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Environmental Groups Call for Courts to Impose New Financial Assurance Requirements on Mines, Utilities, Metal Refinishers, Wood Treaters

April 23, 2008

Environmental groups hope to use the courts to force the Environmental Protection Agency (“EPA”) to impose financial assurance requirements on a broad range of facilities that produce, transport, store or dispose of hazardous substances. Evidence of an ability to pay for cleanups is already required under the Resource Conservation and Recovery Act[1] (“RCRA”) for hazardous waste treatment, storage, and disposal (“TSD”) facilities. In a lawsuit filed last month, however, Earthjustice (on behalf of certain environmental plaintiffs) asks a federal court to order EPA to impose similar requirements under § 108 of the Comprehensive Environmental Response, Compensation, and Liability Act[2] on mines, electric utilities, metal finishers, and wood treatment facilities. Plaintiffs contend that Congress required EPA in CERCLA § 108 to identify “classes” of facilities that should maintain financial assurance “consistent with the degree and duration of risk associated with the production, transportation, treatment, storage or disposal of hazardous substances.”[3] Plaintiffs contend that EPA was required to promulgate such regulations by 1983, and has failed to do so.

Background

When Congress enacted CERCLA in 1980, it included a “financial responsibility” provision in § 108. This section required the President to “promulgate 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.”[4] Section 108 required identification of an initial class of facilities subject to financial assurance regulations by the end of 1983,[5] and the implementation of financial assurance regulations “as quickly as can reasonably be achieved but in no event more than 4 years after the date of promulgation.”[6] EPA and the Department of Transportation (“DOT”), the agencies with delegated responsibility to implement this section of CERCLA,[7] have never published rules pursuant to these requirements.

The Lawsuit

Earthjustice, acting on behalf of the Sierra Club, Great Basin Resource Watch, Amigos Bravos, and Idaho Conservation League (collectively “Earthjustice”), filed a CERCLA citizen suit on March 12, 2008 in the Northern District of California, seeking to use the courts to force EPA and DOT to promulgate financial assurance regulations for the “classes” of facilities called out by the statute.

Earthjustice argues that financial assurances are needed because the federal Superfund lacks the money to cover cleanup costs at “orphan sites,” where there are no viable private parties who can conduct the cleanup because of bankruptcy or other inability to pay. Earthjustice asserts in its complaint that EPA has been left with a significant shortfall in available funding to address sites on the National Priority List (“NPL”).[8] It refers to a 2004 report from EPA’s Office of Inspector General, which estimated that funding during fiscal year 2003 for the Superfund program was $174.9 million below what was necessary to address sites on the NPL.[9]

Congress Considers Mining Legislation

Meanwhile, Congress has been debating mining legislation that also addresses financial assurance requirements. The House has passed its version of a Hardrock Mining and Reclamation bill.[10] It would require operators with hardrock mining permits to provide financial assurance of their ability to fund restoration and reclamation projects in the permit area as a condition of receiving a permit,[11] and would create a cleanup fund for abandoned mining sites.[12] A companion bill is working its way through the Senate. The Senate Committee on Energy and Natural Resources heard testimony on an abandoned mining reform law on March 12, 2008, the day that the environmental groups filed their complaint in California.[13] Industry groups have argued that additional financial assurance legislation is unwarranted given that the mining industry is already subject to a complex network of federal and state laws that impose financial requirements.[14] Further, they argue that additional financial assurance requirements will not impact the bulk of abandoned mining sites, because these sites became contaminated prior to enactment of the current regulatory scheme.[15]

For more information, please contact any member of Marten Law Group’s Waste Cleanup practice group.

[1] 42 U.S.C. §§ 6901 et seq.

[2] 42 U.S.C. §§ 9601 et seq.

[3] Sierra Club v. Johnson, No. 08-01409 (N.D. Cal. Mar. 12, 2008) [hereinafter “Complaint”].

[4] 42 U.S.C. § 9608(b)(1).

[5] Id.

[6] Id. § 9608(b)(3).

[7] See Executive Order No. 12,580, 52 Fed. Reg. 2923 (Jan. 23, 1987) (delegating primary CERCLA implementation authority to EPA); 46 Fed. Reg. 42237 (Aug. 14, 1981) (delegating CERCLA authority with respect to transportation-related facilities to DOT).

[8] Complaint ¶ 28.

[9] Id. ¶ 30-32.

[10] H.R. 2262, 110th Cong. (2007).

[11] Id. § 306.

[12] Id. §§ 401, 411.

[13] “Mining Law Reform—Abandoned Mines, Uranium,” Senate Committee on Energy and Natural Resources, Press Release (Mar. 12, 2008).

[14] See Laura Skaer, Northwest Mining Association, Testimony Before the Committee on Natural Resources Subcommittee on Energy and Mineral Resources (Oct. 2, 2007). Industry members speaking on behalf of the National Mining Association presented similar arguments in a hearing before the Senate Committee on Energy and Natural Resources. See Statement of the National Mining Association, William E. Cobb, Vice President of Environmental Services, Freeport McMoran Mining Company (Jan. 24, 2008).

[15] Laura Skaer, Northwest Mining Association, Testimony Before the Committee on Natural Resources Subcommittee on Energy and Mineral Resources (Oct. 2, 2007).

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