Hardrock Mining: Information on Abandoned Mines and Value and Coverage of Financial Assurances on BLM Land
Published: 2008-03-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Mining Act of 1872 helped foster the development of the West by giving individuals exclusive rights to mine gold, silver, copper, and other hardrock minerals on federal lands. However, miners often abandoned mines, leaving behind structures, safety hazards, and contaminated land and water. Four federal agencies--the Department of the Interior's Bureau of Land Management (BLM) and Office of Surface Mining Reclamation and Enforcement (OSM), the Forest Service, and the Environmental Protection Agency (EPA)--fund the cleanup of some of these sites. To curb further growth in the number of abandoned hardrock mines on federal lands, in 1981 BLM began requiring mining operators to reclaim lands when their operations ceased. In 2001, BLM began requiring all operators to provide financial assurances to guarantee funding for reclamation costs if the operator did not complete the task as required. This testimony provides information on the (1) federal funds spent to clean up abandoned hardrock mine sites since 1998, (2) number of abandoned hardrock mine sites and hazards, and (3) value and coverage of financial assurances operators use to guarantee reclamation costs on BLM land. To address these issues, GAO, among other steps, asked 12 western states and Alaska to provide information on the number of abandoned mine sites and associated features in their states using a consistent definition.
section_title: What GAO Found
paragraphs: Between fiscal years 1998 and 2007, BLM, the Forest Service, EPA, and OSM spent at least $2.6 billion (in 2008 constant dollars) to reclaim abandoned hardrock mines. BLM and the Forest Service have reclaimed abandoned hardrock mine sites on the lands they manage; EPA funds the cleanup of these sites, primarily on nonfederal lands through its Superfund program; and OSM provides some grants to states and Indian tribes to clean up these sites on their lands. Of the four agencies, EPA has spent the most--about $2.2 billion (in 2008 constant dollars) for mine cleanups. BLM and the Forest Service spent about $259 million (in 2008 constant dollars), and OSM awarded grants totaling about $198 million (in 2008 constant dollars) to support the cleanup of abandoned hardrock mines. Over the last 10 years, estimates of the number of abandoned hardrock mining sites in the 12 western states and Alaska have varied widely, in part because there is no generally accepted definition for a hardrock mine site. Using a consistent definition that GAO provided, 12 western states and Alaska provided estimates of abandoned hardrock mine sites. On the basis of these data, GAO estimated a total of at least 161,000 such sites in these states with at least 332,000 features that may pose physical safety hazards and at least 33,000 sites that have degraded the environment. According to BLM's information on financial assurances as reported in its November 2007 Bond Review Report, mine operators had provided financial assurances valued at approximately $982 million to guarantee reclamation costs for 1,463 hardrock operations on BLM land. The report also estimates that 52 mining operations have financial assurances that amount to about $28 million less than needed to fully cover estimated reclamation costs. However, GAO found that the financial assurances for these 52 operations are in fact about $61 million less than needed to fully cover estimated reclamation costs. The $33 million difference between GAO's estimated shortfall and BLM's occurs because BLM calculated its shortfall by comparing the total value of financial assurances in place with the total estimated reclamation costs. This calculation approach has the effect of offsetting the shortfalls in some operations with the financial assurances of other operations. However, financial assurances that are greater than the amount required for an operation cannot be transferred to another operation that has inadequate financial assurances. BLM officials agreed that it would be valuable for the Bond Review Report to report the dollar value of the difference between financial assurances in place and required for those operations where financial assurances are inadequate, and BLM has taken steps to correct this. GAO discussed the information in this testimony with officials from the four federal agencies, and they provided GAO with technical comments, which were incorporated as appropriate.

section_title: Letter
paragraphs: I am pleased to be here today to discuss several aspects of hardrock  mining, including abandoned hardrock mining sites and financial  assurances. We developed this information during the course of our  ongoing review, which is being conducted at the request of this  Committee, Senator Reid, and the Chairman of the House Committee on  Natural Resources.
As you know, the General Mining Act of 1872 encouraged the development  of the West by allowing individuals to stake claims and obtain exclusive  rights to the gold, silver, copper, and other valuable hardrock mineral  deposits on land belonging to the United States. Since then, thousands of  operators have extracted billions of dollars worth of hardrock minerals  from land managed by the Department of the Interior’s Bureau of Land  Management (BLM) and the U.S. Department of Agriculture’s Forest  Service—the two principal agencies responsible for federal lands open for  hardrock mining. However, some operators did not reclaim thousands of  acres of federal land disturbed for exploration, mining, and mineral  processing when their operations ceased. Some of these disturbed lands  pose serious environmental and physical safety hazards. These hazards  include environmental hazards such as toxic or acidic water that  contaminates soil and groundwater or physical safety hazards such as  open or concealed shafts, unstable or decayed mine structures, or  explosives. Cleanup costs for these abandoned mines vary by type and size  of the operation. For example, the cost of plugging holes is usually  minimal, but reclamation costs for large mining operations can be in the  tens of millions of dollars.
Four federal agencies—BLM, the Forest Service, the Environmental  Protection Agency (EPA), and the Department of the Interior’s Office of  Surface Mining Reclamation and Enforcement (OSM)—fund the cleanup  and reclamation of some of these abandoned hardrock mine sites. BLM’s  and the Forest Service’s Abandoned Mine Lands programs focus on the  safety of their land by addressing physical and environmental hazards.  EPA’s funding of abandoned hardrock mine sites, under its Superfund  Program, focuses on the cleanup and long-term health effects of air,  ground, or water pollution by abandoned hardrock mine sites, and is  generally for mines on nonfederal lands. Finally, OSM, under amendments  to the Surface Mining Control and Reclamation Act (SMCRA) of 1977, can  provide grants to fund the cleanup and reclamation of certain hardrock  mining sites after a state certifies that it has cleaned up its abandoned coal  mine sites and the Secretary of the Interior approves the certification or at  the request of a state or an Indian tribe.
Federal agencies, states, mining, and environmental organizations, and  others have attempted to determine the total number of abandoned  hardrock mines and the safety and environment hazards these mines pose.  These estimates vary widely, and many of these abandoned hardrock  mines present safety, health, and environmental hazards.
To curb further growth in the number of abandoned hardrock mines, BLM  issued regulations, effective in 1981, that required all mining operators to  reclaim BLM land disturbed by hardrock mining. In 2001, BLM regulations  began requiring all mining operators to provide financial assurances  before beginning exploration or mining operations on BLM land. These  financial assurances must cover all of the estimated reclamation costs for  a given hardrock operation. Having adequate financial assurances to pay  reclamation costs for BLM land disturbed by hardrock operations is  critical to ensuring that the land is reclaimed if the mining operators fail to  do so. In June 2005, we reported that some current hardrock operations on  BLM land do not have financial assurances, and some have no or outdated  reclamation plans and/or cost estimates on which the financial assurances  should be based. In that report we    concluded that BLM did not have an effective process and critical  management information needed for ensuring that adequate financial  assurances are actually in place, as required by federal regulations and  BLM guidance; and   made recommendations to strengthen BLM’s management of financial  assurances for hardrock operations on its lands.
In response to those recommendations, BLM modified its computer  system—LR2000—to generate the Bond Review Fiscal Report (the Bond  Review Report). BLM uses this report to determine if adequate financial  assurances are in place for mining operations on its lands. BLM also  requires its state directors to annually review the Bond Review Report to  determine if all reclamation cost estimates are adequate, take action to  address inadequacies, and certify that the financial assurances are  adequate.
In contrast to BLM, the Forest Service—the other federal agency  principally responsible for hardrock mining operations on federal land— does not have readily available information on the financial assurances in  place for hardrock operations on its lands. Although the Forest Service’s  regulations do not require financial assurances for all operations, the  Forest Service’s policy is to require them.
In this context, my testimony today, as requested, discusses the (1) federal  funds spent to clean up abandoned hardrock mine sites since 1998, (2)  number of abandoned hardrock mine sites and the number of associated  hazards, and (3) value and coverage of the financial assurances operators  use to guarantee reclamation costs on BLM land.
To address these objectives, we interviewed staff at BLM, the Forest  Service, EPA, and OSM; examined agency documents and data; and  reviewed relevant legislation and regulations. In addition, for the first  objective, we obtained federal expenditure data from these four agencies  for cleaning up and reclaiming abandoned hardrock mine sites from fiscal  years 1998 through 2007. We adjusted the expenditure data to 2008  constant dollars. For the second objective, we asked 12 western states and  Alaska—which have significant numbers of abandoned hardrock mining  operations—to determine the number of these mine sites in their states.  We asked the states to use a consistent definition, which we provided, in  estimating the number of abandoned mine sites and associated features  that pose a significant hazard to public health and safety and the number  of sites that cause environmental degradation. We defined an abandoned  hardrock mine site as all associated facilities, structures, improvements,  and disturbances at a distinct location associated with activities to support  a past operation of minerals locatable under the general mining laws. We  specified that states should only include hardrock (also known as  locatable), non-coal sites in this estimate. From these data, we estimated  the number of abandoned hardrock mine sites, the number of features that  pose physical safety hazards, and the number of sites with environmental  hazards in the 12 western states and Alaska. We also summarized selected  prior survey efforts by federal agencies and organizations to document  differences in estimates, definitions, and methodologies. For the third  objective, we reviewed BLM’s Bond Review Report to determine the value  and coverage of financial assurances in place to guarantee coverage of  reclamation costs. This report provides information on financial  assurances for 11 western states. This Bond Review Report is generated  from BLM’s automated information system—LR 2000. Although the  LR2000 data are of undetermined reliability, our limited assessment of  these data indicates that they are appropriate as used and presented in this  testimony, and we do not base any conclusions or recommendations on  them.
We conducted this performance audit from November 2007 through March  2008, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives. See appendix I for more  detailed information on our scope and methodology.
The four federal agencies we examined—BLM, the Forest Service, EPA,  and OSM—spent at least $2.6 billion (in 2008 constant dollars) between  fiscal years 1998 and 2007 to clean up abandoned hardrock mines. BLM  and the Forest Service spent a total of about $259 million (in 2008 constant  dollars) to fund the cleanup of abandoned sites on the lands they manage.  EPA spent the most of the four agencies—about $2.2 billion (in 2008  constant dollars) to fund the cleanup of abandoned mine sites, primarily  on nonfederal land through its Superfund program, and OSM provided  grants to states and Indian tribes totaling about $198 million (in 2008  constant dollars) to support cleanups of abandoned hardrock mines.
According to several studies we reviewed that were conducted over the  last 10 years, estimates of the number of abandoned hardrock mine sites in  the 12 western states and Alaska vary widely, in part because there is no  generally accepted definition for a hardrock mine site and the studies rely  on the different definitions the states used. Furthermore, BLM’s and the  Forest Service’s estimate of 100,000 abandoned hardrock mines on their  lands is problematic because they included non-hardrock mines and mines  that may not be on their lands. Using a consistent definition that we  provided, the 12 western states and Alaska estimated the number of  hardrock mine sites in their states and from this information we estimated  a total of at least 161,000 abandoned hardrock mine sites in these states on  state, private, or federal lands. These sites have at least 332,000 features  that may pose physical safety hazards, such as open shafts or unstable or  decayed mine structures. The states also estimated that at least 33,000  sites have degraded the environment by, for example, contaminating  surface water and groundwater.
As of November 2007, mine operators had provided financial assurances  valued at approximately $982 million to guarantee reclamation costs for  1,463 hardrock operations on BLM land in 11 western states, according to  BLM’s Bond Review Report. The report also estimates that 52 mining  operations have inadequate financial assurances amounting to about $28  million less than needed to fully cover estimated reclamation costs.  However, we determined that the financial assurances for the 52  operations are actually about $61 million less than needed to fully cover  estimated reclamation costs. The $33 million difference between our  estimated shortfall and BLM’s occurs because BLM calculated its shortfall  by comparing the total value of financial assurances in place with the total  estimated reclamation costs. This calculation approach has the effect of  offsetting the shortfalls in some operations with the financial assurances  of other operations. However, financial assurances that are greater than  the amount required for an operation cannot be transferred to another  operation that has inadequate financial assurances.  BLM officials agreed  that it would be valuable for the Bond Review Report to report the dollar  value of the difference between financial assurances in place and required  for those operations where financial assurances are inadequate, and BLM  has taken steps to modify LR2000.
We discussed the information in this testimony with officials from the four  federal agencies, and they provided us with technical comments, which we  incorporated as appropriate.
subsections: section_title: Background
paragraphs: Historically, the mining of hardrock minerals, such as gold, lead, copper,  silver, and uranium, was an economic incentive for exploring and settling  the American West. However, when the ore was depleted, miners often left  behind a legacy of abandoned mines, structures, safety hazards, and  contaminated land and water. Even in more recent times, after cleanup  became mandatory, many parties responsible for hardrock mining sites  have been liquidated through bankruptcy or otherwise dissolved.  Under  these circumstances, some hardrock mining companies have left it to the  taxpayer to clean up the mining site. BLM, the Forest Service, EPA, and  OSM play a role in cleaning up these abandoned mining sites and ensuring  that currently operating sites are reclaimed after operations have ceased.
BLM and the Forest Service are responsible for managing more than 450  million acres of public lands in their care, including land disturbed and  abandoned by past hardrock mining activities. BLM manages about 258  million acres in 12 western states, including Alaska. The Forest Service  manages about 193 million acres across the nation. In 1997, BLM and the  Forest Service each launched a national Abandoned Mine Lands Program  to remedy the physical and environmental hazards at thousands of  abandoned hardrock mines on the federal lands they manage. According  to a September 2007 report by these two agencies, they had inventoried  thousands of abandoned sites and, at many of them, had taken actions to  clean up hazardous substances and mitigate safety hazards.
BLM and the Forest Service are also responsible for managing and  overseeing current hardrock operations on their lands, including the  mining operators’ reclamation of the land disturbed by hardrock mining.  Although reclamation can vary by location, it generally involves such  activities as regrading and reshaping the disturbed land to conform with  adjacent land forms and to minimize erosion; removing or stabilizing  buildings and other structures to reduce safety risks; removing mining  roads to prevent damage from future traffic; and establishing self- sustaining vegetation. One of the agencies’ key responsibilities is to ensure  that adequate financial assurances, based on sound reclamation plans and  cost estimates, are in place to guarantee reclamation costs. If a mining  operator fails to complete required reclamation, BLM or the Forest Service  can take steps to obtain funds from the financial assurance provider to  complete the reclamation.
BLM requires financial assurances for both notice-level hardrock mining  operations—those disturbing 5 acres of land or less—and plan-level  hardrock mining operations—those disturbing over 5 acres of land and  those in certain designated areas, such as the national wild and scenic  rivers system. For hardrock operations on Forest Service lands, agency  regulations require reclamation of sites after operations cease, but do not  require financial assurances for the reclamation. However, according to a  Forest Service official, if the proposed hardrock operation is likely to  cause a significant disturbance, the Forest Service requires financial  assurances.
Both agencies allow several types of financial assurances to guarantee  estimated reclamation costs for hardrock operations on their lands.  According to regulations and agency officials, BLM and the Forest Service  allow cash, letters of credit, certificates of deposit or savings accounts,  and negotiable U.S. securities and bonds in a trust account. BLM also  allows surety bonds, state bond pools, trust funds, and property.
Neither agency centrally tracks all the types of financial assurances in  place for hardrock operations on its lands. BLM’s LR2000 tracks most of  the types, and BLM is updating the database to include more types of  financial assurances, but data are incomplete for the types of assurances  currently in the system. The Forest Service does not have readily available  information on the types of financial assurances in use, but it is developing  a database to collect this and other information on hardrock operations by  late summer 2008, according to Forest Service officials.
EPA administers the Superfund program, which was established under the  Comprehensive Environmental Response, Compensation, and Liability Act  of 1980 to address the threats that contaminated waste sites, including  those on nonfederal lands, pose to human health and the environment.  The act also requires that the parties statutorily responsible for pollution  bear the cost of cleaning up contaminated sites, including abandoned  hardrock mining operations. Some contaminated hardrock mine sites have  been listed on Superfund’s National Priorities List—a list of seriously  contaminated sites. Typically, these sites are expensive to clean up and the  cleanup can take many years. According to EPA’s Office of Inspector  General in 2004, 63 hardrock mining sites were on the National Priorities  List and another 93 sites had the potential to be added to the list.  Regarding financial assurances, EPA has statutory authority under the  Superfund program to require businesses handling hazardous substances  on nonfederal lands to provide financial assurances, and according to  agency officials, is currently exploring options for implementing this  authority.
OSM’s Abandoned Mine Land Program primarily focuses on cleaning up  abandoned coal mine sites. However, OSM, under amendments to the  Surface Mining Control and Reclamation Act (SMCRA) of 1977, can  provide grants to fund the cleanup and reclamation of certain hardrock  mining sites either (1) after a state certifies that it has cleaned up its  abandoned coal mine sites and the Secretary of the Interior approves the  certification, or (2) at the request of a state or Indian tribe to address  problems that could endanger life and property, constitute a hazard to the  public and safety, or degrade the environment, and the Secretary of the  Interior grants the request. OSM has provided more than $3 billion to clean  up dangerous abandoned mine sites. Its Abandoned Mine Land Program  has eliminated safety and environmental hazards on 314,108 acres since  1977, including all high-priority coal problems and non-coal problems in 27  states and on the lands of three Indian tribes.
section_title: Federal Agencies Have Spent At Least $2.6 Billion to Clean Up Abandoned Hardrock Mine Sites Since 1998
paragraphs: Between fiscal years 1998 and 2007, the four federal agencies we  examined—BLM, the Forest Service, EPA, and OSM—spent at least $2.6  billion to reclaim abandoned hardrock mines on federal, state, private, and  Indian lands. EPA has spent the most—$2.2 billion. Although the amount  each agency spent annually varied considerably, the median amount spent  for the public lands by BLM and the Forest Service was about $5 million  and about $21 million, respectively. EPA spent substantially more—a  median of about $221 million annually—to clean up mines that are  generally on nonfederal lands. Finally, OSM provided grants with an  annual median value of about $18 million to states and Indian tribes  through its SMCRA program for hardrock mine cleanups. Table 1  summarizes information on expenditures and hardrock mine cleanup  activities at BLM, the Forest Service, EPA, and OSM. See appendix II for  more detailed information on agency expenditures by fiscal year.
According to available data, as of September 30, 2007, BLM had spent the  largest share of its funds in Montana—about $18 million; EPA had spent  the largest share of its funds in Idaho—about $352 million; and Wyoming  was the largest recipient of OSM grants for cleaning up hardrock mine  sites—receiving about $99 million. Wyoming was eligible for OSM grants  after OSM’s acceptance of the state’s certification that it had completed its  cleanup of coal mine sites. The Forest Service was unable to provide this  information by state. See appendix II for BLM, EPA, and OSM total funding  by state.
section_title: Prior State Estimates of the Number of Abandoned Hardrock Mine Sites Vary Widely, but Our Data Show at Least 161,000 Sites, with Many Posing Hazards
paragraphs: Previous state estimates of the number of abandoned hardrock mine sites  vary widely in the six studies that we reviewed because, in part, there is no  generally accepted definition for a hardrock mine site and the studies rely  on the states’ different definitions of hardrock mine sites. In addition, we  found problems with BLM’s and the Forest Service’s estimate of 100,000  abandoned hardrock mines on their lands because the agencies included  non-hardrock mines and mines that may not be on their lands. Using our  consistent definition, 12 western states and Alaska estimated a total of at  least 161,000 abandoned hardrock mine sites in their states on state,  private, or federal lands.
subsections: section_title: Six Studies Identified a Range of Estimated Abandoned Hardrock Mining Sites
paragraphs: We identified six studies conducted in the past 10 years that estimated the  number of abandoned hardrock mine sites in the 12 western states and  Alaska. The estimates in each of these studies were developed by asking  states to provide data on the number of abandoned hardrock mine sites in  their states, generally without regard to whether the mine was on federal,  state, Indian, or private lands. The estimates for a particular state do, in  some cases, vary widely from study to study. For example, for Nevada, the  Western Governors’ Association/National Mining Association estimated  that the state had 50,000 abandoned hardrock mine sites in 1998, while in  2004 EPA estimated that the state had between 200,000 to 500,000  abandoned sites. The estimates also reflect the different definitions that  states used for abandoned hardrock mining sites for a given study. For  example, we found that, within the same study, some states define an  abandoned mine site as a mine opening or feature, while others define a  site as all associated mine openings, features, or structures at a distinct  location. As a result, an abandoned hardrock operation with two mine  openings, a pit, and a tailings pile could be listed as one site or four sites,  depending on the definitions and methodologies used. See appendix III for  more information on estimates from these studies.
In addition, some regional or state estimates included coal and other non- hardrock mineral sites because it was (1) not important to distinguish  between the type of minerals mined or (2) difficult to determine what  mineral had been mined. In 2004, EPA commented on this problem, noting,  “it is important to keep in mind that a universally applied definition of an   does not exist at present…therefore, the various  agencies and state-developed…inventories presented may possess  inconsistencies and are not intended for exact quantitative comparisons.”
section_title: BLM and Forest Service Estimates of Abandoned Hardrock Mines Include Non-Hardrock Mines and Mines That May Not Be on Their Lands.
paragraphs: BLM and the Forest Service have also had difficulty determining the  number of abandoned hardrock mines on their lands and have no  definitive estimates. In September 2007, the agencies reported that there  were an estimated 100,000 abandoned hardrock mine sites, but we found  problems with this estimate. For example, the Forest Service had reported  that it had approximately 39,000 abandoned hardrock mine sites on its  lands. However, we found that this estimate includes a substantial number  of non-hardrock mines, such as coal mines, and sites that are not on  Forest Service land. At our request, in November 2007, the Forest Service  provided a revised estimate of the number of abandoned hardrock mine  sites on its lands, excluding coal or other non-hardrock sites. According to  this estimate, the Forest Service may have about 29,000 abandoned  hardrock mine sites on its lands. That said, we still have concerns about  the accuracy of the Forest Service’s recent estimate because it includes a  large number of sites on lands with “undetermined” ownership, and  therefore these sites may not all be on Forest Service lands.
BLM has also acknowledged that its estimate of abandoned hardrock mine  sites on its lands may not be accurate because it includes sites on lands  that are of unknown or mixed ownership (state, private, and federal) and a  few coal sites. In addition, BLM officials said that the agency’s field offices  used a variety of methods to identify sites in the early 1980s, and the  extent and quality of these efforts varied greatly. For example, they  estimated that only about 20 percent of BLM land has been surveyed in  Arizona. Furthermore, BLM officials said that the agency focuses more on  identifying sites closer to human habitation and recreational areas than on  identifying more remote sites, such as in the desert. Table 2 shows the  Forest Service’s and BLM’s most recent available estimates of abandoned  mine sites on their lands.
section_title: Using a Consistent Definition, GAO Estimated at Least 161,000 Abandoned Sites
paragraphs: To estimate abandoned hardrock mining sites in the 12 western states and  Alaska, we developed a standard definition for these mine sites. In  developing this definition, we consulted with mining experts at the  National Association of Abandoned Mine Land Programs; the Interstate  Mining Compact Commission; and the Colorado Department of Natural  Resources, Division of Reclamation, Mining and Safety, Office of Active  and Inactive Mines. We defined an abandoned hardrock mine site as a site  that includes all associated facilities, structures, improvements, and  disturbances at a distinct location associated with activities to support a  past operation, including prospecting, exploration, uncovering, drilling,  discovery, mine development, excavation, extraction, or processing of  mineral deposits locatable under the general mining laws. We also asked  the states to estimate the number of features at these sites that pose  physical safety hazards and the number of sites with environmental  degradation. See appendix I for the complete definition we used when  asking states for their estimates.
Using this definition, states reported to us the number of abandoned sites  in their states, and we estimated that there are at least 161,000 abandoned  hardrock mine sites in their states. At these sites, on the basis of state  data, we estimated that at least 332,000 features may pose physical safety  hazards, such as open shafts or unstable or decayed mine structures; and  at least 33,000 sites have degraded the environment, by, for example,  contaminating surface water and groundwater or leaving arsenic- contaminated tailings piles. Table 3 shows our estimate of the number of  abandoned hardrock mine sites in the 12 western states and Alaska, the  number of features that pose significant public health and safety hazards,  and the number of sites with environmental degradation.
While states used our definition to provide data on the estimated number  of mine sites and features, these data have two key limitations. First, the  methods and sources used to identify and confirm abandoned sites and  hazardous features vary substantially by state. For example, some states,  such as Colorado and Wyoming, indicated they had done extensive and  rigorous fieldwork to identify sites and were reasonably confident that  their estimates were accurate. Other states, however, relied less on  rigorous fieldwork, and more on unverified, readily available records or  data sources, such as published or unpublished geological reports, mining  claim maps, and the Mineral Availability System/Mineral Industry Locator  System (MAS/MILS), which states indicated were typically incomplete.  Several of those states that relied primarily on literature used the literature  only as a starting point, and then estimated the number of features on the  basis of experience. For example, while one state estimated that there  were about three times the number of public safety hazards as identified  by the literature, another state estimated that there were four times as  many, and a third state estimated that there were up to six times as many.
Second, because states have markedly different data systems and  requirements for recording data on abandoned mines, some states were  less readily able to provide the data directly from their systems without  manipulation or estimation. For example, New Mexico estimated the  number of abandoned mine sites from the data it maintains on hazardous  features, and Nevada estimated the number of abandoned hardrock mine  sites from the data it maintains on the number of mining districts in the  state.
section_title: BLM Estimates That Operators Have Provided About $982 Million in Financial Assurances—About $61 Million Less Than Needed to Cover Estimated Reclamation Costs
paragraphs: As of November 2007, hardrock mining operators had provided financial  assurances valued at approximately $982 million to guarantee the  reclamation costs for 1,463 hardrock mining operations on BLM lands in  11 western states, according to BLM’s Bond Review Report. The report  also indicates that 52 of the 1,463 hardrock mining operations had  inadequate financial assurances—about $28 million less than needed to  fully cover estimated reclamation costs. We determined, however, that the  financial assurances for these 52 operations should be more accurately  reported as about $61 million less than needed to fully cover estimated  reclamation costs. Table 4 shows total hardrock mining operations by  state, the number of operations with inadequate financial assurances, the  financial assurances required, BLM’s calculation of the shortfall in  assurances, and our estimate of the shortfall, as of November 2007.
The $33 million difference between our estimated shortfall of nearly $61  million and BLM’s estimated shortfall of nearly $28 million occurs because  BLM calculated its shortfall by comparing the total value of financial  assurances in place with the total estimated reclamation costs. This  calculation approach has the effect of offsetting the shortfalls in some  operations with the financial assurances of other operations. However, the  financial assurances that are greater than the amount required for an  operation cannot be transferred to an operation with inadequate financial  assurances. In contrast, we totaled the difference between the financial  assurance in place for an operation and the financial assurances needed  for that operation to determine the actual shortfall for each of the 52  operations for which BLM had determined that financial assurances were  inadequate.
BLM’s approach to determining the adequacy of financial assurances is not  useful because it does not clearly lay out the extent to which financial  assurances are inadequate. For example, in California, BLM reports that,  statewide, the financial assurances in place are $1.5 million greater than  required, suggesting reclamation costs are being more than fully covered.  However, according to our analysis of only those California operations  with inadequate financial assurances, the financial assurances in place are  nearly $440,000 less than needed to fully cover reclamations costs. BLM  officials agreed that it would be valuable for the Bond Review Report to  report the dollar value of the difference between financial assurances in  place and required for those operations where financial assurances are  inadequate and have taken steps to modify LR2000.
BLM officials said that financial assurances may appear inadequate in the  Bond Review Report when    expansions or other changes in the operation have occurred, thus  requiring an increase in the amount of the financial assurance;    BLM’s estimate of reclamation costs has increased and there is a delay  between when BLM enters the new estimate into LR2000 and when the  operator provides the additional bond amount; and    BLM has delayed updating its case records in LR2000.
Conversely, hardrock mining operators may have financial assurances  greater than required for a number of reasons; for example, they may  increase their financial assurances because they anticipate expanding  their hardrock operations.
In addition, according to the Bond Review Report, there are about 2.4  times as many notice-level operations—operations that cause surface  disturbance on 5 acres or less—as there are plan-level operations on BLM  land—operations that disturb more than 5 acres (1,033 notice-level  operations and 430 plan-level operations). However, about 99 percent of  the value of financial assurances is for plan-level operations, while 1  percent of the value is for notice-level operations. While financial  assurances were inadequate for both notice- and plan-level operations, a  greater percentage of plan-level operations had inadequate financial  assurances than did notice-level operations—6.7 percent and 2.2 percent,  respectively. Finally, over one-third of the number of all hardrock  operations and about 84 percent of the value of all financial assurances are  for hardrock mining operations located in Nevada. See appendix IV for  further details on the number of plan- and notice-level operations in each  state.
Mr. Chairman, this concludes my prepared statement. I would be happy to  respond to any questions that you or Members of the Committee may  have.
section_title: Contact and Staff Acknowledgments
paragraphs: Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this testimony. For further  information about this testimony, please contact Robin M. Nazzaro,  Director, Natural Resources and Environment (202) 512-3841 or  nazzaror@gao.gov. Key contributors to this testimony were Andrea  Wamstad Brown (Assistant Director); Casey L. Brown; Kristen Sullivan  Massey; Rebecca Shea; and Carol Herrnstadt Shulman.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To determine the (1) federal funds spent to clean up abandoned hardrock  mine sites since 1998, (2) number of abandoned hardrock mine sites and  the number of associated hazards, and (3) value and coverage of the  financial assurances operators use to guarantee reclamation costs on the  Department of the Interior’s Bureau of Land Management (BLM) land, we  interviewed officials at the BLM, the U.S. Department of Agriculture’s  Forest Service, the Environmental Protection Agency (EPA), and the  Department of the Interior’s Office of Surface Mining Reclamation and  Enforcement (OSM); examined agency documents and data; and reviewed  relevant legislation and regulations.
Specifically, to answer our first objective, we interviewed officials  involved with the abandoned mine cleanup programs at BLM, the Forest  Service, EPA, and OSM to request expenditure data, to understand how  they tracked and monitored expenditures to clean up abandoned hardrock  mines, and to request and ensure that we would receive the data we  needed. We reviewed agency documents, budget justification reports and  reports detailing agencies’ cleanup efforts and programs. We obtained data  on total expenditures for cleaning up and reclaiming abandoned hardrock  mine sites that were compiled from BLM’s Financial Accounting and  Reporting System, EPA’s Superfund eFacts Database, OSM’s Abandoned  Mine Land Inventory System, and Forest Service officials. BLM officials  told us that in addition to the expenditure data they provided, the agency  receives funding allocations from other sources, such as the Department  of the Interior’s Central Hazardous Materials fund. Since BLM does not  track the expenditures from these other sources, we were unable to  provide this information.
Because the four agencies’ abandoned hardrock mine programs started in  different years, start years for expenditure data vary. Specifically, BLM’s  data were for fiscal years 1997 through 2007; Forest Service’s data, for  fiscal years 1996 through 2007; EPA’s data, for fiscal years 1988 through  2007; and OSM’s data, for fiscal years 1993 to 2007. We performed a limited  reliability assessment of the expenditure data and determined that we  would limit our year-by-year presentation of expenditure data to the past  10 years (1998 through 2007) because of (1) variability in the program start  year across the agencies, (2) inconsistencies across the agencies in their  methods for tracking and reporting the data, and (3) some data recording  errors in early years at some agencies. We presented these data in 2008  constant dollars.
Because of limited time in preparing this testimony, we were unable to  fully assess the reliability of the agencies’ expenditure data and the data  are therefore of undetermined reliability. However, we concluded that the  data are appropriate as used and presented to meet our objectives because  we (1) attribute the data to what agencies report as their expenditures, (2)  present rounded data to minimize the perception of precision, and (3) do  not base any conclusions or recommendations on the data.
To answer our second objective, we summarized selected prior survey  efforts by federal agencies and organizations to document differences in  estimates, definitions, and methodologies. We also consulted experts in  mining and abandoned mine land programs at the National Association of  Abandoned Mine Land Programs; the Interstate Mining Compact  Commission; and the Colorado State Department of Natural Resources,  Division of Reclamation, Mining and Safety, Office of Active and Inactive  Mines to develop a standard definition for estimating the number of  abandoned hardrock mine sites, features, and sites with environmental  degradation. Other efforts to assess the magnitude of the abandoned mine  situation have acknowledged limitations in their efforts to develop a  nationwide estimate because of inconsistencies in states’ definitions and  methods for estimating abandoned sites. Consequently, through iterative  consultation with state and other mining experts, the definition we  ultimately chose was clear and incorporated enough flexibility for all  major hardrock mining states—the 12 western states and Alaska—to  reasonably comply with our request, despite differences in how the states  might define and maintain abandoned mine data. We then provided states  with an edit-controlled data collection instrument that requested data  specifically tailored to our definitions and methods. Our definition of  abandoned hardrock mine sites  includes all associated facilities, structures, improvements, and  disturbances at a distinct location associated with activities to support a  past operation, including prospecting, exploration, uncovering, drilling,  discovery, mine development, excavation, extraction, or processing of  mineral deposits locatable under the general mining laws;    can range from an isolated prospect shaft and its associated waste rock  pile and adjacent prospect pits, to a complex site with multiple entries,  shafts, open pits, mill buildings, waste rock piles, a tailings pond, and  associated environmental problems; and  includes only hardrock (also known as locatable), non-coal sites.
Features that pose a significant hazard to public health and safety include  features, such as mine openings, structures, and highwalls; and  impoundments that pose a threat to public health and safety and require  actions to secure, remedy or reclaim.
Sites with environmental degradation include features that lead to  environmental degradation, and, consequently, require remediation of air,  water, or ground pollution.
Rather than reporting, as requested, the number of features leading to  environmental degradation, most states reported only the number of sites  with environmental degradation, if they reported data for this request at  all. Because most states do not maintain environmental degradation data  by feature, states could only speculate about this figure, or compute it by  estimating an average number of features per site and multiplying that by  the overall number of sites with environmental degradation. Because of  these limitations with feature-level data, we report only the number of  sites with data on environmental degradation in order to ensure more  reliable and consistent reporting across the states.
As a secondary confirmation that states provided data consistent with the  definition, our data collection instrument included a section for states to  provide a brief description of how the various data points were calculated,  and whether the data provided were actual or estimated values. Based on  comments in these fields, and basic logic checks on the data, we followed  up as needed through telephone interviews to clarify and confirm  problematic responses. Our definitional and editing processes provided us  with reasonable assurance that the data were as clean and consistent as  possible, and using these final edited data, we calculated the estimated  number of abandoned mine sites, the number of features that pose  physical safety and environmental hazards, and the number of abandoned  mine sites with environmental degradation in the 12 western states and  Alaska.
To answer our third objective—to determine the value and coverage of  financial assurances in place to guarantee coverage of reclamation costs— we requested the BLM Bond Review Report from BLM’s Legacy Rehost  System 2000 (LR2000) database. Because we had previously reported  reliability problems with data on financial assurances in LR2000, we  conducted a limited reliability assessment of the bond report data. This  limited assessment included (1) basic logic checks on the data we  received, (2) interviews with BLM minerals management officials  knowledgeable of the changes made to LR2000 to address GAO’s 2005  recommendations, and (3) a review of BLM’s June 14, 2006, Instruction  Memorandum 2006-172 for processing and entering Bond Review Report  data in LR2000. Although the data are of undetermined reliability, our  limited assessment indicates that management controls were improved for  the generation of bond review reports from LR2000. We concluded that the  data are appropriate as used and presented, and we did not base any  conclusions or recommendations on these data.
section_title: Appendix II: Information on Federal Agency Expenditures to Clean Up Abandoned Hardrock Mines
paragraphs: This appendix provides information on federal expenditures used to clean  up abandoned hardrock mines by fiscal year (table 5) and by state (table  6).
section_title: Appendix III: Estimated Number of Abandoned Mine Sites, According to Selected Studies, 1998 to 2007
paragraphs: Range of  estimated  abandoned  mines  previously  (2001) (2007)
Mineral  Policy  Center  (2003)
Earthworks  (formerly  Mineral  Policy  Center)  (2007) (2004) “openings”
No data  provided  Western Governors’ Association and National Mining Association, Cleaning Up Abandoned Mines: A  Western Partnership, 1998.
section_title: Appendix IV: Information on BLM Financial Assurances and Their Adequacy to Cover Estimated Reclamation Costs
paragraphs: This appendix provides information from BLM’s November 2007 Bond  Review Report, which includes information on the number of financial  assurances in place for hardrock operations on BLM lands in 11 western  states (table 7); the value of these financial assurances by state (table 8);  the number of inadequate financial assurances for notice- and plan-level  operations, by state (table 9); and BLM’s and our analyses of the  differences between financial assurance requirements and actual value of  financial assurances in place for notice- and plan-level operations by state  (table 10).