Hardrock Mining:

BLM and Forest Service Hold Billions in Financial Assurances, but More Readily Available Information Could Assist with Monitoring

GAO-19-436R: Published: Sep 18, 2019. Publicly Released: Oct 18, 2019.

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fennella@gao.gov

 

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Those mining for gold and other hardrock minerals on federal land must provide financial assurances, such as bonds, to ensure that lands they disturb will be restored.

As of October 2017, the Bureau of Land Management held $3 billion in assurances and has a process in place to monitor these.

As of November 2018, the Forest Service held $251 million in assurances. Its headquarters cannot determine whether these are adequate to cover estimated reclamation costs because information needed to do so is kept in more than 500 paper files in 14 states.

We made 3 recommendations, including that the Forest Service centrally record this information.

A hardrock gold mine on federally-managed land in Nevada

mine

mine

Additional Materials:

Contact:

Anne-Marie Fennell
(202) 512-3841
fennella@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

The U.S. Department of the Interior's Bureau of Land Management (BLM) and the U.S. Department of Agriculture's Forest Service hold billions of dollars in financial assurances, such as bonds, for nearly 2,000 hardrock mining operations for gold, silver, copper, and other hardrock minerals on federal land. The agencies have various practices for monitoring the adequacy of these assurances to cover estimated costs to reclaim—or restore and clean up—the land when operations cease.

As of October 2017, BLM held over $3 billion in financial assurances, which was approximately $11 million less than what BLM estimated was needed to cover reclamation costs. According to agency officials, BLM determines whether financial assurances are sufficient to cover estimated reclamation costs and annual reviews are done on time through its annual state certification process. As part of this process, BLM prepares an annual report that is to identify, among other things, which operations have inadequate financial assurances or have not had their financial assurances reviewed in a timely manner. This report also identifies the number of corrective action plans to be prepared by BLM offices to address any such deficiencies. BLM needs such information to help ensure financial assurances will be sufficient to cover estimated reclamation costs. However, based on data GAO reviewed, the annual report did not identify all the instances in which a corrective action plan was required. Agency officials said this occurred because the computer program that generated the report did not reflect all requirements in the state certification guidance. Modifying the computer program so that it identifies all instances in which a corrective action plan is needed would provide BLM with greater assurance that funds will be adequate to reclaim the land should the operator fail to do so when mining operations cease.

The Forest Service held approximately $251 million in financial assurances, as of November 2018. However, GAO was not able to determine the extent to which these financial assurances were adequate to cover estimated reclamation costs because the Forest Service's data system does not contain certain data needed to do so—such information is maintained in over 500 individual paper case files in the forest or district offices across 14 states. As a result, headquarters officials cannot readily determine whether forest or district offices are ensuring that financial assurances are adequate. Further, the data system includes a field for the date of the most recent review of the adequacy of the financial assurance, but Forest Service officials told GAO that forest and district offices generally do not populate the field and are not required to do so. Establishing a requirement to record this data would enable Forest Service headquarters' officials to efficiently determine whether annual reviews—a key mechanism to help ensure the adequacy of financial assurances—are occurring as required.

Why GAO Did This Study

The General Mining Act of 1872 encouraged the development of the nation's mineral resources by allowing individuals to stake claims and obtain exclusive rights to valuable hardrock mineral deposits on land belonging to the United States. Since then, thousands of operators have extracted billions of dollars' worth of hardrock minerals from land managed by BLM and the Forest Service. However, some operators did not reclaim thousands of acres of federal land disturbed for exploration, mining, and mineral processing when their operations ceased. Some of these disturbed lands pose serious environmental and physical safety hazards, such as contaminated soil, open mine shafts, and decaying structures.

To help ensure lands will be reclaimed, BLM and the Forest Service have issued regulations requiring all hardrock mining operators to reclaim disturbed land when operations cease and provide financial assurance to guarantee reclamation. These regulations require operators to provide a reclamation plan and financial assurances to BLM or the Forest Service before beginning exploration or mining operations.

This report examines the value and adequacy of financial assurances that mining operators have provided to BLM and the Forest Service to guarantee estimated reclamation costs and how these agencies monitor the adequacy of these financial assurances. To conduct this work, GAO reviewed BLM and Forest Service financial assurance data and the agencies' regulations and policies on financial assurances. GAO compared the agencies' data and monitoring practices against federal internal control standards to assess the adequacy of the practices.

What GAO Recommends

GAO is making three recommendations, including one to BLM and two to the Forest Service. Specifically, GAO recommends that BLM modify its computer program that generates its annual report to identify all the instances in which a corrective action plan is required. GAO also recommends that the Forest Service develop a centralized mechanism to record the estimated cost of reclamation for a mining operation, so it can be compared with the financial assurance held to ensure the assurances in place are adequate. The Forest Service should also require forest and district offices to enter the date of their last annual review in its data system. BLM and Forest Service concurred with GAO's recommendations.

For more information, contact Anne-Marie Fennell at 202-512-3841 or fennella@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Interior should direct BLM to modify its computer program that generates its Bond Review Report to identify all instances in which a state office needs to develop a corrective action plan to address deficiencies, such as an inadequate financial assurance, a late review, or missing data. (Recommendation 1)

    Agency Affected: Department of the Interior

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should direct the Forest Service to develop a centralized mechanism to record the current estimated cost of reclamation for a mining operation so that this information is readily available for comparison with the financial assurance held. (Recommendation 2)

    Agency Affected: Department of Agriculture

  3. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should direct the Forest Service to require forest and district offices to enter the date of the last review in the Natural Resource Manager data system. (Recommendation 3)

    Agency Affected: Department of Agriculture

 

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