Hardrock Mining: BLM Needs to Better Manage Financial Assurances to Guarantee Coverage of Reclamation Costs

GAO-05-377 Published: Jun 20, 2005. Publicly Released: Jul 25, 2005.
Jump To:
Skip to Highlights
Highlights

Since the General Mining Act of 1872, billions of dollars in hardrock minerals, such as gold, have been extracted from federal land now managed by the Department of the Interior's Bureau of Land Management (BLM). For years, some mining operators did not reclaim land, creating environmental, health, and safety risks. Beginning in 1981, federal regulations required all operators to reclaim BLM land disturbed by these operations. In 2001, federal regulations began requiring operators to provide financial assurances before they began exploration or mining operations. GAO was asked to determine the (1) types, amount, and coverage of financial assurances operators currently use; (2) extent to which financial assurance providers and others have paid to reclaim land not reclaimed by the operator since BLM began requiring financial assurances; and (3) reliability and sufficiency of BLM's automated information system (LR2000) for managing financial assurances for hardrock operations.

Skip to Recommendations

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Interior To ensure that hardrock operations on BLM land have adequate financial assurances, the Secretary of the Interior should direct the Director of BLM to require the BLM state office directors to establish an action plan for ensuring that operators of hardrock operations have required financial assurances and that the financial assurances are based on sound reclamation plans and current cost estimates, so that they are adequate to pay all of the estimated costs of required reclamation if operators fail to complete the reclamation.
Closed – Implemented
In June 2006 BLM transmitted an Instruction Memorandum (IM No. 2006-172) to all State Directors providing guidance to generate a Bond Review Report in LR2000. The IM states that the purpose of the Bond Review Report is to comply with GAO's recommendations addressing the BLM's hard rock mining bonding program. At the end of each FY (beginning in 2006), the state BLM Directors must review the Bond Review Report and certify that all reclamation cost estimates for Notices and Plans within their States requiring review were examined and are adequate. A corrective action plan must be developed by the State Directors to address any identified deficiencies in the cost estimates within 60 days of generating the Bond Review Report. By December 1, State Directors must send copies of the Bond Review Reports, Certifications, and Action Plans to the BLM Director. The Bond Review Report in LR2000 and the transmittal of this IM addresses the BLM's Action Plan for ensuring that operators have required financial assurances and that the financial assurances are based on sound reclamation plans and cost estimates.
Department of the Interior To ensure that hardrock operations on BLM land have adequate financial assurances, the Secretary of the Interior should direct the Director of BLM to modify LR2000 to ensure that it tracks critical information on hardrock operations and associated financial assurances so that BLM headquarters and state offices can effectively manage financial assurances nationwide to ensure regulatory requirements are met.
Closed – Implemented
In June 2006 BLM transmitted an Instruction Memorandum (IM No. 2006-172) to all State Directors providing guidance to generate a Bond Review Report in LR2000. The IM states that the purpose of the Bond Review Report is to comply with GAO's recommendations addressing the BLM's hard rock mining bonding program. Data standards for Plans and Notices have been modified and a new action code created in LR2000 to generate the Bond Review Report. All hard rock operation case types must be updated with the new data standards by September 30, 2006. In addition, new action codes for reclamation cost determined, bond amount obligated, and operations authorized, as well as the associated sequence of data input will allow BLM to generate the Bond Review Report and manage the financial assurances associated with these operations.

Full Report