RENO, Nev. — In the Old West, a miner's word was his bond. In Nevada, it still is, but some conservationists and state legislators still want to require mining companies to post bonds to cover cleanup costs.
Environmentalists are pressing a bill in the Nevada Legislature that would end the longtime practice of allowing mining companies in the nation's largest gold producing state to guarantee payment of mining reclamation costs by simply promising they are good for the money. The U.S. Interior Department did away with "corporate guarantees" on federal land in 2001, and now requires companies to post bonds to cover projected mine cleanup costs, which can be hundreds of millions of dollars.
Nevada, the third-largest producer of gold in the world behind South Africa and Australia, and Alaska are the only states that still accept some form of guarantees in lieu of bonds. The guarantees are nothing more than "a promise by the company's CEO that they will not go bankrupt and additionally that they will fulfill their pledges to clean up their sites," said Tom Myers, director of the Great Basin Mine Watch, a Reno-based nonprofit environmental watchdog group.
The result, should those companies fail, is that Nevada taxpayers would be responsible for as much as $237 million in mine reclamation expenses — the amount of corporate guarantees held by the state.
"The Nevada taxpayer should not have to bear the responsibility for mine cleanup," said Assemblywoman Sheila Leslie, co-sponsor of legislation introduced last week. "This bill would protect taxpayers from footing the bill for almost a quarter-billion dollars in cleanup costs."
The state's chief environmental regulator said he will consider the proposal but doesn't think it's necessary.
Mines on state land are required to post a bond for 25 percent of projected cleanup costs and promise to pay the rest. "We don't feel the corporate bonding structure in Nevada is broken at this time, but we're always looking for ways to make it stronger," said Allen Biaggi, administrator of the Nevada Division of Environmental Protection.
The state recently strengthened its guarantee requirements, adding annual reviews of the companies and third-party confirmation of finances, he said.
"It's a very delicate balance to make sure we maintain a healthy and vibrant industry while requiring protection of health, safety and the environment," Biaggi said.
Industry leaders who oppose the reforms said they would take a toll on mining companies already suffering from a post-Sept. 11 economy and increased difficulty securing surety bonds after the collapse of Enron Corp. and other large corporations.
"To make the change suggested would put an extreme hardship on some of the companies now using corporate guarantees, which might very well affect their plans to continue with development and operations in rural Nevada," said Russell Fields, president of the Nevada Mining Association.
The Clinton administration eliminated federal guarantees in 2001 as part of a sweeping reform of federal hardrock mining regulations over industry objections. The Bush administration subsequently repealed many of those reforms.
"When Bush did away with the Clinton reforms, the ban on corporate guarantees was about the only thing he kept," said Christie Whitehead, of Great Basin Mine Watch.
On the Net:
National Mining Association: www.nma.org
Great Basin Mine Watch: www.greatbasinminewatch.org