Bellavie 2015 State regulation of large scale hardrock metal mining in the Western United States ENSC505

State regulation of large scale hardrock metal mining
in the Western United States
Andrew Bellavie

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TABLE OF CONTENTS
Page
 Acknowledgements………………………………………………………………………2
 List of figures and tables…………………………………………………………………3
 Introduction………………………………………………………………………………4
 Chapter 1: Scope and methodology……………………………………………………....6
 Chapter 2: Administrative and regulatory efficiency…………………………………….15
 Chapter 3: Performance and reclamation standards……………………………………..21
 Chapter 4: Bonding requirements……………………………………………………......31
 Chapter 5: Bond amount determination……………………………………………….....38
 Chapter 6: Bonding program effectiveness………………………………………………42
 Chapter 7: A ranking of the Western States……………………………………………...47
 Conclusion………………………………………………………………………….........56
 References………………………………………………………………………………..57

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Acknowledgements
I would like to extend special thanks to Dr. William Holden for supervising this project and
providing me guidance and encouragement. Thank-you Dr. Allan Ingelson for being the reader
for my final paper. Thanks to Dr. Tak Fung for assisting me with the cluster analysis. Finally,
thanks to the University of Calgary, the Department of Environmental Science.

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LIST OF FIGURES AND TABLES
Figure 1.1 Percentage public land in the Western United States pg. 6
Figure 1.2 Acid mine drainage in Rio Tinto, Spain pg. 10
Table 2.1 Administrative Efficiency Clusters pg. 16
Table 3.1 Performance and Reclamation Standards Clusters pg. 22
Figure 4.1 Real copper prices in the United States 1900 to 2009 pg. 31
Table 4.1 Bonding Requirements Clusters pg. 33
Table 5.1 Bond Amount Determination Clusters pg. 39
Table 6.1 Bonding Program Effectiveness Clusters pg. 43
Table 7.1 Ranking of the Western United States and PPI 2014 pg. 47
Figure 7.1 Mineral Information Layer for Oregon pg. 49

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INTRODUCTION
Mining is an important industry, both historically and economically, in the United States of
America (USA). It is estimated that non-fuel minerals contributed $16,800 billion GDP to the US
Economy in 2013 (Jewell and Kimball 2014). The mineral resources of the country serve as
feed-stocks and raw materials for a plethora of industries. Despite this economic and industrial
importance, mining has enormous potential for environmental destruction, and is an industry that
causes persistent and costly environmental impacts.
At a federal level, mining and prospecting on federal public lands is governed by the General
Mining Act of 1872. In 1976, the Federal Land Policy Management Act (FLPMA) led to many
changes in the original 1872 mining law. Federal regulations dealing with mining were updated
and published in 2001. The Bureau of Land Management (BLM) and the United States Forest
Service (USFS) are the divisions of the department of the interior and the department of
agriculture respectively. They manage the public lands and administer the FLPMA across the
country. While the 1872 Mining Act and the FLPMA are important, mining regulation is often
conducted by the states themselves, each with a variety of state laws and regulations. One
example of this is the National Pollutant Discharge Elimination System (NPDES). The NPDES
is a federal permitting program established in 1972 under the Federal Water Pollution Control
Act (Clean Water Act) to regulate point source discharges of pollution. NPDES is administered
at the state level by the Environmental Protection Agency (EPA) or by state’s EPA approved
programs.

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The 11 western, or public land states, will be analyzed in terms of their environmental regulation
of hardrock metal mining. Two questions will be answered: How do variations in environmental
regulation affect mining industry perceptions of the state? And, can environmental regulations
provide evidence of regulatory capture of state governments by the mining industry? Ultimately,
each state will be examined qualitatively, compared to the others, and a relative ranking of the
Western States will be generated and compared to the Fraser Institute Annual Survey of Mining
Companies 2014 ranking (Jackson and Green 2014).

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CHAPTER 1: SCOPE AND METHODOLOGY
Scope of the Study
As stated previously, this study is focusing on 11 public land states, located west of the 100th
Meridian in the United States of America (USA), on the North American Continent. The states in
alphabetical order are: Arizona (AZ), California (CA), Colorado (CO), Idaho (ID), Montana
(MT), Nevada (NV), New Mexico (NM), Oregon (OR), Utah (UT), Washington (WA), and
Wyoming (WY). These states are unique in that the US Federal Government owns anywhere
from 80% (NV) to 26% (WA) of the lands per state; hence the term, “public land states” (Figure
1.1). This is a relatively large amount of land compared to an average of 5% federal land
ownership in the other 39 states. Since Federal lands tend to have lower population density than
private lands, mining companies are more inclined to look for exploitable minerals on them
(SMGB Information Report 2007).
Figure 1.1 Percentage public land in the Western United States.
Figure 6.2: Percentage of State Land Area that is Federal Land
0
10
20
30
40
50
60
70
80
90
N
evada
U
tah
Idaho
O
regon
W
yom
ing
Alaska
C
alifornia
Arizona
C
olorado
N
ew
M
exico
W
ashington
M
ontana
Average
ofthe
otherStates
Source: National Research Council (1999)
PercentageosStateLandAreathatisFederalLand

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For each state, regulations that were analyzed specifically applied to hardrock metal mining.
Hardrock mining deals with the excavation of hard minerals or ores containing metals. Often,
metals are located as deposits in igneous or metamorphic formations, hence hardrock. Mineral
resources considered to be metallic in nature include iron, aluminum, manganese, titanium,
magnesium, copper, gold, silver, lead, zinc, tin, tungsten, chromium, platinum, mercury,
molybdenum, and uranium (Skinner 1976). Due to its use in nuclear reactors and its radioactive
nature, uranium is often governed by very specific regulations and administrative bodies that
deal solely with uranium mining. Other non-uranium metal mines are usually regulated under
more general mining policies. For this reason, uranium mining regulation was not considered to
be in the scope of this study. Additionally, some mineral resources are considered non-metallic.
Examples of non-metallic mineral resources include cement, sand, gravel, gypsum, asbestos,
coal, petroleum, oil shale, phosphate, nitrate, sulfur, surface water, and groundwater (Skinner
1976). Non-metallic resources are often mined from sedimentary rock using different techniques
than hardrock mining, and thus lead to different impacts and regulations. With the exception of
water, state regulation of these non-metallic resources was not considered to be in the scope of
this study. Metal mining is a water intensive industry, thus many states have surface and
groundwater policies that deal with all stages of mine life.
Furthermore, many states differentiate between large scale mining operations and hobby or
placer mining. Additionally, underground mining and surface mining are also regulated under
different rules in many cases. For the purposes of this study, only the regulations governing large
scale, surface mining operations were considered due to time restrictions.

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Environmental Impacts of Metal Mining
Mining practices are an ongoing controversy amongst the public, environmental non-government
organizations (NGO), industry lobbyists, and government policy makers around the globe. In
fact, mineral exploration, extraction, and processing are widely regarded as one of the most
environmentally and socially disruptive practices in the world. Environmental impacts can occur
during exploration, development, operations and even after a mine has closed down (Bebbington
et al. 2008). Permanent changes to landscapes, water systems, economies, and communities are
associated with modern large-scale mines (D’Epsosito 2005). Despite this, mining has been and
continues to be practiced as a source of raw materials and for economic development of many
countries and communities throughout history, including the USA (Coulson 2012).
The most apparent impact of mining is certainly how it alters the physical appearance of the
land. The visual, or aesthetic, impacts of mining are possibly the least serious, but still “mining
landscapes seem a nightmarish expression of technology run amok” (Francaviglia 2004). Recent
studies of mining affected landscapes, showed that whole landscapes are cast in a negative light
when active or non-reclaimed mines are present ( Svobodova et al. 2012).
In addition to altering the physical landscape, mining infrastructure development and operations
may have negative impacts on local flora and fauna. Impacts to biodiversity at mining sites is
almost always observed as a reduction in the number of species (Mining, Minerals and
Sustainable Development 2002). Habitat fragmentation resulting to access road construction into
remote wilderness is another commonly observed impact. Whitmore (2006) estimated that 40
percent of the world’s undeveloped forests are threatened by mine development. Generally,
aquatic species bear the brunt of the negative impacts. Clearing vegetation, soil relocation, water

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extraction, and mine waste disposal to land or water have enormous potential for habitat
disruption through soil erosion, sediment deposition, and watercourse alteration (Mining,
Minerals, and Sustainable Development 2002).
Undoubtedly, the most serious environmental impact associated with hardrock mining is the
oxidation of sulfide minerals, or acid mine drainage (AMD). A naturally occurring phenomena
sometimes called “acid rock drainage” when not associated with mining activity, AMD is a slow
spontaneous chemical reaction between atmospheric oxygen and iron-sulfide minerals (pyrite,
marcasite, and pyrrhotite for example) and other products. In the presence of chemotrophic
bacteria, Thiobaccillus ferrooxidans, the rate of reaction is substantially increased (Downing
2014). The rate of reaction is also increased when anthropogenic activities such as mining
expose these minerals to the atmosphere. Overall, the reaction generates a highly corrosive
product: sulfuric acid in water (pH 2.75 at 1mmol/L). This reaction is ongoing through geologic
time, and will continue in perpetuity. Water bodies affected by AMD are easily identified by
their red-orange color, indicating rapid oxidation of pyrites (Figure 1.2). The extremely acidic
conditions induced by AMD are highly impactful on aquatic ecosystems; many fish populations
cannot reproduce below pH 5, and others even die out at pH 6 (Ripley et al. 1996). Furthermore,
the highly corrosive nature of the acid leads to dissolution of the parent and surrounding
materials, mobilizing heavy metals into the water as ions. Heavy metals such as arsenic,
cadmium, chromium, copper, lead, mercury, and zinc have been observed to have detrimental
effects on biological life, especially when biomagnification is considered (Clarkson 1985,
Neuberger et al. 1990). To exasperate the problem further, AMD is difficult to predict, difficult
to prevent, and impossible to reverse once started. Since the 1970s, the EPA has required

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standardized analytical procedures (acid-base accounting, kinetic tests) for predicting acid
generating and neutralizing potential of rock or soil samples (Jennings and Jacobs 2014). These
methods were used in many hardrock mine EIS and since then have been shown to be inaccurate
in their long term predictive capabilities (Kuipers et al. 2006). One reason for this is that there is
often mineral variation between geologic domains (heterogeneity), and sampling may not be
thorough enough to accurately characterize the area (Jennings and Jacobs 2014). Often, by the
time it is realized that the ores are generating acid, it is already too late and the process will
continue in perpetuity.
Figure 1.2 Acid mine drainage in Rio Tinto, Spain. (Rio Tinto River Carol Stoker NASA)

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In order to mitigate the damages of acid mine drainage, the mining industry has used subaqueous
tailings disposal since the 1980s (Ripley et al. 1996). Fine particles of processed mine waste,
“tailings”, are stored underwater in an anaerobic environment as a slurry. This is done to prevent
contact between sulfide ores and atmospheric oxygen, which causes acid generation. Modern
mines generate millions of tons of tailings by exploiting low grade ore bodies, and thus tailings
storage facilities are massive dams holding the ever growing tailings pond. Tailings storage
facilities themselves pose a risk to the environment. If the dam ever failed, millions (if not
billions) of liters of water and mine tailings could be released, leading to pollution of the
surrounding environment. With such high states, tailings storage facilities must be properly
designed and constructed, as well as monitored and maintained in perpetuity, in order to be an
effective solution to mine waste management (Mining, Minerals, and Sustainable Development
2002). Tragically, this has not been the case. The most common environmental accidents are
“breaks and spills from tailings dams and the discharge of tailings into rivers and waterways” as
reported by the mining industry (Burke 2006).
Cyanide leaching is a recent development in mining technology. It has allowed profitable
exploitation of lower grade ore deposits by mining companies around the globe. In gold and
silver mining, there are two methods of using sodium cyanide to extract metals from low grade
ores; heap leaching and vat leaching. Both methods ultimately achieve the same result when the
sodium cyanide chemically bonds with gold and silver atoms, drawing them out of the crushed
ore and into a solution so that the metal can be concentrated and retrieved. For other metal
mines, cyanide is used during milling and concentration processes. The use of cyanide, however,
is controversial because it is an extremely toxic chemical. To put it in perspective, consider that
for a solution of two percent cyanide ingesting only a single tablespoon will kill an adult human

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(Moran 1998). Fish, birds, and other mammals are all susceptible to poisoning from cyanide,
with fish being the most vulnerable (Moran 1998). Environmental contamination from
deliberate and accidental cyanide discharged into lakes and streams has resulted in fish kills.
Additionally, there is great uncertainty in the fate of free cyanide chemical derivatives in the
environment (Moran 1998). Some of the cyanide-related compounds generated by mine waste
are often persistent in the environment and toxic to aquatic organisms (Moran 1998).
Hardrock mining is a water intensive industry, and has potential to impact the availability of
water resources (Holden and Jacobson 2012). In addition to storing tailings, mines use water for
dust suppression, milling, processing, metal recovery, and reclamation. Flooding of open pits
and mine shafts below the water table requires constant pumping (dewatering) and creates a cone
of depression in the surrounding aquifer. This effect is compounded if there are many open pits
or underground tunnels in the same area and can significantly lower the regional water table,
reducing stream flows and groundwater availability. Mining’s impact on hydrology is important
to consider because water is a resource required for all eukaryotic organisms on earth to survive.
This includes people from all economic sectors and social classes.
Just as hardrock mining may impact the environment, there is enormous potential for
repercussions to the social environment. Studies of communities near to a mine being
constructed indicate that prostitution, alcoholism, increased domestic violence, organized crime,
cultural disruption, and sexually transmitted diseases may be related to mine development
(Anderson 1998). In addition, mining corporations around the world have used “security forces”
to protect their operations from criminals or armed insurgents, especially in regions plagued by
political turmoil (Holden and Jacobson 2012). There are disturbing reports from many of these

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regions, detailing how peaceful anti-mining activists have been harassed, and killed by mine
security forces (Moody 2007, Holden and Jacobson 2012). Furthermore, metal mining may be an
avenue for political corruption and white collar crime. As one of the most regulated industries in
the world, the almost constant industry-government interactions during exploration,
development, operation, environmental impact assessments, and closure greatly increase the risk
of regulatory capture, bribery, and fraud (Laffont and Tirole 1991, McEwan 2011).
Analysis Methodology
The following method was used in the determination of the strictness of state mining regulations
and subsequent ranking. For each state the relevant statutes and regulations were surveyed. All of
these documents are readily available online. Any highly significant aspects of mining
regulations were noted. This included, but was not limited to, administrative powers,
performance standards, reclamation standards, bonding and financial surety, and relationships
between state and federal agencies. After compiling the information, it was input into a matrix
spreadsheet via a series of numerical arguments. The matrix was divided into sub matrices, by
grouping arguments together into logical categories. Arguments are essentially a numerical
representation of qualitative data. For example, the category “Bond Amount” contains the five
arguments “surface bonding”, “geochemical”, ”hydrologic”, ”chemical” and “worst-case
scenario”. States that have regulations requiring bonding for hydrologic disturbances received a
“1” under this heading; states that did not require bonding for hydrologic disturbances were
assigned a “0”. The grouping resulted in the creation of five categories (sub matrices). To reveal
similarities and differences between states, each category was subjected to a complete-linkage
cluster analysis using SPSS (version 22) software. Thus, clusters of homogeneous states were

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formed from the matrix input. For each category, the clusters were given a score ranging from
“one” to “five”, with five being the strictest in terms of that category, and one being the least
strict. In other words, clusters of states that had permissive mining regulations scored a “one”,
and cluster scores increased to “five” as the regulations imposed more requirements on the
mining industry. It must be noted that the numerical value is arbitrary; “one” does not indicate
that the cluster has poor governance of the metal mining industry, just like a “five” does not
indicate superiority of that cluster. The scores were totaled across all five categories for each
state giving a total score. When the states are ranked according to the total score, the state with
the highest total score is the one with the strictest (least permissive) regulation of hardrock metal
mining.
To verify the accuracy of this method, the ranking of states was compared to the Fraser Institute
2014 Annual Survey of Mining Companies “Policy Perception Index”. This survey is an
assessment of the mining industry’s opinions on the attractiveness of mining policies.

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CHAPTER 2: ADMINISTRATIVE AND REGULATORY EFFICIENCY
Criteria for Cluster Analysis
In order for any policy to be effective in regulating an industry or protecting the environment,
there must be supporting administrative structure. Since policy sets the rules and guidelines for
governing, weaknesses in administration can lead to minor misunderstandings but also to serious
environmental impacts. After all, regulatory programs could be stringent in theory, but without a
system conducive to action, they could be ineffective in achieving environmental policy goals.
For this purpose efficiency was defined as the extent to which time or resources are used to
achieve the desired result.
To assess the efficiency of each state in terms of their hardrock metal mining regulations, five
variables were considered. The number of agencies, if the state employs a State Environmental
Protection Agency, if the state has a Memorandum of Understanding (MOU) with the BLM or
the FS, and the percentage of federal land in the state, were all quantified and five clusters were
created (TABLE 2.1). Scores were assigned to each cluster based on the assessment of the state
regulations.

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Table 2.1 Clusters And Scores For Administrative Efficiency.
Discussion
Number of Agencies
It was found that western states generally had two or more agencies administering regulatory
programs dealing with hardrock metal mining, with most having three agencies. Notable
exceptions included Montana and California.
Montana regulates mining through a single state entity. The Montana Department of
Environmental Quality (DEQ), Environmental Management Bureau is responsible for

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administering the Montana Metal Mine Reclamation Act (MMRA) and operating permits. This is
a very effective platform for administration, as the all mine operating and reclamation plans, are
reviewed by the same team of officials under one act. This serves to essentially eliminate
conflicting regulations, and presents a system with clear expectations to both industry and
government.
The exception in this category was the state of California. Mining activities in the Golden State
are governed by a veritable labyrinth of state laws. The regulation of surface mining on any lands
of the state is under the Surface Mining and Reclamation Act (SMARA). Enforcement of the act
is relegated to a lead agency. The lead agency could be one of 115 jurisdictions comprising 61
cities and 54 counties. These lead agencies, as well as the Department of Conservation Office of
Mine Reclamation answer to the State Mining and Geology Board (SMGB). Under SMARA,
each county can write its own ordinances that exceed the state reclamation standards. Further
regulation of surface mining comes from the California Environmental Quality Act (CEQA)
administered by the lead agency, the Porter-Cologne Water Quality Control Act (PCWQCA)
administered by one of six Regional Water Quality Control Boards (RWQCB), the Fish and
Game Code Section 5650, and California Endangered Species Act. For California to effectively
regulate hardrock metal mining, there must be co-ordination between the lead agencies, the
SMGB, the RWQCB, and BLM or USFS. Furthermore, individuals in these agencies must be
aware of state and local regulations, have an understanding of the regulations, and recognize
potential interactions of the various ordinances. A 2012 Lead Agency Survey by the SMGB
found that roughly one quarter of responding cities were not familiar with statutory and
regulatory aspects of SMARA, about half of responding cities had dedicated expertise and

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resources to implement SMARA, one quarter of cities had not processed any mining permit
applications in the last 5 years, and one third of the counties and one fifth of the cities SMARA
programs were adversely affected by staff turnover and reductions. This survey was concerned
SMARA alone, however, it still reveals potential issues with administrative efficiency created by
the complex regulatory structure in California.
SEPA
Three of the Western States have state regulations that are similar to the National Environmental
Policy Act (NEPA). These State Environmental Policy Acts (SEPA), or little-NEPAs, as they are
sometimes called, are a reflection of the federal procedural law (Marchman 2012). SEPA
requires state actions to be analyzed for impacts to the environment, often in the form of an
Environmental Assessment (EA) and resulting Environmental Impact Statement (EIS).
California, Montana, and Washington are the states that have SEPAs. A very brief discussion of
the SEPAs follows. In California, the policy of the state is to “take all action necessary to
protect…the environmental quality of the state”, to “preserve for future generations
representations of all plant and animal communities”, and further to “require governmental
agencies at all levels to develop standards and procedures necessary to protect environmental
quality” (Cal. Pub. Res. Code §§ 21000 – 21177). The Montana Environmental Policy Act
(MEPA) is a review of state actions to ensure “(a) environmental attributes are fully considered
by the legislature in enacting laws to fulfill constitutional obligations; and (b) the public is
informed of the anticipated impacts in Montana of potential state actions” (MCA §§ 75-1-101 to
-324). In Washington, the State Environmental Policy is to “(1) To declare a state policy which
will encourage productive and enjoyable harmony between humankind and the environment; (2)

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to promote efforts which will prevent or eliminate damage to the environment and biosphere; (3)
and [to] stimulate the health and welfare of human beings…” (WRCA §§ 43.21C.010 to .914).
EA and EIS are required for proposed large scale hardrock metal mining projects in CA, MT,
and WA.
In terms of administrative efficiency of large scale hardrock metal mining, SEPA is a positive
aspect of these states. It provides the state a tool to assess proposed and current mining projects
in terms of their environmental impacts. While not increasing the speed of administrative
processes per-se, SEPA explicitly sets out a methodology for assessing the environmental
impacts of mining projects, and thus enables efficient governing. With the knowledge gained by
an EIS, state governments in CA, MT, and WA, can make informed decisions about approval or
disapproval of a new mine or magnitude of permitting requirements. This process also enables
input from people outside the sphere of government or industry to review and comment on EIS
and in some cases attend meetings with the relevant agencies and mining companies.
Memorandums of Understanding
A Memorandum of Understanding (MoU) is an agreement between two or more parties, which
indicates the parties will cooperate, coordinate, and share information, such that a shared
objective can be achieved. Given that hardrock metal mining often takes place on Federal lands
in the west, many states have entered into MoUs with the BLM and the USFS. CA, ID, MT, NV,
OR, UT, and WA all have MoU on surface mining on federal lands with the either the BLM or

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the Forest service. [Disclaimer: MoU documents are often not readily available to the public,
leading to increased potential for missing or incorrect information.]
The co-operation between agencies granted by a MoU is essential to efficient regulation. The
MoU is important because without it, regulation of a mining project could be divided among
separate regulatory agencies. The division of authority can lead to inconsistency, duplication of
effort, and failure to meet bonding objectives.
Percentage of Federal Land Ownership
The final factor of Administrative and regulatory efficiency that was considered was the
percentage of Federal owned land in the state. This was noted to be an important factor for
Nevada; in the Silver State, federal land ownership is about 80 percent. In the entire Western US,
Nevada was the only state where Federal laws form the regulatory model, rather than having
separate state regulatory regimes. This simple and predictable administrative method lends itself
to efficient regulation of hardrock metal mining.
On the other hand, MT and WA are the only western states with less than 30% federal land
ownership. These states also follow a regulatory model where mining is regulated by the state,
with the state setting standards, issuing permits, and collecting fees. This is extremely favorable
in terms of regulatory efficiency, since the federal land ownership is less than lands owned by
the state.

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CHAPTER 3: PERFORMANCE AND DESIGN STANDARDS
The main purpose of regulation is to reduce social harms by improving industrial environmental
performance and increasing workplace safety by modification of individual and organizational
behavior (Coglianese et al. 2003). Historically, mining has proven to be an inherently dangerous
activity with great potential for human death, persistent environmental impacts, and sociological
disruption (Down and Stocks 1977). Modern governments use performance and design standards
to impose their expectations on mining companies, in an attempt to reduce the potential impacts
of mine activities, from exploration to post-closure.
In the case of performance standards, the ability of the miner to adhere to the standards form the
basis for legal commands of the regulatory standards. Essentially, the desired outcome is defined
by the state, with the steps taken to achieve that outcome relegated to the mine operator. Often,
these types of regulations are accompanied industry created performance guidelines, or “best
practices”, to meet the standard. The benefit of this type of regulation is flexibility in the
application of new technology to meet performance standards (Besanko 1987). In the case of
hardrock mining, performance standards are considered to be generally less strict than design
standards, but could vary in terms of precision.
In contrast, design standards specify the compliance goal, and exactly how it is achieved. These
are often highly specific in scope. This type of standard limits the technological flexibility of the
mining outfit. In the case of hardrock metal mining, design standards are considered to be

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generally stricter than performance standards, but again vary in terms of precision. When
considering large-scale hardrock metal mining, it is important to consider the extractive
techniques that pose the greatest threat to the environment and are commonly used in the
industry. The eleven western United States were grouped into clusters based on their
performance standard regulations pertaining to: cyanide use or chemical mining techniques,
methods of mine tailings disposal, backfilling requirements, specificity of reclamation standards,
and concurrent reclamation. Five clusters were created and scores were assigned to each cluster
based on the assessment of the state regulations (Table 3.1).
Table 3.1 Clusters and Scores for Performance and Reclamation Standards Category

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Discussion
Regulation of Cyanide Use
As noted previously, cyanide is an extraordinarily toxic compound that is used by hardrock
mining companies to extract gold or other metals from low-grade ore using heap or vat leaching.
With such a high toxicity to living organisms, one would expect strict state regulations on
cyanide leaching practices. This is not the case however, and regulations on cyanide mining
performance standards in the majority of the western states are surprisingly general. For
example, specific detoxification technologies are not prescribed in the regulations, but instead
performance standards requiring detoxification and rinsing of wastes to comply with water
quality standards are the norm. Furthermore, problematic ambiguity arises due to some states
determining these performance standards on a site-specific basis. Important aspects to be
considered are location, heap pad construction, process solution containment, monitoring
requirements, facility maintenance and inspection, and emergency protocols. States that had
explicit performance and design standards dealing with the use, transport, and disposal of
cyanide or design, construction and operation of cyanide facilities that were separate from
general water quality standards included AZ, ID, MT, and OR.
Of the western states, Montana has taken the most proactive approach to preventing
contamination of state waters by cyanide discharge. On November 6, 1998, after a history of
legal battles between the state, mining industry, and a statewide coalition of grassroots NGOs,
the Treasure State enacted a rule (Initiative 137) that bans cyanide heap and vat leaching open pit
gold and silver mining, although mines that were already operating before this can continue to do

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so under their operating permit (MCA 82-4-390). This exempts the Golden Sunlight mine, now
owned by Barrick Gold, which has operated in the state since 1975, and still employs vat
leaching to extract gold from the rocks.
Oregon may have the toughest performance standards for chemical mining in a state that actually
allows cyanide use in hardrock mining. The Chemical Mining Rules (CMR) as administered by
the Department of Environmental Quality (DEQ), explains that public policy in Beaver State is
“staunchly opposed to actions creating water pollution”, and “chemical process mines pose an
unusual risk of environmental harm” (ORS 4688.015, OAR 340-043). Interestingly, the rules
note the historical environmental atrocities as a result of chemical mining in Oregon and other
states, and that permittees were not held responsible for the damages. The rules hold mine
owners (not shareholders) liable for any environmental damages due to the operation (OAR 340-
043-0025(2 and 5)). Aside from blatantly stressing corporate environmental responsibility, the
state designates a “technical review team” for each proposed project, which, amongst other
duties, must determine the best available, practicable, and necessary technologies for ensuring
compliance with environmental standards. This team can be viewed as an effective
environmental safeguard against potential biased reporting, such as in Arizona, where the mining
company or a 3rd party consulting firm determines the best technology (A.R.S 49-243.B.1). If the
review team cannot identify such a technology, then the Department of Geology and Mineral
Industries will not issue a permit (OAR 632-037-0118). Furthermore, Oregon does not allow
chemical facilities on 100-year floodplains or wetlands, and requires an additional 200ft “buffer
zone” between the facility and surface waters. There is a requirement that wildlife is never to
come into contact with process solution. Other specific regulations for heap leach piles include a
table outlining minimum capacity-sizing criteria, specifications for leach pad liner, criteria for a

25
leak detection system, standards for process pond and emergency ponds, and a specific protocol
for leak response. Mining operators must also determine if spent ore has potential for acid
generation, and submit a plan for acid correction, before the heap is loaded. Oregon’s CMR show
how a combination of performance standards and design standards are used to effectively
regulate cyanide mining.
Tailings Disposal
Mine tailings are waste materials remaining after the ore has been processed. Materials that are
present in the mine tailings are dependent on the composition of the ore and the process used to
extract the metal. Tailings from open pit hardrock metal mines are a significant environmental
challenge to the mining industry and the western states. Many of the public land states set
performance standards addressing tailings treatment, detoxification and pond/impoundment
construction. This shows that the state and mining industry are still employing “end-of-pipe”
solutions, and are lagging behind other industries in establishing proactive solutions to pollution
prevention;for example to reuse or recycle. The most common regulation was a “minimum
design criteria” for tailings facilities. For example, Nevada establishes a minimal design criteria
for the impoundment structure at “equivalent to 12 inches of soil liner with coefficient of
permeability 1x10-6
cm/sec” (NAC 445A.434). Other examples of this minimum criteria exist for
many states.

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Backfilling Requirements
With the advancement of modern mining technology, open pit mining is now the conventional
technique employed by the industry. Metal ores are excavated from the surface and subsurface
through engineered explosions and mechanical excavation and hauling equipment. Open pit
mining is the most economical, and simplest method to turn a deposit of low grade metallic ore
into profitable operation. The tradeoff, is adverse effects, such as grandiose topographic
alteration, hydrologic disruption of ground and surface water, groundwater pollution, endless
piles of waste rock and tailings, and sociocultural impacts to nearby communities.
Backfilling describes the process of returning all or some of the material removed from a hole, to
said hole. For a large scale hardrock mine, this material could include the waste rock,
overburden, and spent tailings. Backfilling an open pit can have positive impacts including
reducing the volume of mine waste stored outside of the pit, reducing potential for acid mine
drainage, and returning the natural topography. In contrast, the negative impacts of backfilling
include potential for groundwater pollution, land subsidence, and increased monetary costs. The
inclusion of backfilling can significantly increase the cost of reclamation. For instance, the
Golden Sunlight Mine, MT, and the Zortman-Landusky Mine, MT, had backfilling costs of
$525,000 and $5,750,000 respectively; in contrast to the $60,000 for regrading and recontouring
at the Beartrack Mine, ID (Kuipers 2000). While it is inconclusive if backfilling is an optimal
method of open pit reclamation, it can be said that regulations requiring backfilling of open pits
are stricter than partial backfilling or recontouring.

27
In general, the western states did not require backfilling of open pits; however, many included
provisions for backfilling as an option to meet reclamation objectives. Only California’s
SMARA specifically requires backfilling of all metallic open pit surface mines (14 CCR Section
3704.1). The backfilling standard was adopted in 2003, following an investigation by the SMGB
of closed and abandoned metallic mines. This study revealed the open pits were not being
reclaimed to the performance standard prescribed by SMARA in 1993. The backfilling
requirement was justified by the SMGB as essential to meeting the requirements of SMARA
which seek to reclaim lands affected by mining to a “useable condition readily adaptable for
alternate land uses and create no danger to public health or safety” (PRC Section 2733). The
board noted that the final state of large scale surface mines, huge open pits in the surface
surrounded by millions of cubic yards of waste rock, were not meeting the standard of the site
being returned to a useful condition. Interestingly, this is an example of mining regulations
California increasing in precision as a response to the inability of the industry to conform to
performance standards.
Conditional backfilling regulations exist in Idaho under the Idaho Surface Mining Act 1971
(ISMA). The Gem State requires any waste piles or surface depressions in mined areas less than
two acres must be returned to the approximate previous contour (IDAPA Section 20.03.02.140).
This standard does not address the environmental impacts presented by large scale open pit
surface mines and the huge volumes of waste rock and tailings. For example, the Thompson
Creek Molybdenum Mine, ID, has an open pit approximately 640 acres and a waste rock pile of
500 acres (Blanchard et al. 2002).

28
In contrast, Nevada’s Mined Land Reclamation Act explicitly states that backfilling is not
required for open pits (NAC 519A.345). This is a highly unique regulation, since other states
mention backfilling as an option for reclamation.
Reclamation and Closure Standards
The purpose of reclamation is to return any lands disrupted by resource extraction to a more
natural condition. Western states tended to designate a “post-mining land use” that gives the
mining company a reclamation objective to aim for, requirements that can be used to estimate
bonding costs, and a basis for evaluating the success of reclamation. Regulations governing
reclamation of hardrock metal mines in the west are highly variable in scope and content
between states. All eleven states require reclamation to some degree, but differences exist in
regulation specificity. Reclamation standards were found to be brief descriptions, and detailed
listings of standards. Generally, reclamation standards for surface mines were determined on a
site-specific basis, and the majority of states had generalized requirements. For most states,
mining companies are to produce reclamation plans in their permit proposals. Plan requirements
generally included landscape recontouring or ground stabilization, topsoil salvage and
replacement, erosion prevention, revegetation, capping of tailings ponds, disposal or removal of
equipment, roads, hydrologic balance, water treatment, monitoring, wildlife, public safety, and
post closure maintenance.
States that had detailed, specific closure and reclamation standards were California and New
Mexico. In California, mining operations are required to comply with detailed performance

29
standards for topsoil (SMARA §3711), recontouring (SMARA §3704), Revegetation (SMARA
§3705), water quality (SMARA §3710), and wildlife habitat (SMARA §3703). The New Mexico
Mining Act (NMAC 19.10.6) includes detailed reclamation standards dealing with specific
impacts of mining. The Act contains provisions for wildlife protection hydrologic balance,
stream diversion, surface stability, erosion control and revegetation (NMAC 19.10.6.603).
Notably, the Land of Enchantment requires new mining operations to eliminate perpetual
treatment of water resources as a practice to meet water quality standards (NMAC
19.10.6.603H). In 2013, after extensive industry lobbying, New Mexico’s Water Quality Control
Board adopted amendments to the Copper Rule (NMAC 20.6.7 and 20.6.8). The new rule allows
the pumping of water from an open pit determined to be a “flow-through” pit in order to
maintain water quality standards, contradicting the previous performance standard (NMAC
20.6.7.33D). There are additional provisions that change the “double liner” standard for process
water impoundments to a “liner optional” standard, instead promoting the interceptor well
technique (NMAC 20.6.7.22A4c). Pumping is the current practice at Freeport-McMoRan
Tyrone Mine open pit to achieve hydrologic containment and mitigation of groundwater
contamination.
Concurrent Reclamation
Rather than conducting all reclamation initiatives after the mine has been closed, some of the
Western states require that reclamation must be conducted simultaneously with mine operations.
Concurrent reclamation is required under the reclamation acts in California, Colorado, Idaho,
and Oregon. This requirement is viewed as increasing the overall strictness of the state’s mining
policy. There is significant monetary costs imposed on the mining companies to relocate soil and

30
overburden. Costs are generally lowered since any equipment needed for earth moving is on the
site already. Despite this economic cost, concurrent soil reclamation positively impacts the
mining site by reducing the amount of land disturbed at the time, and may enhance the final soil
quality (Arbogast et al. 2000).

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CHAPTER 4: STATE BONDING REQUIREMENTS
Performance bonding is the practice of requiring financial surety from a company, insurance
company, or bank to guarantee that a project will be completed in a satisfactory manner.
Reclamation and performance bonding has been applied to hardrock metal mining with varying
degrees of success in the Western United States. Mine bonds serve as collateral for covering the
cost of reclamation in the event that the mining company is bankrupt, such as in the infamous
case of Pegasus Gold Ltd and the Zortman-Landusky Mine in Montana. Historically, the prices
of metals fluctuate with high variance, and bankruptcy is a very real fate for many mining outfits
(Figure 4.1). For mining companies that have substantial monetary strength, the choice between
conducting reclamation and defaulting on the bond becomes even more complex (Gerard 2000).
Figure 4.1 Real copper prices in the United States, 1900 to 2009.

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Furthermore, it is important for state bonding policies to be comprehensive since metal mining
can result in many long term and costly environmental harms (Chapter 1). In a comprehensive,
first of its kind study, Kuipers et al. (2006) compared the impacts to water quality predicted in
hardrock mining EIS to the actual hydrologic impacts at the mines. In many cases, where there
was predicted “no impact” to water quality or the potential risk for acid mine drainage was
predicted to be “minimal”, the study identified leaching of heavy metals from tailings
impoundments, high concentrations of cyanide compounds in nearby water bodies, and
acidification of groundwater from acid mine drainage (Kuipers et al 2006). This was especially
common in mines that had been abandoned or that had failed to conduct appropriate mitigation
measures. As previously noted in Chapter 1, prediction of these impacts is not accurate with the
methods currently employed by the industry. This represents but one of many high risk situations
associated with mining and is justification for appropriate reclamation bonding.
The cluster analysis resulted in the eleven Western states grouped into homogeneous clusters.
Five clusters were created (Table 4.1), and scores were assigned to each cluster based on the
assessment of the state regulations.

33
Table 4.1 Clusters And Scores For State Bonding Requirements Category.
Discussion
Surface Disturbance
All of the western states require reclamation bonding for surface disturbances. This forms the
baseline for reclamation bonding and is the least strict bond requirement for hardrock mining. It
was interesting to note that Nevada and the BLM only have authority to bond for surface
disturbances. No other impacts are considered in the bond requirement or calculation. This
greatly simplifies the estimation of bond amounts for Hardrock mines under Nevada state and
Nevada BLM jurisdiction. The value of the bond for surface disturbances is generally calculated

34
in two ways (Gerard 2000). The first calculation is to multiply a cost-per-acre by the total area to
be disturbed by the mine. The second method is to estimate the expected reclamation costs,
including administrative fees and 3rd party reclamation costs, and set the bond amount at this
value. Since August 1, 2013, Nevada has employed an online system to assist operators
preparing reclamation plans and bonding costs; the Nevada Standardized Reclamation Cost
Estimator (NSRCE).
Geochemical
Bonding for geochemical impacts to water quality was required by over half of the states. This is
commonly refers to the costs associated with remediation of acid mine drainage. The Porter-
cologne water quality Act implies geochemical bonding may be required to comply with water
quality standards in California. In Colorado, the Mined Land Reclamation Act (MLRA) may be
used by the Division of Minerals and Geology to bond for geochemical impacts from hardrock
mining. Authority to require bonding for geochemical impacts is also implied in Montana’s
MMRA and Water Quality Act, Oregon’s MLRA and Water Quality Act, and Washington’s
Mining and Milling Act. Arizona’s Department of Environmental Quality and Utah’s
Department of Natural Resources may also be able to require bonding for geochemical impacts
under the Aquifer Protection Permit Program (APP) and Minerals Regulatory Program
respectively.

35
Hydrologic
Bonding for hydrologic impacts is also inferred by regulations in more than half of the western
states. Arizona could require hydrologic bonding under the APP Program. California, Colorado,
and Utah, have authority to bond for various hydrologic impacts implied by their statutes.
Authority to require bonding for hydrologic impacts is implied in Montana’s MMRA and Water
Quality Act, Oregon’s MLRA and Water Quality Act, and Washington’s Mining and Milling
Act.
New Mexico has the authority to require bonding for hydrologic impacts as well, but the new
amendments to Copper Rule (NMAC 20.6.7, and 20.6.8) adopted in 2013 are contrary to this
endeavor. Financial assurance is required for those portions of a copper mine facility to be
reclaimed in accordance with a closure plan prepared by the operator in the permit application
(NMAC 20.6.7.11(U)). The facilities that are listed in NMAC 20.6.7 were open pits,
impoundments, pipelines tanks and sumps, and “crushing, milling, concentrating, or smelting
areas”. Tailings ponds, a source of potential ground and surface water contamination are not
considered “impoundments” under this rule, and are excluded from bonding. In the case of open
pits, like the Freeport-McMoRan Chino open pit, standards of NMAC 20.6.2.3103 do not apply
if the pit is determined to be a “hydrologic evaporative sink” (NMAC 20.6.7.33.D). This
essentially exempts an open pit from ground water quality standards (including maximum
cyanide concentrations), and financial assurance. Furthermore, if the open pit is determined to be
a “flow-through” pit, the rules allow pumping of water from the open pit in order to maintain
water quality standards; an expensive option if the pumping is required in perpetuity (NMAC
20.6.7.33.D).

36
Chemical
It was found that CA, ID, OR, and WA all could require additional financial surety to cover
reclamation of spilled or leaked process chemicals. Under the Mined Land Reclamation Act and
Chemical Process Mining Statutes, Oregon has authority to bond for environmental protection
costs (with no limit on the amount) associated with remedial cleanup measures, detoxification
and disposal of ores and process solutions, cost of restoration for contaminated soil, surface and
groundwater, living resources, and can require additional security for mines using toxic
chemicals (OAR 632-037-0135(6) and OAR 340-043-0025(h)). With the authority granted by
the Metal Mining and Milling Act, the Washington Department of Ecology can bond for impacts
associated with construction, operation and closure of metals mining, including problems
revealed during or after closure (RCW 78.56.110(2)(a and c)). Idaho, on the other hand, does not
have such broad discretion, but rather, the Chemical Processing by Cyanidation permit can be
bonded for $25,000 up to $100,000 (IDAPA §16.01.13.650). Considering that remediation costs
for cyanide pollution can range anywhere from $200,000 to $12 million (for treatment in
perpetuity), setting an upper bond limit at $100,000 essentially ensures financial assurance will
be insufficient (US EPA 1997). This limitation is incredibly short sighted and weakens the
Chemical Processing Permit as an effective chemical impact bonding policy relative to other
states.
Worst-Case Scenario
Of the eleven western states, California proved to have the most comprehensive bonding
requirements. The use of this administrative oversight by the California Water Quality Control

37
Board is best illustrated by an example. The Briggs, CA gold mine was required to include costs
for a “reasonable worst case release from the processing facilities” in their reclamation cost
estimate (Kuipers 2000). The company developed a model for an influx of chemical process
solution due to a failure in the piping system, resulting in a catastrophic overflow of the heap
leach pad. Costs for corrective action and mitigation of this theoretical accident were then
included in the total bond amount. The inclusion of ‘worst case’ bonding by the Golden State to
its already extensive bonding requirements shows that it is the most stringent.

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CHAPTER 5: BOND AMOUNT DETERMINATION
As previously discussed, reclamation and performance bonds are a financial guarantee from the
mine operator or company that the project will be operated as legally required by the state
regulations, and that reclamation is completed as set outlined in the mine closure plan. Ensuring
the bond amount is sufficient to cover the costs of operation and reclamation constitutes an
extremely important stage in the planning of the mine. The project proponent is looking to
develop the mine as a profitable enterprise; a bond amount that is too high, is a risk to the
miner’s financial assets. State governments on the other hand, face 3rd party reclamation costs,
management costs, and costs associated with post reclamation and closure activities. Thus, state
agencies often estimate higher bond amounts. Comparison of surface reclamation costs for the
areas to be reclaimed shows tremendous variability. In fact, total cost of surface reclamation can
vary from less than $800 per acre to more than $20,000 per acre between states and mine sites
(Kuipers 2000).
The cluster analysis yielded 3 homogeneous clusters under this category. In general, the public
land states rely on the mining company to determine the performance and reclamation bond
amounts, with a state agency who reviews and decides if the estimate is sufficient. There are, of
course, notable exceptions to this practice, including the mining company exclusively
determining the bond amount, and a state agency exclusively determining the bond amount.

39
Table 5.1 Clusters and Scores for Bond Amount Determination
Discussion
Both Mining Company and State Agency Determine Bond Amount
The most common practice for mine bond amount calculation in the western United States is a
joint effort between mining companies and state agencies. Colorado, Idaho, Montana, New
Mexico, Utah, Washington, and Wyoming were states grouped in this cluster. Generally, case
studies of these states in Kuipers (2000) revealed that the state governments are relying on the
mining company to estimate the cost of reclamation. The state agency would then review the
bond estimate from the company before calculating the final bond amount. Estimates from the
companies varied in terms of the labor rates, administrative costs, and contingency costs, despite

40
similar reclamation activities. Cost of reclamation per acre of land disturbed also varied state to
state. The main drawback with this method is that the costs of reclamation incurred by the
mining company are typically lower than state incurred reclamation costs.
Mining Company Determines Bond Amount
The second most common method of determining the bond amount was having the mining
company complete the calculation based on the operation plan. The south eastern most states,
Arizona, California, and Nevada all rely on the mining company to calculate the bond amount.
The intricacies of the regulations vary between these states despite this similarity. In Nevada,
estimates of reclamation bonding are greatly simplified by the NSRCE program. The amount
must be based on the mine’s reclamation plan being completed by a third party contractor.
Despite the NSRCE having incredible potential for accurate bond amount estimates, there are
some significant problems. As previously discussed, Nevada’s regulations only require
reclamation and bonding for surface disturbances; the bare minimum in terms of potential
mining related impacts. The state department does have discretion to require “specific types” of
reclamation if appropriate. For mines in Nevada, appropriate reclamation must be economically
and technically practicable, and not anything beyond what is required by a federal agency (NAC
519A.140 and 519A.255). Due to inadequate bonding requirements, neglecting overhead and
indirect costs, there is a high risk of underestimating the cost of reclamation. Consider the
monetary costs and externalities if an open pit mine were to generate huge volumes of acid mine
drainage. A federal agency like the EPA may name it a superfund site, requiring water treatment
and remediation in perpetuity. What was initially a small cost to the mining company could
evolve into an enormous cost for the public down the road.

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State Agency Determines Bond Amount
Oregon is the only state in the west that determines the performance and reclamation bond
amount through a state agency. Under the Mined Land Reclamation Act, the Department of
Geology and Mineral Industries is to calculate the value of the financial security. The amount is
calculated on the basis of estimated actual costs of reclamation and closure, as well as
considering a credible accident analysis for additional environmental protection costs (OAR 632-
037-0135). The actual cost of reclamation is estimated if the department contracted services to
perform the mine reclamation as planned. Use of this method in Oregon has several advantages.
By assigning the task of cost estimates to the department, there is a dedicated group of
individuals who may be repeatedly calculating bond values using their experiences and
knowledge, leading to increased accuracy. Furthermore, the department should have a thorough
understanding of the state requirements, and can address this through the bond value.
Additionally, the department members may be more familiar with local rates and contractors
than a mining company. Rather than depending on the speculation of a mining company, who
may have financial motivation to underestimate the reclamation cost, the state department can
formulate a more realistic value for the reclamation bond in order to achieve environmental
protection.

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CHAPTER 6: BONDING PROGRAM EFFECTIVENESS
Due to the high variability associated with mineral economy, such as the price of metals and
mine development, a performance and reclamation bond should be more than just an insurance
policy. The bond must be effective in guaranteeing compliance, such that the environmental
protection sought by the state can be upheld. To this end, a strict bonding program would be
comprehensive in the mining activities that are to be bonded. Additionally, as the performance
and reclamation bond can take many forms, a strict bonding program would not allow “self-
bonding” or corporate guarantees. The legal intricacies of the many bonding forms will not be
discussed here, but it should be noted that corporate guarantee or self-bonding are the least
effective forms, especially since they essentially become worthless if a company goes bankrupt.
Bond amounts would be dynamic, with a review period of no greater than one year, allowing
bond adjustment to reflect the changing costs of operation, reclamation, and mine expansions.
Furthermore, if reclamation is conducted simultaneously with mining, the bond would not be
released incrementally; it would be kept in full until the completion of the mine reclamation.
State regulations were evaluated in terms of the number of activities covered by bonding, if the
state allows self-bonding or corporate guarantee as a form of surety, if the bond amount is
subjected to annual review, and if the state allows incremental bond review. The cluster analysis
resulted in five clusters of homogeneous states based on these categories (Table 6.1). Scores
were assigned to each cluster based on the assessment of the state regulations.

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Table 6.1 Clusters and Scores for Bonding Program Effectiveness
Discussion
Number of Activities Covered By Bonding
Of the western United States, it was the Golden State that had the most comprehensive bonding
program. Under SMARA and the Porter-Cologne Water Quality Act, California can theoretically
require financial surety for surface disturbances, geochemical impacts, hydrological impacts,
chemical impacts, and worst case scenarios. While unable to bond for worst-case scenarios,
Washington’s Mining and Milling Act (MMA) and Surface Mining Act contain statutes that

44
require bonding for the other four disturbances, resulting in a nearly comprehensive program. In
stark contrast, Nevada Department of Environmental Protection only requires bonding for
surface disturbances under the Mined Land Reclamation Act.
Self-bonding or Corporate Guarantees Permitted
It was found that variation exists in the type of bonds allowed under state bonding programs. The
western states allowed surety bonds, irrevocable letters of credit, trust funds, property deeds,
cash, savings, certificates of deposit, government bonds, corporate guarantee, corporate self-
bonding, and even equipment salvage, to varying degrees. Surety and irrevocable letters of credit
are accepted as financial assurance across all eleven public land states. Many states also allowed
trust funds, property deeds, cash, and savings. The other forms were less common. Corporate
guarantees and self-bonding were allowed in Nevada, Arizona, and Wyoming as an acceptable
bonding form.
Annual Bonding Review
CA, ID, MT, and OR are required to review the bond on an annual basis. Illustrating Idaho as an
example; bonds are reviewed annually, and if there is any increase in acreage of affected lands
over the next 12 months, the bond value is increased (IDAPA §20.03.02.120.04). Despite being
limited to land area disturbances, this is still a very proactive approach to bonding. This
effectively ensures that there is enough money in the bond to reclaim any new mining impacts at
all times. Since these states can increase the bond amount to account for new developments or
mine expansions each year, annual bonding review is considered to be a more stringent

45
regulation of mining. Bonds in other states are reviewed less frequently. Examples of this
included Nevada, where the surety amount is to be reviewed at least every 3 years by the
operator, and Utah, where the surety amount is to be reviewed and adjusted at 5 year intervals
(NAC 519A.380 and UAC R647-4-113). This is a less effective method of ensuring the
reclamation bond is of a sufficient amount during the mine life. Considering that operators in
Nevada can modify mine reclamation plans for any reason (as long as the division receives a
modified plan draft to review), and that there is a blurry distinction between “major” and
“minor” plan modifications (the latter being exempt from hearings and public comment), this
presents a potential situation where there will be inadequate financial surety for up to 3 years.
With the price of metals experiencing significant fluctuations in the past, the long period
between bond reviews serves to increase the risk of insufficient surety for temporarily closed or
abandoned mines.
Incremental Bond Release
It was found that Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, and Utah allow the
mine bond to be released incrementally. Provisions for phased bond release, act as an incentive
for mining companies to practice concurrent reclamation (Warhurst and Ligia Ioronha 2000).
Considering Colorado’s Mined Land Reclamation Act as an example, the operator can apply to
the division to have a portion of the financial assurance released once that part of the reclamation
plan is completed (2 CCR 407-1-4.17). In Nevada, the surety is released periodically; 25% of the
bond when revegetation is completed, and 60% of the bond when revegetation and earthwork is
completed (NAC 519A.385). For this study, allowing incremental bond release, decreases the

46
relative strictness and subsequently, the effectiveness, of the state’s metal mining bonding
program.

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CHAPTER 7: A RANKING OF THE WESTERN STATES
One objective of this study was to obtain a ranking of the Public Land States in terms of their
regulatory strictness. This has been a largely successful endeavor, since there existed substantial
variation in the stringency of hardrock metal mining regulations across the west. The ranking as
determined by this study is presented below (Table 7.1).
Table 7.1 Ranking of the Western United States by strictness score obtained in this study, and by
policy perception index (PPI) score from the Fraser Institute Survey of Mining Companies 2014.
Comparison to the 2014 Survey of Mining Companies
Policy Perception Index
Since 2010, the independent non-partisan research organization, the Fraser Institute, has
investigated the opinions of the mining industry through the annual Survey of Mining
Companies. The survey has been designed to determine how exploration investment is
State Score State PPI 2014
NV 8 WY 87.89
AZ 10 UT 80
WY 11 NV 79.89
CO 12 AZ 71.68
NM 12 CO 71.19
UT 14 ID 67.35
ID 15 NM 63.15
MT 17 MT 59.47
CA 18 CA 56.31
WA 18 WA 44.37
OR 20 OR NA

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influenced by geologic and public policy factors. To accomplish this, an electronic survey was
circulated to 4,200 individuals representing exploration, development, and mining-related
companies around the globe. In 2014, the survey responses allowed analysis of 122 jurisdictions,
including sub-national jurisdictions in the United States. Jurisdictions were only included in the
final report if 10 completed responses were submitted (Jackson and Green 2014).
Of interest to this study, is the Policy Perception Index (PPI), previously called the Policy
Potential Index, included in the Survey. According the Fraser Institute, the PPI is “a ‘report card’
to governments on the attractiveness of their mining policies” (Jackson and Green 2014). The
index is a relative comparison of jurisdictions based on the mining industry responses to survey
questions regarding policy factors (Jackson and Green 2014). 17 factors are compared, with the
final index being normalized to 100 (Jackson and Green 2014).
The PPI can be qualitatively compared to the ranking of states based on the relative regulatory
strictness as determined in this study (Table 7.1). The most obvious issue is that this study found
Oregon to have the most stringent Hardrock Metal Mining Policy, but the Survey does not
provide a PPI score for the Beaver State. This is also true for all previous editions of the Survey.
There is no data available for Oregon. At first it was suspected that this is because there was little
to no locatable mineral potential in the state, however, as the Mineral Information Layer for
Oregon (MILO-2) shows, this is not the case (Figure 7.1). Note the abundance of metals in the
North Western and South Eastern corners of the state. While much less reliable, an internet
search uncovered that there are no active metal mining operations in Oregon at this time, based

49
on data from the US Geological Survey. This may explain why Oregon was not included in
Survey responses.
Figure 7.1. Mineral Information Layer for Oregon.
Another major difference between the two rankings is the relative position of the states with the
most permissive mining regulations (at the top of the table). This essentially equates the least
stringent hardrock metal mining policy to the most attractive for mining investment. Specifically,
Nevada and Wyoming switch positions in the ranking between first and third most permissive.
Considering the nature of this study, analyzing hard rock metal mining regulations, and the
Survey analyzing regulations governing all types of mining; this is not surprising. For Wyoming,
coal mining is one of the most important industries. Coal mining generated 16% of the Cowboy
State’s annual revenues in 2014, while all other minerals only accounted for 0.057% of the

50
annual revenue (Department of Revenue 2014). The favoritism paid to Wyoming by the mining
industry in the Survey PPI 2014 could be attributed to coal mining regulations. When considering
metal surface mining regulations alone, it is no surprise that Nevada is in the top 3. The Fraser
Institute found that the Silver State, had low “uncertainty concerning administration,
interpretation, and enforcement of existing regulations”, and furthermore had low “uncertainty in
environmental regulations”, in the eyes of the mining industry (Green and Jackson 2014). With
the lowest total score of all of the west, Nevada, was characterized by a relatively efficient
administration, highly generalized performance and reclamation standards, and a generally weak
bonding program. All of these factors, result in a state with a hardrock metal mining policy that
is correlated with being extremely attractive for mining investment.
Despite the apparent differences in the state rankings, there are substantial similarities as well. In
particular are the positions of California, Montana, and Washington in both rankings (Table 7.1).
In the Fraser Institute Survey, these states are ranked in the bottom 20 jurisdictions worldwide in
terms of “uncertainty concerning administration, interpretation, and enforcement of existing
regulations”, and are ranked in the lower 10 jurisdictions worldwide in terms of “uncertainty in
environmental regulations” (Jackson and Green 2014). This means that the mining industry is
discouraged from investment by the environmental regulations and administration of said
regulations in these states. Mining industry comments included in current and previous editions
of the Survey referred to California as a “regulatory horror story”, with an “oppressive regulatory
regime”, and criticized the backfilling requirement (Wilson et al. 2013, Jackson and Green
2014). Montana’s cyanide ban, open pit gold mining was called “extremely dissuasive” (Jackson
and Green 2014). Finally, Washington’s mining laws “essentially shut down open pit gold

51
mining” (Jackson and Green 2014). In this study, California, Montana, and Washington, were
all found to have relatively specific performance and reclamation standards, proactive pollution
prevention legislation and comprehensive bonding requirements. It is evident from comparison
with the other western states that these factors correlate with industry perceptions of an
unattractive hardrock metal mining policy.
Regulatory Capture in the Western United States
The second objective of this study was to examine the hardrock metal mining regulations for
evidence of regulatory capture. To do so, there must be a clear definition of regulatory capture.
Though many political scientists and economists have developed complex models of the
phenomenon, regulatory capture is generally defined as the change in the role of an
administrative body from acting in public interests of increasing social welfare, to instead acting
in the interests of the industry it is charged with regulating (Dal Bo 2006). For the state
departments, regulating hardrock mining in the western United States, many of them are charged
with the basic intention of protecting the environment and human health. Consider that in
Montana, the state constitution gives all persons “the right to a clean and healthful environment”
(Article II 3). Others are charged with supporting the economy through mineral exploration and
development. When mining is considered, there is potential for a massive conflict of interest
(Blumm 1994).
While many arguments could be made for the existence of capture in the Western United States,
recent regulatory revisions in New Mexico provide a compelling example. As was previously

52
mentioned, the Water Quality Control Commission (WQCC) adopted new regulations for copper
mining, called the Copper Rule, in 2013 (NMAC 20.6.7 and 20.6.8). This is a statutory
requirement of the WQCC; to regulate specific industries, including the copper industry (NMSA
74-6-4K). It is apparent that this requirement exists because the metal mining industry is the
largest source of pollution in the state (EPA National Analysis Dataset 2013). Furthermore, the
WQCC is charged with adopting regulations to prevent or abate water pollution in the state;
considering factors such as impacts to health, welfare, environment and property, public interest,
the economic value of the source of contamination, technical and economic reasonableness of
reducing or eliminating water contaminants, successive uses of the water, property rights and
accustomed uses, and federal water quality requirements (NMSA 74-6-4E). A part of the
Environmental Improvement Act, the WQCC’s purpose is to ensure the environment of New
Mexico will confer optimum health, safety, comfort, and economic and social well-being on its
inhabitants, and furthermore, to protect current and future generations from health threats posed
by the environment, and maximize the economic and cultural benefits of a healthy people
(NMSA 74-1-2). New Mexico is a region with an arid or semi-arid climate, where average
annual precipitation can be as low as 10 inches (25.4cm), and even less in the South West where
most copper mining occurs (Western Regional Climate Center). Considering that over 90 percent
of the state’s population relies on groundwater for drinking, protection of water resources
becomes even more critical for the health of the people and the environment (National Water
Information System 2010).
The fact is, the new Copper Rule does not achieve this purpose. The rules directly violate the
statutory requirement to “prevent or abate water pollution”, by instead allowing pollution from
new and current mining operations to be captured and contained. For example, if a mine

53
proposes to use an interceptor system in lieu of a liner system for storage and disposal of waste
rock, then testing and characterization of the material for acid mine drainage is not required,
even if the material has already been shown to be acid generating (NMAC 20.6.7.21A(1)). The
interceptor system is apparently considered an equivalent technology to a liner system for both
waste rock pile and for tailings impoundments in capturing and containing groundwater, so long
as groundwater does not exceed applicable standards at specified monitoring well locations
(NMAC 20.6.7.21B (e) and NMAC 20.6.7.22A(e)). By adopting these rules, the WQCC are
essentially allowing continued operation and future construction of unlined impoundments for
cyanide contaminated tailings and acid generating waste materials. Rather than attempting to
limit the fresh water that comes into contact with these toxic chemicals (by requiring a liner
system), the Copper Rules have allowed a potential situation where the volume of process water
will increase in perpetuity as contaminated groundwater is pumped through the interceptor
system.
To further illustrate the lack of attention and thought paid to human health and environmental
protection by the Copper Rules (adopted by the WQCC), consider the abundance of grandfather
clauses that exist in the new regulations. In the Copper Rules, grandfathered regulations are
present for waste rock stockpiles (NMAC 20.6.7.21C(2)), tailings impoundments (NMAC
20.6.7.22B(2)), pipelines and tanks (NMAC 20.6.7.23B(2) and 20.6.7.23C(6) and
20.6.7.23C(7)), monitoring wells (NMAC 20.6.7.28B(1)), and ground water sampling
procedures (NMAC 20.6.7.28G ). Generally, these regulations all allow existing facilities, the
benefit of exemption from the requirements of the Copper Rules, continued operation under their
previous discharge permit, and even “renewal” of the previous discharge permit. The fact that
these grandfather clauses are included in the new regulations again violates the statutory

54
requirement to prevent and abate water pollution. For proof of this statement, consider the track
record of water quality impacts at the Freeport-McMoRan owned Tyrone and Chino mines in
Southwestern New Mexico from 1986 to 2012. The Chino Mine has reported 10 accidental
releases of process water and tailings to Hanover and Whitewater Creek, has reported failures in
water collection and treatment, and contaminated groundwater requiring treatment in perpetuity
(Gestring and Chambers 2012). The Tyrone Mine has reported 7 accidental releases to Mangas
Creek, has reported failures in water collection and treatment, tailings dam breaches, and
contaminated groundwater requiring treatment in perpetuity (Gestring and Chambers 2012). A
joint investigation of the environmental impacts from these two mines by the US Department of
Justice and State of New Mexico in 2011 revealed widespread contamination of groundwater by
hazardous substances in excess of water quality standards (Gestring and Chambers 2012). This
provides evidence that the current mining practices of the Chino and Tyrone Mines are
ineffective at preventing the degradation of groundwater resources in the state of New Mexico,
and thus begs the question; why are the mines still permitted to operate under the new rules?
It has already been shown that the WQCC has gone against its statutory requirements to prevent
and abate water pollution to ensure human and environmental health in its adoption of the
Copper Rules, but was this administrative body really captured by the mining industry? To
answer this question it is best to consider the political and social climate in the state. Before the
regulations were adopted, there was a period of public comment as part of the rule development
process and submission of written statements during the final hearing. Freeport McMoRan also
submitted comments that asked for removal of liner requirements and removal of the lengthy
process for groundwater quality variances, both of which are not found in the final rule. There

55
was significant public and NGO opposition to the proposed Copper Rules, citing concerns about
long term groundwater quality, human health concerns, questions about the economic benefits of
copper mining, and holding the mines financially accountable (WQCC Matter 12-01(R)). It is
evident that the rules were written considering the interests of the copper industry, and not the
nature of copper mining, and thus revealing regulatory capture in New Mexico.

56
CONCLUSION
This study of the Western United States has been successful in achieving the objectives. While
the basic intention of mining and reclamation statutes are generally similar, there exists
variations in the way regulatory models are designed. Using a novel method, a relative ranking
of the Public Land States based on variation in regulatory strictness was developed and
compared to the Fraser Institute Survey of Mining Companies 2014. The comparison revealed
that states with lower environmental regulatory strictness are favored for investment by the metal
mining industry. On the other hand, states with higher regulatory strictness are highly criticized
by the metal mining industry. New Mexico was provided as an example of regulatory capture by
the metal mining industry, using evidence from the state’s regulations.

57
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