On December 1, 2016, following decades of inaction and a court order establishing a deadline by which the proposed rule was to be released, the United States Environmental Protection Agency (“EPA”) announced that it would publish a proposed rule regulating financial assurances required for parties conducting remediation projects in the hardrock mining industry. Section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) directed EPA to develop rules requiring “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 wastes.” 42 U.S.C. 9608(b)(1). Although these rules were required to be promulgated by 1985, EPA never published any rules, which led to a deadline of December 1, 2016 being set by court order in response to a lawsuit complaining that EPA failed to comply with the statute. See In re Idaho Conservation League, 811 F.3d 502 (D.C. Cir. 2016). In the absence of such rules, EPA required financial assurance through negotiated settlements, orders, and guidance.
CERCLA requires that EPA create regulations mandating that certain responsible parties conducting remediation activities establish that they have the ability to fund all necessary remediation costs associated with those actions, otherwise known as financial assurances. For years, EPA made no progress in developing and promulgating such rules. Our previous article detailing the legal and regulatory history leading up to EPA’s announcement is available here. Importantly, the newly proposed financial assurance rule is limited to the hardrock mining industry, and EPA estimates that some 221 facilities throughout the country would be subject to the rule.
The proposed rule includes a detailed explanation of financial assurance mechanisms that will be permitted under the rule and provides that the amount of financial assurance must be sufficient to pay for estimated environmental remediation actions, as well as natural resource damages. The proposal allows a responsible party to demonstrate it has the financial wherewithal to cover the cost of a remediation through the use of approved financial assurance mechanisms, which would include trust funds, insurance policies, letters of credit, surety bonds, or a combination of those instruments.