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

Letter

Background

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.

Accurate Information on the Number of Abandoned Hardrock Mine Sites Was Not Available

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.

Federal Agencies Collect Limited Information on Mining Operations on Federal Land

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.

Federal Agencies Have Spent Billions of Dollars to Cleanup Abandoned Hardrock Mining Sites

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.

Financial Assurances Provided by Operators of Current Mines on BLM Land May Be Inadequate to Cover Estimated Reclamation Costs

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.

Contact and Staff Acknowledgments

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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