's Cricket Mountain Quarry is located south of Delta, Utah in the Cricket Mountains. The mine is in the process of expanding production and developing new reserves for future operations. SRK was contracted to conduct environmental and engineering studies, prepare a modified Plan of Operations and Reclamation Plan, and secure necessary permits. SRK managed the multidisciplinary team assigned to the project including in-house and subcontracted baseline data experts U.S. Silica Company, Oceanside Plant, Oceanside California, U.S. U.S. Silica Company was required to revise the mine plan for their silica sand operation in Oceanside operation to protect wetlands that developed in historic mining disturbance. SRK was also responsible for designing the final closure design consistent with commercial land uses in the area. This required SRK to conduct environmental and geotechnical investigations as part of the final mine plan and closure design Graymont Western U.S., Inc (formerly Continental Lime Company), Brown's Canyon Property, Nevada, U.S. SRK assisted Graymont's with permitting and environmental studies on the grassroots Brown's Canyon property in northern Nevada. The proposed quarry location was the site of several important historical landmarks as well as critical habitat for a number of large game animals. SRK prepared permits for an extensive exploration drilling program as well as developing a strategy for quarry permitting Baldwin Construction Company, Aggregate Quarry, Lassen County, California, U.S. SRK prepared mine plans closure plans and environmental permitting documents for a large aggregate quarry operation in the Honey Lake Valley in northern California. The environmental analysis work was prepared to comply with both CEQA and NEPA, and included mitigation measures to minimize the impacts on deer habitat and visual resources JP/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Parshley_Resume_January_2017.docx Tier 2 October 2016 ED 002061 00087255-00309 SS Profession Education Registrations/ Affiliations Resume JOHN H. PFAHL Corporate Advisory Consultant - Mining Corporate Advisory Consultant - Mining Master of Engineering, Engineer of Mines, Colorado School of Mines, 2008 Bachelor of Science, Engineering, Colorado School of Mines, 2003 Registered Engineer-Intern (EIT) - State of Colorado Registered Member - Society for Mining, Metallurgy, and Exploration, Inc. Specialization Expertise Employment 2015 - Present 2008-2014 2012-2013 2007 - 2008 2004 - 2007 2002 - 2004 2001 - 2001 1998-2000 Publications Languages Strategic planning; project optimisation; business improvement; investment analysis; due diligence; risk analysis; commercial negotiations; stochastic modeling, risk based valuation and project finance structuring. John Pfahl is a mining engineer with over 15 years of global experience in the mining industry. He is a Corporate Advisory Consultant with SRK. Mr. Pfahl has expertise in strategic planning, business improvement, investment analysis, risk analysis, capital markets and project valuation in the mining field. His background activities include project and investment management, strategic evaluations, technical and commercial due diligence, technical studies, financial modeling, structuring and negotiating terms in mergers and acquisitions, mine planning and project finance for projects ranging from exploration through production and across a broad spectrum of commodities. SRK Consulting (U.S.), Inc., Corporate Advisory Consultant, Denver, CO RCF Management LLC, Senior Associate, Denver, CO; Toronto, ON; Perth, WA Uranium Resources, Inc., Independent Member of Board of Directors, Denver, CO Colorado School of Mines Mining Department, Research Assistant, Golden, CO NewFields Boulder, LLC, Consulting Engineer, Boulder, CO MFG, Inc., Staff Engineer, Boulder, CO Hydrometrics, Inc., Engineering Intern, Kellogg, ID Environmental Reclamation, Inc., Construction Crew Supervisor Smelterville, ID Pfahl, J, (2011): "Private Equity Finance", Industrial Minerals, September, 2011, pp 40-45 Various conference and academic presentations Native English, Limited Spanish JP/AK Sierra Club v. EPA 18cv3472 NDCA SRKUS_Pfahl_January_2017.docx Tier 2 January 2016 ED 002061 00087255-00310 SRK Consulting Page 2 JOHN H. PFAHL Corporate Consultant - Mining Key Experience: Strategic Planning, Business Improvement and Risk Analysis Mr. Pfahl has undertaken strategic planning and risk analysis exercises within the mining industry under a variety circumstances, but generally with a focus on long-term project development, market positioning and value creation. Recent project experience includes: Lithium Investment Strategy: Performed multiple studies supporting confidential lithium producers. Studies focused on broad-based screening of global lithium projects to develop targeted lists for detailed project review. Strategies included in the reviews were long-term expansion of production, sourcing of near-term lithium offtake and long-term strategic partnerships for offtake. Lithium Development Strategy: Supported confidential government entity in the development of a strategy for advancing early stage strategic lithium assets. Included review of typical expenditures, timelines and required tasks for advancing lithium projects to production. Utilized to support structuring of joint venture agreements. Confidential Copper Mine: Evaluated strategic alternatives and developed revitalization plan for a large open pit copper mine in South America that was strongly cash flow negative in a depressed metal price environment. Strategic options evaluated included long term care and maintenance, short term standby (to facilitate operational improvements) and continuing operations without change. Included analysis of operational performance, labor, contracts and corporate financial obligations. The selected outcome targeted operating with a broad spectrum of business improvements to minimize near term cash consumption and maximize long-term asset value for which a detailed revitalization plan was developed. The revitalization plan for the operation focusing on improved productivity through improving utilization and availability of existing assets, cost reductions and improving metallurgical performance. Official Committee of Unsecured Creditors of Allied Nevada Gold: Provided strategic technical guidance to the committee in support of its role in the Chapter 11 bankruptcy process. Support activities included analysis of managements strategic and operational decisions during and leading up to the bankruptcy proceedings as well as evaluation of long term potential for the key assets of the company. Nickel Pig Iron Evaluation: Co-lead on an exercise undertaken to strategically guide future investment decisions in nickel projects. Work involved an in-depth review of the nickel pig iron market in China (including numerous site visits and meetings in China with nickel traders, nickel pig iron producers, stainless steel producers and information agencies) and its future outlook in Indonesia and other countries. Results included forecast operating costs for nickel pig iron producers both internal and external to China as well as forecast production volumes, which were used to position investments based on a strategy around global nickel markets. Toro Gold Limited: Oversight of an investment in Toro Gold in the position of the company's largest shareholder. Helped guide Toro's strategic planning for development of the company's flagship Mako asset as well exploration strategy and M&A opportunities. Guidance provided on a risk based approach to ensure the highest probability of success for project development and included project financing strategies, corporate and project budgeting, focusing feasibility efforts, M&A evaluation and project development team. RCF Management, LLC: Co-lead on performing a risk assessment and developing an associated risk management plan for RCF Management, LLC, an investment advisor for a series of mining-focused private equity funds with approximately US$3 billion in assets under management and callable capital. Work focused on the long-term viability of the business to survive commodity cycles and increasing competition in the mining finance and especially private equity space. African Investment Strategy: Lead efforts to develop and implement a strategy to increase focus on mining investment in Africa. Efforts included consolidating existing organizational expertise and information sources and implementing a system to open up information sharing to build a more complete organization-wide understanding of risks and opportunities in Africa. Also spearheaded efforts to break the paradigm of investment dismissal due to perceived risk and focus instead on actual risk and its investment implications. Project Stage Investment Strategy: Lead efforts to evaluate an expansion of investment strategy to encompass earlier stage opportunities than had traditionally been considered acceptable investments. Work focused on risk vs. opportunity in earlier stage investments, potential early stage investment strategies and allocation of internal resources. Base Metal Development Project Analysis: Lead efforts to strategically target investments in global base metal (copper, zinc and lead) projects at or near development ready status. Work involved a risk based analysis of project JP/AK SRKUS_Pfahl_January_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00311 SRK Consulting Page 3 JOHN H. PFAHL Corporate Consultant - Mining quality combined with environmental, political and social factors to highlight projects for detailed due diligence exercises and financing negotiations. Investment in India: Lead efforts to increase understanding and exposure to Indian opportunities and markets. Work focused on a targeted strategic investment in a small company operating in India and utilizing information gathered during the investment process and post-investment, through management of the investment, to guide future investment decisions in the country. Capital Cost Overrun: Oversaw research work to update an internal study on typical cost overruns in mining development projects. Efforts included guiding data collection to improve understanding of sources of cost overruns as well as magnitude of overruns and expanding efforts beyond existing feasibility to development analysis. Project results were then used to guide overall investment strategy regarding project risk profiles and valuation strategies. Molycorp, Inc.: Lead efforts to develop a strategic plan for a major shareholding in Molycorp, Inc. Efforts included technical and commercial due diligence to develop a range of future valuation scenarios combined with recommendations utilizing a risk based approach to future management of the shareholding. Colombian Metallurgical Coal: Guided efforts as lead manager for largest shareholder in a junior company targeting metallurgical coal in Colombia. Efforts included guiding company management's strategy on key attractive attributes for acquisition projects with a focus on infrastructure, logistics, permitting, security and project size. Uranium Resources, Inc.: Independent member of the board of directors of the company as the nominated representative by the company's largest shareholder. The company has a large and diverse portfolio of uranium assets across Texas and New Mexico and efforts focused on a risk based optimization of that portfolio to implement a development plan that would increase market confidence in the projects, the company and its management team. Also lead efforts to bring in a new CEO to take over management of the company and guidance provided on corporate budgeting, M&A activity and near-term strategic planning to best place the company for weak uranium markets. Global Uranium Strategy: Lead efforts to develop an institution-wide investment strategy in the uranium market. Efforts focused on uranium deposit type as a basis for most attractive typical operating parameters and fatal flaw type risks inherent in many development projects. Results generated investment parameters to focus on during due diligence activities and red flags to avoid that are common in many projects. DRC Investment Strategy: Participated in efforts to develop an investment strategy specific to the Democratic Republic of Congo. Efforts included in-depth technical, social, political and legal due diligence to provide investment guidelines for analysis of current and future opportunities in the country. Key Experience: Commercial Negotiations and Structuring Mr. Pfahl has extensive experience in commercial negotiations and transaction structuring through the lead of and participation in numerous transactions including debt, equity and hybrid financings; project acquisitions; corporate mergers; and corporate restructuring. His expertise in these areas includes term sheet development, direct negotiations, development of transaction documents and oversight of legal efforts. Project structuring and negotiations were tailored to individual investment profiles to mitigate risks identified in those opportunities while still maximizing upside leverage. Recent project experience includes: Confidential Copper Project: Lead role on negotiations and guidance of an acquisition process through interfacing with the investment bank managing a proposed asset sale under very strict regulations. Efforts included modification of divesture process to lessen investment risk (timeline and data availability), modification of share purchase plan and feedback to the investment bank regarding bid strategy to attempt a forced process change. Toro Gold Limited: Lead role in negotiating, structuring and implementing an equity financing and a bridge debt financing with conversion into a lead position in a future equity financing. India Resources Limited: Lead role in negotiating, structuring and implementing an equity financing with associated rights appropriate for a dominant shareholding in a publicly traded junior mining company. Confidential Copper Operator: Helped guide strategy on structuring of an on-market investment in a publicly traded operating company with a most likely strategic outcome of a hostile takeover. New Age Exploration: Lead role in negotiating, structuring and implementing multiple equity financings with attached rights appropriate for a dominant shareholding in a publicly traded junior mining company. JP/AK SRKUS_Pfahl_January_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00312 SRK Consulting Page 4 JOHN H. PFAHL Corporate Consultant - Mining Confidential Gold Developer: Lead role in negotiating and structuring a hybrid debt facility for pre-project development financing. With project development being delayed, revised the financing strategy to implement a lead role in an interim equity financing. Confidential PGM Developer: Lead role in negotiating and structuring a proposed equity financing to support project development with a standby hybrid debt facility for cost overruns. Confidential PGM Operator: Lead role in negotiating and structuring a proposed hybrid debt facility to provide development capital for an extension of current operations. Confidential Diamond Operator: Lead role in negotiating and structuring the financing for the proposed acquisition of an operating diamond mine by a third party junior development company from the financier side. Role involved coordinating the financing and due diligence strategy of multiple major financial partners as well as providing guidance to the junior development company on project valuation, debt strategies and acquisition structuring. Noront Resources Limited: Lead role in negotiating, structuring and implementing a bridge financing facility that automatically became a convertible debt facility if not repaid in within a fixed time period. Uranium Resources Inc.: Lead role in negotiating the merger of Uranium Resources Inc. with Neutron Energy and providing an associated third-party equity financing package. The merger was complicated by a large outstanding debt facility, effectively in default to a fourth-party lender by Neutron, which required further negotiation and structuring to remove through a combination of conversion and repayment. Confidential Gold Developer: Lead role in negotiating and structuring a proposed bridge debt facility for project feasibility work with future conversion optionality if certain mechanisms are triggered. Confidential Gold Developer: Lead role in structuring and negotiating a proposed multi-tranche hybrid debt facility to support project feasibility and development for a publicly listed company. Availability of future tranches dependent upon the company's ability to hit strategic targets in project development. Financing strategy included utilization of gold derivative instruments as a zero-cost hedging component. Confidential Polymetallic Developer: Lead role in structuring a proposed multi-tranche hybrid debt facility to support a project acquisition by a private corporation. Availability of future tranches dependent upon the company's ability to hit strategic targets in project development. Confidential Copper Developer: Lead role in structuring, negotiating and implementing a two tranche convertible debt facility to support a drilling campaign and project feasibility work. The initial tranche was significantly smaller than the second tranche, which was at the option of the lender, and targeted to provide information to support further detailed due diligence efforts as project data was sparse and of questionable quality. Meliadine Resources Inc.: Direct participation in negotiating the merger of a wholly owned private corporation with its public joint venture partner (Comaplex Minerals Corp). Negotiations had to overcome significant complexity with variable ownership percentages of individual deposits within a larger project, the presence of a significant non recourse loan between the partners and carried capital and development cost provisions on project development. Also included the structuring of contingent payments on the back of the merger to incentivise an optimal outcome. Key Experience: Corporate/Project Investment Analysis and Due Diligence Mr. Pfahl has perform ed due diligence reviews and investm ent analysis on dozens o f projects. W o rk perform ed typically involved technical and com m ercial due diligence, risk and opportunity analysis, report preparation, m anagem ent of consultants (budgeting and directing work) when utilized and recom m endation on w hether to move forward with the investm ent or not. Recent project experience includes: Vale: T e ch n ica l due dilig en ce fo r a con fide ntia l client on V a le 's B razilian iron ore operations. E valuated long-term production profile (quantity of product, quality of product and type of feed ore) from each operation, current and future production costs (including im pact of FX rates) and operational capital requirem ents. Freeport-McMoRan Inc.: T echnical due diligence fo r a confidential client on a broad range o f North A m erican assets held by Freeport. Led one of three due diligence team s with a focus on the Bagdad and Sierrita operations. In addition, in dividu ally eva lu ated th e El Abra, C lim ax and H enderson assets. R e view focu sed on sho rt and long term mine planning, environm ental liabilities, expansion potential and m olybdenum markets. JP/AK SRKUS_Pfahl_January_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00313 SRK Consulting Page 5 JOHN H. PFAHL Corporate Consultant - Mining Confidential Diamond Mining Company: Technical and commercial due diligence and associated valuation for the acquisition of a mid-tier diamond producer. Lead technical due diligence team including setting up model for valuation purposes and also provided guidance on diamond markets and strategy. Technical due diligence focused on strategic growth options, risk associated with current mine operations and future environmental risk. Confidential Copper Mine, South America: Technical and commercial due diligence for an investment in a large, operating copper mine in South America. Lead technical due diligence team including providing strategic guidance on acquisition strategy and risk. Due diligence focused on sale of complex concentrates, plant bottlenecks and reserve estimates. Morne Bossa Project, Nord Department, Haiti: Fatal flaw review of the proposed development stage Morne Bossa gold project in Haiti. Evaluated project risks and economics to support a potential investment. Cobre Panama Project, Colon, Panama: Project valuation with alternative methods applicable to long life assets and technical/commercial due diligence on a very large open pit copper/gold (porphyry) project under development. Review work included a focus on the feasibility of the proposed 200,000+ tonne per day throughput in a tropical environment, capital and operating cost risks and opportunities, project partner risk, financing risk and social risk. Mineragao Serra Verde, Goias, Brazil: Project and corporate valuation and technical evaluation of a large open pit heavy rare earth project (Serra Verde) that would utilize vat or heap leaching going through the feasibility process and thought to be similar to ionic clay deposits in China. Alkane Resources Ltd, New South Wales, Australia: Project and corporate valuation and technical evaluation of an open pit heavy rare earth deposit (Dubbo Zirconia Project) that would also produce zirconium and niobium going through project financing. The review focused on operating costs and metallurgical risks. The review also covered an associated operating open pit gold asset held within the company. Tiger Resources Limited, Katanga Province, Democratic Republic of Congo: Review of project and corporate valuation and risk factors for an operating open pit copper mine (Kipoi Mine) which targets a stratiform deposit typical of the African Copperbelt utilizing heavy media separation and heap leaching, going through an expansion phase. The review had a focus on risks specific to operating and investing in the Democratic Republic of Congo and an evaluation of availability and effectiveness of political risk insurance to mitigate certain associated risks. Toro Gold Limited, Kedougou, Senegal: Multiple rounds of technical and commercial due diligence with associated corporate valuations on a greenstone hosted open pit gold deposit (Mako) going through prefeasibility and feasibility studies. Due diligence focused on risks associated with very hard ore and social/permitting risk associated with water consumption and disposal. Aquila Resources Pty Ltd., Australia: Review of multiple project valuations with associated technical due diligence on a portfolio of both open pit and underground metallurgical coal and open pit iron ore (direct ship hematite) assets ranging from resource stage to development. Yanfolila Project, Sikasso, Mali: Technical due diligence and valuation on a greenstone hosted gold deposit at the scoping stage. The project was proposed as an open pit operation. Due diligence focused on resource to reserve conversion and haul distances. India Resources Limited, Rajasthan and Jharkhand India: Commercial due diligence (with a focus on management, political, legal and corruption risks) and technical review of an underground contractor operating in a shear hosted (sheeted lode) type copper mine (Surda) with an underground SEDEX lead and zinc development project (Aravalli) at the scoping stage. Consolidated Minerals, Western Australia, Australia and Western Region, Ghana: Commercial and technical due diligence with an associated valuation on two operating open pit manganese mines. Efforts focused on company ownership, valuation and manganese markets. MMC Dalpolimetall JSC, Primorsky Krai, Russia: Technical and commercial due diligence and associated valuation on multiple open pit and underground zinc/lead mines. Efforts focused on operating costs and corporate balance sheet. Champion Iron Limited, Labrador, Canada: Commercial and technical due diligence and corporate valuation on an open pit, low grade hematite project (Fire Lake North), requiring beneficiation, going through feasibility. Efforts focused on infrastructure risk and cost as well as risk around First Nations relations. Oz Minerals Limited, South Australia, Australia: Commercial and technical due diligence and associated corporate valuation on an operating IOCG type open pit and underground copper/gold mine (Prominent Hill). Work JP/AK SRKUS_Pfahl_January_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00314 SRK Consulting Page 6 JOHN H. PFAHL Corporate Consultant - Mining focused on the feasibility of underground expansion, mine life and commercial factors including market trading multiples and management. Lydian International Ltd., Vayots Dzor, Armenia: Commercial and technical due diligence and associated corporate valuation on a feasibility stage epithermal type gold deposit (Amulsar) proposed to be an open pit, heap leach operation. Work focused on metallurgy (optimal crush size and recoveries), political risk and management history. New Age Exploration Limited, Dumfries and Galloway, Scotland and Cundinamarca Colombia: Commercial and technical due diligence focused on the Lochinvar underground development stage metallurgical coal project. Efforts focused on coal marketability and political risk. Technical due diligence also undertaken on the Subachoque project in Colombia. Efforts focused on feasibility of mechanization of existing artisanal scale underground mine, permitting risk for reserve expansion and logistics. Platinum Group Metals Ltd., Limpopo and North West Province, South Africa: Commercial and technical due diligence and associated corporate valuation on an underground reef type PGM project under development (Western Bushveld Joint Venture) with a focus on commercial debt terms, capex and opex. Valuation and technical due diligence also incorporated the Waterburg scoping level PGM project with a focus on capex and opex. Sunshine Silver Mining Corporation, Idaho, USA: Technical due diligence on the brownfields underground Sunshine Silver Mine (high grade mesothermal vein type deposit) going through feasibility work. Efforts focused on resource estimation and reserve conversion. Euromax Resources Ltd, Bosilovo, Macedonia: Technical and commercial due diligence and associated valuation on proposed open pit porphyry copper project (llovitza) going through feasibility. Efforts focused on capex and opex and reserve optimization. Reservoir Minerals Inc., Bor, Serbia: Technical review and corporate valuation for the Cukaru Peki exploration stage underground high sulphidation and porphyry copper/gold project. Efforts focused on capex, opex and resource to reserve conversion. Molycorp, Inc., Shandong, Jiangsu and Tianjin China, Singapore and California, USA: Commercial and technical due diligence and associated corporate valuation on operating rare earth extraction facilities in China, rare earth magnet production facilities in China, rare earth magnet R&D facilities in Singapore and the Mountain Pass operating light rare earth mine and separation facility. Efforts focused on magnetic markets, rare earth markets and key profit drivers for the operating facilities in China. Technical work at Mountain Pass focused on reagent recycling, crack and leach processes and plant throughput. Stornoway Diamond Corporation, Quebec, Canada: Commercial and technical due diligence and associated corporate valuation on the development stage Renard underground/open pit diamond (kimberlite) project. Technical work focused on deep resource conversion, diamond distribution, geomechanical stability, operating costs and capital costs. Commercial work focused on diamond markets, project finance structuring and corporate structure. North American Palladium Ltd., Ontario, Canada: Commercial and technical due diligence and associated corporate valuation on the operating open pit and underground Lad Des lies palladium mine. Work focused on palladium markets, resource to reserve conversion and underground opex. Selwyn Resources Ltd., Yukon Territory, Canada: Technical review and valuation on the feasibility stage open pit and underground SEDEX type lead/zinc Selwyn Project. Review focused on capex, opex, mining methods and infrastructure. Minera Valle Central, Region VI, Chile: Technical due diligence and corporate valuation on the operating copper/molybdenum tailings reprocessing facility. Efforts focused on the proposed expansion of the operations and associated capex, opex and royalty burden. Pinto Valley Operation, Arizona, USA: Technical due diligence and project valuation on the brownfields Pinto Valley porphyry copper project under redevelopment. Review focused on resource to reserve conversion, project opex and environmental liabilities. Canadian Royalties Inc., Quebec, Canada: Technical and commercial due diligence on the open pit and underground Nunavik Ni/Cu/PGM (magmatic massive sulphide) operations under development. Work focused on valuation and corporate balance sheet. Noront Resources Ltd, Ontario, Canada: Technical and commercial due diligence on the feasibility stage Eagle's Nest underground Ni/Cu/PGM (magmatic massive sulphide) project. Work focused on project optimization, including JP/AK SRKUS__Pfahl__January_2017.docx Ja n u a ry 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00315 SRK Consulting Page 7 JOHN H. PFAHL Corporate Consultant - Mining throughput, tailings storage, surface vs. underground infrastructure, shaft/ramp options and aggregate sources as well as infrastructure development, permitting and social risk. Hummingbird Resources PLC, Sinoe, Liberia: Technical review and corporate valuation focused on the scoping stage greenstone hosted Dugbe open pit gold project. Review focused on exploration opportunity, metallurgical recovery and milling costs. Chieftain Metals Corp. British Columbia, Canada: Technical and commercial review with corporate valuation focused on the brownfield Tulsequah Chief underground Cu/Zn/Au/Ag (volcanic massive sulphide) project that had started development and failed and was going back through feasibility. Review work focused on transportation trade offs (barging vs. road access), capital and operating costs, metallurgical performance, concentrate marketing, First Nations relations, financial impact of a precious metals streaming arrangement and permitting. Rio Algom Limited, New Mexico, USA: Technical and commercial review of a brownfields uranium mill site and uranium resources. Work focused on social and permitting risk and quantification of legacy environmental liabilities. Ekati Mine, Northwest Territories, Canada: Technical and commercial due diligence and valuation of the operating open pit and underground Ekati diamond (kimberlite) operation. Technical review focused on pit slope stability, mud rush risks, improvement in diamond recoveries, environmental liabilities, water license renewal and feasibility of future development of the Jay pipe. Commercial review focused on acquisition financing strategy, diamond pricing assumptions, corporate working capital, environmental bonding requirements, diamond marketing strategy, diamond inventory valuation, operational improvements and future management team. Uranium Resources, Inc., New Mexico and Texas, USA: Technical and commercial due diligence and associated corporate valuation on a suite of brownfield and greenfield uranium assets (conventional and ISR) from exploration to development stage. Technical due diligence focused on uranium exploration potential in Texas, amenability of deposits to in situ recovery methods, development of reserves, operating and capital costs, permitting, environmental liability and social risks. Commercial work focused on management team and board, legal risks and corporate strategy. Neutron Energy Inc., New Mexico, USA: Technical review and valuation on portfolio of brownfield underground and open pit uranium assets plus a proposed mill site at the scoping stage. Review focused on opex, resource to reserve conversion and heap leach opportunities. Avanti Mining Inc., British Columbia, Canada: Multiple technical reviews and valuations on the Kitsault brownfield open pit primary molybdenum asset (porphyry orebody) from scoping through feasibility stage. Reviews focused on molybdenum market, capital costs, tailings storage, permitting and environmental, legal and operating costs. Leviathan Minerals Group Inc., Bangka, Indonesia: Technical and commercial due diligence on the proposed Bangka Island offshore alluvial tin project at the resource stage. Due diligence focused on resource estimation, mining and processing technology and costs, management, title and corruption risks. Matamec Explorations, Inc., Quebec, Canada: Technical due diligence with associated valuation on proposed Kipawa open pit heavy rare earth operation at the scoping stage. Due diligence focused on proposed metallurgy and associated operating costs and risks. Titan Uranium Inc., Wyoming, USA: Technical and commercial due diligence with associated valuation on the proposed Sheep Mountain open pit and underground uranium operation at the feasibility stage. Due diligence focused on resource estimation, reserve conversion, mining costs and processing options. Cuprum Resources Corp., Region IV, Chile: Technical and commercial due diligence with associated valuations on the proposed Puquios open pit heap leach (bioleaching) copper project at the feasibility stage. Due diligence focused on applicability of bio leaching to the orebody and risk profile with the technology as well as capital and operating costs. Lachlan Star Limited, Region IV, Chile: Technical due diligence on the operating CMD open pit heap leach gold mine (manto type mineralization). Due diligence focused on resource estimation, mine plan, reserve conversion, operating costs and exploration potential. Deutsche Rohstoff AG, Saxony, Germany: Technical and commercial due diligence with associated valuation on two proposed underground tin operations (Gottesberg and Geyer) at the resource stage. Due diligence focused on reserve estimation, capital costs, operating costs and tin markets. JP/AK Sierra Club v. EPA 18cv3472 NDCA SRKUS_Pfahl_January_2017.docx Tier 2 January 2016 ED 002061 00087255-00316 SRK Consulting Page 8 JOHN H. PFAHL Corporate Consultant - Mining ScoZinc Project, Nova Scotia, Canada: Technical and commercial due diligence with associated valuation on the brownfields open pit and underground ScoZinc project (Mississippi Valley Type). Work focused on resource to reserve conversion, operating costs and management team. Mocoa Project, Putumayo, Colombia: Technical due diligence with associated valuation on the proposed open pit and/or underground porphyry copper/molybdenum Mocoa project. Work focused on capital and operating costs and reserve estimation. Inter-American Coal, Colombia and Venezuela: Commercial due diligence on coal trading and logistics in Colombia and Venezuela and an interest in an operating mine in Venezuela. Review work focused on future business plans. Donner Metals Ltd., Quebec, Canada: Commercial and technical due diligence and associated valuation on the Bracemac underground lead/zinc/copper/gold/silver mine (volcanic massive sulphide) under development. Work focused on reserve estimation and impact of a metal streaming transaction. Krla Resources Ltd. New Brunswick, Canada: Commercial and technical due diligence on the proposed scoping stage Halfmile/Stratmat underground zinc/lead/copper/silver project (volcanic massive sulphide). Work focused on capital and operating costs and viability of toll milling. Dominion Minerals Corp., Chiriqui, Panama: Technical and commercial due diligence on the proposed resource stage open pit Cerro Chorcha copper (porphyry) project. Review work focused on capital and operating costs, resource estimation, social and environmental risks. Canarc Resource Corp., British Columbia, Canada: Technical and commercial due diligence with associated valuation on the proposed feasibility stage (brownfield) New Polaris underground gold (high grade, narrow vein) project. Work focused on metallurgy, logistics, operating costs and synergies with nearby deposits. Coalspur Mines Ltd., Alberta, Canada: Technical and commercial due diligence with associated valuation on the proposed feasibility stage Vista open pit thermal coal project. Work focused on corporate structure, capex, opex, environmental, social and permitting. Peninsula Energy Limited, Wyoming, USA: Technical due diligence on the proposed scoping stage Lance in situ recovery type uranium project. Work focused on project reserves, operating costs, capital costs and permitting. Hathor Exploration Limited, Saskatchewan, Canada: Technical due diligence on the proposed scoping stage Roughrider unconformity type underground uranium project. Due diligence focused on resource estimation, capital and operating costs. UEX Corporation, Saskatchewan, Canada: Technical and commercial due diligence on the proposed resource stage Shea Creek unconformity type underground uranium project. Due diligence focused on mining costs, capital costs, resource to reserve conversion and milling options. Alexco Resource Corp., Yukon Territory, Canada: Technical and commercial due diligence on the development stage Keno Hill underground silver/lead/zinc (polymetallic hydrothermal vein system) project. Efforts focused on resource to reserve conversion, exploration potential, operating costs and impacts of a metals streaming agreement. Inca Pacific Resources Inc., Ancash, Peru: Technical and commercial due diligence and associated valuation on the feasibility stage Magistral open pit copper/molybdenum (porphyry) project. Work focused on capital costs, logistics and government agreements. Anvil Mining Limited, Katanga Province, Democratic Republic of Congo: Technical and commercial due diligence on the Kinsevere open pit copper (stratiform) deposit underdevelopment. Work focused on project capital costs, mineral processing and government relations. Cuco Resources Ltd., Katanga Province, Democratic Republic of Congo: Technical and commercial due diligence on the Kinsanfu open pit copper/cobalt (stratiform) project operating on a limited scale with heavy media separation and evaluating expansion to large scale SX/EW production. Work focused on project resources, government relations, management and corruption risks. Energy Fuels Inc., Colorado and Utah, USA: Technical and commercial due diligence with an associated valuation on a portfolio of underground uranium assets ranging from resource to feasibility stage and a uranium mill development plan. Review work focused on operating costs, capital costs and permitting. JP/AK SRKUS_Pfahl_January_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00317 SRK Consulting Page 9 Key Experience: Engineering Studies JOHN H. PFAHL Corporate Consultant - Mining Mr. Pfahl has been involved in numerous engineering studies from an oversight and guidance perspective. He also has had direct involvement in the preparation of some of these studies. Recent project experience includes: Compass Minerals International: Lead role in an independent reserve audit for seven operating mines. Production includes salt (food, industrial and chemical grades), sulphate of potash and magnesium chloride. Production is sourced from underground mining, solution mining and solar evaporation type operations. Review included development of long-term recovery models from solution mines, audit of underground mine plans and development of a long-term brine depletion model for the Great Salt Lake. Enirgi Group: Lead role in the prefeasibility and feasibility studies for the development stage Rincon brine-type lithium project. Primary role to review and provide guidance on work product from a number of organizations contributing to the studies. Also coordinate work products and consolidate to complete the finished study materials. Natural Soda LLC: Lead role in a prefeasibility study on the expansion of an existing operation producing sodium bicarbonate through in situ solution mining in Colorado, USA. Work focused on operating cost for the in situ process, risk profile of the proposed operations, reserve estimation and guidance on resource estimation and economic modeling. New Age Exploration Limited: Primarily involved in a role of guiding the progress of a scoping study on an underground metallurgical coal project in Scotland. Direct participation in development data collection planning and budgeting to support the study as well as a project risk assessment for the study. Smoky Canyon Mine: Responsibility for the development of multiple scoping level plans for an operating phosphate mine in Idaho, USA. Efforts included conceptual design for a stream diversion and runoff infiltration basin within a drainage that had been filled with mine overburden, end of mine life closure design for all overburden disposal areas and an update of the tailing closure plan for the operation. Coeur d'Alene River Basin Reclamation: Responsibility for the development of a basin-wide reclamation plan targeting historic mine workings and fluvial tailings deposits. Efforts involved geospatial analysis of metals loading in streams to target work combined with reclamation strategies individually developed for each site. The reclamation plan was utilized for litigation and settlement purposes. JP/AK Sierra Club v. EPA 18cv3472 NDCA SRKUS_Pfahl_January_2017.docx Tier 2 January 2016 ED 002061 00087255-00318 SS Resume Mark A. Willow Principal Environmental Scientist Practice Leader / NA Director Environmental Consultant (Permitting Specialist) Master of Science in Environmental Science and Engineering, Colorado School of Mines, Golden, Colorado (1995) Bachelor of Science in Fisheries and Wildlife Management, University of Missouri, Columbia, Missouri (1987) Nevada Certified Environmental Manager (CEM #1832) SME Registered Member (4104492RM) MSHA 24-Hour New Miner Safety Training OSHA 40-hour Health and Safety Training Wetlands Delineator (WTI, 2001) Specialization Expertise Employment 1995 - Present 1995 1993-1995 1987-1993 Publications Languages MW/AO Environmental Due Diligence, Environmental Permitting, Environmental Impact Analyses, Environmental Management Planning, Environmental Risk Assessment, Compliance Monitoring (incl. IFC/Equator Principle compliance), Ecological Risk Assessment. Mr. Willow is a Certified Environmental Manager (CEM #1832) in the State of Nevada, with over 25 years of environmental and ecological project experience, including extensive site characterization and baseline data collection experience, mine plan of operations development, closure planning, pit lake studies, and permitting. As an SRK principal and project manager, Mark oversees work scope implementation and provides senior technical review of local consultants performing environmental studies. Mark provides technical expertise and assistance in the characterization, remediation and mitigation of water and soil systems contaminated with heavy metals. Mark draws upon this diverse background for his knowledge and experience as a human health and ecological risk assessor with respect to potential environmental impacts and monitoring associated with mining operations. Using these skills and experience, Mark provides environmental due diligence/competent persons evaluations for developmental and operational mining projects throughout the world, and is a Qualified Person (QP) in accordance with Companion Policy 43-101 CP to National Instrument 43-101 Standards of Disclosure for Mineral Projects. SRK Consulting (U.S.), Inc , Nevada Geo-Environmental Practice Leader (since 2010); Principal Environmental and Permitting Specialist; Served 3 years as Department Manager in Reno, NV office; Currently serving on the SRK North American Board of Directors. Parsons Engineering Science, Inc., Environmental Compliance & Risk Assessment Specialist in the Denver, Colorado office. Colorado School of Mines, Golden, Colorado Research Assistant - Biological Mine Drainage Treatment Teaching Assistant - Undergraduate Biology (1993-1994) Denver Zoo, Dallas Zoo and Frankfurt Zoologische Gardens Animal Care Specialist/Senior Animal Keeper/Zoologist intern (respectively) Several publications on mine waste management, water treatment (including biological treatment of Acid Rock Drainage), and reclamation/closure. English, Conversational German SRKUS_Wi!!ow_Resume_Feb_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00319 SRK Consulting Page 2 Mark A. Willow Principal Environmental Scientist Publications 1. Parshley, J.V., M.A. Willow, and R.J. Bowell. 2012. The evolution of cyanide heap leach closure methods. Mine Closure 2012: The Seventeenth International on Mine Closure. Brisbane, Australia. September 25-27, 2012. 2. Willow, M.A. and R.R.H. Cohen. 2003. pH, Dissolved Oxygen, and Adsorption Effects on Metal Removal in Anaerobic Bioreactors. J o u r n a l o f E n v ir o n m e n ta l Q u a lity , 32 (4): p. 1212. 3. Willow, M. and C. tenBraak. 1999. Survey of three hard-rock acid drainage treatment facilities in Colorado. Proceedings of the Sixth International Conference on Tailings and Mine Waste '99, Fort Collins, Colorado. 4. Dorey, R., R. Duckett and M. Willow. 1999. Open pit reclamation at the Kennecott Ridgeway gold mine. Proceedings of the Sixth International Conference on Tailings and Mine Waste '99, Fort Collins, Colorado. 5. Muller, G., R. Dorey and M. Willow. 1998. Management of residual pyrite in mine tailings. Proceedings of the Fifth International Conference on Tailings and Mine Waste '98, Fort Collins, Colorado, January 26-28, 1998. 6. Willow, M.A., R.R.H. Cohen and L. Thompson. 1998. Factors affecting the efficiency of passive mine drainage treatment systems. Proceedings of the Fifth International Conference on Tailings and Mine Waste '98, Fort Collins, Colorado, January 26-28, 1998. 7. Willow, M.A. 1995. pH and dissolved oxygen as limiting factors of treatment efficiency in wet-substrate, bio-reactors dominated by sulfate-reducing bacteria. Master's Degree Thesis No. 4747, Colorado School of Mines, Golden, Colorado. 8. Lindsey, S.L., C.L. Bennett, E.A. Pyle, M.A. Willow and A. Yang. 1993. Okapi calf ( O k a p ia jo h n s to n i) management and collection of behavioural and physiological data at the Dallas Zoo. In te rn a tio n a l Z o o Y e a rb o o k . Vol. 38. 9. Willow, M.A. and E.A. Pyle. 1991. Management of okapi calves ( O k a p ia jo h n s to n i) at the Dallas Zoo. AAZPA Regional Conference Proceedings, pp. 399-406. MW/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Wi!!ow_Resume_Feb_2017.docx Tier 2 January 2016 ED 002061 00087255-00320 SRK Consulting Page 3 Mark A. Willow Principal Environmental Scientist Key Experience: Scoping, Feasibility, Ml 43-101 and Due Diligence Projects Relevant project experience includes: Underground Niobium Project PEA and FS, Elk Creek, Nebraska - NioCorp (2014 - Ongoing) Authored environmental section of Preliminary Economic Assessment report, including permitting requirements. Initiated coordination and consultation with NioCorp, its contractors, and regulatory agencies on the issues surrounding permitting of the project. Pre-Feasibility Study for Segovia and Marmato Mines, Colombia - Gran Colombia Gold (2016 - Ongoing) Authoring environmental sections of both PFS reports, including permitting requirements, management plan reviews, and environmental liability assessments. Due Diligence Dayton Gold project, Comstock District, Nevada - GF Capital LLC (November, 2016) Review of environmental, political, and social issues surrounding the permitting and development of Comstock Mining's proposed Dayton Project. Due Diligence of UC RUSAL's Alpart Bauxite Project, Jamaica - Jiuquan Iron & Steel Co., Ltd (February, 2016) Review of environmental and social issues that could affect the re-start and expansion of this aluminum production facility, including issues concerning tailings management. Lead Environmental Consultant, Twin Metals Minnesota (2015 - Ongoing) Selected as Administrative Manager of the SRK/Foth Infrastructure team responsible for advising TMM on permitting associated with its polymetal mine in norther Minnesota. PEA and FS for Open Pit Gold Mine, French Guiana - NordGold (2014 - Ongoing) Authored environmental section of Preliminary Economic Assessment report, including permitting requirements and closure cost estimate. Currently working with SRK and Lycopodium teams on engineering and infrastructure, including environmental design criteria. Due Diligence of Timmins Gold Ana Paula Project, Mexico - Red Kite (Bermuda) Management and Advisor Limited (December, 2015) Gap analysis and review of environmental and social issues (including security issues) that could affect the development of this greenfield project in southern Mexico. Environmental Due Diligence, Kabanga Project, Tanzania - Confidential Clients (May, 2015) High-level review of environmental and social issues as well as estimated closure costs. Fatal Flaw Analysis and Environmental Due Diligence Audit of Gunnison ISR Copper Project, Arizona Confidential Clients (June - July, 2014) Environmental specialist on independent due diligence audit of proposed ln-situ Recovery (ISR) copper project located east of Tucson, AZ. Ni 43-101 Technical Report on Resources, Morro do Pilar, Brazil - Manabi Holding S.A. (2013-2014) Functioned as environmental due diligence auditor and QP for technical evaluation of the proposed Morro do Pilar iron mine, concentrate pipeline and port facility project. Environmental Due Diligence Audit of Ferrous Resources do Brasil S/A Viga Operations Brazil - Confidential Client (May 2014 - June 2014) Coordinated environmental team for independent due diligence audit of existing operations and proposed expansion of the VIGA iron mine near Belo Horizonte. MW/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Wi!!ow_Resume_Feb_2017.docx Tier 2 January 2016 ED 002061 00087255-00321 SRK Consulting Page 4 Mark A. Willow Principal Environmental Scientist Environmental Due Diligence Audit of ASARCO Silver Bell Operations - Confidential Client (March 2014) Environmental specialist on fatal flaw analysis of American Smelting and Refining Company LLC (ASARCO), Silver Bell operations. Environmental Due Diligence Audit of CML Metals, Utah - Confidential Client (January 2014) Environmental specialist on independent due diligence audit of existing Comstock-Mountain Lion iron operations and proposed Rex expansion project near Cedar City, Utah. December 31, 2012 Resource and Reserve Audit, Mining and Exploration Projects - Fresnillo pic Responsible for environmental site investigations, data collection, and summary reporting for audit report. Nl 43-101 Technical Report, Bloom Lake Mine, Quebec Province, Canada - Cliffs Natural Resources Environmental QP for technical report on Bloom Lake iron mine located in the Labrador Trough area which straddles the border between Quebec and Labrador. Nl 43-101 Technical Report, Wabush Mine, Labrador, Canada - Cliffs Natural Resources Environmental QP for technical report on Wabush iron mine located in the Labrador, Canada. Environmental Due Diligence Audit of Compaa Minera Autln, S.A.B.de C.V. Operations Puebla, Mexico - Confidential Client (May 2012 - July 2012) Participated as Environmental Specialist in independent due diligence audit and fatal flaw analysis of two operating ferro-manganese furnaces and an underground manganese mine and manganese kiln, together with associated infrastructure including dams and dumps. Nl 43-101 Technical Report, Planalto Piaui Feasibility Study, Brazil - Bemisa Exploragao Mineral S. A. (2013) Environmental QP for technical evaluation and pre-feasibility study of the proposed Planalto Piaui iron mine located in the state of Piaui in the Northeast Region of Brazil Preliminary Economic Evaluation of Holy Terror Project South Dakota, USA - Mineral Mountain Resources Ltd. (Apr. 2012 - May 2012) Prepared Section 20 of technical report for historic and newly proposed underground mining operation in the Black Hills of South Dakota following Canadian Securities Administrators' National Instrument 43-101 and Form 43-101F1 guidelines. Environmental Due Diligence Audit of Runruno Gold Project Philippines - Red Kite Management (USA) LLP (Dec. 2011 - Feb. 2012) Performed comprehensive review of available data and supporting documentation, as well as information obtained from site visit and personnel interviews, in order to prepare independent technical review of the project, including comment on potential project value, project risks and gap analysis of material items. Independent Engineer's Due Diligence Review for the Almas Gold Project Almas, State of Tocantins, Brazil - Banco WestLB do Brasil S.A. (Mar. 2012 - Apr. 2012) Performed comprehensive review of available data and supporting documentation, as well as information obtained from site visit and personnel interviews, in order to prepare an Independent Engineer's due diligence review of the Preliminary Economic Assessment (PEA) and Feasibility Study (FS) of the Almas Gold Project to help support Rio Novo Gold, Inc. with project debt financing. Nl 43-101 Preliminary Economic Assessment for the Miraflores Property Risaralda, Colombia - Seafield Resources Ltd. (Aug. 2011 - Mar. 2012) Prepared Section 20 of Scoping Study for historic and newly proposed underground mining operation in Colombia following Canadian Securities Administrators' National Instrument 43-101 and Form 43-101F1 guidelines. MW/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Wi!!ow_Resume_Feb_2017.docx Tier 2 January 2016 ED 002061 00087255-00322 SRK Consulting Page 5 Mark A. Willow Principal Environmental Scientist Environmental Due Diligence Audit of Fortuna Silver Mines Caylloma & San Jose Projects Peru and Mxico, respectively - Confidential Client (May 2011 - July 2011) Third-party technical due diligence review of silver and gold operations in Peru (14,000+ feet in elevation) and Mxico for interested buyer. Nl 43-101 Preliminary Economic Assessment (Update) for Trinidad Property Sinaloa, Mxico - Oro Mining Ltd. (Mar. 2012 - May 2012) Prepared Section 20 of PEA for proposed open pit mining operation in Mxico following Canadian Securities Administrators' National Instrument 43-101 and Form 43-101F1 guidelines. Environmental Due Diligence Audit of Gold Wedge Project Manhattan, Nevada - Confidential Client (May 2011 - Jun. 2011) Participated as Environmental Specialist in independent due diligence audit and fatal flaw on Standard Mineral's Gold Wedge Project, located in Nye County, Nevada. Environmental Due Diligence Audit of El Bolo Project Baja Peninsula, Mxico - Confidential Client (Sep. 2010 - Nov. 2011) (May 2012 - July 2012) Third-party technical due diligence review of Cu-Co-Zn-Mn deposit Project located in Baja California Sur, Mexico on the west coast of the Gulf of California. Environmental Due Diligence Audit of Mina de Cobre Panam Project Panam - Confidential Client (Aug. 2010 - Oct. 2010) Third-party review of open pit copper operation located in located in the district of Donos, Colon province, Panama. Environmental Due Diligence Audit of Molejon Gold Project Panama - Confidential Client (Jan. 2010 - Apr. 2010) (May 2010 - July 2010) Third-party review of open pit, cyanide milling operation located in located in the district of Donos, Colon province, Panama. Environmental Due Diligence Audit of Underground and Open Pit Gold Mine Sonora, Mxico - Argonaut (Apr. 2009 - June 2009) Environmental team member reviewing permitting status, compliance and closure cost liabilities for three gold mines in various stages of development. Environmental Due Diligence Audit of Underground Coal Mines Russia - SUEK (Sep. 2008 - Jan. 2009) (Feb. 2010 - Jul. 2010) (Jan. 2011 - Mar. 2011) Environmental team member of international SRK due diligence and Mineral Economics Report (MER) team reviewing underground and open-pit coal mining operations in Siberia (2008). Follow-up visits were conducted in 2010 and 2011 to Russia's Far East Region during updates of the original audit. Environmental Due Diligence Audit of Open Pit Gold Mine Sabodala, Senegal - Mineral Deposits Limited (Mar. 2007 - June 2007) Environmental team member of international SRK due diligence team reviewing proposed gold mining and milling operation in eastern Senegal, near the Mali border. The availability and management of water resources became the limiting factor for this project. Included assessment of compliance with IFC/World Bank and Equator Principles. Environmental Due Diligence Audit of Underground Coal Mine and Coking Plant Shanxi Province, People's Republic of China - Regent Pacific Group (Dec. 2006 - Mar. 2007) Environmental team member of international SRK due diligence team reviewing the Zhaipingcun Coal Mine and associated Wash/Coke Plant, Secondary Wash Plant, Coke By-product Plant, Magnesium Smelter (under construction), and future dolomite quarry. Review focused on environmental upgrades to existing facilities. MW/AO SRKUS_Wi!!ow_Resume_Feb_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00323 SRK Consulting Page 6 Mark A. Willow Principal Environmental Scientist Environmental Due Diligence Audit on Proposed Copper Mine Ecuador - EcuaCorriente (Jul. 2006 - Nov. 2006) Hydrological and environmental team member of international SRK due diligence team evaluating proposed copper mining and milling operation in jungles of Ecuador. Included assessment of compliance with IFCA/Vorld Bank and Equator Principles. Due Diligence Audits, Mexico - Confidential Client (Oct. 2005 - Jan. 2006) Environmental team member of international SRK due diligence team evaluating two, large-scale copper mining and smelting operations in northern Mexico, as part of potential purchase. Due Diligence Audit, Mexico - Confidential Client (Sep. 2004 - Nov. 2004) Participated on a due diligence audit team as the environmental specialist for a small copper leaching operation in northern Mexico. Los Filos/Bermejal Gold Mine Permitting, Mexico - Luismin S.A. de C.V. (2003 - 2005) Managed a multi-disciplinary team for comprehensive program to prepare the environmental permitting documents required to open a new gold mine in southern Mexico. The work included baseline studies, an EIS (MIA), a risk assessment, land use permits, environmental management and closure planning. Terms of reference require strict compliance with Equator Principles. NEPA Environmental Assessments, Relief Canyon Mine Lovelock, Nevada - Firstgold Corporation (Apr. 2008 - July 2008) Prepared two National Environmental Policy Act (NEPA) Environmental Assessments for continued exploration and reprocessing of the existing heap leach pads at the Relief Canyon Mine. NEPA Environmental Assessment, Limousine Butte Exploration Project Ely, Nevada - U.S. Gold Corporation (Dec. 2007 - Aug. 2008) Prepared programmatic Environmental Assessments for proposed expansion of exploration activities in the Ely District of the U.S. Bureau of Land Management. NEPA Environmental Assessment, Tonkin Springs Mine Eureka, Nevada - U.S. Gold Corporation (June 2008 - Nov. 2008) Prepared Environmental Assessments for proposed fluid management system modifications in the Battle Mountain District of the U.S. Bureau of Land Management. Tungsten Mine Operational Permitting Imlay, Nevada - Golden Predator Mines Inc. (May 2007 - Aug. 2008) Project Manager for development of Mine Plan/Reclamation Plan and Water Pollution Control Permit for recommissioning of historic underground and surface tungsten mine. Prepared Exploration plan of Operations for future activities on public land administered by the U.S. Bureau of Land Management. Water Pollution Control Permit Applications, Nevada - Various Clients (1999 - Present) Managed renewal applications for several Water Pollution Control permits under review by the Nevada Division of Environmental Protection. Included a review of existing monitoring requirements and proposed modifications based on current site conditions. Ecological Risk Assessments, Nevada - Newmont Mining Corporation (Nov. 2005 - Apr. 2006) Prepared screening-level ecological risk assessments for five pit lakes in northern Nevada, as input for long-term management alternatives analyses. Atlanta Gold Project, Idaho (Oct. 2003 - Apr. 2005) Oversaw and conducted baseline surface water investigation for proposed gold mining operation in historic Atlanta District. Collaborated on development of Plan of Operations and associated permit documents. Administrative manager of budget and invoicing. MW/AO SRKUS_Wi!!ow_Resume_Feb_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00324 SRK Consulting Page 7 Mark A. Willow Principal Environmental Scientist Cortez Gold Mines Exploration EAs (2003) Participated in environmental assessment of two gold exploration Plans of Operation, including baseline surveys of springs, seeps and jurisdictional waters of the U.S. The West Pine Valley plan covered approximately 36,500 acres, while the West Side plan involved exploration on over 92,600 acres of mostly public lands. Spanish Springs Recreation Complex EA, City of Sparks, Nevada (Apr. 2002 - Dec. 2002) Managed and prepared an EA for the City of Sparks Recreation Department and Carson City Bureau of Land Management for construction and operations of a recreation complex, including sports fields, golf course, and equestrian center, under an R&PP application. Proximity to ACEC of prime concern. R&PP Applications, White Pine County Schools, Nevada (1999) Participated in the preparation of two Recreation and Public Purposes applications to construct two schools in remote areas of White Pine County. The application consisted of plans of development, mineral reports, and environmental assessments. Tonkin Springs LLC Exploration Project, Eureka County, Nevada (2000) Prepared an environmental assessment analyzing potential impacts associated with a proposed gold exploration program. The major issues analyzed by this environmental assessment included cultural resources, Native American religious concerns, water resources, noxious weeds, and cumulative impacts. Getcheli Gold Mine NEPA Permitting, Winnemucca, Nevada (Ongoing) Prepared amendment to existing Plan of Operations to include backfill rock quarry and associated facilities. EA was prepared for PoO amendment, though Determination of NEPA Adequacy was granted to project before completion. Cortez Gold Mines, Toiyabe Heap Leach Pad EA, Nevada (1999 - 2001) Prepared and presented Environmental Assessment to Bureau of Land Management on closure plan for heap leach pad, which included a subsurface infiltration system. Placer Dome Yankee Mine Heap Leach Pad EA, Nevada (2001 - 2002) Prepared and presented Environmental Assessment to Bureau of Land Management on closure plan for heap leach pad, which included a subsurface infiltration system. Evaluated Ecological risk of closure activities on terrestrial, avian and vegetative communities. BHP Robinson Open Pit Lake Ecological Risk Assessment, Ely, Nevada (2007 - 2011) During preliminary closure options evaluations, conducted a Tier 1 and modified Tier 2 ecological risk assessment on the existing open pit lake waters. Nevada law requires protection of terrestrial and avian life for impounded waters related to mining activities. Habitat Mitigation Plan, Camden, Tennessee (Apr. 2000 - May 2000) The Tennessee Department of Environmental Control requested that Mineral Recovery Systems, Inc. prepare a Aquatic Habitat Mitigation Plan to offset streambed and wetland losses due to the construction of their process settling pond. A total of 3.6 acres of wetland and upland habitat was conceptually designed. Echo Bay Mines Pit Water Lake Risk Assessment, Nevada (July 1997) As part of ongoing closure activities at the Borealis Mine, Echo Bay requested that a screening-level ecological risk assessment be completed for the water in the East Ridge Pit. The results are to be submitted to NDOW and the USF&WS. Battle Mountain Gold Phoenix Project Wildlife Baseline Updates, Nevada (Nov. 1998 - Feb. 1999) SRK, and its merger partner WESTEC, conducted baseline vegetation and wildlife surveys of the proposed area of the Phoenix Expansion Project. Due to changes in the Plan of Operations, SRK was required to revisit the site on several occasions in 1998-99 to update the reports for submittal to the BLM as part of the Supplemental Environmental Impact Statement for the project. MW/AO SRKUS_Wi!!ow_Resume_Feb_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00325 SRK Consulting Page 8 Mark A. Willow Principal Environmental Scientist Manhattan Mine, Nevada (1997) In response to NDEP comments, comparison of heap solution soil concentrations to existing phytotoxicological screening benchmarks and other ecotoxicological criteria was performed which indicated that no harm to plants or future potential vegetation should result from the disposal of heap draindown effluent in the tailings impoundment. BLM Land Exchange Habitat Assessment, Nevada (1997) As part of a NEPA driven land exchange between the BLM and a land development firm, conducted habitat assessment on development firm's holdings at determine current uses and potential for restoration due to cattle grazing. Powell/Daniels Rivers, British Columbia, Canada (Sep. 1997) Participated in a Level 1 Fish Habitat Assessment Program of the Powell and Daniels Rivers to evaluate potential ecological effects of old forest lumber operations on fish fecundity and development. Rocky Flats Environmental Technology Site, Colorado (1995) Conducted technical review and quality assurance/quality control for development of radionuclide preliminary remediation goals. Lowry Air Force Base, Colorado (1995) Conducted human health and ecological risk assessments for six investigation units per EPA guidance for the purpose of base closure and property transfer. Environmental media included soil, sediment, surface water, groundwater and air. West Pit Lake, Manhattan Mine, Nevada (1996) A screening-level assessment of potential ecological risks was conducted for the West Pit lake at the Manhattan Mine Project. The primary purpose of this assessment screening was to determine if ecological risks existed and identify chemical constituents contained in the water that might pose a potential, credible risk to ecological communities in and around the pit lake. Chino Copper Mine, New Mexico (1995 - 1996) Principle investigator for human health risk assessment for Smelter Investigation Unit Remedial Investigation Proposal. Also acted as liaison between co-investigators for risk related issues such as receptor identification and exposure assessment. Confidential Client, Arizona (1996) Principle risk assessor for groundwater investigation of potential radionuclides contamination at former mining operation. Findings presented to Arizona Department of Environmental Quality. Illinois Creek, West-Central Alaska (1996) As part of the comprehensive mining permit, conducted risk analysis to determine potential concentrations and aquatic toxicity effects of a cyanide release to the environment during transport to site. Key Experience; Geotechnical/Waste Management Projects Recent project experience includes: Operations & Maintenance Manual Update, Nevada - Dyno Nobel, Inc. (2008) Updated Operations & Maintenance (O&M) Manual based on renewal permit monitoring requirements for explosives manufacturer. Griffon Mine Closure Plan Development, Nevada (2001) Project Manager for development of the closure plan and associated technical specifications of the abandoned Griffon Mine. Work was conducted under contract with the USDA Forest Service. MW/AO SRKUS_Wi!!ow_Resume_Feb_2017.docx January 2016 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00326 SRK Consulting Page 9 Mark A. Willow Principal Environmental Scientist Kennecott Ridgeway Gold Mine, South Carolina (1996) Project Engineer responsible for closure plan analysis and determination of appropriate organic amendments and design for sub-aqueous deposition of backfill and waste rock from mining operations. Conducted geochemical modeling to determine appropriate treatment requirements for surface and groundwater prior to sub-aqueous disposal of backfill and waste rock; residual process solution treatability study; surface water management plan update; closure reports for open pits and tailings impoundment; a surface water geochemical mixing model for ultimate closure of the facility. Thompson Creek Project, Idaho (1996) Provided technical support during preparation of Supplemental Plan of Operations; assisted in development of a modified operating plan for the tailings disposal facility for mitigation of acid rock drainage potential; participated in hydrological and geochemical modeling to evaluate the performance of proposed operating plan modifications. Kensington Gold Project, Alaska (1996 - 1997) Participated as Project Environmental Engineer in development of and acquisition of solid waste disposal and surface- water/stormwater permits. Conducted preliminary design/stability risk assessment for proposed and alternative tailings disposal facilities. Spearheaded research into dry tailings and paste backfill disposal methods. Barite Hill Gold Mine, South Carolina (1996 - 1997) As part of waste management team, prepared final pit closure alternative for presentations to South Carolina Department of Health and Environmental Control. Lead scientist on development, testing and design of constructed wetland (Anaerobic Contact Cell) for treatment of heap leach pad drainage/seepage. Pueblo Viejo Project, Dominican Republic (1997) The Pueblo Viejo project is one of the largest gold deposits in the world with sulfide ore reserves of approximately 35 million ounces. Provided technical assistance on geochemical assessment of the existing mine waste, acid rock drainage mitigation plan and preliminary waste management and closure plan for future mining operations. Mitigation Plan included feasibility evaluation of active and passive water treatment systems. Anchor Hill Gold Mine, South Dakota (1997 - 1998) Analysis of static and kinetic column and weathering cell geochem ical results fo r use in design o f w aste rock removal schedules and repository construction; E xam ination o f w a te r tre a tm e n t plant sludge treatm e nt and disposal alternatives; Evaluation of post-closure pit phreatic surface de velopm e nt and off-site groundwater migration and geochemistry. Grouse Creek Mine, Idaho (1997) As part of waste management team, prepared alternatives evaluation for waste rock repository closure, including evaluation and mitigation measures for potential acid-rock draining development. Developed preliminary grading plans and final surface contours for disposal facility; conducted evaluation of frost penetration on preferred and alternative waste rock cover system designs. Thunder Mountain Project, Idaho (1997) Participated in the development of site waste rock management plan and subsequent waste rock disposal facility design. Also included was development of excavation and construction sequencing for waste rock dump and heap leach pad. El Mojon Project, Nicaragua (1996) As part of the waste characterization and management plan, prepared preliminary waste rock disposal facility layout and design. MW/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Wi!!ow_Resume_Feb_2017.docx Tier 2 January 2016 ED 002061 00087255-00327 SRK Consulting Page 10 Mark A. Willow Principal Environmental Scientist ARD Seminar (1996) Organized and prepared presentation on acid-rock drainage treatment methodologies to visiting dignitaries from the Chinese Central Coal Mining Research Institute in Beijing. MW/AO Sierra Club v. EPA 18cv3472 NDCA SRKUS_Wi!!ow_Resume_Feb_2017.docx Tier 2 January 2016 ED 002061 00087255-00328 Appendix C EPA's Identification of Facilities (that operated in 1980 or later) that Demonstrate Mining is High Risk Table C-1: Facilities Referenced in the Proposed CERCLA 108(b) Proposed Rule Table C-2: Facilities Referenced in Releases from Hardrock Mining Facilities (Releases Report) Table C-3: Facilities Referenced in Evidence of CERCLA Hazardous Substances and Potential Exposures at CERCLA 108(b) Mining and Mineral Processing Sites (Evidence Report) Table C-4: Facilities Referenced in Comprehensive Report: An Overview of Practices at Hardrock Mining and Mineral Processing Facilities and Related Releases of CERCLA Hazardous Substances (Practices Report) Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00329 Table C-1 Facilities Referenced in the Proposed Rule Agrifos, TX EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. Waste Management activities at the site predated the modern waste containment criteria. Cleanup of any of the releases has been and continues to be the responsibility of the facility operator. ArcelorMittal, MN EPA M ischaracterizationsOm issions The Real Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. Cleanup of the releases from the tailings piles has been handled by the operator. Barite Hill, SC EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. Significant changes were made to the state Mining Act in 1990 to specify reclamation requirements and provide additional enforcement tools. This facility did not have a waste rock management plan to prevent formation of acid mine drainage in the main pit as compared to the most recent mine permitted where all potentially high acid rock drainage wastes are placed on a double lined waste facility._______ Sierra Club v. EPA 18cv3472 NDCA 1 Tier 2 ED 002061 00087255-00330 Table C-1 Facilities Referenced in the Proposed Rule Barrick Goldstrike, NV ERA Mischaracterizations-'Omissions The Real Story ERA fails to acknowledge the role of the operator and state regulator in addressing the identified releases. ERA neglects to provide information on changes to the state mining regulations or perm it requirem ents to prevent a similar outcome. ERA falls to acknowledge the voluntary m easures undertaken by the operator to prevents releases. ERA falls to appreciate the magnitude of existing financial assurance. All re le ase s at the Goldstrike Mine have been reported and remediated in accordance with applicable NDEP permits and regulations, the BLM plan of operations and, where applicable, EPA requirements. In every release, appropriate corrective action was approved by regulatory authorities, implemented and documented. NDEP files document that the releases were fully addressed under existing regulatory and permit requirements. Releases cited by EPA reports did not and do not present any risk of a response action. * Operations at Goldstrike have been ongoing for more than thirty years. During that time, many improvements have been made to air and water quality management systems, including additional controls added to comply with updated legal, regulatory and permit requirements from BLM and NDEP. Regulations and permits require that mine facilities are monitored and that any release is reported and addressed. Goldstrike has also implemented internal and corporate environmental management systems and is certified under the IS014001:2004 standard. Current financial assurance for Goldstrike operations totals more than $230 million and is held jointly by NDEP and BLM. Sierra Club v. EPA 18cv3472 NDCA 2 Tier 2 ED 002061 00087255-00331 Table C-1 Facilities Referenced in the Proposed Rule Beal Mountain, MT EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. Wrong date of operations: The Beal Mountain mine was operated by Pegasus Gold from 1984 until 1997. According to the Forest Service (the lead agency conducting cleanup) placer gold was discovered in the area in 1864 and placer mining reached its peak in the early 1900's. The only significant historical production was from placer deposits, which are cited as being primarily responsible for habitat degradation at the site. Since the site operated, both the Forest Service and the State of Montana have increased their requirements on bonding to ensure that sufficient funds are available for reclamation should default occur. The actual date of operations was 1988 through 1997. Buckhorn Mine, WA tP A Mischaracterizations/Omissions The Real Story The mine is owned by Kinross Corp. The site is an underground mine that includes waste rock. W ater management during spring snow melt has been a welldocumented problem. * The mine is owned and operated by Crown Resources Corp., a subsidiary of Kinross Gold U.S.A. Inc. Development rock (a.k.a. waste rock) is temporarily managed on surface and will all be utilized underground. No development rock stockpiles will remain on surface. * Empirical data collected during operations has guided ongoing adaptive management to effectively address annual variations in quantities of snow melt. Successful water management 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00332 Table C-1 Facilities Referenced in the Proposed Rule In 2011 and 2012. the m ine's groundwater capture zone failed to contain spring rains and snow melt resulting in contam inated w ater reaching a nearby creek. W ater generated in the underground mine can carry high concentrations of heavy m etals such as copper, lead, and zinc that must be captured and processed before being discharged at approved outfalls. Violations in 2011 included allowing w ater discharges causing slope instability and erosion and for discharging water at an unauthorized point. Since operations began, the state has issued numerous penalties, notices of violation and adm inistrative orders directing the company to control stormwater, rectify groundwater capture zone inadequacies, prevent slope failures, and comply with permit limits for nitrates, sulfates, acidity, copper, lead zinc and solids from stormwater ponds. activities have included additional discharge outfalls, water treatment technology and system improvements, increased pumping capacity, additional dewatering well installation, and stormwater collection trench installation. In 2011, the operator self-reported an isolated incident that resulted from the malfunction of one dewatering well for a brief period in spring 2011. This discrete release was properly mitigated and the dewatering well has operated without capture zone failure to date. Other alleged capture zone violations were appealed and settled without an admission of fault. * Water from the underground mine sumps is currently collected and treated prior to discharge at approved outfalls. The most recent samples indicate concentrations of copper (year 2016), lead (year 2016) and zinc (year 2015) are below drinking water standards prior to treatment. * Alleged violations were appealed and settled without an admission of fault. * While the state has issued certain penalties and NOVs, these have all be appealed and were either settled without any admission of fault or remain under appeal. In particular, the operator is appealing the 2014 NPDES permit issued by the state as it is unreasonable, based on flawed assumptions and fails to consider natural background quality nor previously permitted mine activities. The permit also set an arbitrary and artificial "capture zone" boundary which, among other things, does not account for facilities that fall outside this 4 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00333 Table C-1 Facilities Referenced in the Proposed Rule "capture zone" that were designed and installed to manage this water. As a result, the permit standards are in many cases unattainable. Florida Canyon, NV EPA Mischaracterizations/Omissions The Real Story The Florida Canyon Mine has been in operation since 1986. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. EPA fails to acknowledge the role of the operator and state regulator in addressing the identified releases. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. The mine began operations in 1987, pre-dating the state's mining regulations by 2 years. The primary groundwater plume at issue was related to a heap leach pad constructed prior to the state Water Pollution Control Regulations. Current state regulations would not allow for this same type of installation. The operator has stopped using the affected portion of the old leach pad and is undertaking remedial action under the oversight of the state regulatory authority. State reports document that the immediate response to the release and conclude that "waters of the state were not threatened and the areas impacted by the released material were remediated quickly with oversight and approval from the site-assigned compliance inspectors." No public money is being utilized for the remediation activities. Sierra Club v. EPA 18cv3472 NDCA 5 Tier 2 ED 002061 00087255-00334 Table C-1 Facilities Referenced in the Proposed Rule Formosa, OR ERA MischaractenzationS'Omissions The Real Story The site has no previous significant legacy mining issues. ERA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome The site was originally mined from approximately 1910-1937. The state subsequently strengthened its mining regulations through passage of the consolidated permit program, which more comprehensively addresses operational design and environmental controls. Golden Sunlight, MT EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA fails to acknowledge the role of the operator and state regulator in addressing the identified release in 1993. EPA fails to appreciate the magnitude of existing financial assurance. Mining operations began in 1890. The release from the tailings facility was discovered as the result of monitoring required by applicable permits. The facility was monitored, the release was reported, and corrective action was taken in accordance with the requirements of applicable permits and regulations. There was no risk of a response action. Golden Sunlight continues to operate and to implement corrective action, reclamation and planned closure activities that will provide long-term assurance that there will be no risk of a response action at Golden Sunlight The current financial assurance for reclamation and closure of the Golden Sunlight mine exceeds $112 million. Montana DEQ is currently reviewing the financial assurance amount and an increase is expected in 2017. 6 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00335 Table C-1 Facilities Referenced in the Proposed Rule EPA ignores the role the ow ner/operator has played in reducing risks of acid rock drainage by facilitating cleanup of historic operations. In addition, an expansion of underground mining operations has been proposed. Financial assurance will be reviewed, and, if necessary, increased before those proposed operations can proceed. In addition to the on-site ore sources, the owner/operator administers a toll milling program and receives ore from various historic mine clean-up projects in the surrounding area. To date, the owner/operator has processed 690,000 tons of material from historic mine waste from 48 southwestern Montana sites. This material, processed through the mill and now is contained within a lined, state of the art tailings facility. Greens Creek, AK EPA Mischaractehzations/Om issions The Real Story The mine lia s been in operation since 1986. Implies the water treatm ent facility was built m response to a release of untreated water with high levels of EPA ignores the role of m onitoring in reducing risk of releases. * Operations commenced in 1989. * Even prior to 1993 when the water treatment facility began operating, all water from tailings and process facilities was collected and treated through a series of ponds and sand filters. No CERCLA-like release ever occurred. Each time that ongoing monitoring has suggested an area of concern at the site, the owner/operator has taken a proactive approach to introduce new technologies and/or operational controls and procedures to minimize and mitigate impacts. 7 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00336 Table C-1 Facilities Referenced in the Proposed Rule Jerritt Canyon, NV EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. EPA neglects to discuss actions taken by the operator under oversight by regulatory authorities. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. EPA overlooks existing financial assurance. The design and much of the construction pre-dates the state's mining regulations. Operator has undertaken extensive corrective action to control sources and pump and contain groundwater plume under oversight by NDEP and Forest Service. No public money is being utilized for the remediation activities. The current financial assurance for Jerritt Canyon, held by NDEP and the Forest Service, totals $74.4 million with $23.5 million of that dedicated to assure management and completion of the corrective action for the releases from the tailings facility. Kennecott Bingham Canyon, UT EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on actions taken by state and federal regulatory agencies (even EPA itself) to prevent a similar outcome Reliance on NGO reports rather than ERA'S own ROD or RI.'FS Failure to acknowledge EPA's past recognition of the site as an example of how releases can be properly addressed. 8 Through regulatory and voluntary efforts, controls have been put in place that have ended the historic practices and prevent further contamination from occurring. The so-called `factsheet' was published by Earthworks, an NGO that is unabashedly and militantly anti-mining and is widely known to play loosely with facts. EPA has touted the site as a leading example of a cooperative federal-state-industry approach to both correct the missteps of the past and provide the right controls to prevent future contamination. Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00337 Table C-1 Facilities Referenced in the Proposed Rule EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. The company has funded all the groundwater source control and other clean-up efforts. Mosaic, FL and LA EPA Mischaracterizations/Omissions The Real Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. EPA indicates that releases leading up to 2015 settlement agreement are representative of current operational problems with phosphogypsum stacks. Implication that the stack releases are being addressed under CERCLA. No discussion of existing financial assurance in place to address identified issues. No public money is being utilized for the remediation activities. EPA's concerns regarding these stacks have been addressed through an enforcement initiative These releases are being addressed under a RCRA consent decree. Through an enforceable consent decree the company agree to place $650 million in a trust and issue a $50 million letter of credit to support the closure and long-term care of these stacks. P4/Monsanto South Rasmussen Facility, ID EPA Mischaracterizations/Omissions The Real Story Inaccurate site identification/description Proposed rule refers to P4/Monsanto South Rasmussen Blackfoot Bridge Facility which are two separate mine but it appears the agency is discussing the South Rasmussen mine since it references a CWA settlement P4 reached with EPA on the legacy South Rasmussen mine site, c South Rasmussen is a legacy mine, permitted in the late 1990s and now in reclamation and closure. 9 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00338 Table C-1 Facilities Referenced in the Proposed Rule EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. Incom plete story of owner ''operator's reclamation efforts. No public money is being utilized for the remediation activities and the mine is covered by a BLM reclamation bond. The company now collects and treats leachate related to the historic overburden disposal areas. Company entered into a consent order with the state to investigate and address groundwater and is working on a remedial action plan. Nearby modern mine operated by company (Blackfoot Bridge) was constructed and permitted to manage surface runoff and basically eliminate infiltration through overburden areas to address potential selenium concerns. Robinson Mine, NV EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. No recognition of the role of the state program in reducing risk. Mining at the Robinson site dates back to the 1860s. Current mine planning emphasizes reclaiming or moving old facilities to prevent releases. The reference releases were identified by the operator through monitoring, reported and addressed through the state regulatory and permit requirements. EPA and state reports document the response and the state concluded that all five released noted by EPA were "quickly cleaned up with the spilled material returned to containment within the process circuit or tailings impoundment." Waters of the State were not threatened and the areas impacted by the released material were remediated quickly with oversight and approval from 10 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00339 Table C-1 Facilities Referenced in the Proposed Rule EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. No discussion of existing financial assurance the site-assigned compliance inspectors. No public money was or has been utilized for the remediation activities. Current financial assurance for the Robinson Mine is $89.7 million, held jointly by BLM and NDEP. Smoky Canyon Mine, ID EPA MischaracterizationsOmissions The Real Story ERA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. EPA fails to acknowledge changes in practices to address the events that happened at the Pole ODA. The owner/operator en tered into an agreement over a decade ago with m u ltip le agencies to investigate and prepare a feasibility study to address releases associated with historical practices. The owner/operator has paid for all investigations, feasibility studies, early actions and all agency costs (including all contractors that state and federal agencies have hired to advise them and oversee the operator's work). Agency costs have been in the millions of dollars. The issues that occurred were the result of historical mining practices used when the mining commenced in 1983 and before selenium had been identified as an issue. These practices have not been used since approximately 2003. U.S. Silver Galena, ID EPA Mischaracterizations/Omissions The Real Story Failure to properly characterize the discharge The issue was a controlled discharge violation that was corrected and settled with the State and EPA. 11 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00340 Table C-1 Facilities Referenced in the Proposed Rule EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. No public money is being utilized for the remediation activities. Zortman and Landusky, MT EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. incomplete discussion of financial assurance EPA neglects to provide Information on changes to the state mining regulations or permit requirements to prevent a similar outcome. Underground mining and vat leaching began in the 1880s. Open pit and heap leaching activities {including use o f cyanide) began in 1977. More than $70 million in financial assurance was available for reclamation and closure of the Zortman and Landusky Mines and for water capture and treatment. BLM reported that was sufficient for some reclamation scenarios but additional funding was needed for the selected reclamation and closure plan. In response to the event at Zortman and Landusky, the federal and state regulatory agencies enacted substantial revisions to their regulations. These changes included much stricter data collection such as waste characterization studies to identify potentially acid-generating materials and revised closure and financial assurance requirements. Sierra Club v. EPA 18cv3472 NDCA 12 Tier 2 ED 002061 00087255-00341 Table -1 Sites Referenced in the Proposed Rule Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00342 Table -2 Sites referenced in Releases Report Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00343 Table -3 Facilities referenced in Evidence Report Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00344 Table -4 Facilities Referenced in the Practices Report Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00345 Table C-2 Facilities Referenced in Releases Report Barite Hill, SC EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. Significant changes were made to the state Mining Act in 1990 to specify reclamation requirements and provide additional enforcement tools. This facility did not have a waste rock management plan to prevent formation of acid mine drainage in the main pit as compared to the most recent mine permitted where all potentially high acid rock drainage wastes are placed on a double lined waste facility. Beai M ountain, MT bPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues EPA neglects to provide information on changes to the state mining regulations or permit, requirements to prevent a similar outcome. Wrong date of operations: The Beal Mountain mine was operated by Pegasus Gold from 1984 until 1997. * According to the Forest Service (the lead agency conducting cleanup) placer gold was discovered in the area in 1864 and placer mining reached its peak in the early 1900's. The only significant historical production was from placer deposits, which are cited as being primarily responsible for habitat degradation at the site. Since the site operated, both the Forest Service and the State of Montana have increased their requirements on bonding to ensure that sufficient funds are available for reclamation should default occur. The actual date of operations was 1988 through 1997. Sierra Club v. EPA 18cv3472 NDCA 1 Tier 2 ED 002061 00087255-00346 Table C-2 Facilities Referenced in Releases Report Brewer Gold, SC EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. The mine is one of the oldest gold mines in the U.S., with the first documented gold production in 1828. The mine operated intermittently from 1828 to 1995. Significant changes were made to the state Mining Act in 1990 to specify reclamation requirements and provide additional enforcement tools. Compared to the minimal monitoring requirements for this site (only at 3 locations) the most recent mine approved in state is required to conduct extensive pre mining, during-mining and post mining surface and groundwater monitoring obligations with quarterly reporting to EPA and the state. This owner/operator posted $500,000 in financial assurance compared to $65 million for most recently approved mine in the state. This facility had an unlined overburden and low-grade storage area as compared to the most recent mine permitted where all potentially high acid rock drainage wastes are placed on a double lined waste facility. Buckhorn Mine, WA tP A Mischaracterizations/Omissions The Real Story T h e mine is owned by Kinross Corp. * The mine is owned and operated by Crown Resources Corp., a subsidiary of Kinross Gold U.S.A. Inc. 2 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00347 Table C-2 Facilities Referenced in Releases Report T h e site is an underground mine that includes w aste rock. W ater m anagem ent during spring snow melt has been a welldocumented problem. In 2011 and 2 012. the mine's groundwater capture zone failed to contain spring rains and snow melt resulting in contam inated w ater reaching a nearby creek. W ater generated in the underground mine can carry high concentrations of heavy metals such as copper, lead, and zinc that must be captured and processed before being discharged at approved outfalls. Violations in 2011 included allowing w ater discharges causing slope instability and erosion and for discharging water at an unauthorized point.________________________________ Since operations began, the state has issued numerous penalties, notices of violation and administrative orders directing the com pany to control______ Development rock (a.k.a, waste rock) is temporarily managed on surface and will all be utilized underground. No development rock stockpiles will remain on surface._____________________ Empirical data collected during operations has guided ongoing adaptive management to effectively address annual variations in quantities of snow melt. Successful water management activities have included additional discharge outfalls, water treatment technology and system improvements, increased pumping capacity, additional dewatering well installation, and stormwater collection trench installation._____ In 2011, the operator self-reported an isolated incident that resulted from the malfunction of one dewatering well for a brief period in spring 2011. This discrete release was properly mitigated and the dewatering well has operated without capture zone failure to date. Other alleged capture zone violations were appealed and settled without an admission of fault.________________________ Water from the underground mine sumps is currently collected and treated prior to discharge at approved outfalls. The most recent samples indicate concentrations of copper (year 2016), lead (year 2016) and zinc (year 2015) are below drinking water standards prior to treatment.____________________ Alleged violations were appealed and settled without an admission of fault. While the state has issued certain penalties and NOVs, these have all be appealed and were either settled without any admission of fault or 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00348 Table C-2 Facilities Referenced in Releases Report stormwater, rectify groundwater capture zone inadequacies, prevent slope failures, and comply with permit limits for nitrates, sulfates acidity copper, lead, zinc and solids from stormwater ponds remain under appeal. In particular, the operator is appealing the 2014 NPDES permit issued by the state as it is unreasonable, based on flawed assumptions and fails to consider natural background quality nor previously permitted mine activities. The permit also set an arbitrary and artificial "capture zone" boundary which, among other things, does not account for facilities that fall outside this "capture zone" that were designed and installed to manage this water. As a result, the permit standards are in many cases unattainable. Cimarron, NM EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. The facility operated from 19601979. The New Mexico Mining and Minerals Division strictly regulates metal mining and milling in New Mexico. The Division, and the mining regulations it promulgated, was authorized by the New Mexico Mining Act of 1993. Florida Canyon, NV EPA Mischaractenzations'Omissions The Real Story The Florida Canyon Mine has been in operation since 1986 EPA neglects to provide information on changes to the state mining The mine began operations in 1987, pre-dating the state's mining regulations by 2 years. * The primary groundwater plume at issue was related to a heap leach pad constructed prior to the state 4 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00349 Table C-2 Facilities Referenced in Releases Report regulations or permit requirements to prevent a similar outcome ERA falls to acknowledge the role of the operator and state regulator In addressing the Identified releases. ERA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities Water Pollution Control Regulations. Current state regulations would not allow for this same type of installation. The operator has stopped using the affected portion of the old leach pad and is undertaking remedial action under the oversight of NDEP. NDEP reports document that the immediate response to the release and conclude that "waters of the state were not threatened and the areas impacted by the released material were remediated quickly with oversight and approval from the BMRR site assigned compliance inspectors." No public money is being utilized for the remediation activities. Formosa, OR EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. The site was originally mined from approximately 1910-1937. The state subsequently strengthened its mining regulations through passage of the consolidated permit program, which more comprehensively addresses operational design and environmental controls. Gilt Edge, SD ERA Mischaractenzations'Omissions The Real Story The site has no previous significant legacy mining Issues. 5 Mining operations commenced in 1876. Sporadic mining by Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00350 Table C-2 Facilities Referenced in Releases Report EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome numerous operators were conducted until 1941. Early gold miners developed extensive underground w o rkin g s that wind through the site and engaged in some surface mining. In addition, early miners deposited mill tailings in two nearby creeks. The site is contaminated as a result of historic mining activities. South Dakota strengthened its mining regulations in 1987 and made additional changes sine to make regulations even more stringent. Golden Sunlight, MT EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA fails to acknowledge the role of the operator and state regulator in addressing the identified release in 1993. EPA fails to appreciate the magnitude of existing financial assurance. Mining operations began in 1890. The release from the tailings facility was discovered as the result of monitoring required by applicable permits. The facility was monitored, the release was reported, and corrective action was taken in accordance with the requirements of applicable permits and regulations. There was no risk of a response action. Golden Sunlight continues to operate and to implement corrective action, reclamation and planned closure activities that will provide long-term assurance that there will be no risk of a response action at Golden Sunlight The current financial assurance for reclamation and closure of the Golden Sunlight mine exceeds $112 million. Montana DEQ is currently reviewing the financial assurance 6 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00351 Table C-2 Facilities Referenced in Releases Report EPA ignores the role the ow ner/operator has played in reducing risks of acid rock drainage by facilitating cleanup of historic operations. amount and an increase is expected in 2017. In addition, an expansion of underground mining operations has been proposed. Financial assurance will be reviewed, and, if necessary, increased before those proposed operations can proceed. In addition to the on-site ore sources, the owner/operator administers a toll milling program and receives ore from various historic mine clean-up projects in the surrounding area. To date, the owner/operator has processed 690,000 tons of material from historic mine waste from 48 southwestern Montana sites. This material, processed through the mill and now is contained within a lined, state of the art tailings facility. Greens Creek, AK EPA Mischaractehzations/Omissions The Real Story T h e mine lias been in operation since 1986. Implies the w ater treatm ent facility w as built m response to a release of untreated water with high levels of EPA ignores the role of monitoring in reducing risk of releases. * Operations commenced in 1989. * Even prior to 1993 when the water treatment facility began operating, all water from tailings and process facilities was collected and treated through a series of ponds and sand filters. No CERCLA-like release ever occurred. Each time that ongoing monitoring has suggested an area of concern at the site, the owner/operator has taken a proactive approach to introduce new technologies and/or operational controls and procedures to minimize and mitigate impacts. 7 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00352 Table C-2 Facilities Referenced in Releases Report Grouse Creek, ID EPA M ischaracterizations/O m issions The Real Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. Seepage and runoff from the w aste rock dum p is routed to the w e s t ditch. The w est ditch w ater flow s to the w astew ater treatm ent plant prior to discharge. Reclamation of the site was completed in 2013 with reclamation bonds released by the state in 2014 and the Forest Service in 2015. The site has been reclaimed with years of documented compliance data demonstrating environmental protectiveness. Operation of a water treatment plant is ongoing and the discharge remains in compliance with the NPDES permit requirements. The data from water quality sampling and in-stream biological monitoring shows no impacts to beneficial use, demonstrates environmental protectiveness and documents the successful reclamation of the mine. The west ditch has been eliminated with completion of the site reclamation. The subsurface water collected by waste rock storage facility keyblock drain is collected into a buried pipe which is routed to the water treatment operations pond and subsequently sent to the water treatment plant prior to discharge. Extensive field testing of the waste rock storage facility's cover system has shown to the satisfaction of the Forest Service that the cover acts as an effective barrier to maintain surface water flow away from the waste rock located beneath the cover. The surface runoff from the majority of the site is clean storm water which is managed by best management practices and routed off-site over reclaimed surfaces as permitted under the Multi-Sector Stormwater General Permit. 8 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00353 Table C-2 Facilities Referenced in Releases Report T h e so urces o f w a s te w a te r in outfalls 002 and 003 discharge include runoff and seepage from the w aste rock dum p, m ine drainage from the S unbeam adit, storm w ater, and w astew ater from the tailings im poundm ent underdrains. Following precipitation, coagulant and flocculant are added to aid settling and the w aste w ater flow s to a lined settling pond. A minimal amount of storm water is routed to the water treatment plant and consists of precipitation falling within the footprint of the operations pond, and two additional ponds, all of which are part of the water management and water treatment system. This language appears to be taken from the 2015 fact sheet for the NPDES renewal but the 2016 renewal fact sheet should be referenced. The water treatment does not include addition of a coagulant as it is not required. Illinois Creek, AK ERA M ischaracterizations/O m issions The Real Story ERA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. ERA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. * In response to the events at Illinois Creek, the state strengthened its financial assurance requirements by increasing the specific items and activities included in the cost estimate, as well as ensuring the estimate more accurately reflected actual reclamation costs. The state entered into a "mine-toreclaim" partnership by allowing a private company to continue operations and use money from the production to fund cleanup and reclamation. Jerritt Canyon, NV EPA M ischaracterizations/O m issions The Real Story 9 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00354 Table C-2 Facilities Referenced in Releases Report EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. EPA neglects to discuss actions taken by the operator under oversight by regulatory authorities. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. EPA overlooks existing financial assurance. The design and much of the construction pre-dates the state's mining regulations. Operator has undertaken extensive corrective action to control sources and pump and contain groundwater plume under oversight by NDEP and Forest Service. No public money is being utilized for the remediation activities. The current financial assurance for Jerritt Canyon, held by NDEP and the Forest Service, totals $74.4 million with $23.5 million of that dedicated to assure management and completion of the corrective action for the releases from the tailings facility. Kendall Mine, MT EPA M ischaracterizationsO m issions The Real Story The site has no previous significant legacy m ining Issues. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. Placer mining began in the 1880s. The advent of the improved cyanide process in 1900 brought a boom to the district as the abundance of "cyanide ores." No public money is being utilized for the remediation activities. Kinsley Mine, NV EPA M ischaracterizations/O m issions The Real Story EPA neglects to provide inform ation on changes to the state and BLM m ining perm it requirem ents to prevent a sim ilar outcom e. Both the BLM and NDEP have changed how reclamation bonds are calculated to ensure sufficient 10 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00355 Table C-2 Facilities Referenced in Releases Report funds for reclamation in the event of a default. L on e Tree M ine, NV EPA Mischaracterizations/Omissions The Real Story Characterization of pit lake acidity as a release requiring a CERCLA-like response incom plete story of owner.-operator efforts to address acidic pit lake. No discussion of existing financial assurance in place to address identified issues As of Jan. 2014 the lake level was approximately 4352 feet. The pit lake became acidic shortly after its formation as a result of exposed, naturally occurring mineralization but there have been no releases to the environment as the pit lake is a hydraulic sink. Groundwater surrounding the pit lake naturally flows to, not out of the lake. Since acidity was first identified, it has been successfully offset. The recent success of treatment and resulting lessons learned will continue to allow for more refined and more effective future reclamation practices. The handling of the issue by the owner/operator demonstrates that existing regulatory programs are capable of detecting and addressing issues before major problems arise and without having to rely on any public funding. The owner/operator holds in excess of $70 million in financial assurance to cover the cost of final closure. Much of this cost is attributed to pit lake management. The lake level is approximately 4,230 "above mean sea level." EPA's omission constitutes an exaggeration of scale and likely overstates the impacts. McLaughlin Mine, CA 11 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00356 Table C-2 Facilities Referenced in Releases Report EPA M ischaracterizations/O m issions EPA selectively quotes from reports regarding the M cLaughlin m ine w ithout reporting the status or conclusions by C alifornia regulatory agencies responsible fo r the site. EPA fails to acknow ledge the role of th e o p e ra to r and sta te re g u la to r in addressing risk of releases. EPA fails to appreciate the m agnitude of existing financial assurance. EPA ignores the role the o w n e r/o p e ra to r has p la yed in reducing risks of acid rock drainage by facilitating cleanup of historic o p e ra tio n s . The Real Story The McLaughlin Mine is closed and is subject to site-specific waste discharge requirements and closure and post-closure maintenance imposed by the California Regional Water Quality Control Board, Central Valley Region. The closure order includes a detailed assessment of mine waste, facilities and mine waste management units and imposes specific design, maintenance and monitoring requirements based on a comprehensive hydrogeologic investigation of the area.________ The construction, operation, reclamation and closure of the McLaughlin mine has been undertaken and continues under the supervision of the California regulatory authority.____________ Financial assurance for closure and post-closure maintenance for the McLaughlin mine exceeds $42 million. That financial assurance is available to respond to any release. However, the operator remains liable for implementing the closure and post-closure maintenance and monitoring plan, and the financial assurance has not been called upon nor have any other taxpayer dollars been expended to respond to a release of hazardous substances at the McLaughlin mine._______________________ During operations, the owner/operator cleaned up three historic mercury mines. Sierra Club v. EPA 18cv3472 NDCA 12 Tier 2 ED 002061 00087255-00357 Table C-2 Facilities Referenced in Releases Report South and Central Rasmussen Ridge, ID ERA Mischaracterizations-'Omissions The Real Story No recognition of the role of the state program in reducing risk ERA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities Incomplete story of ownenoperator's reclamation efforts It was through sampling pursuant to the state regulatory program that the owner/operator identified exceedances of surface water standards. The state and owner/ operator signed a Consent Order 2013 to identify potential sources of contamination to the groundwater and two creeks. A Final Preliminary Source Characterization Report has been submitted and it is anticipated that the final report will be approved in 2017 and a phased remedial action plan is anticipated to commence in mid-2017. * No public money is being utilized for the remediation activities. Following discovery of surface water standard exceedance in a creek in 2005, the owner/operator constructed a pumpback system, which improved ponds and pumps to capture potentially impacted surface water and retain it onsite by pumping to an infiltration pond. The owner/operator instituted best management practices of stormwater, involving routing runoff water into retention and infiltration ponds, with the goal of preventing surface runoff water that has been in contact with excavated material from leaving the site. The owner/operator has successfully run the pumpback system and used these practices to manage stormwater for over twelve years. Stormwater management features will be retained as necessary on active portions of the site, while 13 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00358 Table C-2 Facilities Referenced in Releases Report inactive portions will be reclaimed following mining. * In 2012 the owner/operator worked with state and federal regulations to initiate construction of a Mine Retention Pond Berm to add runoff and stormwater control capacity during high-flow events. * The owner/operator also constructed a geosynthetic cap and cover system of a dump as part of a study to evaluate constructability and effectiveness of a cap in reducing selenium loading and to evaluate the effectiveness of establishing a vegetative cover versus a rock armor cover. Rain Mine, NV EPA M ischaracterizations/O m issions The Real Story EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. No recognition of the role of the state program in reducing risk. No discussion of existing financial a s s u ra n c e in p la ce to a d d re ss identified issues. Incom plete story of ow ner/operator's reclam ation efforts. The dam and waste rock dump at issue were designed before the state's mining regulations for water controls and reclamation went into effect. All issues with respect to acid rock drainage and perceived problems with the tailings storage facility were detected by the owner/operator pursuant to the state-mandated monitoring plan, reported to the state regulator and corrected under the state program, all without the need for any public funding. The owner/operator holds in excess of $67 million in financial assurance. EPA overlooks the owner/operator's current reclamation practices and the positive results to date including, re-grading the heap leach pad, 14 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00359 Table C-2 Facilities Referenced in Releases Report M ischaracterization of tailings. closing the pregnant pond, covering one of the rock dumps, closing the fuel dock and removal of one of the crushing facilities. EPA fails to note that the first seepage referenced consisted of uncontaminated stormwater. EPA fails to mention the state's view that downstream seepage controls are effective. Red Dog, AK bPA M ischaracterizations/O m issions The Real Story No discussion of existing financial a s s u ra n c e in p ia ce to a d d re ss identified long-term w ater management. Issues. * : The reclamation and closure bond provided pursuant to the state regulatory program exceeds $558 million and is sufficient to cover the reclamation and foreseeable long term water treatment costs. The funds will cover long term water treatment, repair and inspections of tailings dams and repair and monitoring of waste rock storage pile covers. Rochester M ine, N V EPA M ischaracterizations/O m issions The Real Story N um ber of heap leach pads. Num ber of process ponds. Incom plete description of pit lake. W hile EPA correctly indicates five heap leach pads are authorized, only five have been constructed. S even ponds are stated but one is not yet constructed. T h e te s t e va p o ra tio n cell is m ischaracterized as a process pond but it is no lo nger used as such. R em ediation of the pit lake has been com pleted through backfilling and lim e am endm ent so that the potential 15 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00360 Table C-2 Facilities Referenced in Releases Report Im plication that certain perm it requirem ents w ere included due to the need to address previous discharges at the site, including conditions for rem ediation of the leach pads and cover system installations. fo r a current or future pit lake no longer exists. T h e term "re m e d ia tio n " is m isrepresented, as the closure system is a function o f the closure of a leach pad as a com ponent of the overall reclam ation of the site. There are "conditions" associated the cover system , but these are typical perm it related conditions that apply to the site from a closure standpoint, not a corrective action "rem ediation" standpoint as the EPA has intended to imply. Also, there is one area w h e re g ro u n d w a te r rem ediation is occurring and this is being addressed. No new co n d itio n s w e re a dded in the authorization related to the current rem ediation tha t is occurring. The g ro u n d w a te r rem ediation is under control, is lim ited, has been a cco u n te d fo r in state perm its, w a s a d d re sse d in the re ce n t N E P A EIS, and is in cluded in th e site 's closure plan and associated reclam ation cost estim ate/financial assurance. Silver Mountain, WA tP A Mischaracterizations/'Omissions The Real Story The site has no previous significant legacy mining issues EPA neglects to provide information on changes to the state mining The site includes the area where a mine operated sporadically from 1928 to the 1960s to extract silver, copper and gold from soil and ore. Another EPA document indicates mining could have commenced as early as 1902. By 1956, the sporadic development of the mine produced about 2000 feet of underground workings and several tailings piles in a mine dump consisting of waste and mineralized rock. The state Metals, Mining and Milling Operations Act was not 16 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00361 Table C-2 Facilities Referenced in Releases Report regulations or perm it requirem ents to prevent a sim ilar outcom e enacted until 1994. The act addresses the following issues that would minimize a repeat of the events that happened at Silver Mountain: inspections, financial assurance, engineering design, cyanide management and waste management. Smoky Canyon Mine, ID EPA M ischaracterizations/O m issions The Real Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. E P A fa ils to a c k n o w le d g e c h a n g e s in practices to address the events that happened at the Pole ODA. The owner/operator entered into an agreement over a decade ago with multiple agencies to investigate and prepare a feasibility study to address releases associated with historical practices. The owner/operator has paid for all investigations, feasibility studies, early actions and all agency costs (including all contractors that state and federal agencies have hired to advise them and oversee the operator's work). Agency costs have been in the millions of dollars. The issues that occurred were the result of historical mining practices used when the mining commenced in 1983 and before selenium had been identified as an issue. These practices have not been used since approximately 2003. Summitville, CO bPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues Historic mining operations began as early as the 1870s or 1890s (documents conflict). 17 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00362 Table C-2 Facilities Referenced in Releases Report EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome In the Summitville Dam Impoundment, a historic tailings pond, AMD was generated by the contact of surface water collected with the waste stored in the impoundment. It was estimated that 36,000 pounds of copper per year was transported from these source areas into the Wrightman Fork. The Reynolds Adit was completed in 1897. Prior to plugging in 1994. the Adit flowed continuously, varying from a low of approximately 100 gallons per minute in the winter to an average high of approximately 400 gallons per minute during spring melt. Because the Reynolds Adit drains the mineralized portion of South Mountain, historically it has evidenced relatively high metal discharges. In 1934, a 100 ton-per-day flotation/cyanidation mill and gold retort was installed close to the south bank of the original Wightman Fork Creek. Records indicate that dewatering filtrate from the flotation circuit was discharged directly into the creek throughout the mid-1930's. Open pit mining operations did not expose standing ground water in the mine pit. Infiltration of surface water (derived from snowmelt and rainfall) through the p it may have resulted in elevated dissolved metal concentration in the water draining from th e Reynolds Adit. The State enacted the Mined Land Reclamation Act of 1993 as a response to the perceived regulatory failure at Summitville. The primary purpose of the Act is to ensure that mining operations utilizing toxic or acidic chemicals receive increased regulatory oversight.___________________ 18 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00363 Table C-2 Facilities Referenced in Releases Report The act requires preparation of an Environmental Protection Plan that describes measures to be taken to prevent any unauthorized release of pollutants to the environment as well as Include adequate reclamation and closure practices for such designated chemicals, toxic or acid-forming materials and how unauthorized discharge of acid mine drainage will be prevented. Additionally, the provides new authorities for regulators regarding inspections and corrective actions. The 1993 amendments also contained additional reporting requirements and financial safeguards intended to prevent another Summitville. Thompson Creek Mine, ID EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state and BLM mining permit requirements to prevent a similar outcome EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. Both the USFS and IDEQ changed how permit conditions are developed and how to calculate reclamation bonds to ensure proper closure and sufficient funds for reclamation. No public money is being utilized for the remediation activities. Wharf Mine, SD EPA M ischaracterlzationsOm issions The Real Story Dated information on exceedances of the weak acid dissociable standard for cyanide. Consistent improvement in water treatment and solution management have resulted in no 19 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00364 Table C-2 Facilities Referenced in Releases Report Dated inform ation on arsenic levels in certain wells exceedances to the Annie Creek since 2009. Of the seven wells mentioned, five of them are now consistently within the arsenic groundwater standard of 0.01 mg/l, and the other two are exhibiting consistent decline in their arsenic concentrations and are expected to also be within the groundwater standard in the near future. Zortman and Landusky, MT EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. Incom plete discussion of financial assurance EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Underground mining and vat leaching began in the 1880s. Open pit and heap leaching activities (including use of cyanide) began in 1977. More than $70 million in financial assurance was available for reclamation and closure of the Zortman and Landusky Mines and for water capture and treatment. B LM reported that was sufficient for some reclamation scenarios but additional funding was needed for the selected reclamation and closure plan. In response to the event at Zortman and Landusky, the federal and state regulatory agencies enacted substantial revisions to their regulations. These changes included much stricter data collection such as waste characterization studies to identify potentially acid-generating materials and revised closure and financial assurance requirements. Sierra Club v. EPA 18cv3472 NDCA 20 Tier 2 ED 002061 00087255-00365 Table C-3 Facilities Referenced in the Evidence Report Anaconda Co. Smelter, MT EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Large-scale copper smelting and concentrating activities outside the town of Anaconda began in 1884. Hazardous release records date back to 1905. The facility was designed long before any the state promulgated any mining or environmental regulations. Argenta Mine and Mill, NV ERA M ischaracterizations-'O m issions The Real Story EPA failed to provide any inform ation as to the relevance of this site to the proposed regulation. T h e Argenta Mine and Mill facilities predate the water pollution control regulations for mining facilities established pursuant to NAC 445A.350 through 445A.447. The NDEP issued permits for this facility and the facility operates within the requirements of those permits. ASARCO Hayden Plant EPA M ischaracterizations/O m issions The Real Story T h e H ayden P la nt is in N evada. EPA attributes the releases to the Hayden Plant. The Hayden Plant is located in Arizona. The releases actually occurred at the ASARCO Ray facility located 20 miles from the Hayden Plant. 1 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00366 Table C-3 Facilities Referenced in the Evidence Report The releases from this facility are recent. The site has no previous significant legacy m ining issues. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. EPA alleges elevated air levels of copper and chrom ium . EPA alleges elevated air levels of arsenic, cadm ium and lead. The releases occurred approximately 25 years ago. Contamination at Hayden may be related to activities potentially dating back to the beginning of operations in 1911 (not 1920). Arizona has adopted the Aquifer Protection Permit (APP) to protect groundwater: o Imposes design, operation, inspection, monitoring, recordkeeping and contingency requirements on mining facilities o Requires specified groundwater standards be met at points of compliance that are designated for each permitted site. The company has paid for all remediation and entered into a consent decree under the CWA (not CERCLA) to ensure impacted groundwater does not impact a nearby creek The document cited by EPA does not discuss copper or chromium. EPA Region 9 has no regional screening levels for copper and chromium in air. The levels for arsenic and cadmium are elevated only in respect to EPA Region 9's regional screening levels, which are generic and merely suggests that further evaluation of potential risks is appropriate. The average measured lead level was below the NAAQS for lead Any violations were resolved by a CAA (not CERCLA) consent decree in 2015, in which the company admitted no liability but agreed to a converter retrofit project to reduce these air emissions. 2 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00367 Table C-3 Facilities Referenced in the Evidence Report EPA exaggerates a 2002 spill. The 2002 was caused by equipment failure and not design or operational flaws. The amount of CERCLA chemicals was small (only 1.37 pounds) and did not leave the site. Bunker Hill, ID EPA M ischaracterizations-'O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to indicate that potentially responsible parties are funding arid conducting a significant portion cleanup or reclam ation activities. Operations began in 1886. The beginning of mining a n d milling at Bunker Hill predated the Clean Air Act by 84 years, the Clean Water Act by 82 years, and the Resource Conservation and Recovery Act by 78 years. * Settlements helping to fund cleanups include $180 million from Hecla and $435 million from ASARCO. Captain Jack, CO EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Mining at the Captain Jack Mill began in 1861. The primary source of contamination of a nearby creek originated in the 19th century. Significant changes were made to the mining law with the passage of the Mined Land Reclamation Act of 1993 to specify reclamation requirements and provide additional enforcement tools. Sierra Club v. EPA 18cv3472 NDCA 3 Tier 2 ED 002061 00087255-00368 Table C-3 Facilities Referenced in the Evidence Report Cimarron, NM ERA M ischaracterizationsO m issions The site has no previous significant legacy m ining issues. ERA neglects to provide Inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. The Real Story The facility operated from 19601979. * The New Mexico Mining and Minerals Division strictly regulates metal mining and milling in New Mexico. The Division, and the mining regulations it promulgated, was authorized by the New Mexico Mining Act of 1993.___________ Eagle Mine, CO EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Mining began in the 1880s and continued until 1984. Significant changes were made to the mining law with the passage of the Mined Land Reclamation Act of 1993 to specify reclamation requirements and provide additional enforcement tools. East Helena, MT EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues Lack of acknow ledgem ent of other sources of contam ination The zinc operation operated from 1927 to 1983, and the lead smelter operated from 1888-2001. Other sources contributing to contamination at Operating Unit 2 of site (which includes the entire City of East Helena) include the Americas Chemet copper pigmentation processing facility 4 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00369 Table C-3 Facilities Referenced in the Evidence Report Lack of acknow ledgem ent that at least, so m e o f th e cle a n u p w a s d on e pursuant to ERA s RCRA. not CERCLA. authority. Failure to accurately report the results of blood lead studies and BNSF railroad yard. Not all costs or actions related to this OU can b e attributable to the Asarco smelter. Some site investigation and cleanup work done under RCRA rather than CERCLA. The site w a s initially designed as a CERCLA site, then re-classified as a RCRA site to address the on-going operations, only to again be re classified as a CERCLA site. Even after designation as a CERCLA site, some site cleanup activities were conducted under RCRA authorities. The Montana Department of Environmental Quality, U.S. Department of Health and Human Services, and CDC conducted in 1983 an integrated epidemiologic study in the Helena Valley of Montana to assess children's blood lead levels and the relationship of these levels to the levels of lead in different environmental media. Despite the elevated soils metal levels, the blood lead levels of all children tested showed no cause for public health concern. Eastern Michaud Flats EPA M ischaracterizations/O m issions The Real Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. The company has funded and conducted any necessary cleanup activities. Sierra Club v. EPA 18cv3472 NDCA 5 Tier 2 ED 002061 00087255-00370 Table C-3 Facilities Referenced in the Evidence Report Elkem Eramet, OH ERA M ischaractenzations'O m issions The Real Story ERA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. The facility corrected its discharge problem without using any taxpayer funds. Foote Mineral Co., PA EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. Operations began in 1941 and included a variety of processing operations that could not be legally constructed today (e.g., a pit used to burn solvents for purposes of disposal, and unlined lithium processing waste lagoons). Through an administrative order on consent and a consent decree, the PRPs performed the remedy and continue to perform operation and maintenance of the constructed remedy. Fort Knox, AK EPA M ischaractenzations'O m issions The Real Story EPA notes this site as one w here S uperfund risk assessm ents took The referenced biomonitoring reports were not related to any releases at the site but were conducted by the state fish and game department to m easure progress o f voluntary reclamation efforts, including the establishment of a habitat reservoir, associated with historic placer mining. Sierra Club v. EPA 18cv3472 NDCA 6 Tier 2 ED 002061 00087255-00371 Table C-3 Facilities Referenced in the Evidence Report Gilt Edge, SD EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. Mining operations commenced in 1876. Sporadic mining by numerous operators were conducted until 1941. Early gold miners developed extensive underground workings that wind through the site and engaged in some surface mining. In addition, early miners deposited mill tailings in two nearby creeks. The site is contaminated as a result of historic mining activities. South Dakota strengthened its mining regulations in 1987 and made additional changes sine to make regulations even more stringent. Greens Creek, AK EPA Mischaracterizations-'Omissions The Real Story T h e mine has been in operation since 1986. Implies the w ater treatm ent facility w as built m response to a release of untreated w ater with high levels of EPA ignores the role of monitoring in reducing risk of releases. Operations commenced in 1989. * Even prior to 1993 when the water treatment facility began operating, all water from tailings and process facilities was collected and treated through a series of ponds and sand filters. No CERCLA-like release ever occurred. Each time that ongoing monitoring has suggested an area of concern at the site, the owner/operator has taken a proactive approach to introduce new technologies and/or operational controls and procedures to minimize and mitigate impacts. 7 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00372 Table C-3 Facilities Referenced in the Evidence Report Herculaneum Lead Smelter, MO EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. Herculaneum Lead Smelter has operated since 1892. EPA fails to note that the smelter was constructed and primarily operated prior to the passage of the Clean Air Act. Homestake Mine, NM EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues EPA neglects the actions of the operator under the oversight of regulatory authorities. EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. * Operations began in 1958. Groundwater contamination was identified by the operator's monitoring in 1976. Remedial activities (ground water treatment and tailings management) are the result of activities which predated the current regulatory framework. The owner/operator of the facility has undertaken response and remedial actions under joint oversight governed by a memorandum of understanding between the NRC and EPA resulting in a CERCLA-equivalent process. Most of the site facilities have been decommissioned and reclaimed by the owner/operator without any taxpayer funds. Sierra Club v. EPA 18cv3472 NDCA 8 Tier 2 ED 002061 00087255-00373 Table C-3 Facilities Referenced in the Evidence Report Li Tungsten Corp.,, NY EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state and federal regulations or permit requirements to prevent a similar outcome. The site has no previous significant legacy mining issues. Changes to state and federal regulations in the 1980s and 1990s limited the occurrence of the type of issues that developed at this site. The facility operated from 1940 to about 1984. Ore feed stock was transported 1,000s to 10,000s miles for processing at the site. Lincoln Park, CO EPA Mischaracterizations/Omissions The Real Story EPA notes this site as one of the few 2 00 9 Current sites where Superfund risk assessm ents took place. EPA neglects to indicate that few taxpayer funds w ere used to conduct cleanup or reclamation activities. Failure to discuss the role of the federal governm ent in the contamination at the site This site is not representative of current sites. Operations began in 1958. * The operator has primarily been funding and conducting cleanup via consent decrees with EPA. The federal government licensed and oversaw the facility in connection with the government's federal nuclear program. Macalloy Corp., SC EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state and federal regulations or permit requirements to prevent a similar outcome. The smelting plant operated at the site from 1941 to 1998. Significant changes were made to the state Mining Act in 1990 to specify reclamation requirements 9 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00374 Table C-3 Facilities Referenced in the Evidence Report and provide additional enforcement ______________________________________tools._______________________ EPA failed to acknowledge that the The Department of Defense has federal government managed parts of owned, operated, or otherwise the site. used areas of the site to produce and store ferrochromium alloy, ______________________________________chrome ore, and slag since 1942. Midnite Mine, WA bPA Mlscharacterizations/Omlssions The Real Story incorrectly identified as post-1980 site. EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. Failure to discuss the role of the federal governm ent in the contamination at the site * Mining took place between 1955 and 1981 The company has conducted the cleanup efforts and reimbursed the agency for all oversight costs: o spent $48 million on remedial work; o placed $42 million in a trust fund o issued $170 million letter of credit for use toward completion of remedial work. The federal government licensed and oversaw the mine in connection with the government's federal nuclear program. In fact, the government was held liable as an owner of the mine by a federal court, which even found that the United States had "the authority to prevent the very contamination" for which it brought action against the company. Monsanto Soda Springs, ID EPA Mischaracterizations/Omissions The Real Story Failure to acknowledge contamination was a result of historic practices and The Record of Decision for the NPL listing and remedial actions to 10 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00375 Table C-3 Facilities Referenced in the Evidence Report have for the most part been addressed. EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. Incorrect description of final remedy. Incorrect characterization of on-site slag piles address groundwater and dust emissions happened nearly 30 years ago. Remedial actions related to an old hydroclarifier that was replaced and ponds that were evacuated and filled. The company is performing a focused RI/FS to determine if a faster groundwater remedy can be achieved. The company has conducted and/or paid for all remedial activities. EPA's "Final Remedy" section notes that adjacent "residential" property owners were given a choice to have their property cleaned up via (a) "evacuation," containment, and replacement of soils or (b) rendered protective of human health and the environment via land-use restrictions...." Properties adjacent to facility are agricultural (not residential) and were given option being cleaned up via "excavatio n ," n o t "evacu atio n " but all opted for land use restrictions on residential development rights. Testing has shown that slag from the plant furnaces is a glass-like, inert material. National Southwire Aluminum, KY EPA Mischaractenzations'Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide Information on changes to the state and federal The is a primary aluminum smelter that operated from 1969. Ore feed stock was transported 1,000s miles for processing at the site. Changes to state and federal regulations in the 1980s and 1990s 11 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00376 Table C-3 Facilities Referenced in the Evidence Report regulations or permit requirements to prevent a similar outcome limited the type of issues that developed at this site. Omaha Lead., ne EPA Mischaracterizations/Omissions The Real Story Type of facility mischaracterized Failure to accurately portray contributions of second on-site facility. ASARCO's operation was a refinery as opposed to a smelter. To the extent offsite remediation was conducted (e.g., yard replacement, blood lead testing) some of this work was attributable to a second facility (smelter and lead battery recycling plant) operated from another entity. Ormet Corp., OH bPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues EPA neglects to provide information on changes to the state and federal regulations or permit requirements to prevent a similar outcome EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. * The is a primary aluminum smelter that operated from 1969. Ore feed stock was transported 1,000s miles for processing at the site. Changes to state and federal regulations in the 1980s and 1990s limited the type of issues that developed at this site. The company is conducting site remediation pursuant to a consent order. Palmerton Zinc Pile, PA EPA Mischaracterizations/Omissions The Real Story 12 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00377 Table C-3 Facilities Referenced in the Evidence Report Mischaracterization of the risks to groundwater. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. While the local drinking water utility draws water from on-site well, the wells have been operated for decade with no issues associated with the past smelting activities. All remedial costs and activities pursuant to CERCLA have been implemented by the relevant PRPs Phelps Dodge Tyrone, NM EPA Mischaracterizations/Omissions The Real Story identifies releases In 2 0 0 0 but fails to discuss actions taken In response. No recognition of the role of the state program in reducing risk. The company agreed to a cooperative assessment of potential natural resource to address such releases. Entered into a settlement of claims under the Migratory Bird Treaty Act resulting in improved water management and reclamation work. Closed and reclaimed all tailings impoundments. Conducted a comprehensive assessment of past and present discharges affecting ground water and surface water both within and outside of the site and submitted 2 abatement plans that were approved by the state. * The facility holds seven state groundwater discharge permits, including a site-wide permit that governs closure. o The closure permit specifies closure and reclamation design requirements to prevent groundwater pollution following closure, water collection and treatment requirements, closure and post-closure monitoring and reporting, 13 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00378 Table C-3 Facilities Referenced in the Evidence Report and financial assurance for all closure costs Each of the permits contains provisions limiting the volume of discharges, governing design and operation of the discharging facilities, and requiring monitoring of the discharges and groundwater and reporting of unauthorized discharges. The state has specific regulations governing copper mining facilities. which apply to future renewals of the existing permits. Red Dog, AK EPA Mischaracterizations/Omissions The Real Story No discussion of existing financial assurance in place to address identified long-term water management issues. The reclamation and closure bond provided pursuant to the state regulatory program exceeds $558 million and is sufficient to cover the reclamation and foreseeable long term water treatment costs. The funds will cover long term water treatment, repair and inspections of tailings dams and repair and monitoring of waste rock storage pile covers. Reynolds Metals Co., OR EPA Mlscharacterizations/Qmlssions The Real Story The site has no previous significant legacy mining issues EPA neglects to provide information on changes to the state and federal * The is a primary aluminum reduction plant that operated from 1969. Ore feed stock was transported 1,000s miles for processing at the site. Changes to state and federal regulations in the 1980s and 1990s 14 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00379 Table C-3 Facilities Referenced in the Evidence Report regulations or permit requirements to prevent a similar outcome ERA does not acknowledge in the rule that the U.S. government constructed this site limited the type of issues that developed at this site. The U.S. Government provided the funding for and constructed the plant in 1941. Silver Mountain, WA EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. The site includes the area where a mine operated sporadically from 1928 to the 1960s to extract silver, copper and gold from soil and ore. Another EPA document indicates mining could have commenced as early as 1902. By 1956, the sporadic development of the mine produced about 2000 feet of underground workings and several tailings piles in a mine dump consisting of waste and mineralized rock. The state Metals, Mining and Milling Operations Act was not enacted until 1994. The act addresses the following issues that would minimize a repeat of the events that happened at Silver Mountain: inspections, financial assurance, engineering design, cyanide management and waste management. Smoky Canyon Mine, ID EPA MischaracterizationsOmissions The Real Story EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. 15 The owner/operator entered into an agreement over a decade ago with multiple agencies to investigate and prepare a feasibility study to address releases associated with Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00380 Table C-3 Facilities Referenced in the Evidence Report historical practices. The owner/operator has paid for all investigations, feasibility studies, early actions and all agency costs (including all contractors that state and federal agencies have hired to advise them and oversee the operator's work). Agency costs __________________________________________________ h ave been in th e m illio n s o f dollars. ERA fails to acknowledge changes in practices to address the events that happened at the Pole ODA. iaaaaaaaaaaaaaaaaaa^^ The issues that occurred w e re the result of historical mining practices used when the mining commenced in 1983 and before selenium had been identified as an issue. These practices have not been used since approximately 2003. Stauffer Chemical (Tarpon Springs), FL EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state and federal regulations or permit requirements to prevent a similar outcome. EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. This phosphorous plant operated from 1947 to 1981. Waste management activities at the site predated the modern waste containment criteria enacted by the state. No public money is being utilized for the remediation activities. Summitville, CO bPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues * Historic mining operations began as early as the 1870s or 1890s (documents conflict). In the Summitville Dam Impoundment, a historic tailings pond, AMD was generated by the contact of surface water collected with the waste stored in the 16 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00381 Table C-3 Facilities Referenced in the Evidence Report ERA neglects to provide Information on changes to the state mining regulations or permit requirements to prevent a similar outcome. impoundment. It was estimated that 36,000 pounds of copper per year was transported from these source areas into the Wrightman Fork. The Reynolds Adit was completed in 1897. Prior to plugging in 1994, the Adit flowed continuously, varying from a low of approximately 100 gallons per minute in the winter to an average high of approximately 400 gallons per minute during spring melt. Because the Reynolds Adit drains the mineralized portion of South Mountain, historically it has evidenced relatively high metal discharges. In 1934, a 100 ton-per-day flotation/cyanidation mill and gold retort was installed close to the south bank of the original Wightman Fork Creek. Records indicate that dewatering filtrate from the flotation circuit was discharged directly into the creek throughout the mid-1930's. Open pit mining operations did not expose standing ground water in the mine pit. Infiltration of surface water (derived from snowmelt and rainfall) through the pit may have resulted in elevated dissolved metal concentration in the water draining from the Reynolds Adit. The State enacted the Mined Land Reclamation Act of 1993 as a response to the perceived regulatory failure at Summitville. The primary purpose of the Act is to ensure that mining operations utilizing toxic or acidic chemicals receive increased regulatory oversight. The act requires preparation of an Environmental Protection Plan that describes measures to be taken to prevent any unauthorized release of pollutants to the environment as well as Include adequate________ 17 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00382 Table C-3 Facilities Referenced in the Evidence Report reclamation and closure practices for such designated chemicals, toxic or acid-forming materials and how unauthorized discharge of acid mine drainage will be prevented, Additionally, the provides new authorities for regulators regarding inspections and corrective actions. The 1993 amendments also contained additional reporting requirements and financial safeguards intended to prevent another Summitville. Teledyne Wah Chang, OR EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state and federal regulations or permit requirements to prevent a similar outcome. The plant produces zirconium and other rare earth metals and alloys and began operation in 1957. Ore feed stock was transported 100s to 10,000s miles for processing at the site. Changes to state and federal regulations in the 1980s and 1990s limited the type of issues that developed at this site. Tex Tin Corp., TX EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. * The plant is a former tin and copper smelter that began operations in 1941 for wartime production and operated until 1991. * Ore feed stock was transported 100s to 1,000s miles for processing at the site. 18 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00383 Table C-3 Facilities Referenced in the Evidence Report EPA neglects to provide information on changes to the state and federal regulations or permit requirements to prevent a similar outcome Changes to state and federal regulations in the 1980s and 1990s limited the type of issues that developed at this site. Sierra Club v. EPA 18cv3472 NDCA 19 Tier 2 ED 002061 00087255-00384 Table C-4 Facilities Referenced in the Practices Report Anaconda Co. Smelter, MT EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Large-scale copper smelting and concentrating activities outside the town of Anaconda began in 1884. Hazardous release records date back to 1905. The facility was designed long before any the state promulgated any mining or environmental regulations. ArcelorMittal, MN EPA M ischaracterizations/O m issions The R eal Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities Cleanup of the releases from the tailings piles has been handled by the facility operator. ASARCO Hayden Plant EPA M ischaracterizations/O m issions The Real Story T h e H ayden P la nt is in N evada EPA attributes the releases to the Hayden Plant The releases from this facility are recent The Hayden Plant is located in Arizona The releases actually occurred at the ASARCO Ray facility located 20 miles from the Hayden Plant The releases occurred approximately 25 years ago The site has no previous significant legacy m ining issues Contamination at Hayden may be related to activities potentially dating back to the beginning of operations in 1911 (not 1920) 1 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00385 Table C-4 Facilities Referenced in the Practices Report EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. EPA alleges elevated air levels of copper and chrom ium EPA alleges elevated air levels of arsenic, cadm ium and lead EPA exaggerates a 2002 spill Arizona has adopted the Aquifer Protection Permit (APP) to protect groundwater: o Imposes design, operation, inspection, monitoring, recordkeeping and contingency requirements on mining facilities o Requires specified groundwater standards be met at points of compliance that are designated for each ________ permitted site.___________ The company has paid for all remediation and entered into a consent decree under the CWA (not CERCLA) to ensure impacted groundwater does not impact a nearby creek__________________ The document cited by EPA does not discuss copper or chromium EPA Region 9 has no regional screening levels for copper and chromium in air_______________ The levels for arsenic and cadmium are elevated only in respect to EPA Region 9's regional screening levels, which are generic and merely suggests that further evaluation of potential risks is appropriate The average measured lead level was below the NAAQS for lead Any violations were resolved by a CAA (not CERCLA) consent decree in 2015, in which the company admitted no liability but agreed to a converter retrofit project to reduce these air emissions The 2002 was caused by equipment failure and not design or operational flaws The amount of CERCLA chemicals was small (only 1.37 pounds) and did not leave the site Sierra Club v. EPA 18cv3472 NDCA 2 Tier 2 ED 002061 00087255-00386 Table C-4 Facilities Referenced in the Practices Report ASARCO Silver Bell, A Z ERA M ischaractenzaiions/O m issions The Real Story ERA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. ERA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclam ation activities. Subsequent to the events in question, Arizona has adopted the Aquifer Protection Permit (APP) which governs this site resulted in construction of dams, catchments and pump back systems to capture any impacted surface or subsurface flow includes best available demonstrated control technology requirements as well as inspection and maintenance requirements * The company has funded all remediation activities and meets the financial assurance requirements both under the APP and the Arizona Mined Land Reclamation program Barite Hill, SC EPA M ischaracterizations/O m issions The Real Story EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Significant changes were made to the state Mining Act in 1990 to specify reclamation requirements and provide additional enforcement tools. This facility did not have a waste rock management plan to prevent formation of acid mine drainage in the main pit as compared to the most recent mine permitted where all potentially high acid rock drainage wastes are placed on a double lined waste facility. Barrick Goldstrike, NV 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00387 Table C-4 Facilities Referenced in the Practices Report ERA Mischaracterizations-'Omissions ERA fails to acknowledge the role of the operator and state regulator in addressing the identified releases ERA neglects to provide Information on changes to the state mining regulations or perm it requirem ents to prevent a similar outcome. ERA falls to acknowledge the voluntary m easures undertaken by the operator to prevents releases. ERA falls to appreciate the magnitude of existing financial assurance. The Real Story All re le ase s at the Qoldstrike Mine have been reported and remediated in accordance with applicable NDEP permits and regulations, the BLM plan of operations and, where applicable, EPA requirements. In every release, appropriate corrective action was approved by regulatory authorities, implemented and documented. NDEP files document that the releases were fully addressed under existing regulatory and permit requirements. Releases cited by EPA reports did not and do not present any risk of a response action. * Operations at Goldstrike have been ongoing for more than thirty years. During that time, many improvements have been made to air and water quality management systems, including additional controls added to comply with updated legal, regulatory and permit requirements from BLM and NDEP. Regulations and permits require that mine facilities are monitored and that any release is reported and addressed. Goldstrike has also implemented internal and corporate environmental management systems and is certified under the IS014001:2004 standard. Current financial assurance for Goldstrike operations totals more than $230 million and is held jointly by NDEP and BLM. Sierra Club v. EPA 18cv3472 NDCA Beal Mountain, MT 4 Tier 2 ED 002061 00087255-00388 Table C-4 Facilities Referenced in the Practices Report EPA M ischaracterizations/O m issions The site has no previous significant legacy m ining issues EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. W rong date of operations: The Beal M ountain m ine w as operated by Pegasus Gold from 1984 until 1997. The Real Story According to the Forest Service (the lead agency conducting cleanup) placer gold was discovered in the area in 1864 and placer mining reached its peak in the early 1900's. The only significant historical production was from placer deposits, which are cited as being primarily responsible for habitat degradation at the site. Since the site operated, both the Forest Service and the State of Montana have increased their requirements on bonding to ensure that sufficient funds are available for reclamation should default occur. The actual date of operations was 1988 through 1997. Blackbird Mine, ID EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues EPA neglects to indicate that alm ost no taxpayer funds w e re used to conduct cleanup or reclam ation activities The Blackbird Mine operated from the 1880 to 1982. Almost all the cleanup of the releases has been and continues to be the responsibility of the facility operator. Sierra Club v. EPA 18cv3472 NDCA 5 Tier 2 ED 002061 00087255-00389 Table C-4 Facilities Referenced in the Practices Report Brewer Gold, SC EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. The mine is one of the oldest gold mines in the U.S., with the first documented gold production in 1828. The mine operated intermittently from 1828 to 1995. Significant changes were made to the state Mining Act in 1990 to specify reclamation requirements and provide additional enforcement tools. Compared to the minimal monitoring requirements for this site (only at 3 locations) the most recent mine approved in state is required to conduct extensive pre mining, during-mining and post mining surface and groundwater monitoring obligations with quarterly reporting to EPA and the state. This owner/operator posted $500,000 in financial assurance compared to $65 million for most recently approved mine in the state. This facility had an unlined overburden and low grade storage area as compared to the most recent mine permitted where all potentially high acid rock drainage wastes are placed on a double lined waste facility. Buckhorn Mine, WA tP A M ischaracterizations/O m issions The Real Story T he m ine is ow ned by K inross Corp. * The mine is owned and operated by Crown Resources Corp., a subsidiary of Kinross Gold U.S.A. Inc. 6 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00390 Table C-4 Facilities Referenced in the Practices Report The site is an underground mine that includes waste rock W ater m anagem ent during spring snow melt has been a welldoclImented problem In 2011 and 2012. the m ine's groundwater capture zone failed to contain spring rains and snow melt resulting In contam inated w ater reaching a nearby creek W ater generated in the underground mine can carry high concentrations of heavy metals such as copper, lead, and zinc that must be captured and processed before being discharged at approved outfalls. Violations in 2011 included allowing w ater discharges causing slope instability and erosion and for discharging water at an unauthorized point.______________________________ Since operations began, the state has issued numerous penalties, notices of violation and adm inistrative orders directing the com pany to control_____ Development rock (a.k.a, waste rock) is temporarily managed on surface and will all be utilized underground. No development rock stockpiles will remain on surface._____________________ Empirical data collected during operations has guided ongoing adaptive management to effectively address annual variations in quantities of snow melt. Successful water management activities have included additional discharge outfalls, water treatment technology and system improvements, increased pumping capacity, additional dewatering well installation, and stormwater collection trench installation._____ In 2011, the operator self-reported an isolated incident that resulted from the malfunction of one dewatering well for a brief period in spring 2011. This discrete release was properly mitigated and the dewatering well has operated without capture zone failure to date. Other alleged capture zone violations were appealed and settled without an admission of fault.________________________ Water from the underground mine sumps is currently collected and treated prior to discharge at approved outfalls. The most recent samples indicate concentrations of copper (year 2016), lead (year 2016) and zinc (year 2015) are below drinking water standards prior to treatment.____________________ Alleged violations were appealed and settled without an admission of fault. While the state has issued certain penalties and NOVs, these have all be appealed and were either settled without any admission of fault or 7 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00391 Table C-4 Facilities Referenced in the Practices Report storm water, rectify groundw ater capture zone inadequacies, prevent slope failures, and com ply with perm it lim its for nitrates, sulfates acidity copper, lead, zinc and solids from storm water ponds remain under appeal. In particular, the operator is appealing the 2014 NPDES permit issued by the state as it is unreasonable, based on flawed assumptions and fails to consider natural background quality nor previously permitted mine activities. The permit also set an arbitrary and artificial "capture zone" boundary which, among other things, does not account for facilities that fall outside this "capture zone" that were designed and installed to manage this water. As a result, the permit standards are in many cases unattainable. Captain Jack, CO EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Mining at the Captain Jack Mill began in 1861. The primary source of contamination of a nearby creek originated in the 19th century. Significant changes were made to the mining law with the passage of the Mined Land Reclamation Act of 1993 to specify reclamation requirements and provide additional enforcement tools. Cimarron, NM EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to provide Inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e 8 The facility operated from 19601979. The New Mexico Mining and Minerals Division strictly regulates metal mining and Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00392 Table C-4 Facilities Referenced in the Practices Report milling in New Mexico. The Division, and the mining regulations it promulgated, was authorized by the New Mexico Mining Act of 1993. Climax Molybdenum, CO EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. R eference to a state notice of violation and fine for a 1986 w ind blown tailing event that w ere later dropped. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Operations began in 1917 and the identified wind-blown tailing issue is historical in nature. Although state regulators initially proposed a penalty, following its inspection and findings but this matter was settled with Colorado regulators, and that the fine was dropped. o The settlement included incorporating a dust control plan into the Mine's permits, o By 1989, the mine had regraded, stabilized, and capped its No. 1 Dam with clean cover, consistent with its negotiations with State regulators. Today, the mine has a dust control plan that is part of its current permits. o Implementation of that plan adequately protects the surface of the tailing dams from atmospheric events, and the mine mobilizes its personnel and equipment to apply additional dust palliative where necessary. Sierra Club v. EPA 18cv3472 NDCA 9 Tier 2 ED 002061 00087255-00393 Table C-4 Facilities Referenced in the Practices Report East Helena, MT ERA M ischaracterizationsOm issions The Real Story The site has no previous significant legacy mining Issues. Lack of acknowledgement of other sources of contamination Lack of acknowledgement that at least some of the cleanup was done pursuant to ERA s RCRA. not CERCLA authority. Failure to accurately report the results of blood lead studies The zinc operation operated from 1927 to 1983, and the lead smelter operated from 1888-2001. * Other sources contributing to contamination at Operating Unit 2 of site (which includes the entire City of East Helena) include the Americas Chemet copper pigmentation processing facility and BNSF railroad yard. Not all costs or actions related to this OU can be attributable to the Asarco smelter. * Some site investigation and cleanup work done under RCRA rather than CERCLA. The site was initially designed as a CERCLA site, then re-classified as a RCRA site to address the on-going operations, only to again be re classified as a CERCLA site. Even after designation as a CERCLA site, some site cleanup activities were conducted under RCRA authorities. The Montana Department of Environmental Quality, U.S. Department of Health and Human Services, and CDC conducted in 1983 an integrated epidemiologic study in the Helena Valley of Montana to assess children's blood lead levels and the relationship of these levels to the levels of lead in different environmental media. Despite the elevated soils metal levels, the blood lead levels of all children tested showed no cause for public health concern. Sierra Club v. EPA 18cv3472 NDCA 10 Tier 2 ED 002061 00087255-00394 Table C-4 Facilities Referenced in the Practices Report Energy Fuels White Mesa Mill, UT EPA M ischaracterizations/O m issions The Real Story The incorrect allegations of CAA exceedances that cam e from an NGO w ere attributed to the state regulator: " In 2015, the U tah D e p artm ent of E nvironm ental Q uality discovered that radon em issions from the tailings cells exceeded by up to 80 tim es the lim its e sta b lish e d in the C A A ..." EPA im plies that an investigation into the exceedances by state regulators w as "ongoing." EPA referenced one-sided "evidence" and ignored exculpatory "evidence. The incorrect allegations of CAA exceedances came from an NGO presentation that misapplied a model. o The results of an analysis, which included proper application of the model, showed that radon emissions were approximately seven times less than the limits. The state never conducted an investigation, only requested additional information and analysis. Once the company responded, the issue was considered closed by the state, which EPA should have discerned from its review of the exceedances allegation. EPA did not take into account several other relevant documents, including the Ute Mountain Ute's "Calculation Brief" documents, and Energy Fuels response to those documents, all of which were submitted directly to the EPA prior to publication of the Practices Document on November 30, 2016 Florida Canyon, NV EPA M ischaracterizations/O m issions The Real Story T h e F lo rid a C a n yo n M ine has been in operation since 1986. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. * The mine began operations in 1987, pre-dating the state's mining regulations by 2 years. The primary groundwater plume at issue was related to a heap leach pad constructed prior to the state Water Pollution Control Regulations. Current state 11 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00395 Table C-4 Facilities Referenced in the Practices Report ERA fails to acknowledge the role of the operator and state regulator in addressing the identified releases. ERA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. regulations would not allow for this same type of installation. The operator has stopped using the affected portion of the old leach pad and is undertaking remedial action under the oversight of NDEP. NDEP reports document that the immediate response to the release and conclude that "waters of the state were not threatened and the areas impacted by the released material were remediated quickly with oversight and approval from the BMRR site assigned compliance inspectors." No public money is being utilized for the remediation activities. Gilt Edge, SD EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. Mining operations commenced in 1876. Sporadic mining by numerous operators were conducted until 1941. Early gold miners developed extensive underground workings that wind through the site and engaged in some surface mining. In addition, early miners deposited mill tailings in two nearby creeks. The site is contaminated as a result of historic mining activities. South Dakota strengthened its mining regulations in 1987 and made additional changes sine to make regulations even more stringent. Sierra Club v. EPA 18cv3472 NDCA 12 Tier 2 ED 002061 00087255-00396 Table C-4 Facilities Referenced in the Practices Report Greens Creek, AK ERA M ischaractenzations-O m issions The Real Story The m ine has been in o pe ra tio n since 1986 im plies the w ater treatm ent facility w a s b uilt In re s p o n s e to a re le a se of untreated w ater w ith high levels of lllllllllllllllli ERA ig n o re s th e role o f m o n ito rin g in reducing risk of releases. Operations commenced in 1989. Even prior to 1993 when the water treatment facility began operating, a ll water from tailings and process facilities was collected and treated through a series of ponds and sand filters. No CERCLA-like release ever occurred. Each time that ongoing monitoring has suggested an area of concern at the site, the owner/operator has taken a proactive approach to introduce new technologies and/or operational controls and procedures to minimize and mitigate impacts. Homestake Mine, NM EPA M ischaracterizations/O m issions The Real Story The site has no previous significant legacy m ining issues. EPA neglects the actions of the operator under the oversight of regulatory authorities. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. Operations began in 1958. Groundwater contamination was identified by the operator's monitoring in 1976. Remedial activities (ground water treatment and tailings management) are the result of activities which predated the current regulatory framework. The owner/operator of the facility has undertaken response and remedial actions under joint oversight governed by a memorandum of understanding between the NRC and EPA resulting in a CERCLA-equivalent process. Most of the site facilities have been decommissioned and reclaimed by 13 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00397 Table C-4 Facilities Referenced in the Practices Report the owner/operator without any taxpayer funds.____________ Jerritt Canyon, NV EPA Mischaracterizations/Omissions The Real Story EPA neglects to provide information on changes to the state mining regulations or perm it requirem ents to prevent a similar outcome. EPA neglects to discuss actions taken by the operator under oversight by regulatory authorities. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities EPA overlooks existing financial assurance. The design and much of the construction pre-dates the state's mining regulations. Operator has undertaken extensive corrective action to control sources and pump and contain groundwater plume under oversight by NDEP and Forest Service. No public money is being utilized for the remediation activities. The current financial assurance for Jerritt Canyon, held by NDEP and the Forest Service, totals $74.4 million with $23.5 million of that dedicated to assure management and completion of the corrective action for the releases from the tailings facility. Kennecott Bingham Canyon, LIT EPA M ischaracterizations/O m issions The Real Story EPA neglects to provide inform ation Through regulatory and voluntary on actions taken by state and federal efforts, controls have been put in regulatory agencies (even EPA itself) place that have ended the historic to prevent a sim ilar outcom e. practices and prevent further ______________________________________contamination from occurring. Reliance on NGO reports rather than The so-called `factsheet' was EPA's own ROD or RI/FS published by Earthworks, an NG O that is unabashedly and militantly anti-mining and is widely known to ______________________________________play loosely with facts._________ 14 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00398 Table C-4 Facilities Referenced in the Practices Report Failure to acknow ledge EPA's past recognition of the site as an exam ple of how releases can be properly addressed. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. EPA has touted the site as a leading example of a cooperative federal-state-industry approach to both correct the missteps of the past and provide the right controls to prevent future contamination. The company has funded all the groundwater source control and other clean-up efforts. Lost Creek, WY EPA M ischaracterizations/O m issions The Real Story M ischaracterization of severity of spills on-site. M is c h a ra c te riz a tio n on the fa ilu re to m a in ta in b le e d in a m a rin e r th a t could allow fo r the possibility of g ro u n d w a te r to e s c a p e - M isch a ra cte riza tio n o f w o rke r e xp o su re to y e llo w ca ke d u st and re la ted violation. * Only one of the 22 spills referenced required cleanup pursuant to federal or state established criteria since the mining solutions generated at in situ mines typically contain only very lo w concentrations of radionuclides or other constituents of environmental concern. The total soil cleanup required the removal of only a few drums of soil. * M in in g so lu tio n s w e re co n tro lle d and none o f the m o n ito r w e lls w e re trig g e re d w h ich w o u ld h ave h a p p e n e d if c o n ta m in a te d flu id s had begun to m ig ra te and co rre ctive a ction w o u ld have been re q uired . T h is issu e w a s re so lved w ith th e a g e n cie s and p ro du ctio n co n tin u e d uninterrupted. # Further, the d o se to the e m p lo ye e s w a s w e ll w ith in lim its e sta b lish e d b y th e N R C . T h e sin g le vio la tion issu e d re su lte d n o t b e ca u se o f th e w orker exposure or exposure le ve ls, it w a s re la te d to th e a b se n ce o f a sp e cia lize d w o rk p e rm it having bee n p re p a re d to im p le m e n t th e c le a n u p in th e plant. 15 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00399 Table C-4 Facilities Referenced in the Practices Report Molycorp Mountain Pass, CA EPA M ischaracterizations/O m issions The Real Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. M ischaracterization of severity of the 1989 spill No public money is being utilized for the remediation activities. EPA's technical background documents for the Phase IV LDR rule acknowledges that for this site: "no remedial measures have been proposed to correct any contamination caused by [the 1989 spill] as the spill was contained on site and not believed to pose a significant threat to human health or the environment." M osaic, FL and LA EPA M ischaracterizationsOm issions The Real Story EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclamation activities. EPA indicates that releases leading up to 2015 settlem ent agreem ent are representative of current operational problems with phosphogypsum stacks Implication that the stack releases are being addressed under CERCLA. No discussion of existing financial assurance in place to address identified issues No public money is being utilized for the remediation activities. EPA's concerns regarding these stacks have been addressed through an enforcement initiative These releases are being addressed under a RCRA consent decree. Through an enforceable consent decree the company agree to place $650 million in a trust and issue a $50 million letter of credit to support the closure and long-term care of these stacks. Sierra Club v. EPA 18cv3472 NDCA 16 Tier 2 ED 002061 00087255-00400 Table C-4 Facilities Referenced in the Practices Report Morenci, AZ EPA M ischaracterizations/O m issions The Real Story Ide n tifies re le ase s in 2 00 0 and 2001 b u t fa ils to d is c u s s a ctio n s ta ke n in response. Identifies a 2008 release but fails to d iscu ss action s take n in re sp on se EPA neglects to provide inform ation on changes to the state m ining regulations or perm it requirem ents to prevent a sim ilar outcom e. The company agreed to a cooperative assessment of potential natural resource damages that resulted in a $6.8 million award to address such releases. Entered into a settlement of claims under the Migratory Bird Treaty Act resulting in improved water management and reclamation work. Under the oversight of the state, the company appropriately responded by removing all impacted sediment and soils and confirming complete removal. Arizona has adopted the Aquifer Protection Permit (APP) to protect groundwater: o Imposes design, operation, inspection, monitoring, recordkeeping and contingency requirements on mining facilities o Requires specified groundwater standards be met at points of compliance that are designated for each permitted site. National Zinc Corp., OK EPA M ischaracterizationsO m issions The Real Story The site has no previous significant legacy m ining Issues. Operations were conducted from 1907-1976. The predominant amount of time the facility conducted operations was prior to the advent of modern environmental law. 17 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00401 Table C-4 Facilities Referenced in the Practices Report Lack of acknowledgement that the cleanup w as done pursuant to ERA s RCRA. not C ERCLA. authority. The facility underwent a RCRA corrective action to complete closure of the facility. This comprehensive action occurred in the late 1990s and is now in the post closure phase with financial assurance in place pursuant to RCRA. Nelson Tunnel/Commodore Waste Rock, CO EPA Mischaracterizations/Omissions The Real Story Failure to acknowledge the 2005 waste rock pile failure is likely the result of legacy mining issues. This site was active from 18761989. The mining and dewatering activities at the site predated any environmental laws and regulations. Nyrstar Clarksville, TN bPA Mischaracterizations/Omissions The Real Story indicates that available documentation does not provide direct evidence that smelting or oilier processes caused certain air emissions and if the emissions w ere permitted Misuse of TR I data to allege risk from releases * A cursory review of public records would have revealed that the emissions were permitted under a Title V CAA permit. Over 90% of the TRI releases were solids stored in permitted impoundments with engineered impervious liners. Sierra Club v. EPA 18cv3472 NDCA 18 Tier 2 ED 002061 00087255-00402 Table C-4 Facilities Referenced in the Practices Report Omaha Lead, n e EPA Mischaracterizations/Omissions The Real Story Type of facility mischaracterized Failure to accurately portray contributions of second on-site facility. ASARCO's operation was a refinery as opposed to a smelter. To the extent offsite remediation was conducted (e.g., yard replacement, blood lead testing) some of this work was attributable to a second facility (smelter and lead battery recycling plant) operated from another entity. P4/Monsanto South Rasmussen-Blackfoot Bridge, ID EPA Mischaracterizations-'Omissions The Real Story inaccurate site identification-description: ERA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. incomplete story of owner/operator's reclamation efforts. The Practices document refers to Proposed rule refers to P4/Monsanto South RasmussenBlackfoot Bridge site but fails to acknowledge that South Rasmussen and Blackfoot Bridge are two separate mines, EPA likely is referring to South Rasmussen because it discusses a CWA settlement P4 reached with EPA on the legacy South Rasmussen mine site. South Rasmussen is a legacy mine, permitted in the late 1990s and now in reclamation and closure, Blackfoot Bridge is a currently operating modern ________ mine.__________________ No public money is being utilized for the remediation activities. For South Rasmussen, the company now collects and treats leachate related to historic overburden disposal practices. 19 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00403 Table C-4 Facilities Referenced in the Practices Report Company entered into a consent order with the state to investigate and address groundwater and is working on a remedial action plan. Nearby Blackfoot Bridge mine was constructed and permitted to manage surface runoff and basically eliminate infiltration through overburden areas to address potential selenium concerns. Phelps Dodge Tyrone, NM EPA M ischaracterizations/O m issions The Real Story Ide n tifies re le ase s in 2 00 0 but fails to d iscu ss action s take n in response. No recognition of the role of the state program in reducing risk. The company agreed to a cooperative assessment of potential natural resource to address such releases. Entered into a settlement of claims under the Migratory Bird Treaty Act resulting in improved water management and reclamation work. Closed and reclaimed all tailings impoundments. Conducted a comprehensive assessment of past and present discharges affecting ground water and surface water both within and outside of the site and submitted 2 abatement plans that were approved by the state. The facility holds seven state groundwater discharge permits, including a site-wide permit that governs closure. o The closure permit specifies closure and reclamation design requirements to prevent groundwater pollution following closure, water collection and treatment requirements, ________ closure and post-closure 20 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00404 Table C-4 Facilities Referenced in the Practices Report monitoring and reporting, and financial assurance for all closure costs Each of the permits contains provisions limiting the volume of discharges, governing design and operation of the discharging facilities, and requiring monitoring of the discharges and groundwater and reporting of unauthorized discharges. The state has specific regulations governing copper mining facilities, which apply to future renewals o f the existing perm its._______________ Sierra Club v. EPA 18cv3472 NDCA 21 Tier 2 ED 002061 00087255-00405 Table C-4 Facilities Referenced in the Practices Report Robinson Mine, NV EPA MischaractenzationS'Omissions The Real Story The site has no previous significant legacy mining issues. No recognition of the role of the state program In reducing risk EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. No discussion of existing financial assurance Mining dates back to the 1860s. * Current mine planning emphasizes reclaiming or moving old facilities to prevent releases. The reference releases were identified by the operator through m o n ito rin g , reported and addressed through the state regulatory and permit requirements. EPA and state reports document the response and the state concluded that all five released noted by EPA were `quickly cleaned up with the spilled material returned to containment within the process circuit or tailings impoundment," Waters of the State were not threatened and the areas impacted by the released material were remediated quickly with oversight and approval from the site-assigned compliance inspectors.___________________ No public money was or has been utilized for the remediation activities. Current financial assurance for the Robinson Mine is $89.7 million, held jointly by BLM and NDEP. Smoky Canyon Mine, ID EPA Mischaracterizations/Omissions The Real Story EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. The owner/operator entered into an agreement over a decade ago with multiple agencies to investigate and prepare a feasibility study to address releases associated with historical practices. The owner/operator has paid for all investigations, feasibility studies, 22 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00406 Table C-4 Facilities Referenced in the Practices Report early actions and all agency costs (including all contractors that state and federal agencies have hired to advise them and oversee the operator's work). Agency costs ______________________________________have been in the millions of dollars. EPA fails to acknowledge changes in The issues that occurred were the practices to address the events that result of historical mining practices happened at the Pole ODA. used when the mining commenced in 1983 and before selenium had been identified as an issue. These practices have not been used since ______________________________________approximately 2003.____________ Summitville, CO EPA Mischaractenzations'Omissions The Real Story The site has no previous significant legacy mining issues. Historic m ining operations began as early as the 1870s or 1890s (documents conflict). In the Summitville Dam Impoundment, a historic tailings pond, AMD was generated by the contact of surface water collected with the waste stored in the impoundment. It was estimated that 36,000 pounds of copper per year was transported from these source areas into the Wrightman The Reynolds Adit was completed in 1897. Prior to plugging in 1994, the Adit flowed continuously, varying from a low of approximately 100 gallons per minute in the winter to an average high of approximately 400 gallons per minute during spring melt. Because the Reynolds Adit drains the mineralized portion of South Mountain, historically it has evidenced relatively high metal discharges. In 1934, a 100 ton-per-day flotation/cyanidation mill and gold retort was installed close to the 23 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00407 Table C-4 Facilities Referenced in the Practices Report ERA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome south bank of the original Wightman Fork Creek. Records indicate that dewatering filtrate from the flotation circuit was discharged directly into the creek throughout the mid-1930's. Open pit mining operations did not expose standing ground water in the mine pit. Infiltration of surface water (derived from snowmelt and rainfall) through the pit may have resulted in elevated dissolved metal concentration in the water draining from the Reynolds Adit. The State enacted the Mined Land Reclamation Act of 1993 as a response to the perceived regulatory failure at Summitville. The primary purpose of the Act is to ensure that mining operations utilizing toxic or acidic chemicals receive increased regulatory oversight. The act requires preparation of an Environmental Protection Plan that describes measures to be taken to prevent any unauthorized release of pollutants to the environment as well as Include adequate reclamation and closure practices for such designated chemicals, toxic or acid-forming materials and how unauthorized discharge of acid mine drainage will be prevented. Additionally, the provides new authorities for regulators regarding inspections and corrective actions. The 1993 amendments also contained additional reporting requirements and financial safeguards intended to prevent another Summitville. Sierra Club v. EPA 18cv3472 NDCA 24 Tier 2 ED 002061 00087255-00408 Table C-4 Facilities Referenced in the Practices Report Tohono (Cyprus), AZ EPA M ischaracterizations/O m issions The Real Story Little recognition that the identified issues at the site are related to legacy m ining issues. No m ention of activities to ensure future groundw ater protection. EPA neglects to indicate that no taxpayer funds were used to conduct cleanup or reclam ation activities. EPA fails to m ention the existing financial assurance requirem ents. Operations at the site began in the 1880s. Environmental issues at the site mainly were the result of historic mining practices. Under a CERCLA order, groundwater is being protected by an ongoing CERCLA remedial investigation/feasibility study and an extensive monitoring well system. The company's new mining restart plan is modern and protective, and is contingent government approvals. The company is conducting all required actions without any taxpayer funding. Financial assurance is already required by the company's lease with the Tohono O'odham Nation and the Bureau of Indian Affairs. United Nuclear, NM EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. EPA neglects to provide information on changes to the state and federal mining regulations or permit requirem ents to prevent a similar outcome. * The mining operation began in 1967 and the milling operation began in 1977. All operations ceased in 1982. The New Mexico Mining and Minerals Division, and the mining regulations it promulgated, was authorized by the New Mexico Mining Act of 1993, three decades after the operation began. 25 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00409 Table C-4 Facilities Referenced in the Practices Report U.S. Silver Galena, ID EPA Mischaracterizations/Omissions The Real Story Failure to properly characterize the discharge. EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. The issue was a controlled discharge violation that was corrected and settled with the state and EPA. No public money is being utilized for the remediation activities. Uranium One Willow Creek, WY EPA Mischaracterizations-'Omissions The Real Story EPA neglects to indicate that no taxpayer funds w ere used to conduct cleanup or reclamation activities. The company conducted and paid for any necessary cleanup activities. O verstatem ent of severity of spills or 2001 spili ERA fa ile d to n o te th a t releases the spill: involved no radionuclides or hazardous materials; impacted approximately 0.04 W, State agency recommended no cleanup of the spill was Jan. 2014 spill - EPA failed to note W I None of the release fluids entered active water State inspection found no visibly discernable impact along the spill flow path to soil or vegetation Upon a showing that cleanup of uranium and radium were complete, the state signed off on a completion report. wAug. 2015spillEPAfailedtonote 26 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00410 Table C-4 Facilities Referenced in the Practices Report ERA neglects to discuss actions taken by the operator to address future spills or releases The correct spill date was Aug. 2014: The leak involved only 492 gallons of fluid, impacting only 0.04 acres of soil. Sept. 2014 drum pressurization incident EPA failed to note that: The company voluntarily notified NRC of this incident and implemented prompt and effective corrective actions: No violations were identified by the Nuclear Regulatory Commission or Department ________ of Transportation.________ Company has voluntarily added into its operational procedures: Leak detection systems at all wellhead locations; Redesigned module buildings to include a lined catchment sump and leak detection: Additional inspection of wellfields; Upgraded leak detection alarm systems: and Investigated each spill to determine cause and ________ prevent future occurrences. Zortman and Landusky, MT EPA Mischaracterizations/Omissions The Real Story The site has no previous significant legacy mining issues. Incomplete discussion of financial assurance 27 Underground mining and vat leaching began in the 1880s. Open pit and heap leaching activities (including use of cyanide) began in 1977. More than $70 million in financial assurance was available for reclamation and closure of the Zortman and Landusky Mines and for water capture and treatment. BLM reported that was sufficient Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00411 Table C-4 Facilities Referenced in the Practices Report EPA neglects to provide information on changes to the state mining regulations or permit requirements to prevent a similar outcome. for some reclamation scenarios but additional funding was needed for the selected reclamation and closure plan.__________________ In response to the event at Zortman and Landusky, the federal and state regulatory agencies enacted substantial revisions to their regulations. These changes included much stricter data collection such as waste characterization studies to identify potentially acid-generating materials and revised closure and financial assurance requirements. Sierra Club v. EPA 18cv3472 NDCA 28 Tier 2 ED 002061 00087255-00412 Appendix D REVIEW OF ENVIRONMENTAL PROTECTION AGENCY REPORTS FINANCIAL RESPONSIBILITY RULES Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00413 R E V IE W OF E N V IR O N M E N T A L P R O T E C T IO N A G E N C Y R E P O R T S FINANCIAL RESPO N SIBILITY RULES B y The SOCIETY FOR MINING METALLURGY & EXPLORATION, INC. INTRODUCTION The National M ining Association (NM A) has requested that the Society for M ining, M etallurgy & Exploration, Inc. (SM E) respond to certain statements and studies underlying the Environm ental Protection A gency's (EPA) newly proposed rule to set "Financial Responsibility Requirem ents under CERCLA 108(b) for Classes of Facilities in the Hardrock M ining Industry," See, 40 CFR Part 320, 44 Fed. Reg. 3338 (January 11, 2017). SM E is a professional society (nonprofit 501(c) (3) corporation) w hose m ore than 15,000 m em bers represent all professionals serving the m inerals industry in more than 100 countries. SM E members include engineers, geologists, metallurgists, educators, students and researchers. SM E advances the worldwide mining and underground construction community through information exchange, education and professional development. A panel of experts within SME has reviewed the EPA proposed regulation and submits the following response to the EPA proposal and tw o of the studies on w hich the agency has relied to support the im position of regulations on the m ining industry. SM E's focus is on the technical validity of statements by the EPA about the technologies employed in mining and the degree and duration of risk associated w ith the use of those technologies. Background - Section 1A - EPA Assumptions, Conclusions and Methodology are flawed Commonly known as "Superfund," the Comprehensive Environmental Response, Compensation, a&foanfchdLiladiiaztuiaberriasldi.tot.iy.ouenssAtsoacubftblrioisssthfkan1aa9ncs8sdeo0smc"i(aaC4tienE2dtRaUwiCn.SiLt.ehCAv.ti)hd9eed6nip0rcer8eoc(tdbosu)f.cEft(iPiEnoAamnn,pcttohiraaal"nsipsrseprosospmurotpaunptlsilgoiieabndti,el)i.ttrryMeeaqcituonminirneesngimst,tieessnnttthotserwatifhgtiaehrstottchrilnedadsidsusepesgotsrrsieaoaellf sector EPA has chosen to regulate and the agency, to date, has not sought to im pose financial responsibility requirem ents on any other industrial class. In proposing this new rule, the EPA relies on two reports to establish w hat the agency considers MHNtihs oaeinavrddiener1mggo9rbc9ePke2erraaMp3cna0tidpi,ncedier2nu,s0gr"1a"6tMabi onyiEnndPitonhAMfegririSEnsekipePtsroeAasritnl',sovPntoVirltvlaoSeencuddepsEewCs.rioifntuHmhgnophdurFa'essrahmdNceairnalonistctiiivkoaeennsmdaRilaneSnPeptdsoeripraotRhn:redeintAliaaensHtses ooOdLcfvifisRmeatrteeavldniee.aPwfsaTaecsshoi ltefitoaiPesnfresda.cCcoTCEtnihdcuReerCsrifsLieranAsattt Hazardous Substances. B oth reports argue that current m ining and processing practices do not 1 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00414 differ significantly from the historical practices that produced the contam inated sites listed on the Superfund's N ational Priorities List (NPL). For example, the 25 year old Housm an/Hoffm an report concludes and EPA endorses the following statement: "W hile some m ining waste m anagem ent practices have changed over time, the basic technologies for extracting and processing of mineral ores have rem ained fairly constant over approximately the last 50 years. M ining technology has become more efficient over tim e in recovering mineral values - allowing lower grade ores to be mined which produce more waste. increased the At the scale of same time, surface distu combi rbance nation and w s a of ste geecnoenraotmioinc."aSnede ptercohpnoosleodg ricualle afat c3t4o7r5s . have SM E has analyzed the E PA 's technical conclusions and the reports on w hich they are based. In short, the E PA 's findings are overly sim plistic and ignore the w eight of scientific evidence demonstrating the evolution and improvement of m ining practices, mineral and ore processing technologies since the enactm ent of CERCLA more than thirty years ago. The fact that EPA relies upon a report published m ore than 25 years ago (Elousman/Hoffman) is itself troubling, given the agency's stated intent to assess contemporaneous m ining practices. The EPA reports also improperly equate the risks associated with current m ining practices with those at "Superfund" sites, which predate the era of m odern m ining regulation. EPA's Methodology and the 2016 Report In the M ethodology section (See 2016 Report at 1-5), E P A acknow ledges th at it conducted a less than thorough analysis, excluding from its review "individual site permits, environm ental im pact statem ents, Report "do easn dnoo tt h e e r n [unspecified deavor to d ] docu evelop me a ntation." 20 formal risk 16 as Repo sessm rt a ent t 4. of EPA also said that the non-operating the and currently operating sites and facilities." In light of the fact that "systematic and com prehensive inform ation about facility characteristics, waste management, releases, and regulatory oversight was not available for either non-operating sites or currently operating facilities," EPA conceded that its profile "is based on inform ation that m ay be incom plete or anecdotal." Id. at 5. The analysis w as also subject to num erous data limitations. Thus, the agency admits that "documentation about operations and releases at currently operating facilities was inherently m ore difficult to find," in the absence of m ajor enforcem ent actions. Thus, "no com parison of magnitude and severity was drawn between releases at non-operating sites and currently operating facilities." The following analysis will demonstrate the im provem ents in m odern m ining and ore processing technologies substances to that g zero or eradt ley mr eind iumc eust hl eevbeol st.h the degree and duration o f risk o f a release of hazardous 2 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00415 Section IB. Non-Entry Solution Mining and Ion Exchange P ro cessin g EPA's overstates the risks of potential releases of hazardous materials associated with solution recovery of hardrock minerals. In general, EPA draws inappropriate conclusions from reports or studies or, alternatively, relies upon reports that have been found incorrect. Our reasons follow: In the introduction, EPA states that solution mining can release hazardous contaminants to the environment, citing as primary threats the potential for releases to adjacent groundwater and to surface soils and w ater from spills. Although from a perm it/license perspective, these releases are contemplated, existing EPA, Nuclear Regulatory Com m ission (NRC) and state regulations already require corrective action. There has never been a docum ented release - based on regulatory records - from solution mines, including uranium recovery that has contam inated adjacent aquifers or adjacent surface properties. Existing regulations rem ain robust and protective. Contrary to the statements in the referenced section, in a public roundtable m eeting with the Small Business Adm inistration in February 2016, an EPA representative (Tom Peak, Office of Radiation and Indoor Air) stated that there are no docum ented impacts to an Underground Source of Drinking W ater (USDW ) by solution mining of uranium. RE PevAisicointess taos athseo uHr ceealitnh saenvedraEl nlovicraotniomnes,ntDalraPftroRteepctoirotn: Economic Analysis: Proposed Standards for Uranium and ThoriumMill Tailings Rule (40 CFR Part 192) (November 2014). In com m ents filed w ith the agency, NM A, other trade groups, m ining companies, and several states, including Texas, Nebraska, and W yoming, disputed the accuracy of this report and claimed it overstated the environmental risks and costs of solution m ining for uranium recovery. In subsequent public meetings, EPA was unable to support the conclusions of this report and significantly revised it. EPA ultim ately w ithdrew the rule prior to publication. U nder the technical portion of the section, EPA cites the use of "new technologies in nonentry m ining [that] also use fracturing or drilling to enhance contact with the ore." This statement could cause the reader to infer - incorrectly - that hydraulic fracturing is used for the in-situ recovery of uranium, a false charge levied on m ultiple occasions by non governmental organizations that intervene in licensing and perm itting process for uranium recovery operations. This statement further implies a new risk to the extraction process using a highly-charged term "fracturing", that is not used and is restricted by existing EPA regulations, nam ely 40 CFR Part 146.33. U nder the section titled, "Potential Sources o f Hazardous Substances", EPA states; "As of 2009, no rem ediation of an In-Situ Leaching (ISL) operation in the United States for which data are available had successfully returned the aquifer to baseline conditions." STSouhurisvtheayrTg(UeuxmSaGesnStC) ioesanstmittalieslldePal"daGiinnrg"o,uannadduwthmaoteirserrdeRaedbssytoraSautriesopanno ratt bUyratnhieumU Innit-eSdituSRtaetecsovGereyoMloginiceas,l Hall. Based on Ms. H all's own statements at public hearings regarding the proposed revisions to 40 CFR Part 192, her report concluded that m ost but not all individual ionic constituents w ere returned to 3 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00416 baseline or below, but she did not make any conclusions on whether groundwater restoration w as successful or not. The Uranium Producers o f Am erica, com m ented on the proposed revisions to 40 CFR Part 192, providing the results of restoration related to the same results discussed in the USGS report. Those comments demonstrated that in every case where an ionic constituent was not restored to its exact baseline condition, it was within 1 to 2 standard deviations of the baseline mean. In the case of those constituents having a M aximum Contaminant Lim it (MCL), the baseline concentrations were above the M CL prior to mining. EPA is alleging that there are significant CERCLA hazards rem aining following restoration, which in fact is untrue. Further, EPA im plies that the release of the restored groundwater is autom atic and not subject to further regulatory action, w hether by N RC or Agreem ent States. F urther, in the sam e paragraph (2nd), E P A states, "D epending on geologic and hydrologic conditions, however, metals and leach solutions may seep into surrounding aquifers post closure." This statem ent cites a hypothetical risk that in over 40 years of operating and post closure experience has not been observed or documented by an operator or regulatory agency. Thus, EPA alleges a potential CERCLA risk that does not exist, and it fails to account for the NRC regulatory process under the Uranium M ill Tailings Recovery Act (UM TRCA). In the third paragraph, EPA attempts to link subsidence to the potential list of CERCLA risks. W ith respect to in-situ recovery of uranium, the risk of subsidence is non-existent since operationally the process, w hether during m ining or groundwater restoration, cannot sustain significant dewatering, a condition that can cause subsidence. In fact, 40 CFR Part 146 discusses subsidence in the case of Class III injection wells in the context of a pre-existing geologic condition and not as the result of injection operations. In the third paragraph, EPA invents a new operational condition called, "self-cleaning" as a gross simplification of the groundwater restoration process. W ith in-situ uranium mining, groundwater restoration is an integral part of the developm ent and operating plan. The risk assessm ent casually m akes broad and general statements that have little basis in fact. For example, EPA states, "Even w ith the application of the above m itigation strategies, the m ajority o f ISL m ines experience higher levels o f selenium and uranium in the groundwater after restoration than before mining started." That is an observation that belies the characterization of risk. These operations are heavily regulated and the baseline and restoration groundwater standards are subjected to licensing review by the NRC and its Agreem ent States. These risks are appropriately characterized in the U M TRCA Statute, NRC rules and regulation, Com m ission decisions, NRC guidance, and specific licensing actions. Under the current regulatory process, no in-situ uranium recovery facility will be released for unrestricted use unless it can meet the current release criteria under 40 CFR Part 192 and 10 CFR Part 40. And appropriate financial assurances is m aintained until all post closure risks are m itigated through corrective actions and/or institutional controls. 4 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00417  Under the section titled "Non-Operating Sites and Currently Operating Facilities", EPA provides detailed commentary on events and operations that have absolutely no bearing on the potential CERCLA related hazards, and they seem to be presented for dramatic effect. o U nder non-operating sites, EPA focuses all of its attention on tw o CERCLA sites in N ew M exico that were placed on the N PL solely at the discretion of the state. These are conventional m illing sites that have significant off-site im pacts that pre date UM TRCA, and are completely different from in-situ recovery operations. EPA did not consider any of the fully released in-situ recovery operations in Texas, W yom ing and N ew M exico that are success stories, instead they spent the entire portion of the reports to unrelated operations. o Under currently operating facilities, EPA focuses a significant portion of the section on operation spills and on-site releases that have been reported and mitigated under the existing licenses. None of these were discussed in the main portion of the risk assessm ent and are unrelated to the report's thesis of the alleged hazards of groundw ater contam ination. The form section of s of solutio th n is m report ineral r related ecovery t(oi.e". nColna-sesnItIrIy (solution) mineral rec m inin overy g" attem injection pts we to lls ) inc as orpora a risk te cla all ss, but focuses entirely on uranium recovery. The report also cites im pacts from activities conducted outside the United States under presum ably different regulatory standards. The report should only cite risks associated with those m ining activities conducted in the U nited States. The section of the report fails to discuss any real CERCLA hazard risks related to financial assurance gaps, and "cherry picks" conclusions from reports that are not risk assessm ents at all. The public record is awash with real risk assessm ents perform ed by the NRC and Agreem ent States. Section 1C - Physical Processing and Gravity and Magnetic Separation Section 1C states that "Physical processing and gravity and m agnetic separation generally require few chemical additives and thus have a relatively small potential for adverse environmental impacts from process chem icals." 2016 Report at 43. Notwithstanding this acknowledgement, EPA cites the potential for the release of hazardous substances associated with physical, gravity and magnetic separation from the following: 1. D u st generated from size reduction prior to usin g any one o f these processes and 2. Tailings disposal following the use of any one of these processes. Dust m anagem ent in the physical, gravity and m agnetic separation plant is a well-known practice in which emissions are contained, captured and recycled back to the process. M any m odem day plants are designed to standards that allow workers to perform their jobs without a physical m eans or device for protection from dust in the air. The dust is captured at the source, contained and recycled. M oreover, m inim izing dust exposure is an occupational health issue and is not the5 5 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00418 type of risk that CERCLA Section 108b was m eant to address. In any event, those "risks" are minim al and subject to appropriate process controls. The report states that "dust from crushed and ground rock is a prim ary source of adverse effects during physical processing, posing concerns for hum an health as well as air and w ater quality." Id. at 43. The refusal to acknowledge that dust em issions are controllable is erroneous. The crushing process, in which run-of-m ine ore is reduced from approxim ately 1 m eter in size to less than 6 inches in size, controls dust using wind curtains, dust covers, w ater spray, w ater m ist or dust collectors. These technologies control and capture dust and are well known and widely used in the industry. EPA also claim s adverse effects from the grinding process, claim ing in a footnote that "the size range of particles undergoing grinding is often in the respirable category. Any particles sm aller than 60 m icrom eters can be suspended in the air and subsequently be inhaled or deposited in nearby ecosystem s." 2016 Report at 43, fn. 176. Today grinding process plants are generally done in a liquid/solid unit operation. W ater is added to the ore and the ore is tum bled and ground to size using steel balls, which elim inates dust in the process area. There are several grinding process plants that still utilize dry grinding. Known dust collection technologies are employed to reduce or eliminate emissions. Critique on Section ID - Flotation Processing The 2016 Report at Section ID states that "The prim ary environmental concerns stem from the tailings produced by flotation processes and their geochemical contents." Report at 51, P aragraph 1, S entence 2. T he rep o rt acknow ledges, how ever, that there is no indication that flotation processing has increased the risk of a potential release of hazardous substances, or increased the risks of environmental harm. In fact, only "eight of the 29 non-operating and processing CERCLA sites reviewed used flotation processing techniques." Although "the pcaradoumcsieetssssoi"ntfhgre"erlIeeda.issaetsnow56ien&rdeic5ida7et,inPotnaifriatehgdaratfpothhr e7s,irxeSloeenaf tsteehnsec aetigthhtesCeEsRitCesL e 1 & 2. (Em p wA ers ieteds irt hecattlyu sceadufsleodt abt iyofnlo, "taEtiPoAn hasis supplied). Regarding operating sites, EPA ha of zraerlde aosuess ,s uinbcsltua ndcinegr we lhe aesthe se,r bthuet rlfiuettlrletehaesereviwddeeancslcaaersewsso:acsi"aAatvetadillweaabistlhte 13 o f 15 facilities experienced tchoenfcloe tran tiinogntph reocc aeusss.e s" and Rep typ ort es at 57, Paragraph 3, Sentence 3 (Emphasis supplied). The report clearly speculates that any discharge to the environm ent would mostly likely result from the uncontrolled discharge of tailings slurry, yet further acknowledges that those reagents," including C E R C L A listed substances, (id. at P age 54, P aragraph 1, Sentence 2) are consum ed during flotation, with only small residual quantities m aking it into tailings." Id. at 54, P aragraph 2, Sentence 1. Thus, as the Report correctly concludes, m ost reagents are consumed during the flotation process. Once added, these reagents chemically attach them selves to the mineral, which is then6 6 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00419 recovered and the m ajority of the reagent is rem oved from the tailing stream. Thus, this process does not directly contribute to any level of risk that would warrant CERCLA financial responsibility requirements. M oreover, SME again opposes any reliance on non-operating CERCLA sites as the basis of a risk determ ination, even when EPA acknowledges the limitations of using those sites. Section IE. Cyanidation The 2016 report acknowledges the evolution of "regulatory requirements, m itigation and best m anagem ent practices" to control the risks and better m itigate the im pact of releases, but then states, w ithout citing any observed both historically studies or examples, that "substantial and as a result of contem porary m ining releases of practices." 2c 0y 1a n6iRd eephoarvteatb 5e 8e .n In addition to confusing the requirements and practices at m odem m ining operations with historic, legacy sites, E PA 's description of the processes and risks associated w ith the use of cyanide at hardrock m ine site processing facilities is inaccurate and incom plete. In fact, these processes are well known and well managed in both their design and operation. EPA describes the cyanidation process as follows: "In cyanidation, cyanide is used to separate gold or silver from its ore. This beneficiation process dissolves gold and silver from ore, separating it from waste material (tailings or spent heap). The cyanide solution containing gold and silver is then processed on site by carbon adsorption or by zinc precipitation (M errillCrowe) process) to produce dore metal, a sem i-pure m ixture of gold and silver. Cyanidation is typically perform ed using either agitated tank or heap leaching processes." This description is too simplistic and im plies that cyanide is simply added to the solution without also m entioning the process controls used to prevent releases to the environm ent. In contemporary cyanidation processing, proper control of the cyanide and lime reagent additions are critical in the m anagem ent o f m etallurgical perform ance as well as environm ental risk. The processing of silver also differs from that of gold. Silver dissolution requires finer grinding of ore and different concentrations of reagents. A sum m ary of the m ajor flaws in E PA 's analysis follows: The process description is too simplistic to dem onstrate how process reagent controls are used in contemporary gold ore processing to m anage toxicity risks while achieving metallurgical performance; The process description does not adequately explain leaching of silver with gold and tailings losses for silver; and The process description does not identify other metal and m etalloid species (As, Cu, Hg, Pb, Sb, Se and Zn) that are properly managed to control environmental risks on an ore specific basis.7 7 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00420 EPA also erroneously confuses releases to the environm ent from active and abandoned mine sites, confusing cyanide leaching, a metallurgical process, with m ining, w hich is the extraction of ore, as follows: "Leaching tanks, leach pads, piping, and storage facilities (e.g., process solution ponds, tailings facilities) can release cyanide and other m obilized contaminants into the environment, however, at both active and abandoned mines." 2016 Report at 58. W ithout separately addressing active from abandoned m ine sites, EPA wrongly im plies that the risks associated with each are the same, when in the fact they are vastly different, both in terms of the natural cyanide degradation, technologies employed and the regulatory standards that apply. EMPaAnuaflsaoctfuariles, toTraacncospuonrt tf,o ranodr discu Use sosfthCey"aInnitdeer niant itohnea Pl rCoydauncitdioenMoafnaGgoeldm"endte Code for veloped b the y a m ulti-stakeholder Steering Com m ittee under the guidance of the United Nations Environmental Program (UNEP). The Code im poses state of the art requirem ents for not only the use of cyanide in metallurgical processing, but also its detoxification to m inim ize or elim inate environmental, health and safety risks. It also covers the entire life cycle of use including m anufacture and transportation. The Cyanide Code is a voluntary industry program for gold and silver m ining companies. It focuses exclusively on the safe m anagem ent of cyanide and cyanidation mill tailings and leach solutions. Companies that adopt the Cyanide Code m ust have their m ining and processing operations that use cyanide to recover gold and/or silver audited by an independent third party to determine the status of Cyanide Code implementation. Those operations that m eet the Cyanide Code requirements can be certified. A unique tradem ark symbol can then be utilized by the certified operation. A udit results are m ade public to inform stakeholders of the status of cyanide m anagem ent practices at the certified operation. The objective o f the Cyanide Code is to im prove the m anagem ent o f cyanide used in gold and silver m ining and processing and assist in the protection of human health and the reduction of environmental impacts. The 1992 Housm an/Hoffm an report predated the development and the adoption of this Code and the 2016 EPA report does not address its adoption on the risks associated with mining by operators that are signatories to the agreement. The code requires that contem porary cyanidation ore processing be carried out in a contained processing facility separate from the mine. The mine delivers ore directly to the process or to ore stockpiles where the process takes control of the ore for cyanidation. For operating cyanidation ore processing operations cyanide reagent and solutions are contained within process lim its1 as fo llo w s: 1 http://www.cyanidecode.org/become-signatory/impiementation~guidance 8 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00421 "Cyanide storage and m ixing tanks should be located on a concrete surface to prevent seepage to the subsurface. Secondary containm ent should be employed to contain any releases from the tanks, and for any precipitation that may com e in contact with the cyanide. Allowances m ust also be m ade for the recovery and return to the cyanidation process or proper disposal of any contaminated water or cyanide leakages." "Secondary containm ents used for this purpose should be constructed of concrete, asphalt, plastic or other m aterials that are dem onstrated to provide a competent barrier. Containments, which m ay include m ultiple containm ents connected by piping, should be sized to hold a volum e of leakage greater than that of the largest tank, any piping that drains back into the containment, and should have additional capacity for the design storm event. Procedures should be im plem ented to prevent discharge to the environment of any process solution or precipitation contam inated with cyanide that is collected in a secondary containm ent area." "For leach pads and leach solution ponds, this typically requires lining with a minimum of one synthetic membrane, such as high- or low-density polyethylene, HDPE or LDPE, placed on a prepared and compacted earthen liner. These and other liner systems, such as two synthetic membranes, can be designed and constructed with leak detection and recovery systems between the liners where significant hydraulic head exists (i.e., a solution pond or the internal solution collection trenches of a heap leach pad) to allow for periodic m onitoring for leakage." "Tanks holding process solutions such as leaching vessels, CIL and CIP tanks and cyanide tanks associated with cyanide regeneration activities should be located on concrete or material im perm eable to seepage of spilled solution. Secondary containm ent should be provided for potential failure of cyanide process solution tanks, with provisions for recovery of released solution or rem ediation of any contam inated soil as necessary to protect surface and ground water. Containm ents should be sized to hold a volum e greater than that of the largest tank within the containment, any piping that drains back into the containment, and have additional capacity for the design storm event. "Spill prevention or containm ent m easures should also be provided for process solution pipelines. Exam ples include secondary containm ent ditches, differential pressure sensing with alarms and/or autom atic shutoff systems, and preventive m aintenance programs with pipe thickness measurements. W hile a program of regular visual inspections should also be conducted, visual inspections alone are not typically sufficient unless the inspections are conducted at a frequency that can identify and prevent significant releases. If a risk exists for a release of process solution from a pipeline to adversely affect surface water, such as where pipes cross streams, operations should evaluate the need for special protection such as double-walled piping." 9 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00422 The cyanide code also lim its the concentration of any discharge from the process to 0.5 m g/L w eak and dissociable (W AD) cyanide and 0.022 m g/L free cyanide at the environm ent m ixing zone. Flow injection analytical methods have been developed to provide reliable analysis at these critical concentrations for the use of process, regulatory and environm ental laboratories (ASTM D7728). Summary Cyanidation is lim ited to processing ore for gold and silver recovery, it is not used in the mine; Contemporary ore processing using cyanidation following cyanide code guidance m anages the risk of contam inant release as do state regulations; The cyanide code addresses suitable cyanide concentrations for containm ent and discharge and is supported by reliable ASTM m easurem ent methods. Free cyanide breaks down fairly rapidly under oxidizing condition; Abandoned mines are outside of the scope of the technical review since they are not subject to the proposed financial assurance for the degree and duration of risk associated with the production, transportation, treatment, storage, or disposal of hazardous substances. Exhibit l.E .l. Gold and Silver Recovery from Cyanidation EPA states: "Dissolved gold and silver are collected with activated carbon (carbon-in-pulp adsorption or carbon-in-leach processing), thickener tanks, vacuum filters, or zinc precipitation. Electrowinning, which uses electric currents to further separate metals, and smelting then produce dore metal, a semi-pure m ixture of gold and silver. M ercury, w hich is com m only present in gold ores, is rem oved as a byproduct." Thickener tanks are not used to collect gold and silver, but are used to concentrate these minerals in solution and separate tailings solids. Dissolved gold and silver is adsorbed in contact with cyanidation slurry (carbon-in-pulp adsorption or carbon-in-leach processing), the residence time can vary from 8-96 hours, depending on processing requirements for the ore. Alternatively, pregnant solutions are separated from solids using a thickener and gold and silver recovered from the pregnant solutions by carbon in column adsorption or M errill Crowe zinc cementation and collection of precipitates on vacuum filters. Loaded carbon is rem oved from the leach slurry by screening and chemically stripped, with the pregnant solution being processed by electrowinning or M errill-Crowe cementation to produce a gold-silver metal concentrate. A vacuum filter can be used to prepare gold-silver concentrate for retorting, if m ercury-bearing, and fire refining. N ot all gold-silver ores contain mercury, however, w here it is recovered it is typically placed in flasks for storage or transportation to a site for processing using a detoxification process. Process residue slurries, after gold is recovered, are norm ally sent to cyanide detoxification and tailings storage facilities where barren solution is reclaim ed and reused in the process where needed. 10 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00423 EPA 's Flow Chart below does not accurately describe the process of metal recovery. Figure 1 Updated Mill Cyanidation Gold and Silver Recovery Flow Sheet Tailings Cyanide Detoxification Mine Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00424 In fact, key item s w ere om itted. In updated in F igure 1, the reclaim stream com es to the grinding circuit as m ake-up water. M ake up lim e and cyanide are added in milling, and cyanide is sometimes added to the mill to control particulate gold losses. If mercury em issions are problem atic from the mill, organic sulfide reagents (sodium polythiocarbonate (NaPTC) can be added to the mill. Cyanide detoxification is critical for w ildlife protection in open tailings storage facilities. Summary: EPA 's description of the contem porary cyanide m illing metal recovery process is inadequate. Reuse of tailings decant w ater is not shown in flow sheet. Lim e (CaO), cyanide and NaPTC reagent use is not shown to manage metal and m etalloid dissolution. M anagem ent of tailings detoxification for wildlife protection is not depicted. Sources of tailings are not included in the figure, tailings slurries are the m ajor process flows. Section IF - Acid Leach, Solvent Extraction and Electrowinninng Section IF states as follows: "Based on the available documentation, prim ary concerns for acid leach and solvent extraction and electrowinning (SX/EW ) are proper reclamation of spent dump or heap leach piles, m aintenance of equipment, and ensuring that systems are prepared for rainfall events. The m ost com m on cause of releases was pipe failure, with chronic seepage from disposal areas, other equipm ent failures and weather-related discharges also causing contam ination." Report at 87, Paragraph 6. Section IF also cites the potential for hazardous substances associated with acid leach and SX/EW as sulfuric acid and organic solvents. "These process reagents can have serious human health report cciotenssenqou en ev ces as idence w o ell as f any ecological such releas effec e of o ts." rgan Id. at ic solv 77, ents Pa to ragraph the env 3, iro Sentence nment at 3. Yet either n the on operating or operating plants. Thus, the report fails to identify negative environmental impacts from solvent extraction or electrowinning technologies. The report cites several different releases of solution containing sulfuric acid and dissolved metals such as selenium, cadmium and copper from non-operating and operating mines. Hence, this critique will focus on the three prim ary concerns mentioned: 1. P ro p er reclam ation o f spent dum p or heap leach piles 2. M aintenance o f equipm ent 3. W eather-related discharges 12 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00425 Proper reclamation of spent dump or heap leach piles Historically dump leaching started when supplies of sulfuric acid becam e readily available and operators recognized that the oxide copper resources contained in the dumps were amenable to leaching. The surface that dumps were placed on was oftentimes not considered. M aterial was placed at the m ost convenient location for storage so as to m inim ize mine haul costs. W hen sulfuric acid leaching was considered the underlying surface characteristics were often unknown. The operator used consulting geotechnical services to determine if a m ajority of the leach solution could be recovered since leaching without solution recovery would be fruitless. Trenching and wells w ere used to recover errant solutions. A certain amount of solution loss was expected. As the price of copper increased over the decades starting in the 1970's and the amount of material available for sulfuric acid leaching increased there was im petus to place dumps on prepared surfaces so as to recover as m uch value as possible from the dump leach. Liner technology advanced in the 1980's with high density polyurethane (HOPE) such that dump and leach heights in excess of 300 feet could be accommodated, thereby containing the leach solutions and ensuring minim al transfer of leach solutions to the surrounding environm ent. Since no liner is 100 percent effective, drainage layers were constructed under the leach area to collect errant and channel them to a collection point for recovery. Additionally, pump back wells were installed so that even minimal amounts of errant solution could be captured and returned to the process. The report cites only one example of a pipeline break for a currently operating facility. In 1997 65,000 gallons leaked from a ruptured weld in the liner at Freeport M cM oR an's Tyrone mine. The report fails to m ention that the 65,000 gallons were contained on property. Given the many leach operations and the extent of the leaching that occurs in the United States, the frequency of spills due to liner failure is insignificant. M oreover, state regulations provide stringent exist to address spills and to require imm ediate action to address, control and minim ize environmental risks. Maintenance of equipment M echanical equipment failures may be resolved by a mix of known and developing technologies. As an example in years past it was difficult and expensive to run a double pipe with the inner piper serving as the transport pipe and the outer pipe serving as spill containm ent and protection for the inner transport pipe. Advances in engineering and construction practices have shown that a double pipeline is very practical to construct and install. Given the ease at which engineering solutions can be im plem ented to overcom e pipeline leaks and equipm ent failures, dump or heap leaching for sulfuric acid solutions should not be considered for CERCLA listing. 13 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00426 Weather-related discharges The report states that weather-related discharges occur on a frequent basis and give a num ber of different instances when this has occurred. W eather-related discharges are the result of precipitation, which overfills the storage capacity of the collection ponds downstream of the dump or heap leach. M odern dump and leach facility design takes into account the storage required to hold a complete drain down of the leach pad as well as the collection of precipitation from the facility for a 100-year event. A com plete drain down o f the dum p or leach pad system w ould occur w hen the pum ps would com pletely fail and w ould not return solution to the leach circuit. A 100-year event is a storm that statistically has a 1-percent chance of occurring in any given year. It should be noted that a 100-year event may occur more frequently than once every 100-years. A double failure of pum ps and a 100-year precipitation event is unlikely to occur. Pum ps are designed with back-up power generation to ensure the removal of solution from the collection ponds and recirculate the solution back up to the leach area. N evertheless, there is a plausible scenario and risk that the 100-year precipitation event could cause an unforeseen pow er failure. Should a double failure occur it is unlikely that the resulting solution overflow from the ponds would result in any environmental damage that would not have occurred as a result of the flooding occurring in the surrounding area. Any contained metal values would be diluted, m inimizing any downstream impact. The means of calculating the dilution and the resulting harm caused by an overflow is available through m odern com puter m odeling. Section 1G - P y ro m e ta llu rg ic a l P ro cesses This section addresses the risks associated with pyrometallurgical processing of hardrock minerals. It contains many errors and overstates the risks associated with these activities, as discussed below. In general, EPA draws conclusions of risks from documents and studies w ithout supporting facts, or relies upon studies since discredited or which underwent substantial revision. EPA 's report reflects a basic misunderstanding of metallurgical processing. M ineral processing is that part of m ining engineering that uses processes w ithout any change of phase. Physical process such as gravity or flotation are used to concentrate minerals. Extractive m etallurgy is a branch of M ineral Engineering that relies on a change of phase. This is norm ally done by the use of heat, electrical energy and chemicals. Pyrom etallurgy is focused on changes in phase which defines it as part of Extractive M etallurgy. Contrary to E P A 's statem ents, alum inum is not generally concentrated w ith pyrom etallurgy. It relies upon the Bayer hydrom etallurgical process for the recovery and concentration of alumina. This pure alum ina is then reduced in the electrom etallurgical Hall H eroult process. 14 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00427 The EPA report draws the sweeping conclusion that all pyrom etallurgical process are associated with environmental and health effects. M odern pyrom etallurgical processing is conducted w ithout health effects. The Stillwater zero em ission sm elter is a prim e exam ple of m odern pyrom etallurgy practices. The Um icore Hoboken smelter is another. Both rely upon m odem pyrometallurgical technology along with advanced emission controls to produce high quality primary and recycled metals. Contrary to EPA 's statements, the domestic pyrom etallurgical industry is not in decline. The Am erican steel industry has grown with the use of regulated m ini-m ills for production. M odern pyrometallurgical technology such as plasm a is used in the recycling of autom obile catalysts. There are many m ore advances in pyrom etallurgy that EPA does not recognize in its report. For example, Ausmelt, Outotec and M itsubishi have developed clean, efficient smelting and converting technologies. M odern efficient electric arc and plasm a furnaces, which m inimize gas flows and airborne emissions, are also in use. Scrubbers, acid plants, baghouses, electrostatic precipitator technologies are m ature technologies employed globally to m inim ize emissions. The EPA errs in discussing aluminum. Alum inum metal is produced by the Hall Heroult process which is a fused salt electrochemical process. This is not actually a smelting process but rather an electrometallurgical one. Pyrom etallurgical technology cannot always be replaced by hydrom etallurgical technology, as EPA recommends. Pyrom etallurgy is efficient in the treatm ent of high volum es of clean ores and concentrates. S ection 1H Bayer P ro cess EPA 's discussion of the Bayer Process also contains errors. For example, EPA does not demonstrate knowledge of chem istry or corrosion. Sodium hydroxide is not highly corrosive, but may be readily be stored long term in m ild steel containers with no adverse effects. Figure l.H .l is an oversim plification that m inim izes key unit operations. It does not show the creation deportm ent of Red M ud. It also does not include the all-im portant recycle of Bayer process solutions that m inim izes costs, energy and effluents. The EPA also fails to m ention that Bayer process Red M ud is a potential source of Rare Earths supply. Pilot plants in Jam aica are currently in operation. Sources: Taylor, and InnovAatniojinesr, P J. ., a Brief nd An Overview derson, C .o, fTShoemBeaIynernoHvyadtiroonmseintaPllyurrogmiceatlaAllluurmgiyn(a2P01ro3)cess Evolution 15 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00428 SSeeccttiioonn 22AW. MastieneMoarnMagineminegnItnPflruaecnticceeds Water (MIW) M ining Influenced W ater is defined to include any w ater which has been in contact with mined or processed solids, so it may be acidic and m etal-bearing, neutral, inert, basic, acid neutralizing or reactive w ith non-m etals. Since all m ined or processed m aterials are not toxic, M IW is not necessarily toxic, in fact, alkalinity in some carbonate-bearing gold ores is beneficial to cyanidation, resulting in reduced lim e consumption. Likewise, lim estone can be used to line water diversion channels, adding alkalinity which can prevent form ation of acid rock drainage (A R D )2 EPA 's report errs in its description of M IW or fails to provide adequate explanations, as outlined herein. Lag Time - E P A states th at "A M D has a considerable lag tim e from the first deposition o f w aste material to the observation of acidic discharge, m aking it an ongoing and potentially perpetual source of hazardous contam ination at a m ine site." Acid generation reactions, not AM D, can have a considerable lag tim e if there is sufficient neutralization potential present. W here there is no neutralization potential and high acid generation potential, acid can be generated without much lag tim e in the presence of oxygen, w ater and bacteria. M IW is not always the source of negative effects, environmental and health risks Operations before contem porary m ining and processing manage their M IW through dewatering operations EPA suggests, nonetheless, that all M IW is hazardous, claim ing that "since the very beginning of mining history, M IW has been a source o f both environm ental and hum an health concerns." 2016 Report at 113. Studies contradict this blanket assertion. Geologists inventoried impacts of natural ARD and historic and inactive mines in the National F orests o f C olorado3, the distribution is show n in F igure 2. N o significant im pacts w ere identified at 86% of the locations sam pled (1,200 out of 19,000 sites had environm ental issues). Contemporary m ining and processing recognizes the potential impacts of M IW on hum an health and the environment, through the developm ent of characterization program s to identify materials for special handling during m ining and processing, in engineered stockpiles, waste rock storage facilities and tailings storage facilities. Reactive sulfidic or alkaline material can be encapsulated using non-reactive material to reduce ingress of water and oxygen to the iron sulfide minerals, slowing the reactions until the facility can be reclaimed. 2 2 Gusek, J. and Figueroa, L., M itigation of M e ta l M ining Influenced W a te r, Volum e of M anagem ent Technologies fo r M etal M ining Influenced W ater, SME, 2009, pp 110. 3 Sares, M . A,,Gusey, D.L. and N eubert, J .T ." Abandoned M ines and N aturally Occurring Acid Rock Drainage on National Forest System Lands in Colorado" h ttp ://c o lo ra d o g e o lo g ic a ls u rv e y .o rg /w p -c o n te n t/u p lo a d s /2 0 1 3 /0 8 /U S F S -IC A R D 2 0 0 0 -p a p e rF in a ll.p d f 16 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00429  1 I B attan e (26) 2 Significant (219) > * Potesti&Jly I 3 Significant (672) 171 4 Slight (1,615) ` 5 None (15,*30) 1 0 J% 2 1. v > I 3*7% JI:: :: :; 4 tV- 1 || i r 86,2% 1 olal~IOK2 Figure 2. D istribution of Environm ental Issues for Colorado N ational Forest natural, historic and inactive M ine Sites S um m ary: M IW has a range of acid-base w ater qualities from acidic to neutral to alkaline Contemporary m ining and processing utilizes characterization methods to implement proper storage practices A m ajority of historic and non-operating m ines and natural ARD sites in the Colorado National Forest that were inventoried contain M IW which is not hazardous. EPA states: " A key characteristic for m ost M IW (whether acidic, neutral, or alkaline drainage) is an elevated concentration of trace elem ents that have leached from surrounding solids such as waste rock, tailings, or m ine surfaces." 2016 Report at 113. W hile EPA recognizes many variables that can affect the risk of environmental releases, the prim ary driver for acidity and m etals production is the m ineralogy o f the waste rock, stockpiles pit surfaces and tailings. EPA claims the M IW generally may contain high acidity and residual process chemicals m obilizing hazardous trace elements. M ost occurrences of waste rock are not highly acidic, but cover a spectrum of acid-base characteristics. W here sulfides, prim arily pyrite, marcasite and pyrrhotite are absent, highly acidic M IW is unlikely. The process of acidic M IW form ation is dependent primarily on the presence and content of iron sulfide m inerals pyrite, m arcasite and pyrrhotite, neutralizing calcium and m agnesium carbonates, oxygen, w ater and iron oxidizing bacteria. 17 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00430 M ining Influenced W ater is the proper term to use with water that has been in contact with m ined and/or processed materials. Acid M ine Drainage (AM D) is not as appropriate to describe process drainage. AM D is best used to describe an acid and metal laden w ater exiting a mine portal. The generic term should be acidic M IW or acidic and m etal-bearing M IW . W hereas use of AM D should be restricted to mines, acidic M IW or alkaline M IW should be useful in this context, discussing hard rock m ines and m etallurgical processing. M uch of cyanidation M IW is affected by gypsum saturation, resulting in periodic cleaning o f scale off o f equipm ent. EPA states: "M IW encompasses any water whose chemical com position has been affected by m ining or mineral processing. The m ost prevalent type of M IW is AM D, but M IW also includes drainage that is neutral or alkaline. In addition to environmental concerns posed by acidity or alkalinity, M IW often contains elevated concentrations of m obilized contaminants, suspended solids, or sulfate or arsenate content." 2016 Report at ix. "M IW rem ains one of the m ost significant issues across the m ining industry."2016 R eport at 113 N ot all M IW is adversely im pacted by m ining or process, although he EPA claim s AM D is the m ost prevalent form o f M IW , it is not true in m any deposits, as shown above in the Figure 2. Acidic, m etal-bearing M IW is a relatively small proportion of the overall M IW , particularly in limestone hosted ore deposits Prospective ore deposits in the US are now routinely characterized for acid generation potential, acid neutralization potential, soluble minerals and soluble m inerals before and after weathering (ASTM E1915, E2242 and D5744). This is im portant data that can be used to identify hazards in M IW , if any, and further testing of the M IW can be used to estimate m itigation costs, where needed, to determ ine the viability of a new project. Sum m ary: Acid M ine Drainage (AM D) is a term that should be lim ited to the mine and should not be applied to ore processing. AM D is not the m ost prevalent type of M IW . Ore deposit characterization programs are in use for determining the distribution of acid-base characteristics in contemporary m ining and processing to manage ores and waste EPA states: "M edia rock w ith high concentrations of zinc, copper, lead, cobalt, nickel, and iron are m ore likely to generate AM D." EPA appears to be confused with metals vs. acid generation. It is not clear w hat contam inants are being discussed. Potentially acid generating m inerals (pyrite, m arcasite or pyrrhotite), under weathering conditions, can produce acidity, if present in the waste rock and tailings beach due to oxidation, not zinc, copper, lead, cobalt, and nickel Acidity can release these detrimental trace elements, if present, by the acid generated, if any. Readily soluble m inerals and salts can be solubilized in un-weathered state. CERCLA priority 18 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00431 contaminants in acidic M IW from iron sulfide m inerals include arsenic, mercury, cadmium, cobalt, nickel and zinc. Copper and iron are greater than 100 on the CERCLA hazard priority list. S um m ary: Iron sulfide m inerals pyrite, marcasite or pyrrhotite are mostly responsible for acidification of M IW not zinc, copper, lead, cobalt, and nickel. Iron sulfide m inerals are m ostly associated with the solids, not the drainage. CERCLA priority contam inants are not discussed (arsenic, mercury, cadmium, cobalt, nickel and zinc) EPA also states that "MIW generally may contain residual process chemicals or mobilized contaminants, with high acidity further m obilizing potentially hazardous trace elements." 2016 Report at 121. The statem ent that M IW generally has high acidity is not correct, per the exam ple in Figure 2. Process chemicals are not normally present in the waste rock other than spend blasting residues. H ighly acidic m aterials should be segregated in the center of a w aste rock storage facility S um m ary M IW does not generally have high acidity, but when it does it can be segregated in the m iddle of an engineered waste rock storage facility. Section 2B -W aste Rock The EPA states: "Ore and waste are extracted separately, and the waste rock is transported to the disposal site, which m ay be in a previously m ined pit or at a dedicated dump or pile."2016 Report Page 117, The m ining of ore and waste requires sampling in order to extract them separately. Ore can be transported directly to processing or simply stockpiled. In contem porary m ining waste rock storage facilities are engineered to m anage M IW . The use of the terms dump or pile are inappropriate where waste rock storage is engineered. The waste rock can be selectively placed by end-dum ping or plug-dum ping to segregate the potentially acid generation waste rock in the interior of the storage facility, to lim it exposure to oxygen and w ater for the long term and allow for M IW collection, if necessary, in draining structures. S um m ary W aste rock is generally placed in an engineered waste rock storage facility separate from piles or dumps if they are suitable m aterials for potentially acid generating waste rock encapsulation in inert to basic waste rock. 19 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00432  Sampling in the m ine for w aste rock acid-base characteristics is practiced in contemporary m ining and processing, EPA states that "Operators can segregate and selectively deposit solid waste - tailings or waste rock - with high concentrations of sulfidic material" Segregation in mine waste rock storage facilities differs from processes tailings storage facilities and for co-disposal. A waste rock storage facility is engineered to handle coarse run of mine rock, while tailings storage facilities are designed to store finely ground m aterials and to separate and reclaim the process solution. Although a co-disposal facility is rare, such facilities have been successfully used and are an option for contemporary m ining and processing, given the proper strip ratio and com petency of the w aste rock. S um m ary M ine waste rock storage facilities are engineered to manage run-of-m ine waste. Ore processing tailings storage facilities are engineered to m anage slurries, and separation of solids and liquids. Although co-disposal facilities are still rare, they have becom e a viable option for contemporary m ining and processing under the right circumstances. EPA states: "W aste rock is uneconom ic material that abuts or surrounds com modity-b earing ore and is currently deem ed not fit for processing. The com m odity is separated from waste rock at the m ine site, at which point the operator disposes of the waste rock." Report at 116. This statem ent is inaccurate. It is not the com m odity that is separated from the waste rock, it is the com m odity bearing ore that is m ined separately from the w aste rock. Also, the waste rock is placed in engineered waste storage facilities, not disposal dumps. Ore is either fed directly to the process or is placed on a stockpile for blending or later processing. S um m ary W aste Rock is m ined separately from ore and is placed in a waste rock storage facility. Ore is fed directly to the process or placed in stockpiles. The description of the sub-ore stockpiles is not correct. . These are norm ally segregated ore type piles with metal content slightly below an ore grade cut off, such that an increase in metal prices, in addition to technology im provem ent can m ake the processing as ore, economic. EPA states: "W aste rock containing residual quantities of a commodity m ay later becom e economical because m ore efficient processes have been developed, allowing operators to treat the waste as ore using low-cost methods such as acid leaching or, depending on the m ineralogy of the rock, m illing." 2016 Report at 116. 20 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00433 The description of the sub-ore stockpiles4 is not accurate. . These are norm ally segregated ore type piles with metal content slightly below an ore grade cut off, such that an increase in metal prices, in addition to technology im provem ent can m ake the processing as ore, economic. S um m ary Sub ore stockpiles are typically just below ore grade cut off sub-ore, not waste mixed with ore Im provem ent of technology or metal prices allow the stockpile to be processed at a later date. The glossary says: "Overburden: non-m ineralized material on top of ore deposits that m ust be rem oved in order to reach ore deposits. Typically stored on site and can be used for backfill and revegetation after mining operations are complete. The term m ay also be used to refer to waste rock, although overburden typically has a lower potential for environmental contamination. It is distinct from tailings, which rem ain after econom ically valuable com ponents have been removed." 2016 R eport at ix. That definition is not clear. Overburden is a subset o f w aste rock excluding w aste that is internal to an open-pit ore deposit, it is typically not rem oved for an underground mine. The overburden should undergo the preoperational analysis to determ ine it is not potentially acid generating. Overburden stored on site for reclam ation use may need to be classified as non-acid generating or amended. The operation feasibility determination for the ore deposit for contemporary mining and processing for a sulfidic ore deposit will likely include a block model of acid generation potential as well as acid neutralization potential and acid-base classification of the ore and waste blocks. The EPA states: " ...In m ost m ining sectors, the ore m ined consists largely of waste m aterial, which creates tailings" 2016 Report at 135 Ore, by definition is not waste, it is rock that can be m ined and processed to m ake a profit. EPA's view is biased, it assum es all ore will be m illed to m ake tailings, which is not the objective, ore is m ined to m ake metal and tailings are m erely a waste product from high grade ore. It would be more correct to state a small fraction of the ore contains valuable m inerals, which, when mostly removed, leaves tailings or processing residue. 21 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00434 2C. T ailings Management EPA states: "Tailings Storage Facilities are the ultim ate repositories for both slurry and paste tailings, unless the operator uses the tailings as m ine backfill" 2016 Report at 135 M ine backfill is one of the few instances where wastes from the mill return to the mine. Use of cyanidation tailings require detoxification to meet MSF1A workplace limits and groundw ater standards to com ply w ith the C yanide C ode5: "W here mill tailings are used as underground backfill, the operation should determine the cyanide concentrations in the liquid phase and evaluate the risks to w orker safety and ground water quality. W here potential exists for worker exposure to hydrogen cyanide gas, or for the release of cyanide to ground water, treatm ents to chem ically convert, rem ove available cyanide, or to com plex it in forms that do not present risks to worker health or the beneficial uses of the ground w ater or other appropriate actions should be implemented." EPA states: "Dewatered paste and filtered tailings are often deposited in a lined or unlined surface im poundm ent with a drain and an embankment." 2016 Report at 135. Eligh solution recovery can be im plem ented with filtered or paste tailings processing. M IW is norm ally recovered from the slurry for reuse in the process. The use of lining in the tailing storage facility is norm ally im plem ented in gold process plants for cyanide code com pliance. EPA states: "At processing facilities that do not reclaim water from tailings ponds, w astewater is sometimes treated and released into local waterways. If treatm ent fails, tailings water with constituent hazardous substances can be released." 2016 Report at 140 It is not com m on practice to treat all reclaim w ater from tailings for discharge. However, treatm ent of excess reclaim w ater is often practiced w hen there is a positive w ater balance. Treatm ent failure is norm ally contained in lined storage ponds as soon as possible. M IW is normally recovered from the slurry for reuse in the process. There are economies in reagent effectiveness by treating the tailings decant water rather than a slurry if excess solution need to be discharged. 5 http://w w w .cyanidecode.org/becom e-signatory/im plem entation-guidance 22 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00435 Summary Cyanidation detoxified tailings may be used for underground backfill provided they m eet human health and groundw ater protection standards. W ater reuse is practiced at m ost tailings facilities Treatment costs for discharge of excess w ater may be reduced by treating tailings decant w ater vs. tailings slurries. EPA states: "Tailings storage facility: is a general term that includes "ponds," "im poundm ents," and "dam s." M any different types of facilities are used to contain and manage the tailings (waste ore) resulting from hardrock m ining. D epending on the type o f tailing (e.g., slurry, filtered, or paste), facilities m ay include liners, tailings ponds, and retention dam s. ." 2016 R ep o rt at x T he C yanide C ode Im plem entation G uidance6states as follow s: "There are a num ber of techniques for limiting and controlling seepage from tailings storage facilities; these are identified for informational purposes only, and are not intended as verifiable elements of the Cyanide Code: Lim iting the hydraulic head by m aintaining a small pond area will reduce the force driving solution into the subsurface. The earthen floor of an im poundm ent can be com pacted in its natural condition, or by adding clay m aterials to form a liner. Deposition m ethods can be used to promote tailings compaction and reduce their permeability. Dam designs are available to prom ote drainage to a collection system rather than to the subsurface, and cut-off trenches can be used to intercept and collect shallow seepage before it can im pact ground water. Remedial actions such as pum p-back systems also can be used to manage subsurface flows and prevent existing ground water plumes from reaching potential receptors and interfering with the beneficial uses of ground water. The need for and nature of seepage control m easures is highly dependent on site-specific hydrogeological conditions. Such systems should therefore be factored into the initial design of a tailings storage facility and be incorporated into the facility's operating plan to protect the designated beneficial uses of ground water. Any measures to restrict or control seepage from tailings storage facilities m ust be integrated into overall facility design, as they are directly related to the overall stability o f the engineered structures." The EPA definition of tailings storage facility in the glossary uses the term "waste ore" to describe tailings. A better description would be "finely ground waste residue from mill processing after metal removal." 6 http://www.cyanidecode.org/becom e-signatory/im plem entation-guidance 23 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00436 There are several instances where tailings storage facility should be used instead for describing contem porary processing in place of its com ponents; im poundm ents or ponds7,: im poundm ent facility9 tailings p o n d 10 EPA states that the residual chem icals are usually recycled with the w ater and trace elements from the ore liberated from the sold portion of the tailings can present health and environmental issu es*11 after acid or alkaline leaching in the tailings storage facilities. T hose risks o f potential im pacts are prevented by the containm ent design of the facility. M ercury occurs in gold ore prim arily as the sulfide mineral cinnabar (HgS), which is soluble in cyanide ion solutions. M ercury is volatile as the neutral cyanide complex [Hg (CN) 2] and metallic liquid form [Hg] and can be stabilized in solution by m aintaining an excess of free cyanide or by com plexing the mercury with sulfide reagents. Use of inorganic sulfides for mercury precipitation is lim ited due to reaction with cyanide to form thiocyanate and dissolution of the m ercury sulfide form ed by cyanide ion. Organic sulfide reagents are more selective, such as sodium polythiocarbonate (thio-red). U se o f h y p o ch lo rite12 is no t recom m ended in a cyanide circuit unless cyanide destruction is desired, due to generation o f toxic cyanogen chloride gas. 7"The surface m anagem ent regulations also specify engineering requirem ents and require liners, containm ent systems, and inspections for process areas, including cyanide leach operations and tailings im poundm ents or ponds." P age 69, P aragraph 3, Sentence 1. 8"N evada w ater control regulations establish m inim um design criteria for tailings im poundm ents and ponds. Process areas must obtain a permit to ensure compliance with these engineering standards." P age 71, P aragraph 1, S entence 1. 9"W hen the desired m ineral or m etal has b een rem oved through extraction and beneficiation, w et tailings are discharged in a dilute slurry at a 20-45 percent solids ratio, or can be physically treated to slurry at a solids ratio of 55 to 60 percent and conveyed through a pipeline to an im poundm ent facility." P age 134, P aragraph 2, Sentence 1. 10 "m ust m o nitor fo r potential contam inant releases from tailings ponds." P ag e 143, Paragraph, Sentence 1. 11 " T hese naturally co-occurring substances (e.g., arsenic and m ercury from gold ore) are liberated from rock and can present health and environm ental concerns. P age 137, P aragraph 1, Sentence 2. 12 "R eleases can be reduced using a hypochlorite injection system and by im proving process and control equipm ent efficiency." P ag e 67, P aragraph 4, Sentence 1. 24 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00437 E P A states th at the liquid state o f tailings lends itse lf to use o f p o n d s13 as a repository. Contemporary tailings processing uses tailings storage facilities to process slurries by separating solids for storage and liquid fraction for reuse in the mill. Com ponents identified by EPA are residual processing ch em icals14, w ater, w aste solids, low content o f valued m inerals and trace elem ents o f potential environm ental co n cern 15. It should be noted that trace elem ents are not present in all tailings. T he exam ple is m illing for flotation or leach in g 16 cyanide, the potential reagents should be identified, such as cyanide detoxification byproducts such as residual cyanides, sulfates, ammonia-nitrogen, cyanate, thiocyanate, nitrite-nitrogen, nitrate-nitrogen, metal cyanide complexes, and oxyanions. . Spills The EPA is referring to the acidic M IW in tailings im poundm ents, w hich are engineered waste storage facilities in contemporary processing, not mining, so the solutions should be called M IW not m in e 1' drainage and tailings storage facilities is m ore accurate term th an tailing im poundm ents. T he definition o f m illin g 18 is also too broad, since it includes transportation to m etallurgical processing from the m ine to the stockpile, w hich should be part of the mine. The EPA discusses M IW as including tailings, which are not part of the mine, but in the m etallurgical p ro cesses19, so the liquid portion should not be referred to as m ine drainage, but 13 "B ecause o f the liquid state o f the tailings, ponds are the m o st com m only used repository." Page 134, Paragraph 2, Sentence 4. 14 "W hile residual chem icals are usually recycled w ith tailings w ater, trace elem ents from th e ore are housed in the tailings and represent longer-term sources of possible contam ination," Page 135, P aragraph 1, Sentence 3. 15 "The tailings slurry contains w ater, w aste particles, and uneconom ic portions o f the com m odity and other trace elem ents o f potential environm ental concern." P age 135, P aragraph 1, Sentence 1. 16 "For exam ple, m illing operations th at practice flotation or leaching m ay produce tailings containing reagents such as lim e or glycol ether and lixiviants including acids and cyanide." P age 135, P aragraph 1, Sentence 3. 17 "In the event the m ine drainage requires treatm en t prio r to discharge, Page 66, Paragraph 4, S18en"tMeniclelin2g. : the facility at w hich beneficiation, or processing, takes place. It usually includes equipm ent used for processing itself, and is connected to supplem entary features that support processing: process ponds that house process liquid before use or reuse, tailings facilities that store processing waste, and transportation facilities to receive unprocessed ore and ship out processed concentrates." Page viii, Paragraph 8. 25 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00438 process M IW 20,21. T he discussion o f tailings drainage reacting w ith sulfide m inerals, should specify potential acid generating sulfide minerals need to be present in the tailings for acid generation to occur, along w ith oxygen and w ater19202, those conditions are n o t alw ays p resent in tailings. EPA calls for ongoing m onitoring to measure effectiveness of failed prevention m ethods23, prevention m ethods should be m onitored if they are successful or fail as part o f a mining or metallurgical quality control program. E P A 's definition o f seepage, uses a tailings storage facility as an exam ple24 w ith continuous release of fluid into soil, bedrock or groundwater. This is a lim ited definition since seepage can be intermittent, seasonal and can be captured and pum ped back to the process, if necessary. E P A discusses spills from em bankm ent failure resulting in tailings dispersal2526. T echnically it is a failure of the em bankm ent com ponent of the tailings storage facility. Dispersal will result if the tailings breach containm ent and reach an active stream. Conventional processing clean-up for cyanidation tails requires excavation of the tailings until a wall sample is below the m aximum contam inant lim it before backfilling (ASTM D7572). 19 "M IW (e.g., acid, alkaline, or neutral m ine drainage), ru n o ff originating from exposed tailings, is also a distinct risk." , P age 148, P aragraph 4, Sentence 1. 20 "Further, im poundm ent failure v ia m ine drainage or seepage and ..." P age 139, P aragraph 2, Sentence 7 21 "D uring operations special handling techniques such the addition o f alkaline m aterials or am endm ents can be used to reduce potential for AM D from leach tailings." Page 139, Paragraph 2, Sentence 3. 22 "Further, drainage m ay react w ith sulfide m inerals, creating acid drainage." P age 139, Paragraph 2, Sentence 3. 23 "... ongoing m onitoring m ust be conducted to assess the efficacy o f any prevention m ethods at a given m ine site if they fail or prove insufficient' Page 139, Paragraph 2, Sentence 3. 24 "Seepage: th e continuous release o f fluid (e.g., from a tailings storage facility) into local soil, bedrock, or groundw ater." Page ix, Paragraph 9. 25 "Embankment failure results in the release of tailings into local environment and, if located near a watershed, dispersal of tailings downstream" Page 138, Paragraph 1, Sentence 1. 26 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00439 Reclamation and Closure A ccording to E P A , reclam ation and closure's objective is to return the site to public u se26. Contem porary m ining and processing require the land to be returned to a state which supports a beneficial use, not necessarily a public use. C O N C L U S IO N E PA 's authority to issue financial responsibility requirem ents under Section 108(b) is contingent upon prioritizing the developm ent of any financial responsibility requirem ents for "those classes ho ifgfhaecsitliltieevse,l ow of ners risk , o and opera f injury'' tors 42 E w h ich i.S.C. the 96 P 08 residen (b) (1) t ( (and emph EP asis A) ad determ ded). O ines nce presents the this threshold determ ination has been made, EPA m ay then prom ulgate regulations to ensure that those "classes o f facilities establish and m aintain evidence o f financial responsibility consistent with the degree and dispo duration sal of haz of ard risk associated ous substances." Iwd.i t(he mt hpeh pro asis duction added). , transportation, treatm ent, storage, or Based upon the SM E's review of the two EPA reports in question, it is clear that EPA has not properly calculated the degree and duration of risk associated with m ining and ore processing of hardrock minerals, and has indeed overstated those risks. M ining is subject to extensive and com prehensive regulation at the state and national levels. Those requirem ents and the evolution of m ining technologies and practices refute EPA 's blanket conclusion that mining technologies have undergone little change over the past 50 years.267 26 "Reclamation and closure: refers to tasks conducted after mining operations have concluded to return the facility site to public use, and to ensure there are no post-operational releases. Tasks include monitoring the site, conducting w ater treatm ent if necessary, and covering and revegetating features that had created a surface disturbance, among others. Reclamation and closure is regulated under both federal surface management regulations (on federal land) and state regulations." Page ix, Paragraph 8. 27 Sierra Club v. EPA 18cv3472 NDCA Tier 2 ED 002061 00087255-00440