FAQ - Mining Act Reclamation Program

What is covered?
Who regulates?
What are the requirements?
What are the requirements for "existing" mine permits?
What are the requirements for "new" mine permits?
What is the role of the public?
What are some current Mining Act issues?
Has the Mining Act been a success?

 
The purposes of the Mining Act of 1993 include “promoting responsible utilization and reclamation of lands affected by exploration, mining or the extraction of minerals that are vital to the welfare of New Mexico.” The act establishes requirements for a broad range of “hard rock” mines to obtain permits, meet certain standards, develop an approved reclamation plan, and post financial assurance to support the reclamation plan.
 

What is covered?
The act requires all mining operations to obtain permits and meet certain requirements. Whether you are or are not subject to the act depends largely on the definitions of mining and minerals in the act. Mining is defined as “the process of obtaining useful minerals from the earth's crust or from previously disposed or abandoned mining wastes, including exploration, open-cut mining and surface operation, the disposal of refuse from underground and in situ mining, mineral transportation, concentrating, milling, evaporation, leaching and other processing.” Minerals are defined as “a nonliving commodity that is extracted from the earth for use or conversion into a saleable or usable product.”

The following commodities and facilities are declared exempt from the act: “clays, adobe, flagstone, potash, sand, gravel, caliche, borrow dirt, quarry rock used as aggregate for construction, coal, surface water or subsurface water, geothermal resources, oil and natural gas together with other chemicals recovered with them, commodities, byproduct materials and wastes that are regulated by the nuclear regulatory commission” and hazardous waste. Some exemptions are designed to avoid duplicative regulation of a commodity or facility already regulated under a different federal or state law, such as coal, water, oil, gas, hazardous waste and NRC facilities. In the end, the act covers most traditional hard rock and industrial minerals including gold, silver, copper, lead, molybdenum, perlite, zeolite, silica and garnet.

The Mining Act applies not only to all mines operating when the act was passed and to all future mines, but it also covers some mines that were no longer operating at the time the act became law. The definition of “existing mining operation” includes any “operation that produced marketable minerals for a total of at least two years between January 1, 1970 and the effective date of the New Mexico Mining Act.” Therefore, a mine that produced marketable minerals for two years in the 1970s but was shut by the time the act passed in 1993 is still covered.

 

Who regulates?   Back to top
Two government entities are at the center of the Mining Act: the Mining Commission and the Mining and Minerals Division (MMD) of the New Mexico Energy, Minerals and Natural Resources Department (EMNRD). The Mining Commission is charged with developing the rules necessary to implement the Mining Act and hearing appeals of permitting and enforcement actions by MMD. The Mining Commission consists of eleven members, four appointed by the Governor and seven ex officio. The seven ex officio members represent different government entities. The appointed members, consisting of two voting members and two alternates, “shall be chosen to represent and to balance environmental and mining interests.”

 

What are the requirements?   Back to top
The requirements for a mining operation under the Mining Act depend on how the operation is classified. The major categories of operations are existing mining operations, new mining operations, and exploration operations. Within each of these categories, there is a subcategory of minimal impact operations. The act provides that reduced requirements should be applied to “operations that have minimal impact on the environment.” Generally, minimal impact mining operations are 10 acres or less in size, and minimal impact exploration operations are 5 acres or less in size.

A permit for an exploration operation is the simplest to obtain. Exploration permits are valid for one year and may be renewed. Exploration operations must reclaim any disturbed areas within two years after completion of the operation.

 

What are the requirements for "existing" mine permits?   Back to top
The Mining Act required all existing mining operations to submit a permit application by December 31, 1994, and then submit a “closeout plan” by December 31, 1995. The closeout plan is the core of the existing mine permit. The plan must demonstrate the work to be done to reclaim the permit area “to a condition that allows for the reestablishment of a self-sustaining ecosystem on the permit area following closure, appropriate for the life zone of the surrounding areas.” This reclamation standard must be achieved unless the operator can show that it conflicts with an approved post-mining land use, or can demonstrate that reclamation of an open pit or waste unit “is not technically or economically feasible or is environmentally unsound.” With the closeout plan, an operator must file financial assurance with the Director sufficient to allow the state to hire a third party to complete the closure and reclamation requirements of the permit. An approved existing mine permit applies for the life of the operation.

 

What are the requirements for "new" mine permits?  Back to top
The permit application process for a new mining operation is more complex. The application must contain considerable detail both on the nature and impacts of the proposed operation and on the background of the mine owners and operators. The applicant must collect at least 12 months of environmental baseline data on the permit area. The baseline investigation must provide information on (and the permit application must assure that) the operation and reclamation of the facility protect human health and safety, wildlife, cultural resources, and hydrologic balance. The Mining Commission rules require that a new mining operation employ best management practices, which include designing the operations to avoid or minimize acid drainage and other impacts to ground and surface water, to control erosion, and to use contemporaneous reclamation when practicable.

The Director cannot issue a new mining permit unless he or she can find that the reclaimed operation will achieve “a self-sustaining ecosystem appropriate for the life zone of the surrounding areas” unless conflicting with a post-mining land use (no other waivers allowed), that the proposed reclamation is economically and technically feasible, and that all environmental requirements can be met without perpetual care. In addition, the operator or owners cannot fail any of the bad actor tests established under the act and the rules. A new mine permit has a maximum term of 20 years with 10-year renewal periods.

 

What is the role of the public?   Back to top
The New Mexico Mining Act provides substantial opportunities for the public to participate in the major actions. Public notice is required on applications for the issuance, renewal, or revision of permits; for variance or standby requests; and for the release of financial assurance. The act requires that notice be provided in several manners, including mailing to all property owners within a half mile of the operation, to local governments, and to those citizens on lists maintained by MMD; posting in four conspicuous places including the facility entrance; and publishing a notice in a local newspaper. The notice provides citizens with an opportunity to comment on the proposed action and to request a public hearing.

Any person who is adversely affected by any order, penalty assessment or permit action taken by the MMD Director can appeal to the Mining Commission. The Commission will then conduct an evidentiary hearing on the appeal. The Commission decision can be appealed to the District Court.

Finally, the Mining Act is unique among New Mexico environmental statutes in allowing a “citizen suit.” A citizen with an adversely affected interest can sue any person who allegedly violated any rule, order, or permit issued under the act, or sue EMNRD, the Environment Department, or the Mining Commission for violating the act or for failing to perform any non-discretionary duty under the act. A citizen suit cannot be commenced if the agencies have undertaken and are “diligently prosecuting” an enforcement action.

 

What are some current Mining Act issues?   Back to top
The implementation of the Mining Act triggered numerous disputes over the interpretation and impact of the act. Some disputes were ultimately resolved by agency actions and some by court decisions. What follows is a discussion of a few of the major issues that remain at the forefront today.

Agency Coordination: At the time the Mining Act was passed, mining operations were already subject to a number of regulatory regimes. These included water and air quality rules of the Environment Department and the federal Environmental Protection Agency (EPA), and, if the mine was on public land, the rules of land management agencies such as the BLM, the U.S. Forest Service, and the State Land Office. Both the environmental community and the mining community were concerned about the coordination of Mining Act requirements with those of other agencies. The environmental community feared that the various agencies would not interact and that serious concerns could fall into the cracks between regulatory programs. The mining community feared that the agencies would issue duplicative and conflicting requirements that would be costly and time consuming for the companies.

The Mining Act attempted to address the concerns of both groups. On the one hand, the Mining Act permits are treated as umbrella permits that require the operator to have obtained all other necessary permits and to obtain a determination from the Environment Department that the permitted mining activities will achieve compliance with environmental standards. On the other hand, the act also imposes requirements on all permitting agencies regulating mining operations to coordinate with each other and to avoid duplicative and conflicting requirements and permit administration.    Back to top

MMD has made some strides in coordinating with other agencies. Agreements have been reached with the BLM and the U.S. Forest Service that establish processes for cooperation on mines on federal land. The State Land Office modified its rules to largely require lessees to follow the Mining Act rules. The greatest challenge in agency coordination has been the relationship between MMD and the Environment Department. As mentioned earlier, MMD must obtain a determination from the secretary of the Environment Department that a proposed closeout plan for a new or existing mine will achieve compliance with all applicable environmental standards. In particular, if a mining operation has potential groundwater contamination concerns, the Environment Department will require that the operator obtain a discharge permit with a “closure plan.” The closure plan attempts to ensure a long-term solution to any groundwater pollution concerns. Like the MMD closeout plan, the closure plan will establish reclamation requirements because in many cases the Environment Department has determined that the best way to prevent long-term water contamination is through reclamation.

While the closure and closeout plan requirements appear to establish duplicative and possibly conflicting mandates for the operators, the agencies and operators have managed to lessen the conflicts. Mine operators will often submit one plan to both agencies. The agencies will then negotiate with the operator, and amongst themselves, to establish one set of requirements for the reclamation of the facility. The agencies will also allow the operator to provide financial assurance that satisfies both permits. After the plans are approved, the agencies then continue to coordinate on the implementation and enforcement of the plans.

While the agencies have had success in avoiding duplicative and conflicting requirements, the process of agency coordination, both for state and federal agencies and for the operators, consumes considerable time and resources. The issue remains as to whether the work of the agencies can be streamlined further. Toward that end, there have been sporadic investigations into modifying the statutory framework, agency structure or staffing arrangements to combine, re-distribute or change these elements to simplify requirements and to reduce or eliminate duplication. These include combining MMD and Environment Department ground water regulatory programs, keeping them legally separate but housing them in the same location, or modifying the controlling statutes to eliminate duplicative requirements.

Financial assurance: The Mining Act requires that each operator post, prior to obtaining a permit, financial assurance (FA) “sufficient to assure the completion of the performance requirements of the permit, including closure and reclamation, if the work had to be performed by the director or a third party contractor.” The act also prohibits the operator from using “any type or variety of self-guarantee or self-insurance.” These strict requirements have resulted in some of the largest financial assurance amounts in the United States: The three largest mines in the state have FA obligations that each exceed $100,000,000.

Traditionally, mines have relied on surety bonds as the primary form of FA. However, changes in the insurance industry have made surety bonds very difficult and very expensive to obtain for mining companies. As a result, both the agencies and the operators have become more creative and flexible to meet FA requirements. The Mining Commission amended its rules to allow additional forms of FA, including trust funds, and to allow mechanisms such as “net present value.” Recent large FA submittals have included a package of instruments, including trust funds, guarantees, collateral and letters of credit. Companies have also been more willing to accelerate their reclamation work to decrease their FA obligations.

Issues still remain about the use of certain FA mechanisms. Most notable are the concerns about whether certain types of guarantees, such as those provided by parent companies, violate the Mining Act's prohibition on self guarantees.

 

Has the Mining Act been a success?   Back to top
The legislature established a goal of promoting responsible utilization and reclamation of lands impacted by mining while also recognizing that mining is vital to New Mexico. Thus, success can be measured by seeing whether the state can require responsible mining and reclamation while not killing the hard rock mining industry in New Mexico.

For existing mines, the act has, up to this point, largely been a success. Reclamation plans have been approved and financial assurance has been provided at almost all of the state's existing mines. This is a remarkable feat considering that these mines were largely developed prior to the Mining Act without any plans for reclamation. At the same time, the state's largest mines remain operational and the act has not prevented the permitting of mine expansions. The recent increases in world commodity prices has resulted in significant increases in production and employment at existing mines, and facilitated the commencement of major reclamation projects.

For new mines, the impact of the Mining Act is harder to judge. A number of new mines have received permits under the act. However, the new mines have been fairly small, and no new large metal mine has been permitted under the act. New Mexico is not alone in this regard. Few new large metal mines have opened anywhere in the continental U.S. in recent years. Metals mining is now a global industry and, for the past few decades, companies have been looking to foreign jurisdictions with large untapped high grade deposits and lower costs.

Still, some in industry will argue that the increased requirements for new mines imposed by the Mining Act and by other agencies discourage perspective mine development in New Mexico. On the other hand, environmentalists might argue that if the act prevents marginal operations from coming to New Mexico, that may also explain why New Mexico has avoided the disasters such as Summitville, Zortman-Landusky, and other mine bankruptcies, which have left most western states with considerable exposure for reclamation and environmental cleanups.

A recent study by the Fraser Institute, a free market think tank in Canada, offers some evidence about how the mining industry views the attractiveness of New Mexico compared to other jurisdictions. Mining executives were surveyed concerning both the policy climate and the mineral potential of various jurisdictions around the world, and their responses were used to create several indices. On a scale of 0 to 100, New Mexico received a 53 for policy potential and a 36 for mineral potential. Compared to other states, New Mexico finished sixth highest overall out of fourteen. States such as Colorado, Montana and Wyoming scored lower than New Mexico. Perhaps more significantly, nine of the top ten jurisdictions were foreign, while eight of the bottom ten were U.S. states.

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