Agencies Have Provided More Rigorous Oversight of Phosphate Mining Since 1996, but Oversight Gaps Remain

Federal agencies have taken steps to strengthen their oversight of  phosphate mining on federal land since selenium contamination was  discovered in 1996 by requiring more detailed environmental analysis and  reclamation plans, requiring financial assurances that provide more  coverage, hiring additional staff, and revising land-use plans. BLM officials  told us that the agency now requires mine operators that propose new  mine sites to develop more comprehensive reclamation plans than  operators did previously. For example, the Forest Service has, among  other things, created a new position to oversee its selenium  remediation efforts. Oversight Gaps Remain in Agency Policy and Coordination

We identified four gaps in the agencies’ oversight efforts that could limit  their ability to address ongoing problems with selenium contamination. Without documenting its bonding  practices in official agency policy, BLM cannot be assured that the current  full-cost financial assurance practices for phosphate mines in Idaho will  be implemented completely and consistently. For Forest Service  officials, this is of particular concern because 16 leases on Forest Service  land are scheduled for readjustment in the next 5 years, and once a lease  is readjusted, as noted earlier, its provisions are in effect for 20 years. Agencies and Mine Operators Have Focused on Assessing Contamination, Not Conducting Remediation, and Total Cleanup Costs Are Currently Unknown

Since selenium contamination was discovered in 1996, federal agencies  and phosphate mine operators in Idaho have largely taken actions  focused on assessing the extent of selenium contamination at the 16  mines where such contamination has been identified, and have  conducted limited remediation. The federal agencies reported having  spent about $19 million on this effort, about half of which has been  reimbursed by mine operators. The mine operators have incurred  additional costs for assessment and remediation activities, according to  agency officials, but the operators did not provide documentary evidence  to support these claims. The agencies and mine  operators are still in the early stages of this process—none had produced  a complete remedial investigation report as of March 2012—and,  according to officials, completing this process at all mines will likely  require years of additional work before final cleanup remedies are  selected. Agencies Have Not Developed Cost Estimates for Future Cleanup Actions Because Site Assessment Efforts Have Not Been Completed

According to EPA and Forest Service officials, they have not developed  cost estimates for future cleanup actions at any of the 16 contaminated  phosphate mines because agencies are still conducting assessment  work, and these officials will not determine cleanup actions until they have  completed this work. A total maximum daily load for selenium has not yet been established. Agencies Hold Millions of Dollars in Financial Assurances for Site Reclamation and Assessment, but Some Are in the Form of Potentially Risky Corporate Guarantees

Federal agencies reported holding financial assurances for phosphate  mine operations in southeastern Idaho for about $91 million to cover (1)  mine reclamation and related activities and (2) site assessment and  limited remediation activities negotiated under CERCLA settlement  agreements. BLM and the Forest Service Reported Holding About $80 Million in Financial Assurances for Reclamation-Related Activities

As of March 2012, BLM reported holding about $75.2 million in  reclamation financial assurances for 13 of the 18 phosphate mines where  federal agencies are overseeing mining operations or cleanup activities. Over 95 percent of this  amount—almost $72 million—is associated with the five currently active  mines, and nearly all of that amount—over $66 million—is associated with  the two most recently approved active mines, the Blackfoot Bridge and  Smoky Canyon mines. For  example, while BLM’s practice of setting financial assurances to cover the  estimated full cost of reclamation for new phosphate mines may better  protect the government from future cleanup liability, the agency has not  documented this practice in official agency policy—lessening the certainty  that the practice will be consistently followed in the future. Specifically,  we recommend that the Secretary of the Interior direct the Director of  BLM to document the practice of requiring financial assurances to cover the  estimated full cost of reclamation in BLM’s official agency policy; work with the Chief of the Forest Service to develop a coordinated  process for (1) proposing and evaluating lease terms and conditions  for phosphate mines in southeastern Idaho, and (2) sharing  information on the amount and adequacy of financial assurances to  provide better coordination between federal agencies regarding  phosphate mine oversight; and analyze BLM’s authorities for directing operators to enter into third- party contracting mechanisms. Specifically, we were asked to provide information on the (1) extent  to which federal agencies’ oversight of phosphate operations has  changed since the discovery of selenium contamination in Idaho in 1996,  and whether those changes appear sufficient to help the agencies  prevent future contamination; (2) actions that federal agencies and mine  operators have taken to assess and remediate contamination from  phosphate mining on federal land, amounts they have spent on these  actions, and estimated remaining costs; and (3) types and amounts of  financial assurances in place for phosphate mining operations and the  extent to which these assurances are likely to cover future cleanup costs. We received information on funds  BLM received from mine operators from Interior’s Federal Financial  System.
Why GAO Did This Study

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

What GAO Found

Since 1996, federal agencies have taken several actions to strengthen their oversight of phosphate mining on federal land. For example, BLM now conducts more detailed environmental analysis when evaluating new mine plans; requires phosphate mine operators to provide more comprehensive plans for reclaiming mine sites (restoring the land to a stable condition that can support other uses); and requires the mine operators to provide financial assurances that are based on the full estimated cost of reclaiming mines, in contrast to BLMs previous practice of calculating financial assurances based simply on the acreage associated with mines. However, gaps remain in agency policies and coordination that could limit the agencies efforts to address contamination from phosphate-mining operations. For example, BLM has not documented its new full-cost financial assurance practice in agency policy and therefore has limited assurance that it will be implemented consistently. BLM also has not fully coordinated with the Forest Service when establishing mine lease conditions and setting financial assurance amounts. Limited coordination is of particular concern because 16 phosphate leases in Idaho are scheduled for review and possible readjustment in the next 5 years, and once a lease is readjusted, its provisions are in effect for 20 years.
Over the last 16 years, federal agencies and mine operators have primarily focused on assessing the extent of selenium contamination in Idaho and have conducted only limited remediation actions. The agencies have conducted or overseen high-level assessments of contamination at 16 of the 18 mines where federal agencies are overseeing mining operations or cleanup activities, and at several of these mines the agencies and mine operators are now conducting more detailed assessments, known as remedial investigations and feasibility studies. However, no final cleanup actions have been chosen at any of the sites, and according to officials, most sites will require years of additional investigative work before final cleanup actions are selected. Federal agencies reported that they have spent about $19 million since 2001 to oversee these assessments and undertake a limited number of remediation actions, roughly half of which has been reimbursed by the mine operators under cleanup settlement agreements. Mine operators told GAO that they too have spent millions of dollars in additional assessment and remediation work but did not provide documentary evidence to support these claims. Agency officials told GAO that they have not developed estimates for the remaining cleanup costs because final cleanup remedies have not yet been identified. However, their informal estimates suggest that remaining cleanup costs may total hundreds of millions of dollars for the contamination from mining in Idaho.
Federal agencies reported holding about $80 million in financial assurances for reclaiming phosphate mines in Idaho. Most of this amountover $66 millionis associated with the two most recently approved phosphate mines. Agencies reported holding an additional $11.5 million in financial assurances to cover site assessment and limited cleanup activities under EPAs Superfund program, but some of these are in the form of corporate guarantees, which the agencies have determined are riskier than other types of financial assurances. No financial assurances have been established to cover future cleanup costs because remaining cleanup actions have not yet been identified, according to agency officials.

What GAO Recommends

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