Abandoned Mines: Information on the Number of Hardrock Mines, Cost of Cleanup, and Value of Financial Assurances
Published: 2011-07-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The General 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 land. 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 Department of Agriculture's Forest Service, and the Environmental Protection Agency (EPA)--fund the cleanup of some of these hardrock mine sites. From 2005 through 2009, GAO issued a number of reports and testimonies on various issues related to abandoned and current hardrock mining operations. This testimony summarizes some of the key findings of these reports and testimonies focusing on the (1) number of abandoned hardrock mines, (2) availability of information collected by federal agencies on general mining activities, (3) amount of funding spent by federal agencies on cleanup of abandoned mines, and (4) value of financial assurances for mining operations on federal land managed by BLM. In 2005, GAO recommended that BLM strengthen the management of its financial assurances, which BLM generally implemented. BLM also agreed to take steps to address additional concerns raised by GAO in 2008.
section_title: What GAO Found
paragraphs: GAO's past work has shown that there are no definitive estimates of the number of abandoned hardrock mines on federal and other lands. For example, in 2008 and 2009, GAO reported that BLM and the Forest Service had difficulty determining the number of abandoned hardrock mines on their lands and had no definitive estimates. Similarly, estimates of the number of abandoned hardrock mine sites in the 12 western states and Alaska (where most of the mining takes place) varied widely because there was no generally accepted definition of what constitutes an abandoned hardrock mine site. In 2008, GAO developed a standard definition for abandoned hardrock mining sites and used this definition to determine that there were at least 161,000 abandoned hardrock mine sites in the 12 western states and Alaska, and at least 33,000 of these sites had degraded the environment, by contaminating surface water and groundwater or leaving arsenic-contaminated tailings piles. In 2008, GAO reported that BLM, the Forest Service, and the U.S. Geological Survey (USGS) either do not routinely collect or do not consistently maintain data on the amount of hardrock minerals being produced on federal land, the amount of hardrock minerals remaining, and the total acreage of federal land withdrawn from hardrock mining operations. According to BLM and Forest Service officials, they do not have the authority to collect information from mine operators on the amount of hardrock minerals produced on federal land or the amount remaining. In contrast, USGS collects extensive data on hardrock mineral production through its mineral industry surveys and reports these data in monthly, quarterly, and annual reports, but the agency does not collect land ownership data that would allow it to determine the amount of hardrock mineral production on federal land. As a result, comprehensive information on hardrock mineral production is generally not available to the public. From 1997 to 2008, four federal agencies--BLM, the Forest Service, EPA, and OSM--had spent at least a total of $2.6 billion to reclaim abandoned hardrock mines on federal, state, private, and Indian lands. Of this amount, EPA had spent the most--$2.2 billion. The amount each agency spent annually varied considerably, and the median amount spent for abandoned hardrock mines on 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 abandoned mines that were generally on nonfederal land. OSM provided grants with an annual median value of about $18 million to states and Indian tribes through its program for hardrock mine cleanups. One factor that contributes to costs for reclamation of federal lands disturbed by mining operations is inadequate financial assurances required by BLM. Since 2005, GAO has reported several times that operators of hardrock mines on BLM lands have not provided financial assurances sufficient to cover estimated reclamation costs in the event that operators fail to perform the required reclamation. Most recently, in 2008, GAO reported that the financial assurances that were provided for 52 operations were about $61 million less than needed to fully cover estimated reclamation costs, which could leave the taxpayer with the bill for reclamation, if the operator fails to do so.

section_title: Letter
paragraphs: We are pleased to be here today to participate in this hearing on  abandoned mines. 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 Department  of Agriculture’s Forest Service—the two principal agencies responsible for  federal lands open for hardrock mining. BLM issued regulations in 1981  requiring all operators of these mines to reclaim the land when their  operations cease, but some did not and abandoned these mines. As a  result, thousands of acres of federal land that were disturbed for  exploration, mining, and mineral processing now pose serious  environmental and physical safety hazards. Environmental hazards  include toxic or acidic water that contaminates soil and groundwater and  physical safety hazards include 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.
From 2005 through 2009, we issued several products on various issues  related to abandoned hardrock mines as well as current hardrock mining  operations on federal land that are relevant to the issue being discussed  at today’s hearing. These products included information on the number  of abandoned hardrock mines, the availability of information collected by  the federal agencies on mining operations on federal land, the amount of  funding that federal agencies have spent to cleanup abandoned mine  sites, and the value of financial assurances that federal agencies collect  from operators to cover the cost of reclamation in the event that an  operator does not reclaim the land. My testimony today will summarize  the key findings of these products. More information on our scope and  methodology is available in each published product.
The work presented in these products was conducted 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  provided a reasonable basis for our findings and conclusions based on  our audit objectives.
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 pay for cleanup of the mining sites.
Four federal agencies—the Department of Agriculture’s Forest Service,  the Environmental Protection Agency (EPA), and the Department of the  Interior’s BLM and 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, under its  Superfund Program, among other things, focuses on the cleanup and  long-term health effects of air, ground, or water pollution caused by  abandoned hardrock mine sites, and is generally for mines on nonfederal  land. OSM, under amendments to the Surface Mining Control and  Reclamation Act of 1977, can provide grants to fund the cleanup and  reclamation of certain hardrock mining sites.
BLM and the Forest Service are responsible for managing more than 450  million acres of public land in their care, including land disturbed and  abandoned by past hardrock mining activities. BLM manages about 258  million acres in 12 western states, and 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 land 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 cleanup hazardous substances and mitigate safety  hazards. BLM and the Forest Service are also responsible for managing  and overseeing current hardrock operations on their land, including the  mining operators’ reclamation of the land disturbed by hardrock mining.  Reclamation can vary by location, but 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 land, agency  regulations require reclamation of sites after operations cease. 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  land. 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.
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 land, 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— EPA’s list of seriously contaminated sites. Typically, these sites are  expensive to cleanup and the cleanup can take many years. For example,  in 2004, EPA’s Office of Inspector General determined there were 63  hardrock mining sites on the National Priorities List that would cost up to  $7.8 billion to cleanup, $2.4 billion of which was expected to be borne by  taxpayers rather than the parties responsible for the contamination.
Regarding financial assurances, EPA has statutory authority under the  Superfund program to require businesses handling hazardous  substances on nonfederal land to provide financial assurances and is  taking steps to do so. In 2006, we testified that without the mandated  financial assurances, significant gaps in EPA’s environmental financial  assurance coverage exist, thereby increasing the risk that taxpayers will  eventually have to assume financial responsibility for cleanup costs.
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 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. In 2008, we reported that OSM had provided more than $3 billion  to cleanup dangerous abandoned mine sites. Its Abandoned Mine Land  Program had eliminated safety and environmental hazards on 314,108  acres since 1977, including all high-priority coal problems and noncoal  problems in 27 states and on the land of three Indian tribes.
subsections: section_title: Accurate Information on the Number of Abandoned Hardrock Mine Sites Was Not Available
paragraphs: In 2008 and 2009, we reported that BLM and the Forest Service have had  difficulty determining the number of abandoned hardrock mines on their  land and have no definitive estimates on the number of such sites.  Moreover, we reported that other estimates that had been developed  about the number of abandoned hardrock mine sites on federal, state,  and private land in the 12 western states and Alaska (where most of the  mining takes place) varied widely and did not provide an accurate  assessment of the number of abandoned mines in these states. For  example, federal agency estimates included abandoned nonhardrock  mines such as coal mines, and included a large number of sites on land  with “undetermined” ownership, which may not all be on federal land.  Similarly, we reviewed six studies conducted between 1998 and 2008 that  estimated the number of abandoned hardrock mine sites in the 12  western states and Alaska, regardless of the type of land they were  located on. However, we found that the estimates in these studies  varied widely in part because there was no generally accepted definition  for what constitutes an abandoned hardrock mine site and because  different states define these sites differently.
In 2008, we developed a standard definition of an abandoned hardrock  mining site and used this definition to determine how many such sites  potentially existed on federal, state and private land in the12 western  states and Alaska. Based on our survey of these states, we determined  that there were at least 161,000 abandoned hardrock mine sites in these  states, and at least 33,000 of these sites had degraded the environment,  by, for example, contaminating surface water and groundwater or leaving  arsenic-contaminated tailings piles. We also determined that these  161,000 sites had at least 332,000 features that may pose physical safety  hazards, such as open shafts or unstable or decayed mine structures.
section_title: Federal Agencies Collect Limited Information on Mining Operations on Federal Land
paragraphs: In 2008, we reported that BLM, the Forest Service, and the U.S.  Geological Survey (USGS) either do not routinely collect or do not  consistently maintain data on the amount of hardrock minerals being  produced on federal land, the amount of hardrock minerals remaining,  and the total acreage of federal land withdrawn from hardrock mining  operations. According to officials with BLM and the Forest Service, they  do not have the authority to collect information from mine operators on  the amount of hardrock minerals produced on federal land, or the amount  remaining. In April 2011, we reported on this issue again and found that  this information is not being collected. In contrast, USGS collects  extensive data on hardrock mineral production through its mineral  industry surveys and reports these data in monthly, quarterly, and annual  reports, but mine operators’ participation in these surveys is voluntary,  and USGS does not collect land ownership data that would allow it to  determine the amount of hardrock mineral production on federal land. As  a result, we found that it is not possible to determine hardrock mineral  production on federal land from the USGS data. In addition, although  USGS does publish the total amount of hardrock mineral production by  mineral type, it is prohibited by law from reporting individual mine  production and other company proprietary data unless the mine operator  authorizes release of that information. In some cases, mine operators that  respond to these surveys report consolidated data that covers production  from several mines. Therefore, information on hardrock mineral  production for every mine is not available to the public.
Some hardrock mineral production data are available from state sources  and through financial reports filed with the Securities and Exchange  Commission. However, these data may not always provide the level of  detail necessary to determine the amount of mineral production on federal  land. BLM also does not centrally maintain data on the amount of federal  land withdrawn from hardrock mining operations. BLM documents land  withdrawn from hardrock mining operations on its master title plats— detailed paper maps maintained at BLM’s state offices. These maps  contain land survey information on federal land, including ownership  information, land use descriptions, and land status descriptions. BLM’s  annual publication, Public Land Statistics, does report the total number of  acres withdrawn each year, but these data do not account for instances in  which multiple withdrawals may have overlapping boundaries, which can  result in double-counting the number of acres withdrawn. Furthermore,  the reason for withdrawing the land is not always indicated, making it  difficult to determine whether it was withdrawn from mining or from other  purposes.
section_title: Federal Agencies Have Spent Billions of Dollars to Cleanup Abandoned Hardrock Mining Sites
paragraphs: In March 2008, we reported that over a 10 year period, four federal  agencies—BLM, the Forest Service, EPA, and OSM— had spent at least  a total of $2.6 billion to reclaim abandoned hardrock mines on federal,  state, private, and Indian land. Of this amount, EPA had spent the most— $2.2 billion. The amount each agency spent annually varied  considerably, and the median amount spent for abandoned hardrock  mines on public land 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 cleanup abandoned mines that  were generally on nonfederal land. Further, OSM provided grants with an  annual median value of about $18 million to states and Indian tribes  through its program for hardrock mine cleanups.
section_title: Financial Assurances Provided by Operators of Current Mines on BLM Land May Be Inadequate to Cover Estimated Reclamation Costs
paragraphs: As we have reported, contributing to the costs incurred by the federal  government to reclaim land disturbed by mining operations are  inadequate financial assurances required by BLM for current hardrock  mining operations. Since 2005, we have reported several times that  operators of hardrock mines on BLM land have provided inadequate  financial assurances to cover estimated reclamation costs in the event  that they fail to perform the required reclamation. Specifically, in June  2005 we reported that some current hardrock operations on BLM land did  not have financial assurances, and some had no or outdated reclamation  plans and/or cost estimates on which the financial assurances were  based. At that time 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. We made recommendations to  strengthen BLM’s management of financial assurances for hardrock  operations on its land, which the agency generally implemented.
However, when we again looked at this issue in 2008, we found that  although BLM had taken actions to strengthen its processes, the financial  assurances that it had in place as of November 2007 were still  inadequate to cover estimated reclamation costs. Specifically, 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 land in 11  western states, according to BLM’s Bond Review Report. BLM’s report  indicated 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. However, our review of BLM’s assessment  process found that BLM had inaccurately estimated the shortfall, and that  in fact 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.
In addition, we found that BLM’s approach for 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 reported that, statewide, the financial assurances in place  were $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 were nearly $440,000 less than needed to  fully cover reclamations costs for those operations. 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  operators fail to complete reclamation as required. When operators with  inadequate financial assurances fail to reclaim BLM land disturbed by  their hardrock operations, BLM is left with public land that requires tens of  millions of dollars to reclaim and poses risks to the environment and  public health and safety.
In conclusion, Mr. Chairman, while it is critical to develop innovative  approaches to cleanup abandoned mines, our work also demonstrates  the importance of federal agency’s having accurate information on the  number of abandoned hardrock mines to know the extent of the problem  and adequate financial assurances to prevent future abandoned hardrock  mines requiring taxpayer money to cleanup.
Chairman Lamborn, Ranking Member Holt, and Members of the  Subcommittee, this concludes my prepared statement. I would be happy  to respond to any questions that you might 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 Anu K. Mittal, Director,  Natural Resources and Environment team, (202) 512-3841 or  mittala@gao.gov. Key contributors to this testimony were Andrea  Wamstad Brown and Casey L. Brown.
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