Phosphate Mining: Oversight Has Strengthened, but Financial Assurances and Coordination Still Need Improvement

GAO-12-505 Published: May 04, 2012. Publicly Released: Jun 04, 2012.
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What GAO Found

Since 1996, federal agencies have taken several actions to strengthen their oversight of phosphate mining on federal land. For example, BLM now conducts more detailed environmental analysis when evaluating new mine plans; requires phosphate mine operators to provide more comprehensive plans for reclaiming mine sites (restoring the land to a stable condition that can support other uses); and requires the mine operators to provide financial assurances that are based on the full estimated cost of reclaiming mines, in contrast to BLM’s previous practice of calculating financial assurances based simply on the acreage associated with mines. However, gaps remain in agency policies and coordination that could limit the agencies’ efforts to address contamination from phosphate-mining operations. For example, BLM has not documented its new full-cost financial assurance practice in agency policy and therefore has limited assurance that it will be implemented consistently. BLM also has not fully coordinated with the Forest Service when establishing mine lease conditions and setting financial assurance amounts. Limited coordination is of particular concern because 16 phosphate leases in Idaho are scheduled for review and possible readjustment in the next 5 years, and once a lease is readjusted, its provisions are in effect for 20 years.

Over the last 16 years, federal agencies and mine operators have primarily focused on assessing the extent of selenium contamination in Idaho and have conducted only limited remediation actions. The agencies have conducted or overseen high-level assessments of contamination at 16 of the 18 mines where federal agencies are overseeing mining operations or cleanup activities, and at several of these mines the agencies and mine operators are now conducting more detailed assessments, known as remedial investigations and feasibility studies. However, no final cleanup actions have been chosen at any of the sites, and according to officials, most sites will require years of additional investigative work before final cleanup actions are selected. Federal agencies reported that they have spent about $19 million since 2001 to oversee these assessments and undertake a limited number of remediation actions, roughly half of which has been reimbursed by the mine operators under cleanup settlement agreements. Mine operators told GAO that they too have spent millions of dollars in additional assessment and remediation work but did not provide documentary evidence to support these claims. Agency officials told GAO that they have not developed estimates for the remaining cleanup costs because final cleanup remedies have not yet been identified. However, their informal estimates suggest that remaining cleanup costs may total hundreds of millions of dollars for the contamination from mining in Idaho.

Federal agencies reported holding about $80 million in financial assurances for reclaiming phosphate mines in Idaho. Most of this amount—over $66 million—is associated with the two most recently approved phosphate mines. Agencies reported holding an additional $11.5 million in financial assurances to cover site assessment and limited cleanup activities under EPA’s Superfund program, but some of these are in the form of corporate guarantees, which the agencies have determined are riskier than other types of financial assurances. No financial assurances have been established to cover future cleanup costs because remaining cleanup actions have not yet been identified, according to agency officials.

Why GAO Did This Study

For over 100 years in the United States, phosphate has been mined on federal land primarily for use in fertilizer and herbicides. The Department of the Interior’s Bureau of Land Management (BLM) is responsible for leasing and overseeing such mines on federal land. In 1996, selenium contamination from phosphate mines was discovered in Idaho, threatening the health of livestock and wildlife. Mines in the area are now being assessed for cleanup under the Environmental Protection Agency’s (EPA) Superfund program. Agencies may require mine operators to post financial assurances, which are usually in the form of a bond, to ensure they meet their leasing and cleanup obligations. GAO was asked to determine the (1) extent to which federal oversight for phosphate operations has changed since 1996; (2) actions federal agencies and mine operators have taken to address contamination, amounts spent to date, and estimated remaining costs; and (3) types and amounts of financial assurances in place for phosphate-mining operations. GAO reviewed agency data and documents, and interviewed key agency and mine operator officials.

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Among other things, GAO recommends that BLM document its financial assurance practice in policy and consult with the Forest Service to better protect the federal government from cleanup costs. In commenting on a draft of this report, Interior, the Forest Service, and EPA generally agreed with GAO’s findings and recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Interior To ensure effective oversight of phosphate-mining operations and reclamation and cleanup, the Secretary of the Interior should direct the Director of BLM to document the practice of requiring financial assurances to cover the estimated full cost of reclamation in BLM's official agency policy.
Closed – Implemented
In response to this recommendation, BLM issued a policy memorandum to the BLM Idaho State Office in September 2013. This memorandum contained guidance that documented and reaffirmed its practices in an attachment entitled "Guidelines for Phosphate Mine Reclamation Cost Estimates".
Department of the Interior To ensure effective oversight of phosphate-mining operations and reclamation and cleanup, the Secretary of the Interior should direct the Director of BLM to work with the Chief of the Forest Service to develop a coordinated process for (1) proposing and evaluating lease terms and conditions for phosphate mines in southeastern Idaho, and (2) sharing information on the amount and adequacy of financial assurances to provide better coordination between federal agencies regarding phosphate mine oversight.
Closed – Implemented
In response to this recommendation, BLM worked with the Forest Service to revise the lease form for phosphate mines to incorporate new lease terms and conditions. In addition, BLM and the Forest Service worked to jointly develop a policy for establishing reclamation cost estimates for phosphate mines in Idaho.
Department of the Interior To ensure effective oversight of phosphate-mining operations and reclamation and cleanup, the Secretary of the Interior should direct the Director of BLM to analyze BLM's authorities for directing operators to enter into third-party contracting mechanisms. If BLM confirms that it has the authority, it should develop a policy document to ensure consistent implementation, including a requirement that BLM reach written agreement with operators regarding arrangements for third-party contracting. Should BLM determine that it does not have the authority to use such mechanisms-and should it wish to continue the practice-it should seek appropriate legislation for doing so.
Closed – Implemented
In response to this recommendation, BLM confirmed that it did have authority to direct operators to enter into third-party contracting mechanisms. It subsequently developed a policy, Instructional Memorandum (IM) ID-2014-038, to ensure these contracts were implemented consistently. This IM includes a requirement that BLM enter into a Memorandum of Understanding with the operator regarding the roles and responsibilities of each party when using a third-party contracting mechanism.
Environmental Protection Agency To ensure effective oversight of phosphate-mining operations and reclamation and cleanup, the Administrator of EPA should ensure that the agency complete its plan to assess whether corporate guarantees are an adequate financial mechanism, including giving due consideration to the experience of EPA Region 10 and BLM in using such assurances. If EPA determines that corporate guarantees are not an appropriate form of financial assurance, then their use should be prohibited in the financial assurance regulations that the agency expects to promulgate for the mining industry.
Closed – Not Implemented
In January 2017, EPA published proposed financial assurance regulations for the mining industry in the Federal Register and stated that it expected to finalize the regulations in December 2017. However, on February 21, 2018, EPA published a notice in the Federal Register announcing its decision to not promulgate final regulations. Because the agency has made a final decision not to issue regulations, we are closing this recommendation as not implemented.

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