the provider gave at least 120 days advance notice. Further,
cancellation, termination or failure to renew the policy may not occur
in the event of one of several ``triggering events.'' Specifically, the
RCRA Subtitle C closure insurance regulations state that cancellation,
termination, or failure to renew may not occur and the policy will
remain in full force and effect in the event that on or before the date
of expiration: (1) The Administrator deems the facility abandoned; (2)
the permit is terminated or revoked or a new permit is denied; (3)
closure is ordered by the Administrator or a U.S. district court or
other Federal court; (4) the owner or operator is named as debtor in a
voluntary or involuntary proceeding under Title 11 U.S.C (Bankruptcy);
or (5) the premium due is paid.\143\
---------------------------------------------------------------------------

    \143\ See 40 CFR 264.143(e)(8).
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    Such a series of non-cancellation provision was one alternative to
a requirement to fund a standby trust that EPA considered. Such an
option could potentially be used for all instruments. However, the non-
cancellation triggering events used in the RCRA Subtitle C closure
post-closure would not all be applicable in the instance of the
proposed CERCLA Sec.  108(b) financial responsibility program which
does not compliment a broader permitting program. For example, two of
the triggering events (the termination, revocation or denial of a
permit and the Administrator ordering closure) are not applicable here
as EPA does not have permitting authority over these facilities.
    Additional triggering events similar to those identified (e.g.
issuance of a CERCLA notice letter, notification of a release at the
facility) could bolster such a provision to lower the likelihood that
financial responsibility was not available when needed to pay valid
third-party CERCLA claims. However, these supplemental criteria would
present the same limitations, implementation challenges and resource
issues as they would in the option where they would be additional
triggers for issuer liability to fund a trust fund. Moreover, EPA was
also concerned that such an arrangement may lead to scenarios whereby
instruments may need to remain in effect and non-cancellable for many
years. For example, it could take several years before a claimant could
obtain a judgment for CERCLA response costs, health assessment costs,
and/or natural resource damages that may prompt a claim against the
instrument. Based on conversations with instrument providers, EPA
believes multi-year non-cancellation periods would likely be
unpalatable to instrument providers. This concern is substantiated by
past EPA experience. In the development of the RCRA Subtitle C closure
and post-closure financial assurance programs EPA proposed that
instruments would not be able to be terminated when a compliance
procedure was pending. Specifically, after notice of intent to cancel
or terminate an instrument was sent by the issuer, EPA would issue a
compliance order requiring the owner operator to obtain alternate
financial assurance. EPA would have been able to draw on the instrument
to fund a standby trust had the owner operator not complied with the
order. In the interim, the instrument would be non-cancellable as a
result of the pending compliance proceeding and thus a lapse in
financial assurance coverage would have been avoided.\144\ However,
such proposal was met with dissatisfaction from issuers of letters of
credit and surety bonds. Institutions that issue letters of credit
commented that non-cancellation provisions would preclude a defined
date on which the letter of credit could expire--an important feature
of letters of credit. Sureties noted that such an arrangement did not
provide them adequate opportunity to limit their risk. As a result, the
RCRA Subtitle C closure post-closure financial assurance regulations
include a 120 days' notice period of the intent to cancel or fail to
extend a surety bond or

letter of credit during the last thirty days of which the instrument
provider would be liable if the owner operator did not obtain alternate
financial assurance. Such a provision is what is being proposed today
for surety bonds, letters of credit and insurance.
---------------------------------------------------------------------------

    \144\ See 46 FR 2822-2823 January 12, 1981.
---------------------------------------------------------------------------

    Nevertheless, EPA requests comments on the option to specify non-
cancellation triggering events and provisions that could eliminate the
need for providers to fund a standby trust after a notice of intent to
cancel the instrument. Specifically, commenters are asked to identify
appropriate non-cancellation triggers, how instrument providers may
react to the prospect of protracted periods of non-cancellation and
whether such an arrangement may be appropriate for some mechanisms but
not others.
    EPA also considered an option whereby after the 120-day notice of
cancellation period, issuers would face no potential liability and the
instrument would be terminated regardless of whether the owner or
operator provided alternate financial responsibility and obtained the
Administrator's approval of the financial responsibility. This option
has the advantage of possibly being the most palatable to instrument
providers; however, it was not proposed for a variety of reasons. In
particular, it provides the least assurance that funds would be
available when necessary to pay CERCLA claimants. EPA believes the
incentive to cancel, terminate, fail to renew or extend the coverage
may be greatest in times when the facilities may present the greatest
need for the instrument (e.g. the owner operator is experiencing
financial decline, after a release of hazardous substances) and thus
coverage may be lost precisely when it is most needed. Moreover, this
concern is elevated in the case of CERCLA Sec.  108(b) which may
require the cost recovery process to run its course before a claim
could be made against an instrument.
    With all of these considerations in mind, EPA has decided to
propose that the instruments would require a 120 day notice of
cancellation, termination, failure to extend or failure to renew and
that the issuer would become liable for the value of the instrument if
the owner operator does not obtain alternate financial responsibility
and obtain written approval of such alternate financial responsibility
from the Administrator within ninety days after receipt by both the
owner or operator and the Administrator of the notice. The proposed
approach provides strong assurance that funds will be available when
necessary to pay CERCLA claims and limits the extent to which Superfund
resources are shifted from conducting cleanups to administering the
proposed financial responsibility program. This approach also has the
virtue of ensuring a trust fund is available to hold financial
responsibility funds at each facility if necessary after facility
closure or the owner operator no longer exists. EPA recognizes that a
trust fund is unique when compared to third-party mechanisms such as
surety bonds, letters of credit or insurance in that ongoing payments
from the owner or operator are not necessary if funded adequately
upfront. Depending on the duration of risk at a given facility,
financial responsibility may need to remain in place long after the
owner or operator ceases to exist. The proposed arrangement whereby if
the owner or operator does not provide alternate financial
responsibility in instances of cancellation of the instrument a trust
is funded, ensures financial responsibility can remain in place for the
long term.
    However, EPA acknowledges that under this construction there would
be instances where issuers would be required to make payment into a
standby trust at facilities where a CERCLA claim may never arise. EPA
requests comments on these provisions of the proposal. Furthermore, EPA
requests comment on whether a hybrid of the options may be most
appropriate whereby for one instrument one option be employed, and for
another instrument a different option might be employed.
8. Use of Multiple Financial Responsibility Instruments (Sec.  320.46)
    An owner or operator would be able to satisfy the requirements of
this section by establishing more than one financial instrument per
facility. The instruments would be required to meet the regulatory
specifications applicable to each instrument except that it would be
the combination of instruments, rather than the single instrument,
which would have to demonstrate financial responsibility for an amount
at least equal to the required amount of CERCLA Sec.  108(b) financial
responsibility. If an owner or operator were to use a trust fund in
combination with a surety bond, letter of credit or insurance policy,
including a trust fund holding a letter of credit, the owner or
operator would be able to use the trust fund as the standby trust fund
for the other instruments. Should the owner or operator obtain a letter
of credit issued in the favor of a trust fund trustee in combination
with a surety bond or insurance policy, the owner or operator would be
able to use the trust fund holding the letter of credit as the standby
trust fund for the other mechanisms. A single standby trust fund could
be established for two or more instruments. A claimant would be able to
elect against which instrument used to provide evidence of financial
responsibility to make a claim for CERCLA response costs, health
assessment costs, and/or natural resource damages. In this way, there
would not be `primary' or `excess' instruments where the ability to
draw on one instrument may be predicated on the exhaustion of another.
EPA is electing to provide for multiple instruments in this fashion as
the Agency believes it will be significantly less administratively
cumbersome and will make implementation of the claims process easier.
9. Use of a Financial Instrument for Multiple Facilities (Sec.  320.47)
    An owner or operator would be able to use a financial
responsibility instrument specified in this section to meet the
requirements of this section for more than one facility. Evidence of
financial responsibility submitted to the Administrator must include,
for each facility, the EPA Identification Number, name, address, and
the amount of funds for CERCLA Sec.  108(b) financial responsibility
assured by the instrument. If the facilities covered by the instrument
are in more than one Region, identical evidence of financial assurance
would be required to be submitted to and maintained with the regional
delegees of the Administrator, as applicable, of all such Regions. The
amount of funds available through the instrument would be required to
be no less than the sum of funds that would be available if a separate
instrument had been established and maintained for each facility. EPA
is proposing this as it may provide for some administrative ease in the
compliance and implementation process.
    This is also provided for in RCRA Subtitle C closure and post-
closure financial assurance program. However, in the proposed CERCLA
Sec.  108(b) financial responsibility program there is a much wider
range of potential parties that may make a claim against an instrument
than in the Subtitle C program. Therefore, the instruments proposed
today are intended to have clear facility-specific sub-limits.
Maintaining the accuracy of the facility-specific sub-limits is
important as the consolidated form provision in CERCLA Sec.  108(b)(4)
provides that multiple owners and operators may obtain an instrument
together while only one may be a common owner or operator at each
facility covered by the instrument.

Ensuring the accuracy of the amount of coverage an instrument provides
at each facility may occasion additional burden on the regulated
community and on EPA. For example, EPA is proposing that schedule A of
the trust agreement that identifies the facilities and amounts covered
by the trust agreement, be updated within sixty days of a change in the
information, even if the trust is not currently funded. EPA believes
such a provision is necessary as the trust may ultimately be funded
when the grantor of the trust is not around and such information should
be as current as possible. However, EPA believes that such additional
burden will likely be offset by the burden reduction provided by using
one mechanism across facilities.
    One final consideration is whether the inclusion of facility
specific sub-limits might affect instrument providers' willingness to
provide instruments. EPA believes that the added clarity and clear
delineation of a provider's potential liability at any given facility
combined with the lower administrative burden of preparing only one
instrument would be a welcome specification. However, EPA could
envision a scenario where a provider found issuing multiple instruments
cleaner and easier than maintaining an accounting of the sub-limits
within an instrument. For example, the proposed wording of the letter
of credit would require the identification of the amount of financial
responsibility at each facility covered by the credit. EPA, in past
Agency rulemakings had proposed including such information in the
letter of credit but was informed by commenters that such information
typically would not be included in a letter of credit. As, in that
case, the information could be included in a separate letter from the
owner operator, EPA decided not to require the inclusion of facility
specific amount in the letter of credit itself (See 47 FR 15042 April
7, 1982). However, as the Administrator will not be directing payments
from CERCLA Sec.  108(b) instruments such information would need to be
included in the instrument were a letter of credit to cover multiple
facilities.
    The proposed instruments do not require that multiple facilities be
covered and thus EPA believes and intended that they provide
flexibility for regulated entities and instrument providers to identify
the most efficient arrangement. EPA requests comment on the proposed
allowance for mechanisms to cover multiple facilities. Specifically,
EPA is interested in hearing if there are alternative means of
specifying facility-specific sub-limits that may have certain
advantages.
10. Consolidated Form and Multiple Owners and/or Operators (Sec.
320.48)
    EPA had to consider how best to implement the provision for
multiple owners or operators at a facility in CERCLA Sec.  108(b)(4).
The provision provides guidance on how a financial responsibility
instrument could provide financial responsibility for the CERCLA
response costs, health assessment costs, and or natural resource
damages of all the current owners and operators of the facility in
instances where there is not one single owner and operator. Under the
proposal, where a facility is owned and/or operated by more than one
person, evidence of financial responsibility covering the facility may
be established and maintained by one of the owners or operators, or, in
consolidated form, by or on behalf of two or more owners or operators.
In practice, the instruments would follow the same form regardless of
whether one of the owners or operators establishes a single instrument
at the facility, whether multiple owners or operators establish a
single instrument at the facility, or whether multiple owners or
operators establish one or more instruments at the facility. EPA
believes the flexibility in establishing financial responsibility at a
facility when there are multiple owner operators is important as each
arrangement may lend itself best to certain instruments. For example,
EPA understands that sureties and banks issuing letters of credit have
strong preference for one party obtaining the instrument. In
discussions with the surety community, EPA learned that the surety
typically interacts and has a surety relationship with one party at a
facility and thus prefer one principal on the bond. While the bond
would cover the valid CERCLA claims associated with all current owners
and operators at the facility, only one principal need be listed.
Representatives from the banking community also expressed a preference
for one applicant per letter of credit on whom the lending institution
would perform its credit assessment. Similar to the bond, the credit
will cover the CERCLA response costs, health assessment costs, and/or
natural resource damages associated with all current owners and
operators at the facility. On the other hand, EPA understands that with
insurance a multiple insured arrangement is more common and may be
required for the policy to cover claims against all the parties at the
facility. In that case, EPA anticipates additional insureds may be
listed on the policy. In this way, EPA proposes to implement the rule
in a way that is consistent with both CERCLA's liability scheme and
with commercial practice.
    When evidence of financial responsibility is established in a
consolidated form, the proportional share of the cost of demonstrating
the financial responsibility for each participant would have to be
shown in a separate letter submitted to the Administrator. This
provision will require the owners and operators to plan out and
apportion the responsibility of obtaining and maintaining the
instrument up front which EPA believes may help reduce the likelihood
of an instrument obtained by multiple parties lapsing due to failure to
pay any premiums or fees required by the instrument provider.
    In either scenario, the evidence of financial responsibility would
have to be accompanied by a statement authorizing the owner or operator
submitting the evidence of financial responsibility to act for and on
behalf of each participant in submitting and maintaining the evidence
of financial responsibility. It is worth noting that all of the current
owners and operators at the facility would still be responsible for
ensuring financial responsibility at the facility is obtained and
maintained in accordance with the regulations. EPA would thus retain
enforcement authority for the regulations against all of the current
owners and operators.

E. Subpart H--Requirements Applicable to Hardrock Mining Facilities

1. Universe of Hardrock Mining Facilities Covered by the Rule (Sec.
320.60)
a. Applicability of the Rule
    The Agency is proposing that the classes of facilities within the
hardrock mining industry that are identified in Sec.  320.60 be subject
to this rule. The classes of facilities that EPA is proposing for
regulation are the classes of facilities that were identified in the
2009 Priority Notice with the exception of four classes determined by
the Agency to present a lower level of risk of injury than the
remainder of the classes identified in the notice, if they meet certain
conditions. The classes EPA is proposing not to include in the rule
are: (1) Mines conducting only placer mining activities as defined in
Sec.  320.62, (2) mines conducting only exploration activities as
defined in Sec.  320.62, (3) surface mines with a disturbance as
defined in Sec.  320.62 of less than five acres not located within a
mile of mine disturbance that occurred in the prior ten-year period
that do not

employ hazardous substances in their processes; and (4) mineral
processors as defined in Sec.  320.62 with less than five acres of
surface impoundment and waste pile disturbance. Owners or operators of
facilities that conduct only these limited activities would not be
required to comply with the requirements of Part 320.
b. Universe Development
(1) Identification of Classes of Facilities Within the Hardrock Mining
Universe for Rule Development
    In the 2009 Priority Notice, EPA identified classes of facilities
within the hardrock mining industry as those for which the Agency would
first develop CERCLA Sec.  108(b) regulations. EPA stated, for purposes
of the notice, that hardrock mining facilities include those which
extract, beneficiate and process metals (e.g., copper, gold, iron,
lead, magnesium, molybdenum, silver, uranium, zinc) and non-metallic,
non-fuel minerals (e.g., asbestos, phosphate rock, sulfur). The Agency
also noted that it was not identifying non-hardrock mineral mines, such
as sand, gravel, limestone, and stone; oil, oil shale or gas
operations; or the mining and preparation of coal as priority classes
of facilities.\145\ In the 2009 Priority Notice, EPA stated it would
inform its selection of classes based on indicators of risk and the
related effects, and reviewed information contained in a number of
studies, reports, and analyses. This review identified numerous factors
EPA could consider. For example, typical elements in evaluating risk to
human health and the environment include the probability of release,
type and duration of exposure, and toxicity.146 147
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    \145\ EPA excluded several classes of facilities (identified by
commodity sector), that otherwise fell within the broad definition
of ``hardrock mining.'' See memorandum to Jim Berlow, from Stephen
Hoffman and Shahid Mahmud, entitled: Mining Classes Not Included in
Identified Classes of Hardrock Mining, June 2009.
    \146\ See Risk Assessment in the Federal Government: Managing
the Process. National Research Council. National Academy Press,
Washington, DC. 1983.
    \147\ See U.S. EPA 2004. Nationwide Identification of Hardrock
Mining Sites. Office of Inspector General. Report No. 2004-P-00005.
Available at: http://epa.gov/oig/reports/2004/20040331-2004-p-00005.pdf.
---------------------------------------------------------------------------

    Based on the information available at the time, EPA concluded that
hardrock mining facilities present such risk that warranted giving
those classes of facilities priority in the development of financial
responsibility requirements under CERCLA Sec.  108(b).
    Throughout the discussion of its data analysis, EPA addresses
several topics that were raised in public comments that EPA received on
its data analysis for the 2009 Priority Notice and in response to EPA's
2010 ANPR relating to other facility classes, where those topics are
relevant to the data analysis for this proposal. It is important to
note, however, that the 2009 Priority Notice was a one-time event,
under which EPA identified the classes for which EPA would first
develop CERCLA Sec.  108(b) requirements. Consistent with this
approach, EPA did not seek public comment on the notice, and nothing in
CERCLA required EPA to issue its 2009 Priority Notice in proposed form,
or required EPA to provide responses to comments received. The 2009
Priority Notice's sole purpose was to identify a set of facilities for
which EPA would begin the process of developing CERCLA Sec.  108(b)
regulations, as provided for in CERCLA Sec.  108(b)(1) (second
sentence), and EPA provided a significant amount of factual information
in support of its conclusions. EPA is not reopening its identification
in the 2009 Priority Notice of hardrock mining as the classes for which
it would first develop CERCLA Sec.  108(b) regulations by this
proposal. EPA requests public comment on its data analysis. However,
EPA is not seeking comment on the 2009 Priority Notice.
    As previously discussed, CERCLA Sec.  108(b) states that
``[p]riority in the development of such requirements shall be accorded
to those classes of facilities, owners, and operators which the
President determines present the highest level of risk of injury.''
Though the 2009 Priority Notice identified the classes of facilities
within the hardrock mining industry as those for which the Agency will
first develop financial responsibility requirements, it did not provide
criteria to define classes of facilities, or to identify which classes
of facilities within that universe present the highest level of risk of
injury. In developing this proposed rule, EPA thus considered these
issues to determine which facilities within the universe described in
the 2009 Priority Notice would be included in this proposed rule.
    The Agency considered how to define classes of mining facilities.
EPA considered two options. EPA first considered identifying classes of
mines based on the commodity mined. This approach had two advantages--
it was consistent with the approach taken in the 2009 Priority Notice
to identify the universe to be considered, and it was consistent with
general industry practice to identify mines (e.g. gold mine, silver
mine, phosphate mine, etc.) so would have been readily understandable
to the regulated community. However, that approach had several
drawbacks. First, the commodity mined is not necessarily the source of
risk of injury at a mine. Numerous hardrock mining facilities mine
multiple ores. Thus, it alone served as a poor basis to compare level
of risk of injury. Second, similar sources of releases exist at
facilities within a range of commodities. Third, minerals are not
located in consistent geologic settings, so the risks associated with a
specific commodity could vary on that basis alone from case to case.
Under the second option considered by EPA, processes that are known to
affect the level of risk of injury at a mine would be identified and
facilities would be grouped based on the presence of those
characteristics and the risk they present. EPA believes this approach
created a more logical link to risk of injury, and the Agency adopted
it in developing this proposed rule. As previously noted, EPA had
identified hardrock mining facilities as those involved in the
extraction, beneficiation or processing of metals (e.g., copper, gold,
iron, lead, magnesium, molybdenum, silver, uranium, and zinc) and non-
metallic, non-fuel minerals (e.g., asbestos, phosphate rock, and
sulfur) but not the specific classes of mining listed in a memorandum
to the record for the 2009 Priority Notice.\148\ Based on the Agency's
analysis of the current universe of hardrock mining and mineral
processing facilities, for illustration purposes the following table
provides examples of commodities that the Agency expects are subject to
the regulations being proposed today. However, it is important to note
that this list is not intended to be an all-inclusive list of the
universe of commodities potentially subject to this rulemaking. This
includes commodities with no currently active or abandoned facilities
that might in the future commence/resume operation, e.g., asbestos,
arsenic, bismuth. Any facility that meets the definition of a hardrock
mining or mineral processing facility (see section VI.D.3. of this
preamble), would also be subject to the requirements in this proposed
rulemaking.
---------------------------------------------------------------------------

    \148\ See supra note 130.

                                                    Commodity
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Alumina..............................  Germanium..............  Osmium.................  Sulfur
Antimony.............................  Gold...................  Palladium..............  Talc
Arsenic..............................  Hafnium................  Phosphate..............  Tantalite
Asbestos.............................  Huebnerite.............  Phosphorus.............  Tantalum
Bastnaesite..........................  Ilmenite...............  Platinum...............  Tellurium
Barite...............................  Iridium................  Potash.................  Thallium
Bauxite..............................  Iron (including          Potassium..............  Thorite
                                        hematite, magnetite,
                                        siderite, taconite).
Beryl................................  Lead...................  Psilomelane............  Thorium
Beryllium............................  Limonite...............  Pyrolusite.............  Tin
Bismuth..............................  Lithium................  Quicksilver............  Titanium
Boron................................  Magnesium..............  Radium.................  Trona
Cadmium..............................  Manganese..............  Rare earth metals......  Tungsten
Cerium...............................  Manganite..............  Rhenium................  Uranium
Chromite.............................  Mercury................  Rhodium................  Vanadium
Chromium.............................  Microlite..............  Rhodochrosite..........  Vermiculite
Cinnabar.............................  Molybdenite............  Ruthenium..............  Wolframite
Cobalt...............................  Molybdenum.............  Rutile.................  Wulfenite
Columbite............................  Molybdite..............  Scheelite..............  Zinc
Columbium............................  Monazite...............  Selenium...............  Zinc
Copper...............................  Nickel.................  Silver.................  Zirconium
Fluorspar............................  Niobium................  Strontium..............  .......................
----------------------------------------------------------------------------------------------------------------

    EPA has described in the following sections the basis for
determining that exploration mines, placer mines, small surface mines
of less than five acres, and mineral processors with less than five
acres of surface impoundment and waste pile disturbance present a lower
level of risk of injury. These classes, it should be noted, were
identified based on facility characteristics and operations, rather
than on the commodity mined.
    EPA solicits comment on whether it would be feasible and
appropriate to identify additional classes of hardrock mining
facilities as presenting a lower level of risk of injury, particularly
classes of mines that differ in their operations and associated risk
from more tradition hardrock mining operations. For consistency with
the approach taken by EPA to identify the lower level of risk of injury
classes proposed in this rule, information to support additional lower
level of risk of injury classes should address facility characteristics
and operations, and should not rely on the commodity mined as a
classification factor. However, EPA further solicits comment on whether
classes of mines identified by commenters as presenting a lower level
of risk of injury based on facility characteristics and operations
could potentially encompass iron ore, phosphate, and uranium mines.
(2) Basis for Determination of Lower Level of Risk of Injury for
Classes Not Included in Proposal
(a) Exploration Mines
    EPA has determined that exploration mines present a lower level of
risk of injury and thus propose that owners and operators of facilities
that conduct only exploration activities as defined in Sec.  320.62
would not be required to comply with the CERCLA Sec.  108(b) financial
responsibility requirements. Mineral exploration is a precursor to the
production of ores and associated wastes at hardrock mining and mineral
processing facilities. The primary purpose of mineral exploration is to
locate ore deposits and/or find significant extension of previously
located deposits associated with operating or abandoned
mines.149 150 However, exploration activities do not
typically result in the generation of significant amounts of hazardous
substances or mineral waste.
---------------------------------------------------------------------------

    \149\ See Lee-Moreno, J.L. 2011. In SME Mining Engineering
Handbook. Third Edition. Volume 1. Chapter 3.2: Minerals Prospecting
and Exploration. United States: Society for Mining, Metallurgy, and
Exploration, Inc.
    \150\ See BLM defines exploration as the creation of non-
negligible surface disturbance to evaluate the type, extent,
quantity, or quality of mineral values present, including sampling,
drilling, or developing surface or underground workings. 43 CFR
Subpart 3809.5
---------------------------------------------------------------------------

    Many exploration projects have only minimal surface disturbances or
impacts. Mineral exploration efforts begin with surface explorations
for signs of potential mineral deposits, commonly utilizing initial
field surveys generally involving low-impact techniques, such as aerial
photography and remote sensing.151 152 Additional
geochemical and geophysical survey techniques use either low-volume
surface sampling \153\ or no sampling, relying on sophisticated tools
to determine geologic properties of sites, such as chemical composition
and magnetism. For most commodities, these result in only limited
surface sampling as only a few minerals, such as gold and platinum-
group metals, economically justify deep subsurface exploration.\154\ In
many cases, exploration activities thus present a negligible level of
risk.
---------------------------------------------------------------------------

    \151\ See International Council on Mining & Metals (ICMM). Good
Practice Guidance for Mining and Biodiversity. Accessed February 25,
2015 at: http://www.icmm.com/document/13.
    \152\ See A. Erickson and J. Padgett. 2011. Chapter 4.1
Geological Data Collection. In SME Mining Engineering Handbook. Ed.
P. Darling. Third Edition. Volume 1.
    \153\ For example, a survey conducted over gold-silver vein
mineralization in Canada described the optimal sample depth of 18-24
inches. For most stream sediment surveys, about 1.1 to 2.2 lbs of
material are collected from the near-surface sediment layer. See:
Jaacks, J.A., Closs, L.G., and J. A. Coope. 2011. Chapter 3.4.
Geochemical Prospecting. In SME Mining Engineering Handbook, Ed. P.
Darling. Third Edition. Volume 1.
    \154\ See Lee-Moreno, J.L. 2011. Chapter 3.2: Minerals
Prospecting and Exploration. In SME Mining Engineering Handbook.
Third Edition. Volume 1. United States: Society for Mining,
Metallurgy, and Exploration, Inc.
---------------------------------------------------------------------------

    Potential impacts of mineral exploration can arise when sub-surface
exploration does occur and include clearing land and potential
contamination from boreholes (narrow shafts penetrating below the
surface). Poor planning and management of drilled holes may cause
aquifer contamination by infiltration of polluted surface water or by
migration of materials in other layers of the earth that previously did
not come in contact with the aquifer. However, due to nature of these
operations where large-scale extraction of resources has not occurred,
the disturbance and impact would be expected to be significantly
smaller. For example, tailings facilities, large open pits, heap and
dump leach operations, and large waste rock deposits, leading sources
of releases of hazardous

substances at hardrock mining sites historically, would not be expected
to exist at exploration projects. Moreover, hazardous substances would
typically not be employed in the exploration activities further
lowering the risk posed by exploration activities compared to
commercial or larger-scale mining operations. The limitation that
exploration excludes activities where material from the site is
extracted for commercial use or sale limits the construction of large
facilities such as those named earlier.
    EPA found no evidence directly linking exploration activities to
releases leading to CERCLA listing. Although CERCLA documents noted the
presence of mineral exploration activities at eight sites, exploration
activities appear to have played little to no direct role in releases
of hazardous contaminants.
    For the reasons stated, EPA believes that mineral exploration
presents a lower level of risk. As such, these mineral exploration
activities are not included in today's proposed rule. EPA requests
public comment regarding our determination to not include exploration
mines in today's proposal.
(b) Placer Mines
    EPA has determined that placer mines, as defined by EPA in this
proposal (See proposed definition in section 320.62) present a lower
level of risk of injury. EPA recognizes that placer mining would not
typically be considered hardrock mining; however such mining practices
would fall within the definition of hardrock mining used by EPA in
identifying the priority class for regulation in the 2009 Priority
Notice. As a result, and due to the lower level of risk of injury
presented by placer operations, EPA is proposing that placer mines not
be included in the CERCLA 108(b) hardrock mining financial
responsibility regulations.
    Placer mining is a method of mining in which the unconsolidated
overburden is removed to expose valuable mineral-bearing gravel
deposits beneath. Placer mines, commonly in alluvial deposits,
typically seek to recover gold, titanium, and rare earths minerals.
Alluvial deposits are commonly non-lithified (non-cemented) sands and
gravels that rarely contain minerals that are more commonly the sources
of contamination in other deposits (e.g. lode deposits). Placer mining
can involve open pit, underground, or dredging operations using
backhoes, bulldozers, or other excavating equipment to extract sand and
gravel; at frozen placer mines, drilling and blasting techniques can be
used to tunnel into the ground. Most commonly, dredges are used to
break apart sand and gravel and remove valuable minerals. Dredge types
vary widely, but generally use either mechanical methods to transport
material on moving buckets or belts, or hydraulic methods to bring raw
materials to the surface using pumps and pipes. Most placer recovery
involves only sizing and separation by physical properties such as
specific gravity, color, or magnetism.\155\ For example, vibrating
screens can separate the ore into particles of different sizes. This
stands in contrast to non-placer mines that may employ chemicals in
their heap leaching processes, a significant source of releases or
threatened releases at hardrock mining facilities. Placer mines may
have tailings, open pits and other features common at other mines.
However, due to the environmentally benign nature of typical alluvial
deposits, such features would not be expected to result in releases of
hazardous substances as such features would not typically contain
minerals (e.g. pyrite) that are more commonly the sources of
contamination in non-placer deposits at other mines.
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    \155\ Chemicals are rarely used for processing. Flotation may be
used in phosphate operations, and hot acid leaching using sulfuric
or hydrochloric acid is sometimes used for zircon sand. In these
operations, effluent treatment involves the addition of neutralizers
and the removal of solids, with effluent water being recycled back
to avoid off-site discharges.
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    Placer mining sediment discharges may diminish the quality of
surrounding environmental resources such as surface water, ground
water, soil, wetlands, and wildlife. Historically, the primary
environmental impact from placer mining has been increases in
sedimentation and heavy metals concentrations downstream from mining
operations. Most current placer mining does not utilize added
chemicals, nor would a placer operation using hazardous substances meet
EPA's definition of placer mine, minimizing the potential for release
of hazardous substances.
    Placer mining practices were directly linked to releases leading to
a CERCLA listing at two mining sites stemming from methods not
typically recently employed domestically as a result of enhanced
environmental regulation and law. Evidence revealed that at one of the
sites sediment discharges resulted from hydraulic mining techniques
which disturbed large volumes of sediment. Hydraulic mining, which was
common in California and Alaska through the 1980s, used high-pressure
jets of water to break apart gravel beds, washing mixtures of water,
sand and minerals into a collection area. However, regulatory regimes
that have since emerged greatly restrict hydraulic placer mining \156\
and EPA thus does not expect it to be a common practice at placer mines
in the US going forward. At the other site where placer mining
practices were directly linked to releases leading to a CERCLA listing,
contamination stemmed from mercury amalgamation, which was historically
used for processing gold in placer mining operations. By following this
process, mercury and gold would form an amalgamated substance from
which pure gold could be extracted. The use of amalgamation processes,
however, has fallen precipitously in the US since the 1970s due to its
high cost, inefficiency for larger-scale mines, growing scarcity of
ores for which the technique can be used, and the introduction of
various environmental regulations.\157\ Furthermore, a placer mine that
did employ mercury amalgamation would need to comply with the Part 320
financial responsibility regulations as they would fail to meet the
proposed definition of placer mine which specifies that a placer mine
does not use CERCLA hazardous substances in the concentration or
processing of materials (see definitions at Sec.  320.62).
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    \156\ See Bullock, Richard L et al., Placer Mining and Dredging.
SME Mining Engineering Handbook. 3rd ed. Vol. 2. Society for Mining,
Metallurgy, and Exploration, (SME), 2011. 1062.
    \157\ See U.S. Environmental Protection Agency. Gold Placers.
Technical Resource Document: Extraction and Beneficiation of Ores
and Minerals, Volume 6. October 1994.
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    In light of the benign nature of alluvial deposits and the absence
of hazardous substances in the processing operations at placer mines
meeting EPA's proposed definition, EPA believes such placer mines are
unlikely to result in contamination. EPA requests public comment
regarding our determination to not include placer mines in today's
proposal. EPA requests comment on whether the class of placer mines as
defined that is proposed as a lower level of risk of injury classes is
appropriate, or whether that class should be further defined to limit
the placer mines not included under this proposal.
(c) Small Surface Mines of Less Than Five Acres
    EPA has determined that small surface mines with a disturbance of
less than five acres not located within a mile of mine disturbance that
occurred in the prior ten-year period that do not employ hazardous
substances in their processes, and are not underground, present a lower
level of risk of injury. While individual small mines may cause

releases or contamination as a result of certain hazardous substances
or mining practices used, such contamination tends to be more limited
due to their lower volumes of mining. Superfund sites are therefore not
generally associated with small individual surface mining facilities,
except in circumstances where there are major clusters that increase
the potential for cumulative impacts.
    Small surface mines tend to extract near-surface higher grade ores
and previously unmined placer deposits. Larger mines are more able to
take advantage of new ultra-mechanized mining; metallurgical techniques
allow them to use lower-grade, large-volume extraction and processing.
Small surface mines likely do not engage in these more modern practices
due to financial factors. As a result, small surface mines will have
much lower volumes of waste and the features from which releases have
historically occurred (e.g. waste rock piles, open pits) will be much
smaller. Furthermore, lower level of risk is further ensured by the
requirement that the small mine also not employ hazardous substances in
their mining practices. As a result, cyanide leaching, one source of
releases or threatened releases, would not be practiced at small mines;
nor would hazardous process chemicals be stored at the facility
lowering the possibility of spills or other mishandling of hazardous
substances. Additionally, it is worth noting that because this
determination of lower risk is being made for small surface mines,
processing operations would not be included in this lower risk class.
As such, practices such as electrowinning, hydrometallurgy, or
pyrometallurgy would not occur at these facilities; nor would tailings
facilities exist. Underground mines are excluded because an underground
mine can expose significant reactive material (e.g. pyrite) in
underground workings, thereby causing contaminated mine drainage, and
still be in an area covering less than 5 acres if the mined material is
hauled off site for processing. Please see a discussion of low risk
mineral processing facilities later in this preamble for more
information on what class of mineral processing facilities EPA has
determined present lower levels of risk of injury.
    In current Federal and state regulations, ``small'' mines are also
typically defined by acreage or volume of ore processed. Small mines
are regulated by the BLM, Forest Service and most states based on their
potential impacts and in most cases face reduced permitting and
operation requirements.\158\ In the case of both BLM and the Forest
Service, small mine projects causing a surface disturbance of less than
five acres are eligible for exemptions from certain financial
responsibility requirements. Alaska, Montana, Nevada, and other states
also have reduced requirements for facilities and projects no greater
than five acres in size. BLM, USFS, and most states do not extend non-
major mining exemptions to operations that use toxic process chemicals
or that have the potential to discharge hazardous substances to water
resources.
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    \158\ See Kuipers, J., 2000, Hardrock Reclamation Bonding
Practices in the Western United States, National Wildlife
Federation.
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    The reduced risk presented by small mines is evident by the lack of
small mines individually becoming Superfund sites. Historically,
Superfund sites with smaller-scale mines reflect the combined
environmental impacts of non-major mines in close proximity. One
example consists of numerous abandoned and inactive hardrock mine sites
that produced gold, lead, zinc and copper.159 160 Mining
waste problems impacting the 53-square mile watershed from abandoned
and inactive mine sites led to CERCLA listing. EPA identified 150
individual mine sites within the watershed boundary, of which 70 have
been prioritized for cleanup. Concern over the potential issues that
may arise from the cumulative impact of numerous small mines in close
proximity is the rationale for the proposed additional qualification
for small mines determined to present a lower level of risk as those
not located within a mile of mine disturbance that occurred in the
prior 10-year period.
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    \159\ See http://www2.epa.gov/region8/upper-tenmile-creek-mining-area.
    \160\ Additional Superfund sites representing mining districts
with multiple smaller-scale operations include: Copper Basin Mining
District (CERCLIS ID TN0001890839), Oronogo-Duenweg Mining Belt
(CERCLIS ID MOD980686281), Cherokee County (CERCLIS ID
KSD980741862), Washington County Lead District (CERCLIS ID
MON000705027), Basin-Cataract Mining District (CERCLIS ID
MTD982572562), California Gulch (CERCLIS ID COD980717938), and
Carpenter Snow Creek Mining District (CERCLIS ID MT0001096353).
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    EPA believes that small surface mines of less than five acres
present a lower level of risk when such mines are not in close
proximity to another mine and do not use hazardous substances. EPA
requests public comment on the proposal that owners and operators of
such small mines would not be required to comply with the CERCLA Sec.
108(b) hardrock mining financial responsibility regulations.
(d) Mineral Processors With Less Than Five Acres of Surface Impoundment
and Waste Pile Disturbance
    EPA is proposing that owners and operators of mineral processing
facilities with less than five acres of surface impoundment and waste
pile disturbance not be required to comply with the financial
responsibility requirements in Part 320. EPA is proposing this because
the Agency believes that releases from surface impoundments and waste
piles present elevated risk at mineral processing facilities. These
features were identified as contamination sources at many superfund
sites historically. For example, surface impoundments which contained
tailings and wastewater were the source of contamination for more than
160 different response actions; slag and heap leach waste piles were
sources of contamination for more than 54 and 17 responses
respectively. Further waste piles and surface impoundments at mineral
processing and combined mining and mineral processing sites have caused
natural resource damages.\161\ Additionally, releases from surface
impoundments have resulted in EPA needing to issue imminent and
substantial endangerment orders and other orders requiring injunctive
relief.\162\ Moreover, in a 1998 EPA study of mineral processing damage
cases, EPA found that many of the cases involved releases from waste
piles and surface impoundments. Additionally, the report noted at least
one additional NPL site (not included in the damage cases reviewed)
where contamination appeared to be from land-based mineral processing
units. The report also noted that land placement of products,
byproducts, in-process materials, and intermediates can result in
environmental problems.\163\ Since 2004, EPA's National Enforcement
Initiative on Mining and Mineral Processing has performed over 100
inspections of mineral processing facilities. These facilities ranged
from small to very large operations and had a wide variety of waste
management practices. However, EPA found that facilities that managed
wastes in large surface impoundments or piles posed higher
environmental risk to human health and the environment

than facilities with smaller waste management units.\164\
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    \161\ For examples, see Select NRD Cases at Mineral Processing
Facilities, PDF portfolio available in the docket for this proposed
rule.
    \162\ For examples, see Select Enforcement Cases at Mineral
Processing Facilities, PDF portfolio available in the docket for
this proposed rule.
    \163\ See U.S. EPA. Damage Cases and Environmental Releases from
Mines and Mineral Processing Wastes. April 1998.
    \164\ See U.S. EPA. National Enforcement Initiative for Mining
and Mineral Processing Summary of Activities 2005 to 2016. November
15, 2016.
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    Some of the risk of surface impoundments and waste piles stems from
poor environmental practice (e.g. failure to use liners, overtopping,
instability of berms). For example, in 2004, an EPA inspection of a
mineral processing facility in Florida found that storage and disposal
of hazardous waste into unlined ditches and surface impoundments
released hazardous substances off-site. Nearby groundwater and private
drinking water wells were contaminated as a result of these
releases.\165\
---------------------------------------------------------------------------

    \165\ For examples see 2004 Coronet compliance evaluation
inspection report file in Select Enforcement Cases at Mineral
Processing Facilities, PDF portfolio available in the docket for
this rulemaking.
---------------------------------------------------------------------------

    As the volume of wastes disposed of in a surface impoundment or
pile increase, the units become larger and hydraulic pressure
increases. This results in higher incidents of leaks and structural
failures.\166\ Larger units also have increased pressure due to larger
surface areas exposed to rainfall. Sometimes a surface impoundment may
be located on top of or adjacent to a waste pile. For example, releases
from a large waste pile/surface impoundment (referred to as a
``phosphogypsum stacks'') in Florida, Texas, and Mississippi released
millions of gallons of highly acidic wastewater resulting in fish kills
and impacting other aquatic life and natural resources.\167\
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    \166\ See Select Surface Impoundment Technical Reports PDF
portfolio in the docket.
    \167\ See Mosaic, Agrifos, and Piney Mulberry examples in Select
NRD Cases at Mineral Processing Facilities, and Select Enforcement
Cases at Mineral Processing Facilities, PDF portfolios, available in
the docket for this rulemaking.
---------------------------------------------------------------------------

    Mineral processing facilities with less than five acres of surface
impoundment and waste pile disturbance generally pose lower risk due to
the lower quantities of hazardous substances present, and less
likelihood of spills and structural instability and the smaller
expected impact of any releases. As such, EPA proposes that owners and
operators of mineral processing facilities with less than five acres of
surface impoundment and waste pile disturbance not be required to
comply with the financial responsibility requirements in Part 320. EPA
requests comment on this proposal. Specifically, EPA is interested in
damage cases that have arisen at mineral processing facilities with
less than five acres of waste pile or surface impoundment disturbance.
2. Timeframes for Compliance (Sec.  320.61)
    CERCLA Sec.  108(b)(3) requires a phased-in approach to
implementation of the financial responsibility requirements of this
proposal. That section requires that financial responsibility
requirements be imposed as quickly as can reasonably be achieved but in
no event more than four years after the date of promulgation of the
final rule. The statute further requires that, where possible, the
amount of financial responsibility shall be achieved through
incremental, annual increases. This phased approach provides time for
the financial markets to develop and make available instrument capacity
while, at the same time, has financial responsibility put into place at
facilities subject to the rule quickly.
    Under the proposed schedule for implementation of financial
responsibility requirements, owner or operator's would be required to
demonstrate financial responsibility for: (1) Health assessment costs
by twenty four months after promulgation of the final rule, i.e., after
publication of the final rule in the Federal Register; (2) for fifty
percent of the response and natural resource damages amount of
financial responsibility by thirty six months after promulgation of the
final rule; and (3) for full response and natural resource damages
amount by forty eight months after promulgation of the rule.
    In developing this proposed schedule for implementation of
financial responsibility requirements, EPA considered the requirement
in the statute that financial responsibility implemented in incremental
annual increases, as well as the need for the financial markets do
develop and make available capacity. EPA also sought to provide the
maximum amount of time for owners or operators to establish a financial
responsibility level for their facilities.
    EPA proposed that owners or operators provide the amount of
financial responsibility for the health assessment component of the
formula first as that amount does not require a calculation, and thus
requires no input of information by the facility. This approach
provides three years before the first amount of financial
responsibility that must be calculated is due to EPA. EPA believes that
this is a reasonable approach, and that it balances the needs of the
owner or operator as well as the financial market. Delaying further
significant levels of financial responsibility would have resulted in a
surge in demand on the financial market in year four. Requiring
calculated financial responsibility earlier would have provided less
time for owners or operators to become familiar with the formula,
gather any necessary information, and perform necessary calculations.
    EPA believes that this schedule would meet the statutory
requirement for phased implementation, and would provide owners and
operators an adequate time period to identify the necessary financial
responsibility amount for their sites. Further, these phased-in
requirements would help to assure the availability of instruments by
providing extended time for market capacity to build. EPA solicits
comment on this approach to implementation of the financial
responsibility requirements, on the schedule for compliance, and on
whether this approach would help assure availability of instruments.
EPA solicits comment on this approach.
    For owners and operators of hardrock mining facilities that come
into operation after the effective date of this rule, the Agency is
proposing a different approach.
    Facilities that become subject to the rule after the effective date
of the final rule and on or before the date four years after the
effective date would be comply with the requirements for demonstrating
financial responsibility that are applicable to facilities that were
authorized to operate, or should have been authorized to operate on the
effective date of the final rule. For example, if a facility were to
become subject to the requirements of this rule two years after the
effective date, the owner or operator would be required to demonstrate
financial responsibility for the health assessment amount prior to
beginning operations, and then follow the schedule provided in Sec.
320.61(a).
    Finally, facilities that become subject to the rule more than four
years after the effective date of the final rule would be required to
demonstrate financial responsibility for the full amount required under
this rule before beginning operations.
    The Agency believes this approach is reasonable in that the
capacity concerns that arise when a newly promulgated rule becomes
effective are not relevant as the Agency does not expect a large number
of newly regulated facilities to enter the market seeking financial
responsibility instruments after the rule initially becomes effective.
The Agency solicits comment on this approach.
3. Definitions (Sec.  320.62)
    The Agency is proposing definitions in Sec.  320.62 that are
applicable to this

Subpart. The Agency solicits comment on these definitions.
4. Determining the Financial Responsibility Amount (Sec.  320.63)
    EPA considered options for how to calculate financial
responsibility amounts for classes of facilities under CERCLA Sec.
108(b). The statute provides only very general direction on this
question, and thus confers upon EPA significant discretion in both
methodology and in the ultimate selection of the appropriate amount.
CERCLA Sec.  108(b) establishes a general end-point for the Agency's
financial responsibility requirements, which must be ``consistent
with'' the ``degree and duration of risk associated with the
production, transportation, treatment, storage, or disposal of
hazardous substances'' at the facility. EPA does not interpret this to
require any precise association with a risk calculation. Standard
dictionary definitions of the term ``consistent'' include merely
``being in agreement'' or ``compatible.'' \168\ Moreover, as discussed
earlier, CERCLA Sec.  108(b) amounts are necessarily established in the
absence of any response action, although it is through such response
actions that the precise level of risk associated with a particular
site is ascertained. Thus, EPA believes that Congress intended for the
Agency to set a level of risk that is generally reflective of risk for
each facility class.
---------------------------------------------------------------------------

    \168\ 301 Webster's II New Riverside University Dictionary
(1988).
---------------------------------------------------------------------------

    The statute also does not specify any particular methodology to
reach that general end-point, specifying simply that the amount of
financial responsibility be established at the level that the EPA
``determines is appropriate.'' The statute does provide a non-exclusive
list of information sources in CERCLA Sec.  108(b)(2) on which it is to
base its decision--the payment experience of the Superfund; courts
settlements and judgments; and voluntary claims satisfaction. Notably,
it does not specify how the information from these sources is to be
used--for example, how the data from each source should be weighted
relative to the other sources. Similarly, the list of sources does not
specify whether EPA is to derive particular values from each category
to be aggregated into one amount that is ``consistent with the degree
and duration of risk,'' or whether EPA is to identify from each
category, particular practices (that is, for example, the types of
activities for which the Fund has paid) the cost of which can form the
basis for an amount. Therefore, EPA has concluded that these provisions
of the statute confer a significant amount of discretion upon the
Agency in how it uses the data it has, to determine the appropriate
amount for which owners and operators must provide evidence of
financial responsibility.
    EPA considered four approaches to identify a financial
responsibility amount for a facility--fixed amount, site-specific
amount, parametric approach, and formulaic approach. A description of
each approach follows. This proposed rule uses a combination of these
approaches--specifically, a fixed cost approach for certain costs
(health assessments) and a formulaic approach to identify an amount for
potential response costs consistent with the risks to human health and
the environment based on facility features.
    Under a fixed amount approach, the Agency would identify a standard
cost for the class. This method does not rely on site-specific factors
but rather on historical costs associated with similar facilities to
calculate an expected future amount. This approach is best applied
where the costs at issue are fairly uniform, as the wider the
variation, the lower the accuracy of the financial responsibility
amount for that cost. If there is wide variation in the costs
associated with the facilities within the class to which the fixed
amount is applied, the result can be significant over-regulation at
those facilities with lower levels of liabilities, and significant
under-regulation of facilities with higher levels of liabilities. At
the same time, this approach has advantages in that it requires a lower
level of effort on the part of the regulated community and the Agency
to implement because the rule does not require a site-specific
calculation to be developed, submitted, or evaluated. Thus, EPA
believes that in certain circumstances the fixed amount approach may be
the best choice to implement CERCLA Sec.  108(b) requirements.
    For example, as discussed in section VI.D.4. of this preamble, the
Agency was able to determine a fixed level for health assessment costs
under this proposed rule, but applied a formulaic approach to determine
financial responsibility amounts for response costs and natural
resource damage costs.
    The second method considered by EPA is a site-specific approach.
Under this approach, the owner or operator would calculate the cost of
conducting known activities to address identified problems. This
approach is the most precise of the three approaches considered by EPA.
However, it is also the most resource intensive to implement. It
requires gathering detailed information about the site, including an
assessment of the site conditions, and is most easily implemented where
a release has occurred, a response is necessary, and a remedy
determination has been made. As described earlier, CERCLA Sec.  108(b)
financial responsibility is not based on a remedy determination;
therefore, EPA determined that a site-specific approach was not
appropriate or practical for use under this rule. EPA solicits comment
on how a site-specific approach might be developed for future CERCLA
Sec.  108(b) rulemakings in situations where there has been no remedy
decision.
    Having identified reasons that a site-specific approach may not be
appropriate or practical to determine financial responsibility amounts
for response costs and for natural resource damages, EPA sought to
develop an approach that was more accurate than the fixed amount, yet
could be implemented without conducting a full site investigation at
the facility. The Agency's efforts resulted in development of a formula
designed for facilities within the hardrock mining industry.
(a) Information Used To Determine Financial Responsibility Amounts
Under CERCLA Sec.  108(b)
    As discussed earlier, CERCLA Sec.  108(b)(2) requires that the
level of financial responsibility must be ``based on the payment
experience of the Fund, commercial insurers, courts settlements and
judgments, and voluntary claims satisfaction.'' Thus, in developing
this proposed rule, EPA considered how to consider those factors. EPA
considered two approaches to basing financial responsibility levels on
the ``payment experience of the Fund.'' Under one approach, the Agency
would consider the cost of past cleanups at similar facilities, and use
those costs as a basis for financial responsibility. For example, EPA
would look to historical cost data and, if a Superfund remedy at
similar facilities averaged $X dollars, EPA would consider that the
appropriate amount of financial responsibility for that class of
facilities and promulgate a regulation requiring that amount at
facilities in the class.
    This interpretation would best be applied to the fixed amount
methodology. Thus, if past Superfund actions at a class of facilities
averaged $X dollars, the Agency would identify by rule that amount as
the financial responsibility amount required for that class of
facilities. EPA recognized limitations associated with this approach.
For example, because it looks

to historical data, it assumes that operations at historical facilities
are similar to current operations, and that costs will be similar. The
Agency recognizes, however, that past operating procedures, before the
advent of environmental laws, were likely in many cases to give rise to
environmental problems that current regulations and modern operating
practices can prevent or minimize. In addition, Superfund cost data
represents only a portion of the expenditures at historical facilities,
especially those with ongoing cleanups or maintenance, and a uniform
set of data that includes all expenditures at facilities is not
available. However, EPA believes this approach is appropriate in some
circumstances--for example, where current costs are available for an
activity that is fairly consistent in cost from facility to facility.
Thus, EPA has proposed adopting this approach to determine the
financial responsibility amount for health assessment costs as
discussed in section VI.D.4. of this preamble.
    Under a second approach, EPA would look at components of response
actions taken by Superfund in the past--that is, distinct activities
Superfund paid for--at facilities within the to-be-regulated class, and
determine the cost of those activities today. For example, if a
Superfund remedy involved installing an impermeable cap at a surface
impoundment, the Agency would calculate the cost of installing such a
cap today at the regulated facility with a similar unit to determine
the financial responsibility amount. This second approach to
considering the ``payment experience of the Fund'' was used by EPA in
developing the formula for determining financial responsibility amounts
for response costs and natural resource damages under this proposal.
The Agency solicits comment on these two approaches to basing financial
responsibility under this proposal on the criteria in CERCLA Sec.
108(b)(2).
    It should be noted that the Agency's decision to not propose
requirements in this rule based on a site-specific approach to
determining financial responsibility amounts does not mean that the
Agency has concluded that methodology is not appropriate under CERCLA
Sec.  108(b). In fact, following initial implementation of financial
responsibility at facilities subject to this proposed rule, EPA may
identify site-specific conditions that indicate a response action is
needed at the facility, and that the current amount of financial
responsibility implemented under CERCLA Sec.  108(b) is not adequate to
cover the costs associated with the response. In those cases, the
Agency believes it could apply a site-specific methodology at the
facility to determine a more precise amount of financial responsibility
more consistent with the degree and duration of risk at the facility.
EPA would increase the amount of financial responsibility required at
the facility under CERCLA Sec.  108(b) rather than apply CERCLA Sec.
106 authority to require a separate financial responsibility
instrument. The Agency solicits comment on this approach.
(b) Development of the Hardrock Mining Financial Responsibility Formula
    EPA developed a financial responsibility formula for owners and
operators of hardrock mining facilities to use to calculate the amount
of financial responsibility that would be required under this proposed
rule. EPA considered how to develop an amount of financial
responsibility that reflected an estimate of funds that might be
required in the event of a release from a regulated facility.
    As described in section IV.B of this preamble, EPA is proposing to
make the financial responsibility instruments available for all types
of CERCLA liabilities enumerated in CERCLA Sec.  107. Thus, in
developing the financial responsibility formula, EPA sought to take
into account the same three categories of costs (response costs
(including both removals and remedial actions), natural resource
damages, and health assessment costs) that may be incurred by owners
and operators of facilities subject to the rule. To do so, EPA
separately developed three formula components to estimate financial
responsibility for each of those three categories. These three
components--response costs, natural resource damages, and health
assessment costs--make up the final formula.
    EPA collected and analyzed data on both the total funds expended at
CERCLA sites and the types of goods and services on which those funds
were spent. Total funds expended were used to estimate both the health
assessment component and the natural resource damage component, while
the types of goods and services were used to estimate the response
component. For each, this preamble discusses EPA's data collection
efforts, how the Agency developed estimates of costs from that data,
and how it developed the resulting formula.\169\ EPA has followed the
Agency's Peer Review Policy with respect to the underlying formula
supporting this action. Specifically, EPA has conducted a peer review
of the Background Document. Peer review materials, including charge
questions, are available in docket for this proposed rule (Docket No.
EPA-HQ-SFUND-2015-0781).
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    \169\ For a detailed discussion of the development of the
formula, see the CERCLA 108(b) Financial Responsibility for Hardrock
Mining Facilities Background Document--Peer Review Draft (Background
Document), located in the docket for this proposal (Docket No. EPA-
HQ-SFUND-2015-0781).
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(i) Response Component
    EPA collected information on response costs from national
priorities list (NPL) and non-NPL CERCLA response activities. This data
consisted of records of decision (RODs), settlements, actual
expenditures to date by EPA, and estimated expenditures for present and
future work by potentially responsible parties. EPA used these data to
generate a best estimate of total response costs at these hardrock
mining facilities. EPA was able to collect this information for 319
sites.
    In addition to the total response cost data, EPA also collected
data on specific activities conducted at 438 operable units at 88 NPL
or Superfund alternative hardrock mining sites. From this data on
activities themselves, EPA could link specific site features to
releases or threatened releases of hazardous substances, and to
remedies that incurred response costs. EPA found that thirteen site
features \170\ \171\ served as the source of release that resulted in
remedies within the following twelve categories: (1) On-site disposal
(excavation, capping, covering, revegetation); (2) off-site disposal;
(3) engineering and/or containment (other); (4) surface water
diversion; (5) water treatment (other); (6) water treatment (lime
addition); (7) no action; (8) alternative drinking water; (9) sediment
dredging/disposal; (10) monitoring (all media and as separate remedy);
(11) monitored natural attenuation/recovery; and (12) deconstruction/
decontamination of buildings. EPA solicits comments on additional
remedies or categories of CERCLA

response costs that do not appear in this list, as well as the data
supporting the inclusion of those remedies.
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    \170\ The 13 site features include (in order of frequency): (1)
Contaminated soils, (2) tailings (pond, pile), (3) waste rock or
overburden, (4) contaminated sediments, (5) acid mine/rock drainage,
(6) slag, (7) smelter emissions, (8) underground workings, (9)
process areas and buildings, (10) leachate (from failed cap/cover or
similar system), (11) demolition debris, (12) heap leach piles/
leaching waste, and (13) open pits/pit lakes.
    \171\ The 13 site features include (in order of frequency): (1)
Contaminated soils, (2) tailing (pond, pile), (3) waste rock or
overburden, (4) contaminated sediments, (5) acid mine/rock drainage,
(6) slag, (7) smelter emissions (8) underground workings, (9)
process areas and buildings, (10) leachate failed cap/cover or
similar system), (11) demolition debris, (12) heap leach piles/
leaching waste, and (13) open pits/pit lakes.
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(aa) Linking Response Categories to Current Cost Estimates
    EPA's prior experience with CERCLA cleanups leads it to expect that
similar types of remedies will continue to be selected for mining sites
in the future. EPA also expects that for eleven of the twelve remedy
categories described earlier (the exception being ``no action''), the
magnitude of that cost will differ with changing site characteristics.
For example, the expected costs of constructing a cap over a unit to
prevent water infiltration can be expected to increase with the acreage
of that cap. Thus, in order to produce more accurate estimations of
costs at a particular facility, it is necessary to consider both
specific response costs and specific response activities. However, EPA
generally found that the response cost data discussed earlier were
available in the form of payments or total expenditures. Since these
payments or expenditures were aggregated across various activities,
they could not be separated into more specific cost amounts (e.g., the
cost to construct a particular cap on a particular tailings
impoundment).
    Given this difficulty, EPA considered how to estimate the expected
costs associated with these particular activities. EPA searched for
existing, publicly available engineering cost estimates that contained
costs specific to these activities. EPA found that such engineering
cost data was readily available from cost estimates developed for state
and Federal mining reclamation and closure plans, and associated
documents. These engineering cost data were available for currently
operating facilities potentially regulated under the proposed rule, and
represented similar site features (e.g., tailings facilities, open
pits) as facilities for which prior response actions were taken. Thus,
these data reflect recent engineering cost values appropriate for EPA's
statistical analysis.
    In order to monetize the expected costs for eight of the twelve
types of remedies listed earlier, EPA linked these remedy types to
similar tasks identified in the current engineering cost data. The
remaining three CERCLA remedy types, ``No action,'' ``Alternative
drinking water,'' and ``Monitored natural attenuation'' are excluded
from the initial list of twelve remedy types. Since these three remedy
types do not involve engineered controls, EPA was concerned that
including them as part of a nationally-applicable rule could have the
effect of producing an inadequate amount of financial responsibility
for those sites where engineered controls were necessary. Therefore, as
a conservative assumption to help ensure thea adequacy of the amount of
financial responsibility should engineering controls prove necessary,
EPA excluded these three remedy types from further consideration.
    Also excluded was ``Sediment dredging/disposal.'' Although this
element has appeared historically as a response category, EPA notes
that it was already incorporated in the natural resource damages
component. For example, the final restoration plan for the Upper
Arkansas River/California Gulch Superfund site (one of the data points
used in developing the natural resource damages multiplier) includes
dredging of contaminated soils as a restoration alternative.\172\ Thus,
EPA believes that since this cost is already represented in the natural
resource damages multiplier, it is inappropriate to duplicate that cost
in the response component of the formula. EPA solicits comment on
whether this activity is more appropriately included in the response
component or the natural resource damages component of the formula.
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    \172\ See Stratus Consulting Inc. (2010). Restoration Plan and
Environmental Assessment for the Upper Arkansas River Watershed.
Available at: http://www.fws.gov/mountain-prairie/nrda/leadvillecolo/californiagulch.htm.
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    ``On-site disposal (excavation, capping, covering, revegetation)''
and ``Engineering/containment (other)'' were linked to engineering cost
estimates categorized as backfill, portal closure, earthwork,
revegetation, feature-specific stormwater controls, and source
controls. These first two remaining categories were further linked to
the specific site feature being addressed: Open pit, underground mine,
waste rock, tailings facility, heap/dump leach, process ponds and
reservoirs, and slag piles. Since not all currently operating
facilities have all of these site features, this site-feature linkage
allowed EPA to identify costs for only the features present at a given
mine.
    ``Off-site disposal'' and ``Deconstruction/decontamination of
buildings'' were linked to engineering cost estimates categorized as
solid waste disposal, hazardous waste disposal, organic solution
removal, building decontamination, contaminated soils disposal, and
haulage and disposal. ``Surface water drainage'' was linked to drainage
controls. ``Water treatment (lime)'' and ``Water treatment (other)''
were linked to engineering cost estimates categorized as site and water
management, process fluid stabilization, neutralization, solution
disposal, reclamation of well-field and disposal wells, seepage
capture, and water treatment. Finally, ``Monitoring (all media and as
separate remedy)'' was linked to engineering cost estimates categorized
as groundwater and surface water monitoring, geotechnical stability
monitoring, erosion and vegetation monitoring, fish and wildlife
monitoring, and other short- and long-term monitoring.
    While not specific to any remedy category, multiple remedies'
operations and maintenance activities were linked to the reclamation
and closure plan tasks of road maintenance, stormwater repairs,
revegetation repairs, reclamation of monitoring and pumpback wells,
well maintenance, evaporation pond maintenance, and stormwater,
erosion, and vegetation maintenance. Additionally, all remedies were
linked to reclamation and closure plan tasks necessary to conduct
direct engineering work including mobilization/demobilization,
engineering design/redesign, contingency, contractor profit and
overhead, contractor liability insurance, payment and performance
bonds, agency direct costs, and agency indirect costs. EPA solicits
comment on the accuracy of these linkages, and specific data or
examples that would indicate an alternative linkage should be made.
(bb) Response Component Data Collection
    EPA sought through its engineering cost estimate data collection
effort to accumulate as much recent, high quality cost information for
currently-operating hardrock mining facilities as possible and
represent the range of states and commodities produced. EPA obtained
and sorted data from the Mining Safety and Health Administration (MSHA)
and the U.S. Geological Survey (USGS) to generate a combined list of
354 facilities. To derive this group of 354, EPA identified facilities
that would correspond to the scope of the proposed rule. Thus, EPA
excluded from the combined MSHA/USGS data set, those facilities that
were not identified in the 2009 Priority Notice,\173\ as well as closed
or abandoned facilities. Therefore, the data set consisted of active,
intermittent, or temporarily idled mining or mineral processing
facilities. Comprehensive lists of all data sources

are available in Appendices A through M of the Background Document.
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    \173\ See Identification of Priority Classes of Facilities for
Development of CERCLA Section 108(b) Financial Responsibility
Requirements, 74 FR 37213, July 28, 2009.
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    EPA obtained a sample of 63 facilities' reclamation and closure
plan engineering cost data. This 63 facility subset was representative
of the frequency of states and commodities identified in the full
universe of 354 potentially regulated mines. Thus, EPA expected it
would be representative of the larger group of facilities. This dataset
included costs as well as related inputs that drive these cost
components. For example, acreage is an input of the Standardized
Reclamation Cost Estimator model used to conduct several of the
collected engineering cost estimates. One of the highest-dollar
response categories, water treatment, also presented one of the
smallest cost sample sizes with only 15 facilities represented. As a
result, EPA supplemented the closure plan cost data on water treatment
costs with data from the three CERCLA sites contained in EPA's CERCLA
site data set, for which water treatment cost data were readily
available, and could be disaggregated from the sites' full costs. EPA
solicits comment on additional cost estimates, whether historical or
current, that would appropriately represent active hardrock mining
facilities. EPA solicits comment on data generally, and specifically
regarding industrial minerals, slag pile, in-situ leach, and water
flows. EPA solicits comment on expanding the water treatment variable
to capture additional facilities that would necessarily need more
advanced water treatment due to the nature of their leachate.
    EPA subject-matter experts believed that other variables could
explain the differences between higher and lower costs at sites based
on their professional experience. First, these experts believed that
water-related factors such as distance to groundwater or surface water,
as well as net precipitation could influence the costs estimated for a
site. Second, these experts believed that the process methods used
could influence costs necessary for a site. These data are not included
in the reclamation plan data collected. Therefore, EPA located and
collected them from Environmental Impact Statements or other publicly
available documents.
    Water-balance-related data that were available in these public
documents included precipitation, evaporation, distance to surface
water, and depth to groundwater. EPA solicits comment on the collection
of these water balance data. In particular, six of the hardrock mining
facilities in EPA's data set did not contain depth to groundwater data.
EPA solicits comments on depth to groundwater data for the six hardrock
mining facilities for which data were not collected. These facilities
are: Silver Bell (Arizona), Clear Creek (Colorado), Hibbing Taconite
(Minnesota), SCRAM (Minnesota), Standard (Nevada), and Trenton Canyon
(Nevada).
    In addition to water-balance-related data, EPA collected data
related to process methods for the four leaching processes identified
at the 63 sites in EPA's data set. These process method data included
the use of floatation, cyanide, acid, and in-situ leaching processes.
EPA solicits comments on data characterizing the process methods for
these 63 sites as well as how EPA might analyze such data.
    For more details about the data collected, see Section 4 of the
Background Document. EPA solicits comment on alternative uses of its
actual cost data from Section 2.2 of the background document. EPA
solicits comment on additional data points that may be more
appropriately apportioned to other site features. EPA solicits comments
on the use of a 62 percent upward adjustment based on Ernst & Young
(2015). The Agency also solicits comment on the proposal to use the
2013 Reclamation and Closure Plan document for Pinto Valley.
(cc) Response Component Regression Analysis
    EPA performed statistical analysis on the engineering cost data
collected, for each response category. The purpose of this statistical
analysis was to establish a numerical relationship between a limited
number of a facility's site-specific characteristics and the resulting
associated reclamation and closure plan costs. Once this relationship
was established, it could be used to generate a sub-formula that
results in an expected financial responsibility amount for each
response category, on a nation-wide basis. To ensure the accuracy of
the regressions, EPA solicits comment on whether the reclamation and
closure plan data is accurately described in Appendix G of the Formula
Background Document. Specifically, EPA solicits comment on the accuracy
of the estimated cost figures, acres, and source control tags for the
thirteen response categories, as described in Appendix G.
    A number of site-specific engineering-based models generated the
detailed engineering cost estimates collected by EPA. However, certain
parameters appeared to be central to the workings of those
calculations. For instance, capital costs appeared to be affected by
the relevant acreage that these costs were applied. While EPA did not
know the exact suite of variables that might be relevant for any
particular response category, some variables were much more likely to
be statistically significant based on the use of these variables in
reclamation and closure plan cost estimates. As a result, EPA chose to
conduct a bidirectional elimination stepwise regression that started
with variables believed to be most significant and test the addition or
deletion of individual variables. Further details on the regression
methodology, as well as the results of the regressions are available in
Section 5 of the Background Document.
    These results generally confirmed the significance of the variables
EPA expected to be predictive. EPA performed an additional 88
robustness tests to demonstrate that the regressions selected by the
stepwise regression process were the best fit possible for the data.
EPA solicits comment on the appropriateness of the bidirectional
elimination stepwise regression used here as well as alternative
methods that may be appropriate and justifications for using those
methods. EPA also solicits comments generally on the steps and criteria
used in the stepwise regression process as applied. In particular, EPA
solicits comment on the retention of the source control variable in the
heap/dump leach regression (including additional data points that would
supplement the two source controls in the dataset) and on the addition
or removal of variables from the starting suite of variables when such
additions or removals were made. EPA solicits comment on influence
points Continental and Chino Mines for the Interim O&M regression, and
Phoenix Copper for Water Treatment regression.
    Further, because the formula is trying to monetize potential future
CERCLA liability response costs, in the absence of an actual release/
response to monetize, a potential drawback of this approach of
predicting levels of financial responsibility could be that future
major incidents will not have sufficient assurance to cover the
necessary response costs, and that there could be an associated risk
that the rule will potentially require financial responsibility that
may never be required. EPA solicits comments on this potential drawback
to the chosen approach.
    EPA also calculated overhead and oversight costs (OCs) as a percent
of direct engineering costs rather than through regressions on site-
specific characteristics. However, not every facility calculated or
reported every category of oversight costs. Thus, to avoid biasing any
of the oversight cost

estimates low, EPA calculated each oversight cost separately, and used
only data from facilities which had calculated that oversight cost. EPA
estimated each oversight cost category at each facility as a percent of
engineering costs. This was done by dividing the oversight cost in
question at a facility by that facility's total direct engineering
costs. Once all facility-specific oversight cost percentages were
calculated, EPA averaged these oversight cost percentages for each
category. EPA solicits comment on the approach of a fixed percentage of
direct engineering costs for estimating oversight costs.
(dd) Converting O&M Costs into a Net Present Value
    Four of the response cost categories--interim O&M, water treatment,
short-term O&M, and long-term O&M--represent the expected costs for
activities over time. Thus, the regression equations for represent
annualized amounts. These annualized amounts must further be converted
into a single net present value, so that they can be included as part
of the final formula, which represents a facility's total financial
responsibility amount. EPA converted to net present value using the
same equation as that presented in U.S. EPA (2001).\174\
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    \174\ See U.S. EPA (Environmental Protection Agency). 2001.
Groundwater Pump and Treat Systems: Summary of Selected Cost and
Performance Information at Superfund-financed Sites. EPA 542-R-01-
021a. OSWER. Washington, DC 20460. December. Available at: http://www.epa.gov/superfund/cleanup/postconstruction/p1report.pdf.
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    EPA used an O&M period of ten years for converting both the short-
term O&M and interim O&M costs into a net present value. This period
has been discussed and used in guidance documents such as U.S. EPA and
USACE (2000).\175\ O&M after ten years could prove to be unnecessary,
or continue indefinitely. The cost estimation formula uses a perpetual
period of O&M for both water treatment and long-term O&M. EPA
considered using a period of thirty years similar to the default long-
term O&M period of thirty years historically used by EPA for purposes
of cost estimation in the absence of detailed estimates of project
duration (U.S. EPA, 1988).\176\ However, more recent guidance relies
less heavily on this default period and more heavily on the actual
project duration of each alternative considered in the RI/FS process
(U.S. EPA and USACE, 2000).
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    \175\ See U.S. EPA (Environmental Protection Agency) and USACE
(Army Corps of Engineers). 2000. A Guide to Developing and
Documenting Cost Estimates during the Feasibility Study. EPA 540-R-
00-002. OSWER. Washington, DC 20460. July. Available at:
www.epa.gov/superfund/policy/remedy/pdfs/finaldoc.pdf.
    \176\ See U.S. EPA (Environmental Protection Agency). 1988.
Guidance for Conducting Remedial Investigations and Feasibility
Studies under CERCLA (Interim Final). EPA/540/G-89/004. OSWER.
Washington, DC 20460. October. Available at: www.epa.gov/superfund/policy/remedy/pdfs/540g-89004-s.pdf.
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    In addition, EPA's CERCLA data from hardrock mining facilities
indicates that perpetual O&M expenditures are common. Specifically, in
U.S. EPA (2004),\177\ EPA's Office of Inspector General collected
survey responses from regional experts regarding expected long-term O&M
durations at 156 hardrock mining facilities. The median response from
that survey was that long-term O&M at hardrock mining facilities would
continue into perpetuity. Therefore, the financial responsibility
formula uses a perpetual period of O&M for both water treatment and
long-term O&M. EPA solicits comment on the timeframes used in the net
present value conversion. Specifically, EPA solicits comment on whether
justifications of alternate timeframes exist for long-term O&M.
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    \177\ See U.S. EPA (Environmental Protection Agency). 2004.
Nationwide Identification of Hardrock Mining Sites. Report No. 2004-
P-00005. OIG. Washington, DC. 20460. March. Available at: https://www.epa.gov/sites/production/files/2015-12/documents/20040331-2004-p-00005.pdf.
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    Finally, annualized O&M costs are converted to a net present value
based on the ten-year short-term and perpetual long-term time horizons
seen in the CERCLA cost data using the rate of return of the Superfund.
Analysis of these real rates of return from the Superfund yielded a
geometric mean of 2.63 percent. This approach is also consistent with
recent EPA guidance on O&M cost estimation processes in the separate
context of CERCLA settlement agreements and unilateral orders (U.S.
EPA, 2015) \178\ which recommends using a discount rate representative
of real investment returns. EPA solicits comments on whether and how
future rates of return should be automatically used to update the 2.63
percent rate of return of the Superfund. The Agency also solicits
comments on the use of net present value of O&M.
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    \178\ See U.S. EPA (Environmental Protection Agency). 2015.
Guidance on Financial Assurance in Superfund Settlement Agreements
and Unilateral Administrative Orders. OECA. Washington, DC 20460.
April 6. Available at: https://www.epa.gov/sites/production/files/2015-04/documents/fa-guide-2015.pdf.
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(ee) State-Specific Adjustment Factors
    On average, the sub-total of overhead costs calculated by EPA was
found to be 35.78 percent of direct engineering costs. However, a
similar sub-total of oversight cost percentages was not estimated due
to the region-specific nature of agency indirect costs. To calculate
these percentages, region-specific indirect cost rates are multiplied
by the national average agency direct cost percentage to estimate the
agency indirect costs as a percentage of direct engineering costs.
Adding agency direct cost percentage to the region-specific indirect
cost percentages yields region-specific agency cost percentages. Total
non-construction costs are estimated by adding the 35.78 percent
overhead cost percentage sub-total to the region-specific total agency
cost percentages. Using this approach, EPA calculated ten region-
specific oversight cost percentages to be applied to the direct
engineering costs estimated in the formula response components. These
percentages can be found in Appendix II of the proposed rule.
    Furthermore, the relationships estimated represent only a generic,
nationwide engineering cost of a CERCLA response because the response
category regressions were estimated using reclamation and closure plan
cost data that had been normalized to national values. While this was
necessary to perform regression analysis and develop a nationwide
formula, the same labor and materials can have different prices in
different locations. Hence, the resulting estimates described in
earlier sections would immediately be inaccurate for any given state.
To adjust for these locality differences in prices, the response
component of the formula is multiplied by the most current state cost
adjustment factors in USACE (2015).\179\ These adjustment factors can
be found in Appendix III of the proposed rule.
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    \179\ See U.S. Army Corps of Engineers, ``Civil Works
Construction Cost Index System,'' Manual No. 1110-2-1304 (31 March
2012, revised through September 30, 2015). Available at: http://www.publications.usace.army.mil/Portals/76/Publications/EngineerManuals/EM_1110-2-1304.pdf.
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(ii) Natural Resource Damage Component
    EPA collected data on both natural resource damages and natural
resource damage assessment costs at hardrock mining sites from CERCLA
court settlements and judgments, and voluntary payments. This effort
resulted in data on 64 sites. EPA's data indicate that natural resource
damages and response costs are not independent of each other. Instead,
response actions have regularly been shown to influence natural
resource damages. This is particularly true in the case of sites
receiving technical impracticability

waivers. When a technical impracticability waiver is issued, previously
projected response costs may be reduced. However, the remaining
contamination may lead to additional natural resource damages.
    One example summarized in U.S. EPA (2012) \180\ is the technical
impracticability waiver at the Silver Bow Creek/Butte Area. At that
site, an EPA evaluation concluded that the water quality in an affected
alluvial aquifer could not be improved within a reasonable time frame
even assuming the most extensive and costly alternatives. Thus, EPA
issued a technical impracticability decision that waived cleanup levels
for several constituents in that aquifer. However, when such an aquifer
is left contaminated, trustees may seek natural resource damages for
that aquifer. In the case of the Silver Bow Creek/Butte Area, this same
groundwater appeared in the trustees' final restoration plan.\181\ So
while the technical impracticability waiver reduced response costs, it
increased the natural resource damages. Thus, while the proportion of
total liabilities relating to response costs and natural resource
damages was altered, the overall magnitude was similar.
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    \180\ See U.S. EPA (Environmental Protection Agency). 2012.
Summary of Technical Impracticability Waivers at National Priorities
List Sites. OSWER Directive 9230.2-24. August. Available at: https://nepis.epa.gov/Exe/ZyNET.exe/P100EYIC.TXT?ZyActionD=ZyDocument&Client=EPA&Index=2011+Thru+2015&Docs=&Query=&Time=&EndTime=&SearchMethod=1&TocRestrict=n&Toc=&TocEntry=&QField=&QFieldYear=&QFieldMonth=&QFieldDay=&IntQFieldOp=0&ExtQFieldOp=0&XmlQuery=&File=D%3A%5Czyfiles%5CIndex%20Data%5C11thru15%5CTxt%5C00000005%5CP100EYIC.txt&User=ANONYMOUS&Password=anonymous&SortMethod=h%7C-&MaximumDocuments=1&FuzzyDegree=0&ImageQuality=r75g8/r75g8/x150y150g16/i425&Display=hpfr&DefSeekPage=x&SearchBack=ZyActionL&Back=ZyActionS&BackDesc=Results%20page&MaximumPages=1&ZyEntry=1&SeekPage=x&ZyPURL.
    \181\ See Butte Natural Resource Damage Restoration Council
(BNRC) and Montana Natural Resource Damage Program (NRDP). 2012.
Butte Area One: Final Restoration Plan. December. Available at:
https://dojmt.gov/wp-content/uploads/Final-BAO-Restoration-Plan.pdf.
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    EPA notes that although the extent of response actions ultimately
necessary as a result of a release may affect the relative portion of
how much natural resource damages may be in comparison with damages,
the total magnitude of potential liabilities (response costs and
natural resource damages combined) will increase or decrease together.
This is effectively captured by a multiplier. Thus, EPA uses a similar
approach here as to U.S. EPA (2014) \182\ where the Agency estimated
natural resource damages as a percent of cleanup costs where both
future cleanup costs and future natural resource damages were
uncertain. This average percent was used as a multiplier for the
purposes of estimating natural resource damages once potential future
response costs were estimated. As with that previous study, the natural
resource damages and response costs are uncertain, but EPA found that a
similar relationship between damages and costs was presented.
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    \182\ See U.S. EPA (Environmental Protection Agency). 2014.
Regulatory Impact Analysis (RIA) for EPA's 2015 Coal Combustion
Residuals (CCR) Final Rule. OSWER. Washington, DC. December.
Available at: www.regulations.gov Document ID#: EPA-HQ-RCRA-2009-
0640-12034.
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    Within this dataset, EPA had both natural resource damages and
total response costs from the response component data collection for 24
sites. From this subset of 24, EPA divided the average natural resource
damages by the average response costs to generate a hardrock mining-
specific natural resource damages multiplier. This resulted in average
natural resource damages and natural resource damage assessment costs
of 13.4 percent of the response costs to account for natural resource
damages and assessment costs. Thus, EPA included a multiplier of 1.134
in the financial responsibility formula for the natural resource damage
component. EPA solicits comment providing additional natural resource
data. The Agency also solicits comment on the appropriateness of a
fixed multiplier to estimate natural resource damages within the
hardrock mining class of facilities, particularly with respect to the
risk of magnifying any potential bias from the response cost formula.
EPA solicits comment on alternate approach such as the use of a
geometric mean or median instead of the mean for the multiplier
calculation. EPA solicits comment on the feasibility of running the
response component of the model for facilities which EPA has natural
resource damages data for an alternative method, if data is readily
available.
    EPA is also considering an alternative approach. Under this
approach, EPA would use the median natural resource damages and natural
resource damage assessment costs of 3.8 percent of the response costs
to account for natural resource damages and assessment costs. Thus, EPA
would include a multiplier of 1.038 in the financial responsibility
formula for the natural resource damage component. EPA solicits comment
on whether the median or average NRD multiplier is more representative
for application to future hardrock mining facilities.
(iii) Health Assessment Component
    Under 42 CFR 90.14, by the Agency for Toxic Substances and Disease
Registry (ATSDR) is required to maintain documentation pertaining to
the costs associated with all phases of a Public Health Assessment or a
Health Consultation (HA) performed by the Agency to form the basis for
cost recovery by EPA.\183\ Upon EPA's request, ATSDR provided cost
information for recently completed health assessments. ATSDR limited
the data provided to the minimum, maximum, and average costs of health
assessments conducted over the past 18 months (as of March 2016). ATSDR
did not provide hardrock mining-specific data, and thus non-mining
health assessment costs are included in this dataset.
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    \183\ See 42 CFR 90.14 Documentation and cost recovery: (a)
During all phases of ATSDR health assessments and health effects
studies, documentation shall be completed and maintained to form the
basis for cost recovery, as specified in Sec.  107 of CERCLA; (b)
Where appropriate, the information and reports compiled by ATSDR
pertaining to costs shall be forwarded to the appropriate EPA
regional office for cost recovery purposes.
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    Based on the information available to it, EPA adopted a fixed
amount of $550,000 representing the average health assessment cost
reported by ATSDR as the health assessment component of the proposed
formula. Health assessments often make use of EPA-collected data.
Because this approach avoids potentially costly data collection
activities, a relatively low amount of $550,000 is not unexpected for
an average cost. Furthermore, EPA expects future health assessments to
generally be consistent with this amount since ATSDR has experience
performing the same types of reports routinely. Finally, EPA notes that
this average health assessment cost reported by ATSDR is consistent
with additional second-hand sources of estimates that EPA presents in
Section 7 of the Background Document. EPA solicits comment on the
appropriateness of a fixed health assessment cost for all classes,
including data that would justify any alternate approaches suggested.
(c) Hardrock Mining Financial Responsibility Formula
    EPA's proposed rule requires that a facility's financial
responsibility amount be adjusted for inflation to preserve the real
value of the financial responsibility. This inflation adjustment must
be made to the entire financial responsibility amount as calculated in
2014 dollars. The proposed rule uses an inflation

factor derived from the most recent Implicit Price Deflator for Gross
Domestic Product (GDP) published by the U.S. Department of Commerce in
its Survey of Current Business. The inflation factor is the result of
dividing the latest published annual Deflator by the Deflator for 2014.
EPA selected the Implicit Price Deflator for the GDP as that has become
the Department of Commerce's favored basis for the Implicit Price
Deflators a representation of national output. Furthermore, the data is
readily accessible from the Department of Commerce's Bureau of Economic
Analysis providing for transparent implementation.\184\ The Agency
solicits comment on the appropriateness of the Engineering News-Record
Construction Cost Index as an alternative inflation adjustment.
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    \184\ See Table 1.1.9, Implicit Price Deflators for Gross
Domestic Product. Available at: http://www.bea.gov/iTable/iTableHtml.cfm?reqid=9&step=3&isuri=1&903=13.
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    Additionally, in the absence of a site-specific remedial
investigation/feasibility study (RI/FS) or ROD, EPA cannot
categorically determine that source controls and water treatment
activities would not be necessary to minimize the volume, toxicity, or
mobility of hazardous substances. Therefore, as a conservative
assumption to help ensure the adequacy of the amount of financial
responsibility should source controls and water treatment prove
necessary, EPA assumes that both will be used, and sets the variables
corresponding to the activities equal to one for all hardrock mining
facilities calculating CERCLA Sec.  108(b) financial responsibility
amounts. EPA solicits comment on two alternatives to this approach that
could be used alone or in conjunction. In the first alternative, EPA
solicits comment on whether a weighted average of costs with and
without source controls or water treatment would be appropriate. The
weights for this average would be determined based on historical use of
these responses. EPA also solicits comment on whether a conservative
upper confidence interval such as the 95 percent confidence levels
presented in Appendix J of the background document would be appropriate
to avoid underestimating future financial responsibility needs.
    Incorporating the net present value calculations and the
assumptions of source controls and water treatment into the regression
results, the response category equations for the response component
are:
    (1) Solid and hazardous waste disposal category = $2,600,000 \185\
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    \185\ No variables were found to predict the variability in
solid and hazardous waste costs. Thus, an average cost was applied
as discussed in Section 5 of the Background Document.
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    (2) Open pit category =
5.07x10[supcaret](4.24+1.08xLog10[Open Pit Disturbed Acres])
    (3) Underground mine category = $4,500,000 for an underground mine
with hydraulic head or $200,000 for an underground mine otherwise.
    (4) Waste rock category =
1.85x10[supcaret](5.18+0.75xLog10[Waste Rock Disturbed
Acres])
    (5) Heap/dump leach category =
2.29x10[supcaret](4.57+1.01xLog10[Heap and Dump Leach
Disturbed Acres])
    (6) Tailings category =
1.71x10[supcaret](5.32+0.68xLog10[Tailings Disturbed Acres])
    (7) Process pond and reservoir category =
1.64x10[supcaret](4.29+1.03xLog10[Process Pond and Reservoir
Disturbed Acres])
    (8) Drainage category =
9.56x10[supcaret](3.42+0.57xLog10[Total Disturbed Acres+1])
    (9) Slag pile category = $64,000x[Slag Pile Acres] \186\
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    \186\ Slag piles were represented by only one cost data point,
and therefore were included as a fixed cost of $64,000 per acre
based on that data point.
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    (10) Interim O&M category = {1.46x10[supcaret](6.04+0.01x[Net
Precipitation]+0.34xLog10[Heap and Dump Leach Disturbed
Acres+1]+0.10xLog10[Tailings Impoundment Disturbed
Acres+1]){time} x{1/0.0263{time} x{1-(1/[1.0263[supcaret]10]){time}
    (11) Water treatment category =
{1.16x10[supcaret](3.22+1.10xLog10[Flow]+0.70x[In-Situ
Leach]){time} /0.0263
    (12) Short-term O&M and monitoring category =
{1.82x10[supcaret](4.01+0.38xLog10[Total Disturbed
Acres+1]){time} x{1/0.0263{time} x{1-(1/[1.0263[supcaret]10]){time}
    (13) Long-term O&M and monitoring category =
{1.64x10[supcaret](3.12+0.58xLog10[Total Disturbed
Acres+1]){time} /0.0263
    Furthermore, the cost equation for water treatment requires the
input of gallon per minute flows that require treatment. However, as
discussed earlier, EPA calculates the potential costs associated with
the use of source control covers for many site features. Albright
(2015) \187\ provides results of EPA's Alternative Cover Assessment
Program (ACAP). These results indicate that such controls in place will
necessarily reduce the amounts of seepage that may require capture and
treatment prior to discharge. Thus, EPA expects that source controls
would have the effect of reducing the expected volumes of water
requiring treatment. The average infiltration for the ACAP data set was
five percent of precipitation. As a result of these considerations, EPA
has adopted the presumption of 95 percent effectiveness for source
control covers, resulting in a residual five percent infiltration based
on gross precipitation. EPA solicits comment on data demonstrating that
source controls reduce the costs of diversion and/or O&M other than
water treatment.
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    \187\ See Albright, William. 2015. Final Covers for Mine
Tailings. Desert Research Institute Clu-In Seminar. Available at:
https://clu-in.org/conf/tio/mining_052015/slides/Albright_Day_Two.pdf.
---------------------------------------------------------------------------

    This results in flows being calculated as 0.05 x Precipitation x
[Total Disturbed Acres] x 0.05166 for all flows except for underground
mine flows and in-situ leach flows which are not assumed to receive the
same types of source controls evaluated in ACAP. The Agency solicits
comment on this approach for calculating the gallons per minute flow at
a facility. EPA also solicits comment providing data demonstrating that
source controls reduce the costs of diversion and/or O&M other than
water treatment. EPA solicits comment on the exercise of validating the
formula by running it for CERCLA sites that have incurred costs across
all site features.
    For a hypothetical facility with a single site feature of each type
(e.g., a single heap leach), EPA shows the proposed financial
responsibility formula in Equation 1. EPA solicits comment on the
appropriateness of this draft formula developed in the formula-approach
to determine a reasonable amount for CERCLA Sec.  108(b) financial
responsibility.

[GRAPHIC] [TIFF OMITTED] TP11JA17.000

Where:

Deflatory = the most recent available GDP Implicit Price Deflator
for year y; and
Deflator 2014 = the GDP Implicit Price Deflator for 2014
i = the ith response category (e.g., water treatment costs);
n = the total number of relevant response categories;
r = EPA region r (e.g., EPA Region 3); and
s = state s (e.g., Montana).
(d) Inputs to the Financial Responsibility Formula
    To implement the formula and calculate a financial responsibility
amount for the facility, the owner or operator will have to input
facility information. The Agency anticipates that the information
required by the formula will largely be existing information, and that
most facilities will not have to develop information to implement the
financial responsibility formula. EPA solicits comment on whether the
information required is largely existing at facilities.
    The first piece of information required is acreage. For the site
feature-specific calculations, the acreage is the total of all areas
covered by the particular site feature. For example, a facility with
two waste piles would add the acreage of each together and input the
total acreage into the calculation. For site-wide calculations, such as
short-term O&M, the acreage entered would be the entire area covered by
the hardrock mine and/or mineral processor.
    Several inputs to the formula are yes/no determinations. These
include the presence of a pressurized bulkhead, in-situ leaching, and
underground mines. If these are not present, the owner or operator
should enter a zero into the formula.
(e) Reductions to the Financial Responsibility Amount
    The Agency is proposing under Sec.  320.63(c) to allow (but not
require) owners or operators to reduce the response cost component
under Sec.  320.63(b) by making an adequate demonstration that risk
reducing regulatory requirements are in place. Owners and operators
will have to demonstrate that they meet specific minimum standards for
various formula components, along with a general performance standard,
and other requirements. This approach is specifically designed to
account for reductions in risk at a facility that may result from
compliance with applicable Federal, state, tribal, and local
requirements. The Agency solicits comment on this approach.
    In developing these proposed requirements, EPA sought to balance a
number of competing concerns. EPA desires to account for risk-reducing
effects of compliance with other programs, while acknowledging that
requirements for hardrock mining and mineral processing facilities, and
implementation of them, vary substantially across the country. The
CERCLA Sec.  108(b) proposed rules, however, are nationally applicable.
EPA was thus concerned that, should it allow an owner or operator to
invoke other requirements as justification for reducing the amount
otherwise required by the formula, it should do so only to the extent
that reductions can confidently be tied to reductions in risk in a
nationally-applicable rule. Similarly, in order for EPA to allow an
owner or operator to reduce the amount of financial responsibility that
it must obtain under CERCLA Sec.  108(b) based on its compliance with
non-CERCLA regulatory requirements imposing future risk-reducing
controls, EPA must be confident that those non-CERCLA requirements will
have their intended risk-reducing effects, by ensuring the controls
will be implemented when necessary. Lastly, as discussed earlier, EPA
has sought to develop an effective, nationally-applicable formula that
can be readily applied by the regulated community and overseen by EPA.
EPA is accordingly proposing to allow for simple, all-or-nothing
reductions for the formula sub-components, when they can be justified.
In sum, therefore, this proposed rule allows an owner or operator to
rely on other regulatory controls in order to obtain reductions in the
amount of CERCLA financial assurance it must obtain, but includes
several conditions that must first be met by the owner or operator. EPA
intends for this approach to allow for a more tailored amount of
financial responsibility under the nationally-applicable formula, while
still providing assurance that the resultant amount is consistent with
the level of risk.
    First, the reductions incorporate a general performance standard in
paragraph 326.63(c). In order to qualify for a reduction, the owners
and operators must be prepared to demonstrate to EPA that any
requirements relied upon under paragraph 320.63(d) also meet the
general standard, that the engineering requirements will result in a
minimum degree and duration of risk associated with the production,
transportation, treatment, storage, or disposal, as applicable, of all
hazardous substances present at that site feature. This general
requirement will provide a benchmark against which the controls can be
measured. In addition, this provision is intended to reflect that if
the general performance standard is met, the proposed approach allows
for a complete reduction from the financial responsibility formula
component. Where the requirements do not result in a minimum level of
risk, EPA cannot be confident that a complete reduction for that cost
component is warranted.
    Next, EPA is proposing to require that any of the requirements
relied upon be enforceable against the owner or operator claiming the
reduction, that they have in place adequate financial responsibility to
assure that the requirements will be implemented, and that they certify
that the facility is in compliance with the requirements. These
conditions are intended to ensure that the underlying controls that
form the basis of the risk reduction are highly likely to occur and
thereby achieve their intended risk-reducing effect.
    Third, EPA is proposing to require that the owner or operator
certify that the facility is in compliance with the requirements relied
upon in claiming a reduction to the facility's financial responsibility
amount. This condition is intended to ensure that the controls

upon which the reduction is based are, in fact, currently implemented
at the facility.
    Fourth, the proposed rule also includes a general requirement that
the owner and operator provide the information necessary for EPA to
evaluate the claimed reductions. Specifically, Sec.  320.63(c)(2)
provides that information submitted must provide sufficient and
detailed supporting information adequate to allow EPA to evaluate the
adequacy of the financial assurance and of the underlying requirements
for meeting the reduction.
    Finally, EPA is proposing specific minimum standards for the
various categories of reductions.\188\ These are specified in Sec.
320.63(d)(3). This portion of the proposed rule provides the criteria
that owners or operators must meet for particular reductions. The
performance standards in paragraph (c) describe objectives for reducing
risk at facilities and include future engineering controls and
practices that reduce the risk associated with the hazardous substances
at the site. That paragraph provides reduction criteria for each
component of the maximum financial responsibility formula--capital
costs, interim O&M, short-term O&M, long-term O&M, water treatment,
hazardous materials management, and surface water drainage. For capital
costs, the paragraph provides reductions for each site-feature
category--open pits, underground mines, waste rock, heap and dump
leach, tailings impoundments and stacks, process ponds and reservoirs,
and slag piles. Owners and operators that meet the criteria for a
formula component reduction would not have to calculate financial
responsibility for that component. Because the natural resource damage
component is calculated by a multiplier, this component would produce a
correspondingly smaller amount, as the reductions are claimed.
---------------------------------------------------------------------------

    \188\ See U.S. EPA, Office of Land and Emergency Management,
Reductions Technical Support Document: Financial Responsibility
Requirements under CERCLA Sec.  108(b) for Classes of Facilities in
the Hardrock Mining Industry Proposed Rule, November 30, 2016 for
discussion of the development of the reduction criteria.
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    EPA solicits comment on the proposed reductions to the financial
responsibility amount. EPA solicits comment specifically on whether the
Agency has identified the appropriate criteria for the reductions, and
whether the reduction criteria will provide incentives for owners or
operators to implement more protective practices at their facilities to
lower their financial responsibility amounts. EPA solicits comment on
whether the criteria for the reductions are described in sufficient
detail to allow for effective implementation and, if not, how they
might be modified. EPA solicits comment on whether the reduction
criteria are likely to be complied with and/or enforced such that, at
the applicable time, risk at the facility will, in fact, be reduced.
    EPA solicits comment on whether alternate or more flexible
engineering standards can substitute for some or all of the numeric
engineering standards in the proposed reduction criteria (e.g. planning
for a 200-year storm event, reduction of net precipitation by 95
percent). In addition, EPA requests comment on whether the proposed
reduction criteria would limit flexibility necessary for innovative or
different site-specific approaches and, if so, how those might be
preserved under the proposed rule. EPA also invites comment on a
possible role for third-party certifiers or other regulatory
authorities in identifying alternative, protective site-specific
controls as a basis for financial responsibility reductions. EPA also
requests comment on whether other regulatory programs already impose
the requirements that would satisfy the reduction criteria. Finally,
EPA solicits comment on allowing reductions to the financial
responsibility amount for other risk-reducing practices and/or controls
(e.g., voluntary practices) that are implemented at hardrock mining
facilities that should be accounted for in the reductions, and on how,
if reductions were allowed for such practices and/or controls, EPA
could assure that those controls would remain in place and be effective
over time where there is no regulatory program overseeing their
maintenance and operation.
    As discussed above, EPA is seeking to develop reduction criteria
standards that are appropriate in the context of a nationally
applicable rule. The Agency requests comment on whether any particular
reduction criteria in paragraph 320.63(c) might be inappropriate under
particular facility conditions that could still be defined in the
context of a national rule. Specifically, EPA requests that commenters
identify particular facility conditions where a nationally applicable
standard different from the reduction criteria proposed should be
applied. EPA requests that commenters identify both those alternative
facility conditions and any appropriate reduction criteria with
particularity. EPA is particularly interested in objective criteria
that define facility conditions that could be verified by a certified
professional.

Program Deferral Approach

    As described above, EPA is proposing to allow reductions to the
financial responsibility amount for the response component of the
financial responsibility formula. Those reductions are based on
criteria established in the rule for each of the thirteen response
categories that together determine the response component amount. EPA
is proposing that eligibility for the reductions be determined by
owners and operators on a site-specific basis, subject to EPA review.