Frequent Questions about the Financial Responsibility Requirements under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) Section 108(b) for Classes of Facilities in the Hardrock Mining Industry
EPA complied a collection of answers to questions frequently asked about the proposed financial responsibility requirements for the hardrock mining industry under the CERCLA.
On this page:
- What is CERCLA 108(b)?
- Why is CERCLA 108(b) important?
- How has EPA sought input on the development of the proposed rule?
- Does the CERCLA 108(b) financial responsibility proposed rule apply to closed, inactive or abandoned mine sites?
- What are key requirements of the proposed CERCLA 108(b) financial responsibility requirements for the hardrock mining industry?
- How will this proposed rule support the existing CERCLA cleanup process?
- How will the financial responsibility requirements under this rule be different than under existing federal or state requirements?
- Does this proposed rule preempt or duplicate existing financial responsibility requirements?
- How is the financial responsibility amount determined? How are Natural Resource Damages and Health Assessment costs factored into the financial responsibility amount?
- How are site specific credit reductions applied?
- What is the duration of financial responsibility requirements and instruments?
- How has EPA consulted with the financial and insurance sectors?
- Under this proposal, how would EPA ensure transparency and provide citizens and states with the information needed to stay fully engaged?
- What other industries are being considered for CERCLA 108(b) financial responsibility requirement?
What is CERCLA 108(b)?
Section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA, commonly called Superfund) directs EPA to develop regulations that require classes of facilities to establish and maintain financial responsibility consistent with the degree and duration of risk associated with the production, transportation, treatment, storage or disposal of hazardous substances.
Why is CERCLA 108(b) important?
When releases of hazardous substances occur, or when a threat of release of hazardous substances must be averted, action by EPA may be necessary. Since the Superfund tax that previously funded a trust fund for cleaning up abandoned or uncontrolled hazardous waste sites has expired, EPA’s Superfund program is increasingly funded by the American taxpayer if parties responsible for the release or potential release of hazardous substances are unable to assume the cleanup costs. CERCLA 108(b) regulations ensure that responsible parties are making financial arrangements to address the risks at their sites, and thus help protect the taxpayer from the costs of environmental cleanups. Financial responsibility requirements can also provide an economic incentive for facility owners and operators to conduct their operations in a way that lessens the risk to human health and the environment.
How has EPA sought input on the development of the proposed rule?
This proposal is the result of many years of incremental steps since the agency identified hardrock mining as the first sector for development of requirements. The agency extensively consulted with stakeholders, including small and large businesses, industry groups, environmental groups, and state and tribal governments. Through conference calls, meetings, webinars, and written communications, EPA exchanged information and ideas with stakeholders, which contributed to the development of the proposal.
The proposed rule was signed on December 1, 2016 and it was published in the Federal Register on January 11, 2017. The comment period ends on March 13, 2017. The proposed rule includes instructions on how to comment on the rule. EPA will consider comments received during the public comment period for the proposed rule; responses to public comments will be published upon issuance of the final rule.
Does the CERCLA 108(b) financial responsibility proposed rule apply to closed, inactive or abandoned mine sites?
The proposed rule would apply only to owners and operators of facilities that are authorized to operate, or should be authorized to operate, on the effective date of the rule. The proposed rule would not apply to owners or operators of past hardrock mining facilities, such as abandoned mines, nor would it apply to former owners or operators of mines that are covered by the rule. Under this proposed rule, owners or operators and operators subject to CERCLA 108(b) requirements would remain subject to those requirements until released by EPA. Thus, those obligations would continue regardless of the operating status of the facility.
What are key requirements of the proposed CERCLA 108(b) financial responsibility requirements for the hardrock mining industry?
Owners and operators of facilities subject to the proposed rule would be required to:
- notify EPA that they are subject to the rule;
- calculate a level of financial responsibility for their facility using a formula provided in the rule (and provide supporting documentation for the calculation);
- obtain a financial responsibility instrument, or qualify to self-assure for the amount of financial responsibility if that option is adopted in the final rule;
- demonstrate to EPA that they have obtained such evidence of financial responsibility; and;
- update and maintain financial responsibility until EPA releases the owner or operator from the CERCLA section 108(b) regulations.
Facilities subject to the proposed rule would be required to demonstrate financial responsibility using one or more of the following financial responsibility instruments:
- letter of credit
- insurance
- trust fund
- surety bond
In addition, the proposed rule includes a co-proposal to allow or not allow use of a stringent, credit rating-based financial test and corporate guarantee. See the proposal for more details.
How will this proposed rule support the existing CERCLA cleanup process?
The proposed rule is designed to complement, but not change or substitute for, existing Superfund cost recovery and enforcement procedures. EPA intends for existing CERCLA processes to continue to determine when and what Superfund action is necessary. The identification of a financial responsibility amount under the rule does not contribute to a remedy decision. The CERCLA process for determining liability would be unchanged. CERCLA 108(b) requirements would complement existing Superfund processes for funding cleanups at particular facilities (such as settlements using special accounts and supporting cost recovery actions).
How will the financial responsibility requirements under this rule be different than under existing federal or state requirements?
CERCLA is primarily a response program that does not establish a permitting regime covering all facilities involving hazardous substances. This means that the proposed section 108(b) regulations will operate differently from other financial responsibility programs. Under other programs, a permit or regulations typically specify, in advance, technical requirements for the entity (such as requirements to conduct closure and post-closure care); these are often accompanied by supporting financial responsibility requirements. Thus, those financial responsibility amounts are intended to be used for a known and specified purpose. In contrast, however, consistent with CERCLA's response program, section 108(b) authorizes financial responsibility requirements designed to assure that owners and operators have made sufficient financial arrangements to ensure that funds are available to pay for CERCLA liabilities, as they arise. In developing a proposed rule under section 108(b), the EPA is not imposing design construction and operating standards for hardrock mines. Rather, the agency proposes requirements that are appropriate for the limited purpose of demonstrating evidence of financial responsibility under CERCLA.
Does this proposed rule preempt or duplicate existing financial responsibility requirements?
EPA’s proposed CERCLA 108(b) regulations will be stand-alone financial responsibility requirements that address CERCLA liability. There are significant differences between these requirements and other existing requirements for hardrock mining facilities. In particular:
- the proposed rule does not include technical requirements regulating the operation, closure, or reclamation of hardrock mining facilities;
- the proposed rule does not provide financial responsibility to ensure closure or reclamation requirements made applicable to hardrock mining facilities through a permit;
- the proposed rule does is not intended to preempt state or local mining reclamation and closure requirements; and
- the proposed rule is distinct from federal closure and reclamation bonding requirements imposed under other statutes.
The proposed rule specifically addresses obligations under CERCLA to develop requirements that 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.
How is the financial responsibility amount determined? How are Natural Resource Damages and Health Assessment costs factored into the financial responsibility amount?
Financial responsibility under the section 108(b) proposed rule covers CERCLA liabilities specified in section 107 which include response component, natural resource damages, and health assessment costs. The response component of the formula consists of sub-formulas associated with twelve remedy categories of response activities that EPA has undertaken at hardrock mining sites. The formula also accounts for Natural Resource Damages as a fixed percentage of the response component, and health assessment costs as a fixed amount.
The formula uses the particular site features as inputs into developing the level of financial responsibility required, but the actual availability and use of funds is not predetermined or assigned to any particular remedy or feature. Funds in an instrument will be available to pay for any valid CERCLA 107 claim - response costs, natural resource damages, or health assessment costs.
How are site specific credit reductions applied?
Under the proposed section 108(b) rule, the facility owner and operator will calculate the facility’s level of required financial responsibility using the rule's financial responsibility formula. A facility may be able to receive a reduction for components of the formula if it has controls in place that addresses CERCLA liabilities under an enforcable document issued by another regulating and enforcing authority and meets certain other conditions. The facility owner and operator will submit evidence supporting any reductions to EPA.
What is the duration of financial responsibility requirements and instruments?
There is no prescribed duration of financial responsibility requirements under the proposed rule. The section 108(b) requirements would apply until the owner and operator are released by EPA. Upon a request for release from the owner and operator, EPA would make a preliminary determination on whether the degree and duration of risk associated with the production, transportation, treatment, storage, and disposal of hazardous substances at the facility is minimal, and that the facility should therefore be released from the CERCLA section 108(b) requirements. EPA would then undertake a public involvement process prior to releasing the owner and operator.
How has EPA consulted with the financial and insurance sectors?
EPA engaged with stakeholders, including the financial industry, via public webinars and direct consultation with instrument providers. The meetings focused primarily on the mechanics of the financial responsibility instruments that owners and operators would need to obtain under the rule.
Under this proposal, how would EPA ensure transparency and provide citizens and states with the information needed to stay fully engaged?
EPA is proposing that owners and operators be required to develop and maintain a facility record that includes information documenting compliance with the financial responsibility requirements of this proposed rule. The facility record must include at least all information required to be submitted to EPA, comments received from the public, and all notifications received from EPA related to the financial responsibility obligations of the facility.
These requirements help ensure transparency and provide citizens with information about financial responsibility requirements. It will also provide citizens and states with the information they need to fully engage in its implementation.
What other industries are being considered for CERCLA 108(b) financial responsibility requirement?
The January 2016 order from the U.S. Court of Appeals for the District of Columbia Circuit, also required EPA to sign for publication a determination whether the agency will issue notices of proposed rulemaking regarding similar financial responsibility requirements for three additional industries: chemical manufacturing; power generation, transmission and distribution; and petroleum and coal products. This notice is not a determination that regulatory financial assurance requirements have been found necessary for any of these three industry classes. The notice explains that EPA intends to move forward to determine, what, if any, financial requirements are necessary for these industries.
EPA will evaluate a broad range of options in consultation with stakeholders including state and tribal governments, industry groups, and environmental groups before making such determinations. EPA’s future activities will consist of information collection regarding each sector and an evaluation of the modern practices of these industries.