June 21, 2000
Testimony to the Subcommittee on Fisheries, Wildlife, and Water
By David Gerard
PERC Research Associate
PERC is the nation's oldest and largest nonprofit institute dedicated to original research that advocates using market principles to address environmental problems. More than 90 percent of our funding comes from foundations and individual donors. As part of its mission, PERC produces independent scholarly research on environmental policies. Thus, PERC's comments on the proposed Clean Water Act revisions do not represent the views of any affected parties or special interest groups, but instead represent the interests of American citizens.
PERC has ongoing research on mining and hazardous waste issues, including a current study of abandoned mines. Our abandoned mines project is in the process of examining the status of abandoned mine reclamation efforts, identifying issues confounding reclamation (including liability issues), and exploring alternative approaches for encouraging and funding site reclamation.
We would like to express our thanks to the members of the Committee for allowing us to testify on this proposed legislation.
Summary of Testimony on S.1787
The intent of S.1787 is to encourage parties that are not responsible for environmental conditions to take steps to improve water quality at abandoned mine sites. The question is: Are any Good Samaritans likely to emerge? If not, why not? And, if so, will their resources be put to their best use?
The proposed legislation responds to the provisions of the Clean Water Act (CWA) that discourage parties from remediating waste discharges from abandoned mine sites. The disincentive stems from the fact that, pursuant to the CWA, any party that in any way affects a discharge becomes fully responsible in perpetuity to meet the CWA water quality standard. This full compliance holds even if the remediating party had no role in creating the conditions that originally caused the adverse water quality impacts. Thus, it is not possible for a remediating party simply to improve water quality; the party must meet the water quality standard specified by the CWA, whatever the cost.
As the title of the legislation suggests, meeting the CWA standard at many abandoned sites is such a daunting responsibility, even the proverbial Good Samaritan would need an additional incentive before undertaking site remediation. The legislation provides this incentive by amending the CWA to allow a remediating party to improve water quality without being held responsible to comply fully with the CWA water quality standard. Thus, the intent of the proposed legislation is to promote voluntary cleanup.
My analysis of the proposed legislation draws two principal conclusions:
- S.1787 will have positive environmental impacts on sites addressed through state abandoned mine programs.
- S.1787 does not encourage Good Samaritans to undertake cleanup efforts, and will therefore have little impact on the number of sites addressed.
For sites slated for reclamation or already in the remediation process, the proposed legislation will broaden the scope of activities allowable. The resulting environmental quality at reclaimed sites will be higher once the CWA liability is relaxed.
At the same time, however, the disincentives built into S.1787 make it unlikely that new remediation parties will emerge. For instance, the proposed legislation forces the Good Samaritan to expend resources on an owner/operator search, which has proven to be a costly and uncertain process in other contexts. In addition, the proposed legislation does not eliminate all relevant liability concerns. Specifically, potential liability under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) is a major industry concern, and might also be of concern to other potential remediating parties. These liability concerns alone make industry Good Samaritan efforts unlikely. Almost without exception, the proposed legislation discourages potential remediation parties from pursuing cleanup efforts.
Abandoned Mines Background
There are thousands of abandoned noncoal mine sites in the U.S. that pose environmental and/or safety hazards. Some of these abandoned sites are the source of environmental contamination, including heavy metal and acid discharges that degrade surface or groundwater quality.
Arizona has surveyed 5,890 mine openings, shafts, adits, prospects, and quarried out areas. Of these sites, 118 (2 percent) have possible environmental hazards, and 668 (11 percent) pose public safety hazards (Arizona, 1999). In Montana the state has evaluated more than 3,800 sites based on their environmental and safety characteristics, and has designated 380 priority cleanup sites from this list.
As the table indicates, these sites are located both on private and on public lands. The table, however, belies the complex ownership patterns of historic mining districts. As a result of various land policies, it was common for the same mine site and processing facilities to be located both on public land (e.g., mining claims) and private land. Even for sites on private lands, however, often there is either no identifiable owner or the owner does not have the financial resources to reclaim the site. In cases where there is no identifiable and solvent owner, the site is considered to be abandoned.
Table: Ownership of Inactive Mines and Priority Cleanup Sites in Montana
|Priority Sites||All Inactive Sites|
Source: Montana Department of Environmental Quality, August 1998
The legacy of abandoned mines is attributed to both a lack of industry and public concern about potential hazards and an absence of environmental regulation to address these hazards. Of course, public attitudes and regulatory systems have changed radically over the past three decades, and mining is now one of the country's most heavily regulated industries. Mining activities are subject to federal statutes and federal land agency regulations, as well as state statutes and regulations. These regulations also affect activities at inactive and abandoned mines. Though intended to promote sound environmental management, these regulations can discourage remediation of hazardous waste sites, including abandoned mined lands.
The Clean Water Act and Abandoned Mine Land Remediation
The U.S. Environmental Protection Agency (EPA) maintains that discharges from abandoned mine sites are subject to the National Pollutant Discharge Elimination System (NPDES) under Section 402 of the Clean Water Act. Thus, whether the mine is active or inactive, the mine owner must obtain an NPDES permit, and the owner is responsible for meeting water quality standards as specified in the permit.
Many abandoned sites produce discharges that contribute to degradation of water quality. In such cases a party that begins remediation activity that alters the current discharge becomes permanently responsible for meeting the permit standard. The assignment of liability occurs even though the remediating party did not create the conditions causing or contributing to the water quality degradation and had no previous responsibility or liability for the condition of the site. This potential liability discourages parties that might otherwise take steps to improve water quality at abandoned mines.
Enter the Good Samaritan?
The proposed legislation (S.1787) addresses these disincentives. The legislation allows the potential remediating party - the Good Samaritan - to obtain a permit that allows it to take steps to improve water quality without being required to comply fully with the water quality standard.
The liability shield from liability for parties that had no role in creating the water quality degradation would allow remediating parties - particularly state abandoned mine land programs - to expand the types of allowable activities (i.e., activities that affect the discharge covered by NPDES permit). What is less clear is whether the liability shield would be sufficient to encourage new parties to pursue or to expand remediation activities. To address this issue, consider the following possible Good Samaritan candidates:
- federal agencies (Bureau of Land Management, Forest Service, National Park Service)
- local governments
- non-profit groups
- mining companies
Federal Agencies: The legislation prohibits federal agencies from acting as Good Samaritans on lands owned by the federal government. In fact, if federal agencies are always considered responsible parties on federal lands, it could be the case that S.1787 does not apply to any abandoned mine sites on federal lands (see below).
Local Governments and Private Groups: The legislation builds in a number of hurdles for private groups. Specifically, it requires Good Samaritans to identify the identity and financial solvency of the property owners, even though these expenditures do nothing to improve the water quality at the site. Nonprofit groups may also have concerns about being exposed to liability under CERCLA.
Mining Companies: Mining companies face these same hurdles, and are particularly concerned about potential CERCLA liability. In addition, the proposed legislation removes other incentives by prohibiting remining and mineral exploration, and also by prohibiting remediating parties from profiting from a Good Samaritan cleanup.
Thus, there are clear obstacles other than CWA liability that could prevent Good Samaritan cleanups.
Disincentives for Potential Remediating Parties
This brief survey indicates that new parties might not emerge because (1) all liability is not removed, and (2) additional hurdles and disincentives are added. I discuss these problems in greater detail below.
1. The Search for Owner/Operators and the Solvency Test - Wasting Time and Resources while Water Quality Deteriorates
As part of the permit requirements, the potential remediating party is required to take steps to identify an owner or operator (e.g., current or past owners, mine operators, lessees). An identifiable owner is defined as a party that (1) is responsible for creating or contributing to the current waste discharge; and (2) "is financially capable of compliance with requirements of sections 301, 302, and 402" of the Clean Water Act.
The EPA (the Administrator) will approve the permit application only if "no identifiable owner or operator exists." Thus, EPA can reject a permit if the Good Samaritan has not taken "reasonable efforts" to identify an owner/operator; or if the Administrator determines that the party identified, in fact, meets the rather loosely defined solvency requirements.
It is not clear why the potential remediating party should be required to expend resources on an owner/operator search. Even so, the proposed legislation does nothing to limit owner liability. If an owner is identified, it will still be responsible for bringing water quality into compliance with CWA permit requirements.
Moreover, the search process is likely to be complicated. The Good Samaritan is required to not only to search for an operator, but also to determine whether the operator is solvent. As we have seen, land ownership in historic mining districts is most often a mixture of public and private land, and therefore there are often several parties with partial ownership or some history of operations at a given site. The search requirement does nothing to improve environmental quality. Instead it creates uncertainty as to the issuance of a permit and diverts resources that could otherwise be allocated toward cleanup.
Why should legislation prohibit a Good Samaritan effort to mitigate the effects of ongoing waste discharges? If private funds are used, that is the choice of the private party; if public funds are used, the state or federal agency would be able to put a lien on the property or to sue to recover the remediation costs. There is no reason to believe that environmental quality would suffer if the search provision was eliminated from the proposed legislation.
The Forest Service's abandoned mine cleanup efforts are instructive on these issues. According to a 1996 Inspector General (IG) audit, the Forest Service had identified 335 contaminated sites, but the agency had remediated only 16 of these sites. The IG makes it clear that the Forest Service's emphasis on determining the existence of a potentially-responsible party (PRP) limited the number of site cleanups:
Because of emphasis on sites where [the Forest Service] is the only responsible party, [the Forest Service] has, so far, spent about $12.7 million on actual cleanup of mines and only 16 sites have been completely cleanup up (USDA, 1996, 9).
The passage suggests that there will be few cases where there are no parties that satisfy some element of the "ownership" criteria as spelled out in the proposed legislation.
Even where the Forest Service found a PRP, however, it found it difficult to collect funds. The IG found that:
[The Forest Service] has pursued PRP's (sic) at 29 sites with estimated cleanup cost of $48.5 million. Bills of collection totaling $4.3 million have been issued at only 6 sites and only $2.2 million collected. Of the $2.2 million collected, $1.56 million came from one PRP (USDA, 1996, 16).
Although the emphasis on sites with no identifiable PRPs delayed cleanup efforts, it did little to actually collect funds from PRPs. Presumably no cleanup had occurred at these sites. At the same time, because the Forest Service identified owners, these 29 sites would have been off limits to any Good Samaritan efforts (the EPA will not approve a permit if an identifiable owner exists). As a result, the offensive discharge will continue.
The benefit of finding an owner/operator comes at a very high price: The search for an owner/operator will be time consuming and costly, which will delay cleanup and limit resources available for site remediation. If an owner/operator is located, the EPA will deny the permit application, further delaying cleanup.
State Agencies: State agencies that remediate sites, however, generally do not object to these search provisions because funding sources for these cleanups are often tied to completing a search. For instance, the Montana State Department of Environmental Quality (DEQ) is a primary agency involved in abandoned mine cleanup. The DEQ uses surplus funding from the Surface Mining Control and Reclamation Act (SMCRA) to finance the cleanup of hardrock sites. In order to tap this funding, DEQ must complete a PRP search. PRP searches are also routine under federal and state Superfund programs. Thus, S.1787 does not create an additional hurdle for state abandoned mine programs because that hurdle already exists.
The owner/operator search is a potentially costly hurdle. If the provision is retained (and there is no reason to believe that the provision will have any beneficial environmental impacts) the language should allow for fast, low-cost searches.
2. Are Federal Lands Excluded?
The proposed legislation excludes federal agencies from being a remediating party on federal lands. The text of the IG audit of the Forest Service suggests that all federal lands are excluded from Good Samaritan remediation:
Because of emphasis on sites where [the Forest Service] is the only responsible party... (USDA, 1996, 9, emphasis mine).
This phrase suggests that if no owner/operator exists, then the administrative agency is considered an owner of abandoned sites on federal lands. If this is the case, there is no possibility of a Good Samaritan cleanup because there is always a solvent owner - the federal government. If this is the case, then the opportunities for Good Samaritan cleanups will be limited. In Montana, more than 20 percent of priority sites are on federal land, and there are some estimates that as much as 70 percent of abandoned mine lands are located on federal land. This would severely limit scope of proposed legislation.
Therefore, the legislation should explicitly provide for Good Samaritan cleanups on federal land.
3. CERCLA Liability
A major industry concern is that a permit obtained pursuant to the proposed legislation will move a remediating party out of the frying pan of Clean Water Act liability and into the fire of CERCLA liability. If there is any uncertainty about CERCLA liability, the number of industry Good Samaritan cleanups will be roughly zero. Again, this does not present a disincentive to state abandoned mine programs, as the states are immune from CERCLA liability.
4. Remining and Mineral Exploration Prohibited
In addition to exposing industry Good Samaritans to CERCLA liability, the proposed legislation does its best to discourage involvement by the mining industry. This is unfortunate, as industry is a primary source of both expertise and potential reclamation funding.
Remining: There is a reasonable rationale for not providing for remining. The allowance of remining would complicate the basic scope of the legislation by extending it beyond the purview of the CWA.
Reprocessing: The proposed legislation requires a remediating party that generates revenues by reprocessing materials to put those funds back into the remediation effort. The proposed legislation stipulates that the processing and removal of minerals can only be used to "further improve the quality of waters identified in paragraph (3)(B)(iii)" (emphasis added). Thus, a company cannot use proceeds to finance a remediation effort, but is required by law to take a loss on the venture.
Exploration: Mineral exploration is expressly prohibited.
The disincentive effects of these provisions require no elaboration. Given the political opposition of environmental groups, bringing remining or mineral exploration to the table complicates passage of this legislation. However, it is not clear why the legislation should so thoroughly reject parties that will improve water quality at a given site. Moreover, success of remining at sites such as the Druid and Sunnyside Mines in Colorado makes remining a possibility that warrants further review.
5. Citizen Suits
The proposed legislation allows for citizen suits. The entire rationale for Good Samaritan legislation is that the remediating party is not a polluter, and therefore should not be treated as such. The Western Governors Association has asserted that citizen suits are a "major disincentive" for Good Samaritan efforts (WGA, 1998).
Under the Clean Water Act the EPA generally delegates authority to the states (1) to issue discharge permits to industries and municipalities and (2) to enforce the permit requirements. EPA has delegated this responsibility to 43 states. In the proposed legislation, however, the EPA will not delegate authority to state agencies. The rationale for this is that it is inappropriate for a state to issue a permit to itself, given the uncertainty surrounding enforcement and the general absence of checks. (Unfortunately, this provision reflects the underlying theme of my analysis, which is that it is unlikely that remediation parties other than the states are likely to emerge.
Because the proposed legislation does not prohibit citizen suits, it is difficult to see why this argument applies. If there is some question about the state's compliance with the permit provisions in a cleanup effort, citizen suits can be used as an enforcement mechanism.
But even without the citizen suit provision, the explicit prohibition on delegation to the states is questionable. States are closer to the actual situation, and therefore have a better chance to make appropriate decisions than the national government. The purpose of the proposed legislation is to give remediating parties greater discretion over discharge, without assuming liability under the CWA. Thus, the legislation is intended to encourage actions that improve water quality. It is hard to imagine how a federal regulatory agency would have greater incentive to improve environmental quality within a state than a state agency. It is much easier for citizens to hold local government officials accountable and to monitor local environmental regulations.
It is difficult to label S.1787 as "Good Samaritan" legislation. Almost without exception, the provisions discourage all potential remediating parties other than state abandoned mine programs from undertaking cleanup efforts.
The exception, of course, is a very important one. The proposed legislation would provide state abandoned mine programs, such as the one operated by the Montana DEQ, with broader latitude in their remediation activities. This should have positive impacts on water quality at sites remediated by state agencies, though the cost of the permit process is probably more cumbersome than it needs to be.
The intent of the proposed legislation is to encourage parties that are not responsible for environmental conditions to take steps to improve water quality at abandoned mine sites. The question is: Are any other Good Samaritans likely to emerge? And, if so, will their resources be put to their best use?
S.1787 has been marketed as legislation that provides positive incentives for parties to address water quality problems at abandoned mine sites. This is important conceptually because a fundamental precept of sound environmental policy is that incentives matter. The problem, however, is the only positive incentive contained in the legislation will primarily affect state abandoned mine land programs that are already undertaking cleanup efforts. For other parties the incentive structure is not as promising. Most significantly, the legislation does not clearly eliminate all potential sources of retroactive liability, and it builds in disincentives for other parties that might initiate cleanup efforts. To summarize:
- There is uncertainty concerning CERCLA liability
- The permitting process requires the Good Samaritan to conduct a search for a solvent owner. The search is costly and creates uncertainty, though there are no obvious environmental benefits from the provision.
- Mining firms, the source of potential funding and expertise, have no reason to act as Good Samaritans. In addition to potential CERCLA liability, remining and mineral exploration are expressly prohibited; processing minerals allowed only if remediating party operates at a loss.
- Citizen suits create disincentive to all potential remediating parties.
- The scope of the legislation will be narrow if federal lands are excluded.
S.1787 is a positive step that will improve environmental quality at some abandoned mine sites, but it will fail to encourage new Good Samaritans to emerge. Therefore, I suggest the proposed legislation is either amended to address the many disincentives to potential remediating parties, or renamed "The Clean Water Act Liability Reduction for State Abandoned Mine Land Programs."
Arizona State Mine Inspector (1999) "Abandoned and Inactive Mine Survey," Pamphlet.
Montana Department of Environmental Quality(1998) "Montana Inactive Mine Inventory and Mine Reclamation Priorities."
United States Department of Agriculture, Office of the Inspector General (1996) Forest Service Management of Hazardous Material at Active and Abandoned Mines. Audit Report No. 08601-1-At. Atlanta: USDA.
Western Governors' Association (19989) "Background Summary on the WGA Proposed Amendment to the Clean Water Act Regarding Good Samaritan Cleanups of Abandoned and Inactive Mines."