oversight

Phosphate Mining: Oversight Has Strengthened, but Financial Assurances and Coordination Still Need Improvement

Published by the Government Accountability Office on 2012-05-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office

GAO          Report to Congressional Requesters




May 2012
             PHOSPHATE MINING

             Oversight Has
             Strengthened, but
             Financial Assurances
             and Coordination Still
             Need Improvement




GAO-12-505
                                               May 2012

                                               PHOSPHATE MINING
                                               Oversight Has Strengthened, but Financial
                                               Assurances and Coordination Still Need
                                               Improvement
Highlights of GAO-12-505, a report to
congressional requesters.




Why GAO Did This Study                         What GAO Found
For over 100 years in the United               Since 1996, federal agencies have taken several actions to strengthen their
States, phosphate has been mined on            oversight of phosphate mining on federal land. For example, BLM now conducts
federal land primarily for use in              more detailed environmental analysis when evaluating new mine plans; requires
fertilizer and herbicides. The                 phosphate mine operators to provide more comprehensive plans for reclaiming
Department of the Interior’s Bureau of         mine sites (restoring the land to a stable condition that can support other uses);
Land Management (BLM) is                       and requires the mine operators to provide financial assurances that are based on
responsible for leasing and overseeing         the full estimated cost of reclaiming mines, in contrast to BLM’s previous practice of
such mines on federal land. In 1996,           calculating financial assurances based simply on the acreage associated with
selenium contamination from                    mines. However, gaps remain in agency policies and coordination that could limit
phosphate mines was discovered in              the agencies’ efforts to address contamination from phosphate-mining operations.
Idaho, threatening the health of               For example, BLM has not documented its new full-cost financial assurance
livestock and wildlife. Mines in the area      practice in agency policy and therefore has limited assurance that it will be
are now being assessed for cleanup             implemented consistently. BLM also has not fully coordinated with the Forest
under the Environmental Protection
                                               Service when establishing mine lease conditions and setting financial assurance
Agency’s (EPA) Superfund program.
                                               amounts. Limited coordination is of particular concern because 16 phosphate
Agencies may require mine operators
to post financial assurances, which are
                                               leases in Idaho are scheduled for review and possible readjustment in the next 5
usually in the form of a bond, to ensure       years, and once a lease is readjusted, its provisions are in effect for 20 years.
they meet their leasing and cleanup            Over the last 16 years, federal agencies and mine operators have primarily
obligations. GAO was asked to                  focused on assessing the extent of selenium contamination in Idaho and have
determine the (1) extent to which              conducted only limited remediation actions. The agencies have conducted or
federal oversight for phosphate                overseen high-level assessments of contamination at 16 of the 18 mines where
operations has changed since 1996;             federal agencies are overseeing mining operations or cleanup activities, and at
(2) actions federal agencies and mine
                                               several of these mines the agencies and mine operators are now conducting
operators have taken to address
                                               more detailed assessments, known as remedial investigations and feasibility
contamination, amounts spent to date,
and estimated remaining costs; and             studies. However, no final cleanup actions have been chosen at any of the sites,
(3) types and amounts of financial             and according to officials, most sites will require years of additional investigative
assurances in place for phosphate-             work before final cleanup actions are selected. Federal agencies reported that
mining operations. GAO reviewed                they have spent about $19 million since 2001 to oversee these assessments and
agency data and documents, and                 undertake a limited number of remediation actions, roughly half of which has
interviewed key agency and mine                been reimbursed by the mine operators under cleanup settlement agreements.
operator officials.                            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
What GAO Recommends                            support these claims. Agency officials told GAO that they have not developed
                                               estimates for the remaining cleanup costs because final cleanup remedies have
Among other things, GAO                        not yet been identified. However, their informal estimates suggest that remaining
recommends that BLM document its               cleanup costs may total hundreds of millions of dollars for the contamination from
financial assurance practice in policy         mining in Idaho.
and consult with the Forest Service to
better protect the federal government          Federal agencies reported holding about $80 million in financial assurances for
from cleanup costs. In commenting on           reclaiming phosphate mines in Idaho. Most of this amount—over $66 million—is
a draft of this report, Interior, the Forest   associated with the two most recently approved phosphate mines. Agencies
Service, and EPA generally agreed              reported holding an additional $11.5 million in financial assurances to cover site
with GAO’s findings and                        assessment and limited cleanup activities under EPA’s Superfund program, but
recommendations.                               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
View GAO-12-505. For more information,         assurances have been established to cover future cleanup costs because
contact Anu K. Mittal at (202) 512-3841 or
mittala@gao.gov.
                                               remaining cleanup actions have not yet been identified, according to agency
                                               officials.
                                                                                         United States Government Accountability Office
Contents


Letter                                                                                      1
               Background                                                                   5
               Agencies Have Provided More Rigorous Oversight of Phosphate
                 Mining Since 1996, but Oversight Gaps Remain                             19
               Agencies and Mine Operators Have Focused on Assessing
                 Contamination, Not Conducting Remediation, and Total Cleanup
                 Costs Are Currently Unknown                                              27
               Agencies Hold Millions of Dollars in Financial Assurances for Site
                 Reclamation and Assessment, but Some Are in the Form of
                 Potentially Risky Corporate Guarantees                                   41
               Conclusions                                                                45
               Recommendations for Executive Action                                       46
               Agency Comments and Our Evaluation                                         47

Appendix I     Scope and Methodology                                                      49



Appendix II    Information on 18 Phosphate Mines Overseen by Federal Agencies in
               Southeastern Idaho, and CERCLA Cleanup Expenditures                        53



Appendix III   Comments from EPA                                                          55



Appendix IV    Comments from the Department of Agriculture                                57



Appendix V     Comments from the Department of the Interior                               58



Appendix VI    GAO Contact and Staff Acknowledgments                                      61



Tables
               Table 1: Production Status and Presence of Selenium
                        Contamination at Phosphate Mines in Southeastern Idaho            11




               Page i                              GAO-12-505 Phosphate Mining on Federal Land
          Table 2: CERCLA Activities at 16 Contaminated Mines, by
                   Assessment Process                                               30
          Table 3: Acres Disturbed, CERCLA Lead Agency, and Surface Land
                   Ownership at 18 Phosphate Mines in Southeastern Idaho            53
          Table 4: Assessment and Cleanup Expenditures at the 16
                   Contaminated Phosphate Mines in Southeastern Idaho,
                   from Fiscal Years 2001 through 2011                              54


Figures
          Figure 1: Map of the Western Phosphate Field                                7
          Figure 2: An Active Phosphate Mine in Southeastern Idaho                    8
          Figure 3: An Inactive Phosphate Mine in Southeastern Idaho with a
                   Cross-Valley Fill                                                  9
          Figure 4: How Phosphate Mining Overburden Can Release
                   Selenium                                                         10
          Figure 5: The CERCLA Non-Time Critical Removal Assessment and
                   Cleanup Process                                                  16
          Figure 6: The CERCLA Remedial Action Process                              18
          Figure 7: Total Agency Expenditures for Overseeing Phosphate
                   Mine Assessment and Remediation, and Percentage and
                   Amounts Reimbursed by Mine Operators, 2001-2011                  37
          Figure 8: Amount and Composition of BLM-Held Reclamation
                   Financial Assurances                                             43




          Page ii                            GAO-12-505 Phosphate Mining on Federal Land
Abbreviations
BIA             Bureau of Indian Affairs
BLM             Bureau of Land Management
CERCLA          Comprehensive Environmental Response, Compensation,
                and Liability Act
FWS             Fish and Wildlife Service
EIS             Environmental impact statement
EPA             Environmental Protection Agency
E.O.            Executive Order
IDEQ            Idaho Department of Environmental Quality
NEPA            National Environmental Policy Act
NPDES           National Pollution Discharge Elimination System
NPL             National Priorities List
TMDL            Total Maximum Daily Load
Corps           U.S. Army Corps of Engineers

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Page iii                                    GAO-12-505 Phosphate Mining on Federal Land
United States Government Accountability Office
Washington, DC 20548




                                   May 4, 2012

                                   The Honorable Barbara Boxer
                                   Chairman
                                   Committee on Environment and Public Works
                                   United States Senate

                                   The Honorable Edward J. Markey
                                   Ranking Member
                                   Committee on Natural Resources
                                   House of Representatives

                                   Since the early 1900s, phosphate rock—the only economically viable
                                   source of phosphorus used to make detergents, herbicides, and
                                   fertilizer—has been mined on predominantly federal land in southeastern
                                   Idaho, which is part of the Western Phosphate Field. The Western
                                   Phosphate Field comprises about 86 million acres of land in the Rocky
                                   Mountains from Utah and Colorado stretching north into Idaho, Montana,
                                   and Wyoming. However, in 1996 selenium—a potentially toxic chemical
                                   that leached out of the waste rock taken from phosphate mines—was
                                   discovered in southeastern Idaho, and since then an estimated 600 head
                                   of livestock (including horses, cattle, and sheep) have died after ingesting
                                   plants or surface water containing high concentrations of selenium. 1 As
                                   was common practice at these mines, to facilitate the removal of the
                                   phosphate rock, operators had used the waste rock, called overburden,
                                   as backfill and placed it in large external waste rock piles or in adjacent
                                   valleys. 2 The selenium present in the overburden has been transported
                                   by rain and snow run-off into groundwater or into streams and rivers
                                   inhabited by native fish, and accumulated in ground cover plants that
                                   have been consumed by livestock and other animals such as deer and




                                   1
                                    One phosphate mine currently operates on federal land in Utah, but the discovery of
                                   selenium contamination associated with phosphate operations was limited to mining
                                   locations in Idaho. As a result, this report focuses on agency and mine operator activities
                                   in Idaho.
                                   2
                                    For simplicity in this report, we use the term mine operators to refer to those individuals
                                   and companies that engage in activities related to phosphate mining, such as leasing
                                   federal land, obtaining regulatory approval for a phosphate mine, and operating a
                                   phosphate mine.




                                   Page 1                                        GAO-12-505 Phosphate Mining on Federal Land
elk. Much of the mining in this area has taken place on federal land, 3 and
federal agencies are currently overseeing mining operations or selenium
cleanup at 18 phosphate mines, of which 5 are active and 13 inactive. 4 Of
the 18 mines, 16 are contaminated with selenium and most are being
assessed under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), also known as Superfund, for
future cleanup.

The phosphate reserves being mined in southeast Idaho contain
phosphate formations that are thicker and richer, on average, than in the
other states and account for about 30 percent of total U.S. reserves,
according to the U.S. Geological Survey. The Western Phosphate Field
represents one of two commercially-viable phosphate reserves in the
nation—the other is located primarily on private land in the southeastern
United States. About 80 percent of the phosphate reserves in
southeastern Idaho lie underneath land managed by the Department of
Agriculture’s Forest Service as part of the 3-million acre Caribou-Targhee
National Forest.

Phosphate deposits on these lands are leased to mine operators by the
Secretary of the Interior under the Mineral Leasing Act of 1920, which,
with the regulations implementing the act, creates a system to lease
these resources and charge a royalty for their extraction. Interior’s Bureau
of Land Management (BLM) is responsible for issuing leases for solid
mineral deposits, such as phosphate, on federal land. Under the
provisions of the Mineral Leasing Act, BLM issues leases for 20 years
and as long thereafter as the operator maintains compliance with lease
terms and other conditions, but the leases are subject to readjustment
every 20 years, at which time BLM has the opportunity to modify lease
terms and conditions. For federal phosphate leases, BLM is responsible
for approving mine operators’ plans of operation for proposed mines and
is authorized to monitor mine operations during production and to ensure
the mine operators complete reclamation once the operations have




3
Federal land is used in this report to refer to federally-owned surface or subsurface land.
4
 There are additional, smaller phosphate mines in southeastern Idaho, none of which are
currently active, where federal agencies do not have a role in overseeing mine operations
or cleanup and that are considered a lower priority for cleanup. These mines are not
included in our review.




Page 2                                      GAO-12-505 Phosphate Mining on Federal Land
ceased. 5 In overseeing phosphate mining, BLM works with other federal
agencies, including the Forest Service; Interior’s Bureau of Indian Affairs
(BIA) and Fish and Wildlife Service (FWS); the Environmental Protection
Agency (EPA); and the U.S. Army Corps of Engineers (Corps). BLM also
works with state agencies, including the Idaho Department of
Environmental Quality (IDEQ). This involves coordinating inspections,
enforcement, and mine-plan reviews and giving consideration to federal
laws, such as the National Environmental Policy Act (NEPA), 6
Endangered Species Act, 7 and Clean Water Act, 8 as well as land-use
plans that BLM and the Forest Service have developed.

BLM requires mine operators to provide financial assurances to ensure
that they meet the obligations specified in their leases and permits, such
as paying royalties and complying with requirements for mine operations
and reclamation. 9 If the mine operator fails, for example, to reclaim a
mine site after production has ceased or to pay federal royalties, BLM can
demand payment from the financial assurance to cover the obligation.
Other agencies may also hold financial assurances for activities
associated with mining. For example, the Forest Service can require that
mine operators post financial assurances when obtaining permits to
construct roads through a national forest to access a leased site.
Additionally, federal agencies, including EPA, can obtain financial
assurances from mine operators to help ensure performance in




5
 Reclamation generally includes restoring the land to a stable condition that can support
other uses through actions such as recontouring hillsides, removing roads and structures,
and planting vegetation.
6
 42 U.S.C. §§ 4321-4347 (2006). NEPA requires federal agencies to evaluate the likely
environmental effects of a proposed project using an environmental assessment or, if the
project would likely significantly affect the environment, a more detailed environmental
impact statement evaluating the proposed project and alternatives.
7
    16 U.S.C. §§ 1531-1544 (2006).
8
    33 U.S.C. §1251-1387 (2006).
9
  These financial assurances, also referred to as bonds, can be surety or personal bonds.
A surety bond is a third-party guarantee that an operator purchases from a private
insurance company approved by the Department of the Treasury. The operator must pay
a premium to the surety company to maintain the bond. These premiums can vary
depending on various factors, including the amount of the bond and the assets and
financial resources of the operator, among other factors. Personal bonds may be in the
form of a check or negotiable U.S. Treasury bonds.




Page 3                                      GAO-12-505 Phosphate Mining on Federal Land
accordance with settlement agreements negotiated under CERCLA for
assessing and cleaning up contamination from mines. 10

You asked us to review issues surrounding the oversight and cleanup of
phosphate mines on federal lands. This report examines 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.

To address the first objective, we reviewed relevant agency documents
and reports created both before and after 1996. These include BLM’s and
the Forest Service’s land-use plans; BLM records of decision for new
mine plans and associated NEPA documents; and BLM lease and bond
reports. We interviewed officials with BIA, BLM, FWS, and the Office of
Natural Resources Revenue, within the Department of the Interior; the
Forest Service; EPA; the Corps; and IDEQ. We also interviewed
representatives of the three phosphate mine operators who operate in
Idaho and visited the phosphate mines operating as of June 2011. To
address the second objective, we reviewed BLM, Forest Service, EPA,
and IDEQ documents and reports on the status of assessment and
cleanup efforts, and the related settlement agreements with the mine
operators. We obtained data on agency expenditures from Interior, BLM,
FWS, the Forest Service, EPA, and IDEQ, including the source of the
funds, and data on the amount of expenditures reimbursed by mine
operators under the CERCLA settlement agreements. To evaluate the
reliability of these data and determine their limitations, we reviewed the
agencies’ internal controls of their data systems and interviewed agency
officials and determined that the expenditure data were sufficiently
reliable for our purposes. To address the third objective, we obtained
financial assurance data from BLM, BIA, the Forest Service, and EPA,


10
  EPA and other federal agencies may accept financial assurances in the form of
corporate guarantees, which are promises by mine operators, sometimes accompanied by
a test of financial stability, to pay remediation costs, but they do not require that funds be
set aside to pay such costs.




Page 4                                        GAO-12-505 Phosphate Mining on Federal Land
             including data on financial assurances held by Idaho state agencies for
             operations on federal land. To evaluate the reliability of the financial
             assurance data, we interviewed agency officials, examined agency
             records, and cross-checked the data with the financial assurance
             amounts listed in agency databases and CERCLA settlement
             agreements, and determined that these data were sufficiently reliable for
             our purposes. To obtain additional perspectives on the issue of
             phosphate mining, we also interviewed representatives from regionally-
             focused environmental advocacy groups, including the Idaho
             Conservation League and the Greater Yellowstone Coalition. Appendix I
             describes our scope and methodology in more detail.

             We focused our report on agencies’ and mine operators’ activities in
             Idaho for two primary reasons. First, phosphate-mining operations on
             federal land are generally limited to the Western Phosphate Field, and all
             but one of these operations are located in Idaho. Second, the occurrence
             of selenium contamination resulting from phosphate mining operations on
             federal lands is currently limited to Idaho; similar levels of contamination
             have not been discovered in the neighboring state where a portion of the
             Western Phosphate Field is mined.

             We conducted this performance audit from May 2011 through May 2012
             in accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             Phosphate is used in the manufacture of a variety of products, including
Background   toothpaste, soft drinks, and dishwashing and laundry detergents. Over 95
             percent of the phosphate produced in the United States, however, is used
             in the manufacture of fertilizers and animal feed supplements. This section
             provides information on phosphate mining in Idaho, the phosphate-leasing
             process, the mine plan approval process, the Clean Water Act permitting
             process, and the CERCLA assessment and remediation process.




             Page 5                               GAO-12-505 Phosphate Mining on Federal Land
Phosphate Mining in Idaho   Roughly 12 percent of the phosphate currently produced in the United
                            States comes from the five active mines located in southeastern Idaho on
                            lands managed by BLM, the Forest Service, the State of Idaho, and
                            private landowners. 11 In addition, phosphate mining occurred historically
                            on nearby lands in Idaho leased by the Shoshone-Bannock Tribes on the
                            Fort Hall Indian Reservation. The entire area of southeastern Idaho is at
                            the center of the Western Phosphate Field that extends into six western
                            states. Figure 1 shows the location of the field.




                            11
                              The remaining phosphate produced in the United States comes predominantly from
                            phosphate mines located on mostly private land in the southeastern United States, as well
                            as from one active mine on federal land in Utah. As noted earlier, these mines are not
                            included in our study.




                            Page 6                                     GAO-12-505 Phosphate Mining on Federal Land
Figure 1: Map of the Western Phosphate Field




Three mine operators currently mine phosphate at the five active mines in
southeastern Idaho. At each of these mines, operators use drilling and
blasting to expose the layers of phosphate ore so that it can be excavated




Page 7                                 GAO-12-505 Phosphate Mining on Federal Land
and hauled by truck, train, or pipeline to a facility for processing. 12 Two of
these operators process the phosphate ore into fertilizer products, while
the third produces elemental phosphorus for use in herbicides. To access
the phosphate ore, the mine operators must also remove the
overburden—that is, the layers of rock that overlay, or in some cases are
layered between, the phosphate ore. The overburden was historically
placed in external waste dumps or used as backfill in mine pits or in
nearby valleys, creating what are known as cross-valley fills. Figure 2
shows an active phosphate mine in southeastern Idaho, and figure 3
shows an inactive phosphate mine with a cross-valley fill.

Figure 2: An Active Phosphate Mine in Southeastern Idaho




12
  To transfer phosphate via pipeline, the ore must first be crushed and mixed with water to
form a thick solution called slurry that can be pumped through the pipeline. The three
operators also operate separate mineral processing facilities, each of which poses
additional environmental issues. However, these processing facilities are not addressed in
this report.




Page 8                                      GAO-12-505 Phosphate Mining on Federal Land
Figure 3: An Inactive Phosphate Mine in Southeastern Idaho with a Cross-Valley Fill




After horses grazing downstream from a cross-valley fill on federal land
became sick and had to be euthanized in 1996, it was discovered that
much of the overburden at phosphate mines in Idaho contains high
concentrations of selenium—a naturally occurring element that in trace
amounts is essential to the normal functioning of cells in animals but that
can be poisonous in large concentrations. The selenium present in the
overburden can be transported by rain and snow into the groundwater or
into rivers and streams, or picked up by the roots of plants growing on the
waste piles. The uptake of selenium contamination in vegetation or the
frequent ingestion of selenium by animals can cause it to build up over
time in a process known as bioaccumulation. BLM officials estimate that
over 600 head of livestock have died from selenium poisoning since 1996
in the area—including a 2005 incident involving the deaths of over 30
sheep near a mine on federal land. Adverse effects due to selenium
contamination have also been documented in birds and aquatic animals
such as fish and invertebrates. Figure 4 shows the phosphate mining
process and how it can result in the release of selenium.




Page 9                                   GAO-12-505 Phosphate Mining on Federal Land
Figure 4: How Phosphate Mining Overburden Can Release Selenium




                                      In southeastern Idaho, selenium contamination has been measured at 3
                                      of the 5 active mines, and at all 13 of the inactive mines. Table 1 shows
                                      the 18 phosphate mines in southeastern Idaho and their production
                                      status, and the locations where selenium contamination and livestock
                                      deaths have occurred. See appendix II for more detailed information on
                                      the acres and surface land ownership of these mines.




                                      Page 10                             GAO-12-505 Phosphate Mining on Federal Land
                        Table 1: Production Status and Presence of Selenium Contamination at Phosphate
                        Mines in Southeastern Idaho

                                                                                 Selenium    Livestock deaths
                                                                               contamination or illnesses have
                         Mine name                        Active    Inactive     detected         occurred
                         Ballard                                        •             •
                         Blackfoot Bridge                    •
                         Champ                                          •             •
                         Conda                                          •             •                  •
                         Diamond Gulch                                  •             •
                         Dry Valley                                     •             •
                         Dry Valley, South Extension         •
                         Enoch Valley                                   •             •
                         Gay                                            •             •
                         Georgetown Canyon                              •             •                  •
                         Henry                                          •             •
                         Mountain Fuel                                  •             •
                         North Maybe                                    •             •                  •
                         Rasmussen Ridge                     •                        •
                         Smoky Canyon                        •                        •
                         South Maybe Canyon                             •             •                  •
                         South Rasmussen                     •                        •
                         Wooley Valley                                  •             •                  •
                         Total                               5         13             16                 5
                        Source: BLM.




The Phosphate-Leasing   BLM issues phosphate leases under the Mineral Leasing Act of 1920. 13
Process                 BLM is responsible for leasing on federal lands, but it must consult with
                        the agency having jurisdiction over the surface, such as the Forest
                        Service, with respect to surface protection and reclamation requirements.
                        BLM will decline to issue a lease for phosphate mining if it is inconsistent
                        with an applicable land-use plan. According to BLM officials, most of the




                        13
                          A phosphate lease gives the mine operator the exclusive right to phosphate resources
                        on the leased land, but not to the lands themselves. Use of the land is subject to the terms
                        and conditions of the lease.




                        Page 11                                      GAO-12-505 Phosphate Mining on Federal Land
                         86 phosphate leases in southeast Idaho were issued over 50 years ago, 14
                         and BLM last held a competitive lease sale in 1991. However, additional
                         lands have been leased through lease modifications—a non-competitive
                         process whereby a mine operator requests that BLM expand an existing
                         lease to include lands adjacent to an active or proposed mine. Leases are
                         for indefinite terms; however, BLM may make reasonable adjustments to
                         the lease conditions once every 20 years. Lessees have the right to
                         challenge the terms and conditions proposed by BLM through
                         readjustment, including a right of appeal to the Interior Board of Land
                         Appeals. 15 In addition to obtaining a lease from BLM, mine operators may
                         need to obtain a special-use permit to use National Forest System land
                         for off-lease activities, such as the construction of access roads. Mine
                         operators must pay a royalty of at least 5 percent of the gross value of
                         phosphate rock and associated minerals produced, as well as annual rent
                         of up to $1.00 per acre. For leases that have not been in production for 6
                         or more years, mine operators pay an annual royalty of $3 per acre that
                         includes rent. According to officials with Interior’s Office of Natural
                         Resources Revenue, the federal government collected roughly $7 million
                         in royalties and rents from phosphate mine operations on federal land in
                         fiscal year 2010.


The Mine Plan Approval   Before conducting any operations under a lease, an operator must submit
Process                  to BLM a mine plan detailing the operations to be conducted. The mine
                         plan outlines basic mine operations and mine-specific production
                         measurement methods for calculating royalties. The mine plan also is to
                         include information on the environmental aspects of the proposed mine,
                         such as pollutants that may enter waters, measures to be taken to
                         prevent air and water pollution and damage to fish or wildlife, and a
                         reclamation plan. The reclamation plan details the steps the operator will
                         take to restore the land to its previous condition, including action such as
                         recontouring hillsides, removing roads and structures, and planting
                         vegetation. BLM is required to consult with other federal agencies, such
                         as those having jurisdiction over surface land, prior to approval and may
                         require modifications to an approved plan if conditions warrant. For



                         14
                           Some mines are associated with multiple leases and some leases have no mining
                         activity. As a result, the number of leases in the area—86—is greater than the number of
                         mines where federal agencies are overseeing mining operations or cleanup activities—18.
                         15
                          43 C.F.R. § 3511.26 (2011).




                         Page 12                                    GAO-12-505 Phosphate Mining on Federal Land
example, BLM may seek to modify a mine plan if selenium is discovered
at the site after operations begin. After the approval of a mine plan, BLM
sets a financial assurance amount for the mining operation. Financial
assurances may cover individual leases or all leases for a single lessee in
a state or nationwide. The minimum amount for an operator is $5,000 for
individual leases, $25,000 for all of the operator’s leases statewide, or
$75,000 for all of the operator’s leases nationwide. BLM may enter into
agreements with states whereby any financial assurance provided to a
state would also satisfy BLM’s requirements. BLM will release a financial
assurance when it determines that the operator has (1) paid all royalties,
rents, penalties, and assessments; (2) satisfied all lease obligations; (3)
reclaimed the site; and (4) taken effective measures to ensure that the
mineral prospecting or development activities will not adversely affect
surface or subsurface resources. The Forest Service may also require
operators to post financial assurances for activities associated with
special-use permits.

In association with the mine approval processes, BLM—in cooperation
with the Forest Service if National Forest System land is involved—must
evaluate the proposed mine under NEPA. NEPA requires federal
agencies to evaluate the likely environmental effects of a proposed
project using an environmental assessment or, if the project is likely to
significantly affect the environment, a more detailed environmental impact
statement (EIS). EPA officials told us that EPA is required to review, and
issue written comments on, each draft EIS, which BLM may accept or
reject. 16 As part of the NEPA process, and also to comply with the
Endangered Species Act, BLM and the Forest Service may also
undertake a biological assessment to identify endangered or threatened
species and critical habitat that may be affected by mine operations. 17 If
BLM and the Forest Service determine that a mine may affect an
endangered or threatened species, FWS may issue a biological opinion
as to whether the activity is likely to jeopardize the continued existence of
the species. If FWS finds that the activity will not jeopardize the species,


16
     EPA comments on each draft EIS pursuant to section 309 of the Clean Air Act.
17
   The purpose of the Endangered Species Act is to conserve threatened and endangered
species and the ecosystems upon which they depend. The act includes provisions for
listing species that need protection, designating habitat deemed critical to a listed species’
survival, developing recovery plans, and protecting listed species against certain harms
caused by federal and nonfederal actions. Section 7(c) of the act states that agencies may
conduct a biological assessment as part of their compliance with NEPA.




Page 13                                       GAO-12-505 Phosphate Mining on Federal Land
                                 its opinion will still list measures that can be taken to minimize impacts on
                                 the species. The outcomes of these analyses may affect BLM’s final
                                 decision on an operator’s mining plan.

The Clean Water Act Permitting   Mine operators may also need to work with other agencies to obtain
Process                          additional permits or certifications before they can begin mining
                                 operations. For example, operators must obtain a permit under section
                                 404 of the Clean Water Act from the Corps for the discharge of dredged
                                 or fill material into waters of the United States at specified disposal sites.
                                 Such discharges can include disposal of mine overburden. In addition,
                                 operators must obtain a permit under Section 402 of the Clean Water Act
                                 from EPA for discharges of storm water runoff that is contaminated by
                                 contact with certain materials such as overburden. 18 Under such permits,
                                 operators may need to implement technology-based controls to protect
                                 waters, but operators may also be required to implement other controls
                                 based on the quality of the water into which they are discharging.

                                 In addition, under section 303(d) of the Clean Water Act, states must
                                 establish a Total Maximum Daily Load (TMDL) for any water body that
                                 cannot meet applicable water quality standards even after technology-
                                 based controls are applied to sources of water pollution. The TMDL
                                 represents the total amount of a pollutant that can be discharged into a
                                 water body each day without exceeding the water quality standard for that
                                 water body. The state of Idaho has identified selenium as a substance
                                 impairing water quality in some of its waters, but it has not yet established
                                 any TMDLs for selenium. 19 Section 401 of the Clean Water Act also
                                 provides states with the opportunity to object to the issuance of federal
                                 permits and licenses, including section 404 or 402 permits that may affect
                                 water quality in the state. Accordingly, an operator seeking a federal
                                 permit for a project that may affect water quality in Idaho must also seek
                                 section 401 certification for the proposal from IDEQ.




                                 18
                                    National Pollution Discharge Elimination System (NPDES) permits are generally issued
                                 by states under EPA-approved programs, but Idaho does not have a program for issuing
                                 such permits; therefore, EPA issues these permits in Idaho.
                                 19
                                   Section 303(d) of the Clean Water Act does not provide any specific deadline for the
                                 development of TMDLs.




                                 Page 14                                     GAO-12-505 Phosphate Mining on Federal Land
The CERCLA Assessment     Environmental contamination discovered at a mine may require
and Remediation Process   remediation under CERCLA, the federal government’s principal program to
                          respond to releases or substantial threats of releases of hazardous
                          substances, pollutants, or contaminants which may present an imminent
                          and substantial danger to the public health or welfare. Under CERCLA, the
                          federal government has the authority to compel parties responsible for
                          contaminating sites to clean them up, or to conduct cleanups itself and then
                          seek reimbursement from the responsible parties. The National Priorities
                          List (NPL) is EPA’s list of the nation’s most contaminated sites, and
                          cleanups of these sites are typically expensive and lengthy. For NPL sites
                          on Forest Service or BLM land, the land management agencies and EPA
                          work together under interagency agreements to implement response
                          actions. For non-NPL sites on Forest Service or BLM land, the land
                          management agencies take the lead on implementing CERCLA response
                          actions, except for emergencies which have been delegated exclusively to
                          EPA. 20

                          In enforcing CERCLA, federal agencies generally attempt to reach an
                          agreement—known as a settlement agreement—with responsible parties
                          (such as mine operators or other entities) to perform and pay for site
                          cleanups once contamination has been discovered. Under these
                          agreements, responsible parties may be required to post a financial
                          assurance to ensure the performance of agreed-upon cleanup actions.
                          However, there are currently no regulations that require mine operators to
                          provide such financial assurances; agencies and responsible parties
                          negotiate these terms in each settlement. 21 Under CERCLA, EPA is
                          required to issue regulations requiring certain businesses that handle
                          hazardous substances to demonstrate their ability to pay for
                          environmental cleanup costs, but the agency has not yet issued such
                          regulations. However, the agency expects to propose such a rule for
                          certain types of mining, which could include phosphate mining, in 2013,
                          according to EPA officials.



                          20
                            Executive Order (E.O.) 12580, Superfund Implementation, was issued in 1987 and
                          delegates to EPA certain regulatory authorities that the statute assigns to the President,
                          while delegating to other federal agencies, including Interior and the Department of
                          Agriculture for the Forest Service, authority for non-NPL remedial actions and removal
                          actions other than emergencies on their lands, subject to section 120 and other provisions
                          of CERCLA. See E.O. No. 12580, 52 Fed. Reg. 2923 (Jan. 23, 1987).
                          21
                           EPA has model settlement agreements to help guide negotiations.




                          Page 15                                     GAO-12-505 Phosphate Mining on Federal Land
After contamination has been identified, the agency taking the lead on the
cleanup initiates a process to investigate the extent of the contamination,
decide on the actions that will be taken to address contamination, and
implement those actions. The CERCLA program has two basic types of
cleanup: (1) cleanups under the removal process, which generally
address short-term threats, and (2) cleanups under the remedial action
process, which are generally longer-term cleanup actions.

•   Removal actions include (1) time-critical removals for threats requiring
    action within 6 months, and (2) non-time-critical removals for threats
    where action can be delayed to account for a 6-month planning
    period. As shown in figure 5, the non-time-critical removal process
    involves three primary phases, (1) a site evaluation, including site
    investigation and engineering evaluation/cost analysis, to characterize
    the site and identify and analyze removal alternatives; (2) selection
    and implementation of the removal action; and (3) monitoring and
    maintenance.

Figure 5: The CERCLA Non-Time Critical Removal Assessment and Cleanup
Process




•   The remedial action process begins with a remedial investigation and
    a feasibility study to characterize site conditions, assess the risks to
    human health and the environment, and to evaluate various options to
    address the problems identified, among other things. These findings
    and decisions are documented in a record of decision. Implementation
    of the remedial action is divided into two parts: (1) remedial design, a
    further evaluation of the best way to implement the chosen remedy;
    and (2) remedial action, the implementation of the remedy selected.
    When physical construction of all remedial actions is complete and



Page 16                              GAO-12-505 Phosphate Mining on Federal Land
    other criteria are met, the lead agency deems the site to be
    construction complete. Most sites then enter an operation and
    maintenance phase, wherein the responsible party or the state
    maintains the remedy, while the lead agency conducts periodic
    reviews to ensure that the remedy continues to protect human health
    and the environment. For example, at a mine site with piles of
    overburden contaminated with selenium, the remedial action could
    consist of building a cap over the contaminated soil, while the
    operation and maintenance phase would consist of monitoring and
    maintaining the cap. 22 The remedial action process is a more
    transparent and comprehensive process with more distinct steps than
    the removal action process. For example, CERCLA and its
    implementing regulations provide more opportunities for the public to
    participate in the remedial action process, including participation in
    site-related decisions, than are required in the removal action
    process, which may be limited to a single comment period. The
    remedial investigation/feasibility study process is subject to more-
    detailed data requirements than the site evaluation process for a
    removal action, and under section 121 of CERCLA, remedial actions
    generally require completed sites to achieve certain cleanup
    standards, which is not necessarily the case for removal actions.
    Finally, the remedial action process favors permanent remedies over
    short-term abatement. Figure 6 shows the remedial action process.




22
  Waste pile caps and covers can be made of synthetic or natural materials, such as
compacted clay. They work to reduce the migration of contamination by preventing rain
and snow run-off from transporting contamination into ground and surface water.




Page 17                                    GAO-12-505 Phosphate Mining on Federal Land
Figure 6: The CERCLA Remedial Action Process




                                      a
                                       Postconstruction completion includes activities such as operation and maintenance, long-term
                                      response actions, and 5-year reviews, which ensure that Superfund cleanup actions provide for the
                                      long-term protection of human health and the environment.


                                      Responsibility for selenium contamination in southeastern Idaho has been
                                      the subject of a recent CERCLA lawsuit. Under CERCLA, a party can be
                                      held liable for cleanup costs as an owner or operator of a facility where
                                      there was a release of hazardous substances or if the party arranged for
                                      disposal of hazardous substances. In 2009, a phosphate mine operator
                                      sued to compel the federal government to share the costs of cleaning up
                                      contamination under CERCLA at four mines, asserting that the
                                      government was an owner, arranger, and operator of the waste disposal
                                      sites at those mines. In the first step of the litigation, the court held in
                                      2011 that the government was an owner, arranger, and operator. 23
                                      Specifically, the court found that the government owned the mine site,
                                      owned the middle waste shale that is the source of the hazardous
                                      substance involved (selenium), had the authority to control the disposal of
                                      that substance, and exercised some actual control over the disposal of
                                      that substance. Furthermore, the government managed the design and
                                      location of waste dumps at the mines and regularly inspected the mines
                                      to ensure compliance with the mining plans and waste disposal


                                      23
                                          Nu-West Mining, Inc. v. United States, 768 F. Supp. 2d 1082 (D. Idaho 2011).




                                      Page 18                                          GAO-12-505 Phosphate Mining on Federal Land
                         guidelines. The court did not determine the amount of cleanup costs the
                         government owes, deferring that to a subsequent phase of the litigation.
                         The parties have since agreed to settle the issues remaining in the
                         case. 24


                         Federal agencies have taken steps to strengthen their oversight of
Agencies Have            phosphate mining on federal land since selenium contamination was
Provided More            discovered in 1996 by requiring more detailed environmental analysis and
                         reclamation plans, requiring financial assurances that provide more
Rigorous Oversight of    coverage, hiring additional staff, and revising land-use plans.
Phosphate Mining         Nevertheless, oversight gaps remain that limit the agencies’ ability to
                         effectively address contamination from phosphate mining operations.
Since 1996, but          These gaps include inadequate documentation of BLM’s financial
Oversight Gaps           assurance practices, inconsistent coordination on financial assurances,
Remain                   an ineffective process for resolving agency disagreements on lease terms
                         and conditions, and insufficient mechanisms for overseeing activities
                         being conducted by third party contractors.


Agencies Have            In an effort to reduce the likelihood that new and ongoing mines will result
Strengthened Their       in additional sources of selenium contamination and improve the
Oversight to Address     management of ongoing CERCLA cleanups, BLM and the Forest Service
                         have taken the following steps to strengthen their oversight of phosphate
Selenium Contamination   mining operations.

                         •     BLM requires a more detailed environmental analysis for approving
                               mine plans. According to BLM officials, in 1998 the agency began to
                               prepare a full site-specific EIS when evaluating new mine plans,
                               instead of relying on a 1977 areawide programmatic EIS and
                               conducting site-specific environmental assessments that were more
                               limited in scope, as had been done previously. Under the new EIS,
                               officials told us, they conduct enhanced environmental testing and
                               analysis to understand the potential sources of selenium at proposed
                               mine sites, investigate how proposed mines would affect surface
                               water and groundwater, and evaluate engineering models for options
                               to prevent or mitigate the contamination.




                         24
                             The terms of the settlement were not available as of this report’s issuance.




                         Page 19                                        GAO-12-505 Phosphate Mining on Federal Land
•   BLM requires more comprehensive reclamation 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, mine operators are now
    generally required to agree to backfill open mine pits and not
    construct cross-valley fills; separate selenium-contaminated waste
    from other waste; engineer systems of natural or synthetic caps and
    covers for both reducing the infiltration of surface water into waste
    piles that can contribute to groundwater contamination and preventing
    the uptake of selenium by the roots of vegetation planted for
    reclamation; and select plants for revegetating mine sites that
    minimize selenium uptake and reduce the risk of ingestion by
    livestock and wildlife. In addition, the new mine plans provide for
    enhanced inspection of the mine operations in order to, among other
    things, monitor groundwater to detect selenium contamination early
    and oversee the construction of waste pile caps and covers. Since the
    state of Idaho decided to list parts of the Blackfoot River as impaired
    for selenium under section 303(d) of the Clean Water Act in 2002,
    BLM has also been requiring mine operators to demonstrate through
    their mine and reclamation plans that the mines will not add any
    measurable selenium contamination to the river and its tributaries.

•   BLM requires full-cost financial assurances for new mines. BLM
    officials told us that the agency decided in 2001 to set financial
    assurances for new mining operations using a formula based on the
    estimated full cost of reclaiming the site—meaning that, if the mine
    operator defaults on its reclamation obligation, the financial assurance
    would be adequate for BLM to hire contractors and incur oversight
    and overhead costs to perform the work—plus 3 months of estimated
    royalties. In the past, BLM officials told us, as agreed with the state of
    Idaho, BLM generally set financial assurance amounts at not more
    than $2,500 per acre of surface disturbance, regardless of the
    potential cost of reclamation. The financial assurances for the new
    mines are substantially higher than those set under the per-acre
    calculation. For example, one mine approved in 2011 was required to
    provide a financial assurance valued at nearly $22 million; based on
    general past practices, that financial assurance would have been set
    at about $1.7 million, according to our analysis. The adequacy of
    these larger financial assurances for reclamation has not yet been
    tested, however, because all of the mines at which they have been
    required are still active. BLM officials told us that they generally have
    not increased or decreased financial assurance amounts for inactive
    phosphate mine operations because most of those mines will require
    further remediation for selenium contamination under CERCLA, and


Page 20                               GAO-12-505 Phosphate Mining on Federal Land
     the costs to reclaim and remediate those sites—which would form the
     basis for any adjustment in the financial assurance amounts—have
     not yet been estimated.

•    BLM and the Forest Service have made changes to readjusted
     leases, and BLM has denied lease relinquishments. To help ensure
     that phosphate mine operators are liable for any environmental
     damage they may cause, BLM and the Forest Service jointly devised
     a lease stipulation that has been included in every lease readjustment
     since 2002, covering a total of 63 leases. Under the new stipulation,
     the mine operator agrees to pay for certain environmental damage it
     causes and, when requesting that a lease be relinquished, 25 to
     conduct an environmental site assessment of the mine site to identify
     any possible contamination. BLM also made other changes, such as
     the addition of a notification to phosphate lessees that details the
     information that should be included in a proposed mine plan, and
     language stating that lessees will be required to comply with
     CERCLA, as well as other environmental laws. BLM officials told us
     they intend to use the environmental site assessment in evaluating
     whether to allow the operator to relinquish the lease. Until the lease is
     relinquished, BLM can maintain the financial assurance associated
     with the lease, and any terms and conditions of the lease including
     reclamation obligations remain in effect. BLM officials told us that their
     practice has been to deny lease relinquishments if there are any
     indications that further CERCLA cleanup may be necessary to
     address selenium contamination, and that they last relinquished a
     phosphate lease in 1997 at a site where no phosphate production had
     occurred. No phosphate mine operators requested a lease
     relinquishment from 1993 through 2003, and since 2003, BLM has not
     approved any of the 8 requests it has received for lease
     relinquishment, according to BLM officials.

•    BLM and the Forest Service have taken some steps to supplement
     staff resources. Since selenium contamination was discovered in
     1996, BLM and the Forest Service have combined their mine
     oversight field staff in southeastern Idaho into a minerals branch
     under an interagency initiative known as Service First. According to


25
  When a lease is relinquished, the mine operator ceases operations and the terms and
conditions of the lease are no longer in effect. A mine operator may relinquish a lease If
BLM agrees that relinquishment is in the public interest and the mine operator pays
accrued rentals and royalties and performs reclamation required by BLM.




Page 21                                      GAO-12-505 Phosphate Mining on Federal Land
     BLM officials, this initiative has allowed the agencies to eliminate
     redundant mine oversight, increase efficiency, and accomplish more
     work. BLM and the Forest Service have also hired additional staff to
     help manage the increased workload associated with overseeing new
     and ongoing mines. For example, the Forest Service has, among
     other things, created a new position to oversee its selenium
     remediation efforts. This position is currently held by a former EPA
     employee with 15 years of experience managing CERCLA cleanups.
     In addition, BLM has arranged to have mine operators pay for third-
     party contractors to support BLM staff in certain aspects of mine
     oversight. For example, mine operators have paid contractors to
     prepare EISs, 26 and BLM has directed two mine operators to enter
     into and pay for contracts with third parties to provide monitoring and
     other services associated with constructing and implementing cover
     systems for waste rock. BLM has also asked mine operators to
     reimburse it directly to fund two BLM positions to conduct mine
     oversight. 27 Despite these efforts, BLM officials in Idaho told us that
     they still face challenges in meeting their workload demands,
     particularly because changes in the oversight process since 1996
     have required additional time and effort to implement. For example,
     BLM officials told us that it typically takes 5 years to complete an EIS
     for a proposed new mine, and this process can incur contractor costs
     of over $2 million. In contrast, BLM could complete the environmental
     assessment process it used previously in 2 years using agency
     resources.

•    BLM and the Forest Service have revised their land-use plans to
     address contamination. BLM began the process of revising its land-
     use plan for the area covering the Idaho portion of the Western
     Phosphate Field in 2003, and in 2010 issued a final EIS for the draft
     plan that provides direction for managing phosphate activities,



26
  Even if a contractor prepares an EIS, BLM officials are still responsible for the scope
and content of the statement, furnishing guidance to the contractor, participating in
preparation, and independently evaluating the statement prior to its approval.
27
  The positions in question were identified by BLM officials as positions that support EIS
project management. Under federal law, BLM is authorized to retain fees for processing,
recording, or documenting authorizations to use public lands or resources. 43 U.S.C. §
1734a (2006). Also, under BLM regulations, the agency may set processing fees on a
case-by-case basis for a plan of operations that requires the preparation of an EIS. 43
C.F.R. § 3800.5 (2011). We did not analyze whether BLM’s acceptance of industry
funding for salaries in this instance was consistent with these or other authorities.




Page 22                                      GAO-12-505 Phosphate Mining on Federal Land
                                preventing contamination, and setting standards for contaminants.
                                BLM officials told us that these changes are intended to help ensure
                                that phosphate mine operators provide adequate financial assurances
                                and that operators adequately reclaim mine sites, including preventing
                                selenium contamination. BLM officials told us that they expect to
                                approve the record of decision for the plan in 2012. Similarly, the
                                Forest Service issued a revised forest plan for the Caribou National
                                Forest in 2003 that set new standards and guidelines for phosphate
                                mine development on forest lands to help detect and prevent
                                selenium contamination. For example, the revised plan contains new
                                standards that, among other things, stipulate that vegetation used in
                                reclamation must be monitored for bioaccumulation of hazardous
                                substances, such as selenium, and that financial assurances should
                                be based on the estimated full cost of reclamation and in place before
                                the mine operator disturbs the land surface. 28


Oversight Gaps Remain in   We identified four gaps in the agencies’ oversight efforts that could limit
Agency Policy and          their ability to address ongoing problems with selenium contamination.
Coordination               First, although BLM has strengthened its oversight of new phosphate
                           mines by requiring that operators provide financial assurances to cover
                           the estimated full cost of reclamation, BLM has not documented this
                           practice in its official agency policy. In a 2002 internal evaluation of
                           financial assurance policies, BLM recognized that its practices for
                           phosphate mines in Idaho are not reflected in current policy and
                           determined that the agency should revise the manual associated with this
                           program to recognize these practices. 29 However, BLM officials told us
                           that the agency has not yet done so. As noted in the Standards for
                           Internal Control in the Federal Government, agency policies should be
                           clearly documented and readily available for examination to ensure
                           effective program management. 30 Without documenting its bonding
                           practices in official agency policy, BLM cannot be assured that the current



                           28
                             U.S. Department of Agriculture, Revised Forest Plan of the Caribou National Forest
                           (Idaho Falls, ID: February 2003).
                           29
                             Bureau of Land Management, Fiscal Year 2002 Program Evaluation Report—Bonding in
                           the Non-Energy Leasable Minerals Program, IM 2003-033 (Washington, D.C.: November
                           2002).
                           30
                             GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1
                           (Washington, D.C.: Nov. 1, 1999).




                           Page 23                                    GAO-12-505 Phosphate Mining on Federal Land
full-cost financial assurance practices for phosphate mines in Idaho will
be implemented completely and consistently.

Second, according to Forest Service officials, since at least 2006, BLM
has not consistently coordinated with the Forest Service about the
financial assurances for phosphate mining operations on National Forest
System land. BLM must consult with the agency that administers the
surface land prior to issuing a lease and, generally, regarding the surface
protection and reclamation requirements of the lease. 31 Forest Service
officials told us that they are not consistently consulted about the
appropriate level of financial assurances nor made aware of the decisions
regarding financial assurances being made by BLM. BLM and the Forest
Service have an interagency agreement that includes procedures for
coordinating on issues involving licenses, permits, and leases, but this
agreement does not expressly discuss issues related to financial
assurances. Similarly, BLM and the Forest Service have drafted an
agreement covering the sharing of staff and resources under their Service
First initiative in Idaho, but this draft agreement does not provide details
on the steps the agencies should take to coordinate on financial
assurances. The resulting inconsistency in coordination is of particular
concern to Forest Service officials, because they consider financial
assurance amounts, particularly for existing mines, to be potentially
inadequate to cover the estimated reclamation costs. These officials told
us that additional communication and coordination with BLM when
establishing and reviewing the adequacy of financial assurances would
allow them to offer relevant information that might help BLM officials in
setting bond amounts. They also noted that additional coordination would
help ensure that the mine operator is acting in accordance with the
portions of the forest plan specifying that financial assurances should be
adequate to cover the full cost of reclamation and should be in place
before surface disturbance occurs. BLM officials told us that while they do
coordinate with the Forest Service, it tends to be on a case-by-case basis
and that in some instances they are limited in their ability to coordinate by
insufficient staff.

Third, BLM and the Forest Service have not in all cases been able to reach
agreement on lease terms and conditions to include when issuing new
leases and readjusting existing leases. BLM and the Forest Service have



31
 43 C.F.R. § 3503.20(a); 43 C.F.R. § 3590.2(h).




Page 24                                   GAO-12-505 Phosphate Mining on Federal Land
an interagency agreement that states the agencies will coordinate at the
local level on issues involving lease terms and conditions, and at the
headquarters level on issues involving agency-wide lease terms and
conditions. However, the agencies do not have a detailed process for doing
so in a timely manner. For example, beginning in 2010, BLM and the
Forest Service discussed potential changes proposed by the Forest
Service to the terms and conditions in three existing phosphate leases.
According to BLM and Forest Service officials, although BLM made some
of the changes the Forest Service was seeking, most of the substantive
changes being proposed by the Forest Service necessitated coordination
with BLM’s Washington, D.C., headquarters because they would require
changes to the standard leasing forms used by BLM. Subsequently, in
December 2011, the Forest Service proposed several changes to BLM’s
general lease terms and conditions to BLM’s Washington, D.C.,
headquarters office that, in the Forest Service’s view, would better protect
the government from potential liability associated with selenium
contamination in the future, particularly in light of the lawsuit noted earlier.
However, as of April 2012, the agencies had not yet reached agreement on
whether or how to change the general lease terms and conditions. During
this period, BLM has renewed three phosphate leases for another 20 years
without including the changes the Forest Service was seeking, in part to
meet the deadline for renewing the leases. In commenting on a draft of this
report, Interior noted that an additional reason the leases were renewed
without including the Forest Service’s proposed changes was a difference
in professional judgment between officials of the two agencies. Without a
timely process for resolving disagreements on the part of BLM and the
Forest Service regarding lease terms and conditions, we are concerned
that BLM may again readjust leases or issue new leases in the future
without having resolved disagreements that may exist between the
agencies about proposed lease terms and conditions. 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. In
commenting on a draft of this report, both Interior and the Forest Service
told us they have begun working to improve the coordination process.

Fourth, BLM does not have mechanisms in place for overseeing all
activities that are being conducted by third-party contractors, and the
agency could not identify the statutory or regulatory provisions that
authorize or lay out its responsibilities with regard to directing and
overseeing such arrangements. In two instances, BLM has directed mine
operators to enter into and pay for contracts with third parties to provide
monitoring and other services associated with the construction and


Page 25                                GAO-12-505 Phosphate Mining on Federal Land
installation of waste-pile cover systems and other related reclamation
activities on mine sites. 32 However, in neither instance does BLM have a
written agreement with the mine operators to outline expectations for the
monitoring contracts or clearly define the roles and responsibilities of the
various parties. BLM officials told us that even without such agreements,
they believe that they have adequate controls in place and can take
enforcement actions over the work being done. For example, officials noted
that BLM, rather than the mine operator, selected the contractor for one
mine and will do so for the second. In addition, they noted that one of the
contracts between the operator and the third party is based on a statement
of work BLM wrote and that this contract repeatedly states that work is
being done for BLM and at BLM’s direction. Further, BLM officials told us
that even without such written agreements, under the applicable
regulations the agency can issue enforcement orders to compel the mine
operator’s compliance with established requirements, including those
contained in the records of decision approving the mine plans. 33
Nevertheless, we are concerned that without written agreements with mine
operators, BLM’s ability to ensure that the work is carried out to its
satisfaction is unclear. For example, while BLM officials cited the agency’s
ability to issue enforcement orders as a useful control mechanism, agency
officials have also noted limitations with this process. Specifically, they told
us that an operator may take many months to comply with an enforcement
order and that BLM lacks the authority to issue fines to, or impose fees on,
phosphate mine operators for failing to comply with an enforcement
order. 34 Moreover, we have broader concerns because BLM could not
identify the statutory or regulatory provisions that specifically authorize or
lay out its responsibility with regard to the contractual arrangements the
agency has required mine operators to enter into.




32
  In the first of these instances, BLM stated in its record of decision on the EIS for one
mine that it would enter into a written agreement with the mine operator for monitoring the
installation of a cover system to mitigate potential environmental impacts associated with
the mine. In another record of decision, BLM did not specifically mention a written
agreement, but stated that the operator would be responsible for certain costs associated
with a similar contractual arrangement.
33
 43 C.F.R. § 3598.4 (2011).
34
  Failure of the operator to take action in accordance with an enforcement order is
grounds for BLM to issue an order to cease operations or to initiate legal proceedings
against the operator and cancel its lease.




Page 26                                      GAO-12-505 Phosphate Mining on Federal Land
                             Since selenium contamination was discovered in 1996, federal agencies
Agencies and Mine            and phosphate mine operators in Idaho have largely taken actions
Operators Have               focused on assessing the extent of selenium contamination at the 16
                             mines where such contamination has been identified, and have
Focused on Assessing         conducted limited remediation. The federal agencies reported having
Contamination, Not           spent about $19 million on this effort, about half of which has been
Conducting                   reimbursed by mine operators. The mine operators have incurred
                             additional costs for assessment and remediation activities, according to
Remediation, and             agency officials, but the operators did not provide documentary evidence
Total Cleanup Costs          to support these claims. Future cleanup costs are unknown because the
                             agencies have not selected final cleanup actions, although agency
Are Currently                officials informally estimate these costs could amount to hundreds of
Unknown                      millions of dollars.


Actions to Date to Address   Since the discovery of selenium contamination in 1996, federal and state
Selenium Contamination       agencies and mine operators have worked to assess the extent of the
Have Included Lengthy        contamination caused by phosphate mining, and have conducted some
                             limited remediation. Agency officials described a number of factors they
Assessment Efforts and       believe contributed to the amount of time spent on these efforts, including
Limited Remediation          a shift in their cleanup approach after nearly 10 years of activity.

Assessments Have Been        According to federal and state officials, in 1997 the agencies and mine
Ongoing Since 1997           operators formed a voluntary working group led by the mine operators to
                             collaborate on efforts to investigate the selenium contamination
                             discovered at that time. As part of this and other parallel efforts, mine
                             operators and the agencies, including the Forest Service and the U.S.
                             Geological Survey, spent 4 to 5 years collecting water-quality and other
                             data and publishing reports that helped quantify the scope of the
                             selenium problem, according to these officials. These data-gathering
                             efforts indicated that high concentrations of selenium were widespread
                             throughout the area.

                             According to Forest Service and state officials, given the broad scope of
                             the problem and the potential risks posed by the contamination identified
                             by these early efforts, federal and state agencies decided it would be
                             beneficial to move from a largely voluntary effort primarily paid for by
                             mine operators to one in which the agencies formally coordinated their
                             actions under federal and state authorities. As a result, in 2000 the six
                             agencies with authority over cleanup efforts— BLM, FWS, BIA, the Forest
                             Service, EPA, and IDEQ—and the Shoshone-Bannock Tribes signed a
                             memorandum of understanding that provided a framework for
                             coordinating their investigations of, and responses to, the


                             Page 27                              GAO-12-505 Phosphate Mining on Federal Land
contamination. 35 The memorandum identified a two-pronged approach:
agencies would conduct (1) an areawide investigation to continue the
work the mine operators and agencies had initiated through the working
group and (2) site-specific investigations to address contamination
sources at individual mines.

The areawide investigation began in 2001 and was led by IDEQ. The
agencies’ costs for this investigation were to be reimbursed by the
operators in accordance with the terms of a settlement agreement. The
investigation included gathering available data and identifying data gaps,
conducting water and other environmental sampling, completing risk
assessments that identified contaminant sources and ways in which
humans and wildlife could be exposed, and developing guidance based
on these risk assessments for remediation goals to potentially be used in
the site-specific efforts. Sampling efforts showed selenium levels above
state water quality standards; as a result, IDEQ listed more than 150
miles of streams flowing near and through the mines as impaired under
the Clean Water Act. According to a senior IDEQ official, water quality
monitoring work under the areawide investigation continues, although the
settlement agreement for the investigation expired in 2011.

Site-specific investigations began in 1998 and as of March 2012,
assessment activities were continuing, according to Forest Service and
EPA officials. Officials told us that the agencies originally decided to
conduct this assessment work under CERCLA’s non-time critical removal
process, during which a site investigation and engineering evaluation/cost
analysis is conducted before a removal action is selected and
implemented. According to EPA officials, this process is ideally suited for
isolated contamination sources that have proven remedies. Forest
Service and EPA officials told us that the agencies chose this route
because the officials responsible at the time believed it would be the
quickest way to control and abate immediate threats posed by the
contamination within waste rock dumps. From 1998 to 2004, the agencies
and mine operators entered into non-time critical removal process



35
  The responsible land management agencies have been delegated authority for cleanup
response under CERCLA at these sites except in emergency situations. For the mines
located partially on BLM land, BLM has deferred to EPA to take the CERCLA lead. For the
one mine located on the Fort Hall Indian Reservation, home of the Shoshone-Bannock
Tribes, the agencies determined that EPA had authority for cleanup response under
CERCLA.




Page 28                                   GAO-12-505 Phosphate Mining on Federal Land
settlement agreements at six mines, with final engineering evaluation/cost
analysis reports issued for two of these mines in 2006 and 2011.

According to EPA and Forest Service officials, however, in 2006—after
nearly 10 years of pursuing actions under the non-time critical removal
process—the agencies decided to switch their approach and address the
contamination issues at mine sites under the longer-term remedial action
process, resulting in further clean-up delays as additional site-specific
data were collected. In explaining the switch, Forest Service and EPA
officials told us that information generated from the areawide and site-
specific investigations conducted prior to 2006 indicated that the
contamination issues at the mines were more complex and widespread
than originally suspected and that many mines would likely require long-
term water treatment of a kind not typically implemented as part of a non-
time critical removal action. As a result, according to EPA and Forest
Service officials, the approach offered by CERCLA’s remedial action
process would allow a more comprehensive investigation and evaluation
of the mines and remediation that would fully address long-term threats
posed by selenium. Forest Service officials told us that at three of the six
mines where non-time critical settlement agreements had been reached,
the Forest Service decided to continue with the non-time critical removal
process to address contamination at waste rock dumps, while also
negotiating settlement agreements with the mine operators to address
other contamination at these sites through the long-term remedial action
process. At the remaining three mines that were undergoing assessment
under the non-time critical removal process, EPA began negotiating
settlement agreements for remedial investigations and feasibility studies
rather than continuing with the non-time critical removal process.

As of March 2012, mine operators and agencies had begun work on the
first step of remedial action process—conducting remedial
investigations—at 7 of the 16 mines known to have selenium
contamination, including 5 of the 6 mines that were being addressed
under the non-time critical removal process. 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. For the remaining 9 of the 16 contaminated mines, a senior
Forest Service official told us officials are negotiating settlement




Page 29                              GAO-12-505 Phosphate Mining on Federal Land
                                         agreements at 3 mines but have not initiated the remedial action process
                                         at the 6 others, 36 either because the agencies have not had sufficient
                                         resources to begin negotiations, the agencies have not reached
                                         settlements with the mine operators, or (for two mines) the agencies are
                                         addressing the contamination under provisions of the Clean Water Act or
                                         the terms of the reclamation plan. Table 2 shows the CERCLA activities
                                         that have occurred at these 16 mines, as well as estimated dates for
                                         future activities.

Table 2: CERCLA Activities at 16 Contaminated Mines, by Assessment Process

               Pre-Removal
               or Remedial
                 Process              Non-Time Critical Removal Process                        Remedial Action Process
                                                               Final
                                           Final site   engineering   Removal                          Remedial Feasibility
                Preliminary    Process investigation evaluation/cost    action             Process investigation    study
Mine           assessmenta    initiatedb      report analysis report completed            initiatedb   complete complete
Ballard                   -       2003                 -                -            -        2009          (2013)       (2013)
Enoch Valley              -       2003                 -                -            -        2009          (2014)       (2014)
Henry                     -       2003                 -                -            -        2009          (2013)       (2014)
North Maybe           2000        2004                 -                -       2008c         2010                -              -
Smoky                     -       2003             2005             2006         2007         2009          (2013)       (2014)
Canyon
South                     -       1998             2007             2011        (2014)            -               -              -
Maybe
Canyon
Champ                 2000           -                 -                -            -            -               -              -
Conda                 2008           -                 -            2011        (2013)        2008                -      (2014)
Diamond               2007           -                 -                -            -            -               -              -
Gulch
Dry Valley            2008           -                 -                -            -            -               -              -
Gay                   2003           -                 -                -            -        2010          (2015)       (2016)
Georgetown            2007           -                 -                -            -            -               -              -
Canyon
Mountain              2000           -                 -                -            -            -               -              -
Fuel




                                         36
                                          Although these nine mines have not entered the remedial action process, varying
                                         amounts of assessment work have occurred at each mine, according to agency officials.




                                         Page 30                                   GAO-12-505 Phosphate Mining on Federal Land
Rasmussen    2002   -       -                  -                 -               -            -                  -
Ridged
South        -      -       -                  -                 -               -            -                  -
Rasmussend
Wooley       2000   -       -                  -                 -               -            -                  -
Valley
                        Source: GAO analysis of agency data.

                        Notes: Dates in parenthesis represent estimates for future milestones. Shading indicates mines that
                        had been initially assessed under the non-time critical removal process.
                        a
                         Preliminary assessments under CERCLA are often the first step undertaken after a potentially
                        contaminated site has been identified. They are used to identify potential threats, determine the need
                        for further investigation under the removal or remedial process, and gather information to evaluate
                        eligibility for the National Priorities List.
                        b
                         In most cases, this process was initiated when the agencies and mine operators signed a settlement
                        agreement.
                        c
                         The action at this mine was a time-critical removal action, the need for which was discovered as part
                        of the assessment work conducted under the non-time critical removal action process.
                        d
                            This is an active mine not currently being assessed for cleanup under CERCLA.


                        Federal agencies have also begun using CERCLA to address harm to
                        fish and wildlife resources from contamination associated with the
                        phosphate mines in southeastern Idaho. According to FWS officials, in
                        2011 the agency initiated the first step in a CERCLA process known as
                        natural resource damage assessment, under which the agency may
                        ultimately seek damages for harm to natural resources caused by
                        phosphate mining and conduct natural resource restoration activities. 37
                        Through this process, mine operators may work cooperatively with federal
                        agencies to develop an assessment and implement natural resource
                        restoration activities, or the agencies may independently develop a
                        damage claim to be resolved through settlement or litigation. FWS
                        officials told us they are determining whether a natural resource damage
                        assessment is warranted and are working with other agencies in the area
                        to determine whether they are interested in participating in the process.




                        37
                          Under CERCLA, a party responsible for the release of a hazardous substance is liable
                        for injuries to natural resources resulting from the release. The regulations implementing
                        the act designate certain federal agencies, state governments, and tribal authorities as
                        natural resource trustees and authorize them to make claims against the parties
                        responsible for the injuries. The federal trustees include FWS.




                        Page 31                                            GAO-12-505 Phosphate Mining on Federal Land
Agencies and Operators Have   Since selenium contamination was discovered in 1996, federal agencies
Conducted Limited             and mine operators have taken some limited cleanup actions to address
Remediation                   highly problematic sources of contamination at three phosphate mines.

                              •   Smoky Canyon mine. In 2007, to help reduce the amount of selenium
                                  leaching into a creek, a mine operator built a pipeline to divert water
                                  around a contaminated waste rock dump at the Smoky Canyon mine
                                  on Forest Service land. This action was the culmination of a 2003
                                  CERCLA settlement agreement under the non-time critical removal
                                  process. According to Forest Service officials, this waste rock dump—
                                  overburden placed into the bottom of a valley—was the source of one
                                  of the highest concentrations of selenium in the area, and the
                                  diversion appears to have substantially reduced the amount of
                                  selenium coming out of the waste dump. Officials from EPA and
                                  IDEQ, however, have voiced concerns with the effectiveness of the
                                  diversion, especially after large amounts of precipitation in 2011
                                  caused the system to overflow, allowing water to once again flow
                                  through the waste rock and carry high amounts of selenium into the
                                  creek. The mine, including this waste rock dump, is being assessed
                                  as part of an ongoing remedial investigation and additional cleanup
                                  measures to address the waste rock dump are expected to emerge
                                  from the investigation.

                              •   North Maybe mine. As part of assessment work performed under the
                                  non-time critical removal process, one mine operator identified
                                  elevated selenium levels in ponds at the bottom of a large waste rock
                                  dump at the North Maybe mine. These selenium levels posed a threat
                                  to an adjacent creek if a large amount of precipitation should cause
                                  the ponds to overflow into the creek. To mitigate this threat, in 2008
                                  the Forest Service approved a time-critical removal action where the
                                  mine operator excavated contaminated sediments from the ponds.
                                  The operator then disposed of the sediments by adding them to a
                                  separate waste dump at the site and covering them with organic
                                  material to reduce exposure to precipitation. The Forest Service
                                  project manager reported that care was taken to ensure that this
                                  action would be consistent with potential future cleanup activities.

                              •   South Rasmussen mine. After water quality monitoring revealed that a
                                  waste dump at the South Rasmussen mine was discharging selenium
                                  into a creek without a required permit, EPA took an enforcement
                                  action against the mine operator under the Clean Water Act. The mine
                                  operator agreed to pay $1.4 million in fines and, according to an EPA
                                  official, has begun to address the discharge by capturing the outflow
                                  from the dump and storing it temporarily in ponds. According to EPA


                              Page 32                              GAO-12-505 Phosphate Mining on Federal Land
     officials, the mine operator will need to follow up with a more
     permanent solution to address the contamination from the mine, but
     the officials have not determined the most appropriate approach for
     doing so. EPA officials told us they are currently determining whether
     other active mines in the area may also potentially be violating the
     Clean Water Act, but said that their efforts have been limited because
     EPA has not had sufficient staff or funding. EPA officials told us they
     may also initiate additional enforcement actions under the Clean
     Water Act at inactive mines if they determine that no progress is being
     made under CERCLA.

At a fourth mine, BLM officials told us they are working with a mine
operator to arrange for additional mitigation measures to stem an ongoing
selenium discharge, although such measures have not yet been taken.
Specifically, BLM officials told us they are working with the operator to
incorporate additional mitigation measures into a reclamation plan being
implemented at a portion of the Rasmussen Ridge mine that has already
been mined. BLM officials told us that they are able to take this somewhat
unusual approach because other portions of the mine are still active and
the operator has equipment on site that could be used to implement these
mitigation measures, and undertaking these efforts now would help
reduce costs for the operator. These officials also noted that the mine
operator has an incentive to agree to this approach because the operator
has other mine plan approvals pending with the agency and cooperating
would help demonstrate willingness to address contamination resulting
from this operator’s mining activities.

Since 1996, mine operators have also conducted mitigation work,
including testing remediation methods, outside the purview of CERCLA
settlement agreements, according to operator representatives with whom
we spoke. For example, these representatives told us that they took steps
to restrict livestock and wildlife access to ponds and other water at their
mines. In addition, according to one mine operator, the operators have
supported research projects related to selenium contamination, including
one that involved applying cheese whey and iron granules to
contaminated soils to test whether the materials could prevent plant
uptake of selenium, making it biologically unavailable. 38 A representative
from this operator told us that some of these projects were successful,


38
  Whey is the water and solid components of milk that remain after the manufacture of
cheese.




Page 33                                    GAO-12-505 Phosphate Mining on Federal Land
                                 although further research is needed before these techniques can be
                                 applied on a large scale. Further, EPA officials also noted that mine
                                 operators have taken action to reduce the uptake of selenium in
                                 reclamation vegetation and better control stormwater runoff.

Several Factors Contributed to   Agency officials told us that five factors have contributed to the length of
Lengthy Time Spent on            time spent conducting assessments at contaminated phosphate mines in
Assessment                       southeastern Idaho. First, the phosphate mines present complicated, large-
                                 scale contamination challenges that are unique to the area, according to
                                 agency officials. While the agencies have experience dealing with other
                                 contaminated, large-scale mines, especially hardrock mines, officials told
                                 us that the phosphate mines in southeastern Idaho feature a complex
                                 interaction of selenium in the waste rock with the surrounding surface water
                                 and groundwater. EPA officials explained that complex systems such as
                                 those found at the phosphate mines require considerable time to
                                 understand, which is why the agencies have spent—and will likely continue
                                 to spend—years assessing contamination at these mines.

                                 Second, having multiple agencies with authority over some aspect of
                                 cleanup at the mines—including different agencies acting as the lead at
                                 different sites—has slowed down the assessment process, according to
                                 officials with these agencies. For example, EPA and Forest Service
                                 officials noted that it is time-consuming to coordinate the other agencies’
                                 involvement, including obtaining, considering, and reconciling multiple,
                                 often conflicting, opinions. EPA officials told us that technical
                                 disagreements among agencies have led to delays in reviewing some
                                 operators’ assessment documents. Further, according to these officials,
                                 the situation is exacerbated at those mines located on private and federal
                                 land where decision-making authority is shared, requiring those agencies
                                 to come to full agreement before moving forward with decisions or actions
                                 that affect the entire site. In addition, the agencies’ roles sometimes
                                 needed clarification. For example, at one mine located on an Indian
                                 reservation, agency officials said BIA and EPA spent 2 years negotiating
                                 which agency would take the lead in managing cleanup work under
                                 CERCLA because the agencies disagreed over which agency had the
                                 legal authority to do so.

                                 Third, the decision to switch from the non-time critical removal process to
                                 the remedial action process resulted in delays. According to Forest
                                 Service and EPA officials, the agencies and mine operators spent
                                 additional time renegotiating settlement agreements at mines where they
                                 had begun to address contamination under the non-time critical removal
                                 process, delaying the process of negotiating new agreements at the


                                 Page 34                              GAO-12-505 Phosphate Mining on Federal Land
mines that had not yet been addressed. These officials also told us that
some of the data collected under the non-time critical removal process
needed to be validated by third-party external contractors, which resulted
in additional delays. Senior EPA and Forest Service officials who entered
the process after the non-time critical approach was selected told us they
believed the agencies could have started the CERCLA remedial action
process initially, in part because of the large sizes of the mine sites and
the high degree of uncertainty associated with them. EPA and Forest
Service officials told us that selecting the remedial action process from
the beginning may have streamlined the process of assessing
contamination.

Fourth, according to EPA, Forest Service, and state officials, an individual
mine operator’s level of participation and cooperation influences the
amount of progress that can be made at the contaminated mines, and a
difficult situation with a mine operator can slow down the assessment
process. According to agency officials, this has happened in several
cases. For example, as noted earlier, one mine operator sued to compel
the federal government to share liability for the costs of cleaning up
contamination under CERCLA at four mines; Forest Service officials told
us that responding to that lawsuit has taken resources and attention away
from managing assessment and cleanup activities at the other mines on
its land, resulting in additional delays to the assessment process.
Ultimately, the difficulties associated with this situation resulted in the
agency’s terminating the assessment work the mine operator had been
conducting at two of the mines and undertaking the work itself. In
addition, EPA officials told us they have had concerns with the quality of
the draft reports the mine operators produced for review by the agencies
as part of the assessment process. These officials told us the agencies
provided extensive comments on the draft reports, necessitating
significant rework by the mine operators.

Finally, the Forest Service did not have sufficient technical and
management expertise in place, or a sufficient focus on enforcement, in
the early years of the assessment efforts to successfully manage those
efforts under CERCLA, according to Forest Service and EPA officials. For
example, according to an internal Forest Service review, the CERCLA
knowledge and expertise of the Forest Service field staff were not
sufficient to address the complexity of the mines, which limited cleanup
progress. The review also found the agency did not hire enough technical
support contractors with relevant expertise to assist with oversight. As a
result, according to Forest Service officials and the review, it was difficult
for the Forest Service to critically assess the mine operators’ work, and


Page 35                               GAO-12-505 Phosphate Mining on Federal Land
                             the agency did not always conduct oversight in a timely manner. In
                             addition, according to EPA officials, the Forest Service was not
                             aggressive in enforcing the terms of its early settlement agreements,
                             which led to a site assessment lasting 13 years in one case. Moreover,
                             these officials told us they believe the lack of enforcement occurred in
                             part because the Forest Service, unlike EPA, generally does not have
                             experience with CERCLA enforcement.

                             In 2008—12 years after the contamination was first identified—the Forest
                             Service recognized it needed staff with more CERCLA-specific
                             experience to manage the cleanup work, and in 2009 it hired a former
                             EPA official to manage its cleanup program. According to this official, the
                             Forest Service also hired more experienced project managers for each
                             mine and increased its use of technical support contractors to bolster its
                             oversight of mine operators. EPA officials told us they believe the
                             composition of the Forest Service staff is now appropriate for managing
                             the cleanup work at the phosphate mines but that having the Forest
                             Service manage the CERCLA cleanup work at the mines may continue to
                             pose certain challenges. For example, EPA officials told us they believe
                             the Forest Service lacks the institutional support for its CERCLA project
                             managers that is available to EPA’s project managers. 39


Since 2001, Agencies Have    Federal and state agencies reported having spent about $19 million since
Spent About $19 Million to   fiscal year 2001 to oversee assessment and remediation efforts at
Oversee Assessment and       contaminated phosphate mines in southeastern Idaho, 40 according to our
                             analysis of federal and state data. 41 Of this amount, these agencies spent
Remediation, but Costs of
Mine Operators’ Activities
Were Unavailable             39
                               Specifically, EPA officials told us that CERCLA project managers who work on EPA’s
                             phosphate-related cleanup in Idaho have at their disposal roughly 45 full-time equivalent
                             staff with expertise in contaminant cleanup—including chemists, biologists, and attorneys.
                             Forest Service officials said their staff consists of five project managers and two technical
                             support staff, including a geologist and an environmental protection specialist; they also
                             have three attorneys available. However, these officials told us that they hire technical
                             contractors for additional support.
                             40
                               In addition to oversight, the Forest Service has also directly conducted some limited
                             assessment work at two mines.
                             41
                               Reported spending represents agency expenditures, also referred to as outlays, in 2012
                             constant dollars. Also, officials from each agency told us they incurred additional
                             expenses related to cleanup at the phosphate mines in southeastern Idaho prior to fiscal
                             year 2001, but since not all of the agencies had records of those expenses, we are
                             reporting expenditures beginning in 2001.




                             Page 36                                       GAO-12-505 Phosphate Mining on Federal Land
$10 million on general project management and assessment efforts that
reached across multiple mines, including time spent planning and
consulting over the cleanup process and working on the areawide
investigation, with the remainder spent primarily on oversight of activities
at individual mines.

Agencies also reported that the mine operators, who have carried out
most of the assessment and remediation efforts, have reimbursed the
agencies for 44 percent of the total agency expenditures under CERCLA
settlement agreements, and the rest has come from the agencies’
budgets. Figure 7 shows, by agency, expenditures paid from agency
budgets and expenditures reimbursed by mine operators.

Figure 7: Total Agency Expenditures for Overseeing Phosphate Mine Assessment
and Remediation, and Percentage and Amounts Reimbursed by Mine Operators,
2001-2011




Notes: In some cases, mine operators have contributed additional amounts that the agencies expect
to use to defray future costs. Because the agencies have not yet expended these amounts, this figure
does not reflect these amounts. Expenditures include the agencies’ administrative costs.




Page 37                                          GAO-12-505 Phosphate Mining on Federal Land
As figure 7 shows, the agencies reported varying amounts of
expenditures and rates of reimbursement. The Forest Service, which is
managing cleanup efforts at 7 of the 16 contaminated mines, reported
spending the largest amount—about $9 million—an amount that
approaches the other agencies’ expenditures combined. The Forest
Service also reported incurring more expenditures that were not
reimbursed—about $6 million—than the other agencies, receiving
reimbursement for 25 percent of its expenditures. According to Forest
Service officials, the agency’s relatively low reimbursement rate occurs, in
part, because the Forest Service did not have cost recovery provisions in
its settlement agreements for any of its oversight work until 2006. BLM
and BIA also reported low overall rates of reimbursement because, for the
most part, these agencies did not have cost recovery arrangements at the
mines where they were most active until settlement agreements were
signed in 2008 or later. Instead, they paid for oversight at these mines in
the years leading up to the settlement agreements out of their budgets. In
contrast, EPA has managed cleanup at five mines and reported incurring
about $3 million in expenditures, of which 80 percent has been
reimbursed by mine operators. EPA officials told us that because of
limited funding and staff resources, as well as other factors, EPA Region
10 (which oversees phosphate assessment and cleanup activities in
Idaho) helps oversee CERCLA assessments primarily at mines where it
has negotiated cost recovery mechanisms as part of settlement
agreements, or expects to do so in the future. Similarly, FWS officials told
us that because of the agency’s own funding constraints, they have also
restricted their involvement to those mines where cost recovery is
available, also resulting in a high rate of reimbursement. According to the
EPA and FWS officials, this approach protects the agencies financially,
but it has also limited their ability to contribute their expertise across the
cleanup efforts. See appendix II for more detailed information on agency
expenditures and amounts reimbursed by mine operators at each of the
16 mines known to have selenium contamination.

The approximately $19 million in expenditures for agency oversight efforts
does not include the cost of assessment and remediation work the mine
operators have conducted, either under the terms of settlement
agreements or independently, according to agency officials. For example,
the operators’ costs for developing and implementing plans for water
quality sampling or constructing a diversion pipeline are not included in
the agencies’ expenditure total. We requested documentary evidence to
support the costs incurred by the mine operators but they did not provide
these documents to us. Anecdotal information suggests that the mine
operators have spent a significant sum on assessment and remediation


Page 38                               GAO-12-505 Phosphate Mining on Federal Land
                             work. For example, one mine operator representative told us his company
                             spent $12 million on assessment and remediation actions taken under
                             settlement agreements from 2003 through 2011 at its three mines, and
                             another mine operator reported it had spent about $10 million on cleanup-
                             related work at four of its mines. Nevertheless, without the mine
                             operators’ expenditure information, we cannot be assured of the accuracy
                             of the amounts the mine operators reported spending on assessment and
                             remediation work.


Agencies Have Not            According to EPA and Forest Service officials, they have not developed
Developed Cost Estimates     cost estimates for future cleanup actions at any of the 16 contaminated
for Future Cleanup Actions   phosphate mines because agencies are still conducting assessment
                             work, and these officials will not determine cleanup actions until they have
Because Site Assessment      completed this work. However, information from phosphate and hardrock
Efforts Have Not Been        mines provides an indication of potential future costs that are likely, and
Completed                    which, according to informal estimates provided by EPA officials, could
                             total hundreds of millions of dollars, in part because several of the mines
                             are likely to require long-term remedial actions that are typically costly to
                             implement.

                             According to EPA and Forest Service officials, the following two cleanup
                             actions, if required, would significantly influence cleanup costs at
                             phosphate mines in southeastern Idaho:

                             •   Long-term water collection and treatment. According to EPA officials,
                                 the need for long-term water collection and treatment can be the most
                                 costly remedial action at a mine site, primarily because water
                                 collection and treatment can require ongoing activity for more than
                                 100 years. Costs for this type of action include design; the initial
                                 capital investment in infrastructure for collection, storage, and
                                 treatment of the water; ongoing infrastructure upgrades and
                                 replacements; and personnel costs for continual operation. Such
                                 costs can be significant; for example, at another cleanup site in
                                 Region 10, the Holden hardrock mine in Washington State, EPA and
                                 the Forest Service have estimated the cost for long-term water
                                 treatment will be about $47 million. EPA officials told us that, based
                                 on information gathered to date, at least five phosphate mines may
                                 require long-term water treatment.

                             •   Waste rock covers. According to EPA officials, the cost of consolidating
                                 and capping large volumes of waste rock materials can vary depending
                                 on the number of acres needing coverage, the type of cover required,



                             Page 39                              GAO-12-505 Phosphate Mining on Federal Land
     and the topography of the area to be covered. For example, the Forest
     Service recently approved a cover, consisting of a clay layer, a
     synthetic membrane, and soil, that will be implemented as part of a
     non-time-critical removal action at one phosphate mine and is
     estimated to cost about $17 million to cover roughly 100 acres of a
     cross-valley fill. A synthetic cover recently required as part of the
     reclamation plan at a new mine is estimated to cost about $29 million to
     cover nearly 400 acres. 42 According to a Forest Service official, long-
     term monitoring and maintenance can further increase the costs of
     these covers.

Based on our review, several other factors add to the uncertainty about
the level of cleanup that will be required in the area, and the amount and
allocation of cleanup costs.

•    The selenium water quality standard is expected to change. According
     to EPA officials, final remedial actions under CERCLA will be based,
     in part, on the state’s water quality standard for selenium in rivers and
     streams. This standard is based on a national recommendation issued
     by EPA, which is in the process of updating its recommendation to
     better protect fish and other aquatic organisms. After the new
     recommendation is issued, according to EPA officials, Idaho will likely
     adopt a new state standard, using the recommendation as a basis. If
     the new standard is more stringent than the current standard, the level
     of cleanup required may change as well, increasing the costs
     associated with cleanup. 43

•    A total maximum daily load for selenium has not yet been established.
     Because the streams in the Blackfoot River watershed—the main
     watershed affected by selenium contamination in Idaho—have been
     listed as impaired for selenium under section 303(d) of the Clean
     Water Act, the state is required to establish a TMDL for selenium for


42
  These estimated costs represent the cost to the government to construct the covers;
according to BLM officials, the costs would be less if the operators were to perform the
work.
43
  One phosphate mine operator is developing a proposal for a site-specific water quality
standard for selenium at one of its mines, which is allowed under EPA regulations.
According to EPA officials, in some locations, the nationally recommended standard may
be considered under- or overprotective if the species at a site have different sensitivities
than those considered for the national recommendation. EPA will ultimately decide
whether to approve the site-specific standard.




Page 40                                       GAO-12-505 Phosphate Mining on Federal Land
                             those waters. According to IDEQ and EPA officials, the state has
                             delayed developing the TMDL, in part because the ongoing CERCLA
                             assessment process is yielding valuable information about the
                             sources of selenium in the watershed and how these sources interact
                             with one another—and this information will be critical to helping the
                             state establish a TMDL for selenium. Once a TMDL is established, it
                             may inform pollution limits that are established for the mines that
                             directly discharge selenium to the watershed. According to EPA
                             officials, a TMDL would also likely help provide a road map for
                             handling the selenium contamination at the remaining mines where
                             CERCLA actions have not yet been initiated.

                         •   The government’s share of future cleanup costs is not yet determined.
                             One outcome of the lawsuit filed against the government by a mine
                             operator under CERCLA is that according to the court decision, the
                             government is potentially liable for costs associated with
                             environmental contamination at the four mine sites at issue in the
                             litigation. However, the court has not determined the government’s
                             share of the cleanup costs. As of April 2012 the government and the
                             mine operator were negotiating a proposed settlement regarding
                             allocation of past and future costs that will be final once approved by
                             the court. Because of the court’s decision holding the government
                             potentially liable, agency officials told us other mine operators may
                             also seek to have the government share cleanup costs with them. If
                             they are successful, the agency officials said the government’s costs
                             could ultimately be significant.


                         Federal agencies reported holding financial assurances for phosphate
Agencies Hold            mine operations in southeastern Idaho for about $91 million to cover (1)
Millions of Dollars in   mine reclamation and related activities and (2) site assessment and
                         limited remediation activities negotiated under CERCLA settlement
Financial Assurances     agreements. Specifically, the agencies reported holding financial
for Site Reclamation     assurances valued at approximately $80 million to cover mine
and Assessment, but      reclamation and related activities and $11.4 million to cover site
                         assessment and limited remediation activities negotiated under CERCLA
Some Are in the Form     settlement agreements. About $4.5 million of this amount was in the form
of Potentially Risky     of corporate guarantees, a type of financial assurance that both BLM and
                         EPA have stated is potentially risky because corporate guarantees are
Corporate Guarantees     not covered by a specific financial asset. The agencies have not entered
                         into settlement agreements or established financial assurances to cover
                         future cleanup costs because, as described in the prior section, they have
                         not determined the actions that will be needed or the associated costs.



                         Page 41                              GAO-12-505 Phosphate Mining on Federal Land
BLM and the Forest         As of March 2012, BLM reported holding about $75.2 million in
Service Reported Holding   reclamation financial assurances for 13 of the 18 phosphate mines where
About $80 Million in       federal agencies are overseeing mining operations or cleanup activities. 44
                           (The five mines without BLM financial assurances are all inactive and are
Financial Assurances for
                           being assessed for cleanup under CERCLA.) Over 95 percent of this
Reclamation-Related        amount—almost $72 million—is associated with the five currently active
Activities                 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. BLM also reported holding an additional $127,200
                           in financial assurances for eight leases where the operator is engaging in
                           exploratory activities but where mine operations have not yet commenced
                           and other unmined sites. Figure 8 shows the amount and composition of
                           BLM-held reclamation financial assurances for phosphate mines in Idaho,
                           including the amounts associated with each of the five active mines.




                           44
                             This figure includes financial assurances held by the state of Idaho and BIA for
                           phosphate operations on federal land overseen by BLM. According to BLM officials, BLM
                           can use these financial assurances to help cover the cost of reclamation or federal royalty
                           obligations. As a result, we have included them with the reclamation bonds held by BLM.




                           Page 42                                      GAO-12-505 Phosphate Mining on Federal Land
Figure 8: Amount and Composition of BLM-Held Reclamation Financial Assurances, for Phosphate Mines in Idaho




                                       In addition, as of March 2012, the Forest Service reported holding $5.2
                                       million in financial assurances for reclamation of mining-related activities
                                       associated with six special-use permits. These financial assurances are
                                       for reclamation of disturbed surfaces that are associated with, but not
                                       physically located on, federal leases on Forest Service land, 45 through
                                       activities such as removing access roads and auxiliary structures and
                                       restoring forest land. Of this total, about 54 percent—or $2.8 million—is
                                       for the Smoky Canyon mine.




                                       45
                                         As noted, BLM holds financial assurances related to mining activities physically located
                                       on leased Forest Service land.




                                       Page 43                                     GAO-12-505 Phosphate Mining on Federal Land
The Forest Service and        As of March 2012, there were 6 mines undergoing CERCLA assessment
EPA Hold $11.4 Million in     for which the Forest Service and EPA reported holding financial
CERCLA Financial              assurances valued at $11.4 million. Such assurances are intended to help
                              ensure mine operators’ performance under CERCLA settlement
Assurances for Site           agreements. For one of these mines, the Forest Service holds a financial
Assessment and Limited        assurance, which is valued at about $3.9 million and covers both a
Remediation Activities, but   CERCLA assessment and previous remediation work at that mine to
Some EPA Financial            construct a water diversion pipeline, according to agency officials. For the
Assurances May be Risky       other five mine sites, EPA holds $7.5 million in financial assurances to
                              cover CERCLA assessments, according to agency officials.

                              About $4.5 million of the $7.5 million in financial assurances that EPA
                              holds for three of the five mines is in the form of corporate guarantees.
                              Corporate guarantees are promises by mine operators, sometimes
                              accompanied by a test of financial stability, to pay remediation costs, but
                              these guarantees do not require that funds be set aside by the operators
                              to pay such costs. As a result, for these three sites, EPA does not hold a
                              financial asset that it could use to pay for the work specified in the
                              settlement agreement should the operator fail to do so. EPA officials
                              noted, however, that these guarantees cover only the investigation and
                              planning stage of the process, and that the operator at these mines has
                              already successfully completed a significant portion of the activities under
                              an earlier removal settlement agreement. Nevertheless, EPA Region 10
                              has acknowledged the risk associated with corporate guarantees. In its
                              2009 Region 10 Mining Financial Assurance Strategy, 46 the region noted
                              that the form of a financial assurance is as important as the amount and
                              stated that corporate guarantees are not a secure mechanism should a
                              company go bankrupt or have financial difficulties. As an example, the
                              region cited a corporate guarantee that it had accepted from an operator
                              of a mine smelter site in Washington State. When EPA requested a more
                              secure type of financial assurance, the operator filed for bankruptcy,
                              leaving the federal government with additional responsibility for the
                              cleanup costs at that site. Recognizing the inherent risks associated with
                              corporate guarantees, the region stated in its strategy that it would no
                              longer accept them as part of CERCLA consent decrees or settlement
                              agreements related to cleanup actions for mining operations.




                              46
                                EPA Region 10, Region 10 Mining Financial Assurance Strategy, (Seattle, WA: January
                              2009).




                              Page 44                                   GAO-12-505 Phosphate Mining on Federal Land
              Such concerns about corporate guarantees have been raised previously
              by others. In 2000, for example, BLM stopped accepting corporate
              guarantees for new mining operations, stating that they are less secure
              than other forms of financial assurance, particularly in light of fluctuating
              commodity prices and the potential for an operator to declare
              bankruptcy. 47 Moreover, as we reported in August 2005, EPA has stated
              that corporate guarantees offer EPA minimal long-term assurance that a
              company with environmental liability will be able to fulfill its financial
              obligations. 48 As a result, EPA and taxpayers may be exposed to
              significant financial risk, especially at mining sites where one or a few
              parties are liable for cleanups—as is the case for phosphate mining in
              Idaho. We also noted in our August 2005 report that EPA’s selection of a
              reliable financial assurance mechanism is particularly important given the
              potential for large liabilities stemming from mining sites. EPA does not
              have regulations on the use of corporate guarantees as financial
              assurances under CERCLA, however. EPA is considering promulgating
              regulations related to financial assurances for mining and other industries
              and has solicited public comments on the risks associated with corporate
              guarantees and the experiences of regulators who have attempted to use
              them. EPA expects to publish a proposed rule outlining its approach to
              financial assurances later in 2013, according to EPA officials.


              Selenium contamination from phosphate mining has been a concern in
Conclusions   southeastern Idaho for over 15 years. 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 assessments and reclamation plans, requiring
              financial assurances that provide more coverage, and hiring additional
              staff. However, addressing the contamination has been a lengthy
              undertaking with many factors contributing to the length of this process,
              including the complexity and scale of the sites, sometimes-difficult
              relations with mine operators, an initial lack of expertise and resources on
              the part of the Forest Service, and the decision to switch to a more
              comprehensive cleanup approach. Nevertheless, the fact remains that
              after years of study and millions of dollars spent, the agencies and mine


              47
               65 Fed. Reg. 69998, 70004, 70074 (Nov. 21, 2000).
              48
               GAO, Environmental Liabilities: EPA Should Do More to Ensure that Liable Parties Meet
              Their Cleanup Obligations, GAO-05-658 (Washington, D.C.: Aug. 17, 2005).




              Page 45                                   GAO-12-505 Phosphate Mining on Federal Land
                      operators are still years away from fully understanding the extent of
                      contamination in the area and many more years away from completing
                      actual mine cleanup.

                      The agencies have taken important steps aimed at preventing future
                      contamination, including BLM’s use of more rigorous oversight
                      procedures when considering or approving new mines, but gaps in
                      agency policies and coordination may result in missed opportunities for
                      the agencies to fully implement the approaches they have developed. 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. Likewise, the
                      lack of established coordination practices between BLM and the Forest
                      Service may result in cases where BLM may not give full or timely
                      consideration to the Forest Service’s input when establishing mine lease
                      terms and conditions or setting financial assurance amounts for mines in
                      southeastern Idaho. As a result, BLM in some cases may be basing its
                      decisions on incomplete information. Additionally, while BLM has
                      attempted to leverage its limited resources by requiring mine operators to
                      pay for contractors to help oversee reclamation work, it does not have
                      mechanisms in place to fully oversee such activities and could not identify
                      its authorities for directing and overseeing such arrangements. And
                      finally, EPA’s acceptance of financial assurances in the form of corporate
                      guarantees related to assessment (and, potentially, cleanup) activities
                      leaves the federal government at increased risk of shouldering more of
                      the financial burden for these tasks should the mine operators fail to carry
                      them out or declare bankruptcy. In its current efforts to draft regulations
                      for financial assurances under CERCLA, EPA has stated that it plans to
                      assess the risks associated with different forms of financial assurances,
                      including corporate guarantees, and the experiences of regulators to
                      assess the adequacy of various financial mechanisms—which we believe
                      is an important step in ensuring that the financial assurances accepted by
                      the federal government are adequately reducing the government’s
                      exposure for cleanup costs.


                      To ensure effective oversight of phosphate-mining operations and
Recommendations for   reclamation and cleanup, we are making three recommendations to the
Executive Action      Secretary of the Interior and one to the Administrator of EPA. Specifically,
                      we recommend that the Secretary of the Interior direct the Director of
                      BLM to


                      Page 46                              GAO-12-505 Phosphate Mining on Federal Land
                     •   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. If BLM confirms that it has the
                         authority, it should develop a policy document to ensure consistent
                         implementation, including a requirement that BLM reach written
                         agreement with operators regarding arrangements for third-party
                         contracting. Should BLM determine that it does not have the authority
                         to use such mechanisms—and should it wish to continue the
                         practice—it should seek appropriate legislation for doing so.

                     In addition, we recommend that the Administrator of EPA ensure that the
                     agency complete its plan to assess whether corporate guarantees are an
                     adequate financial mechanism, including giving due consideration to the
                     experience of EPA Region 10 and BLM in using such assurances. If EPA
                     determines that corporate guarantees are not an appropriate form of
                     financial assurance, then their use should be prohibited in the financial
                     assurance regulations that the agency expects to promulgate for the
                     mining industry.


                     We provided EPA and the Departments of Agriculture, Defense, and the
Agency Comments      Interior with a draft of this report for their review and comment. EPA, the
and Our Evaluation   Forest Service (responding on behalf of the Department of Agriculture),
                     and Interior generally agreed with our findings and recommendations, and
                     their written comments are reproduced in appendixes III, IV, and V
                     respectively. Each of these agencies also provided technical comments
                     which we incorporated as appropriate. The Department of Defense
                     declined to provide comments.

                     While the Department of the Interior generally agreed with our findings
                     and recommendations, it expressed concern that our discussion on
                     BLM’s coordination with the Forest Service on leasing activities could be
                     misleading. Interior noted that in some instances BLM does not accept
                     the Forest Service’s recommended changes to existing phosphate leases



                     Page 47                             GAO-12-505 Phosphate Mining on Federal Land
because of differences in professional judgment, not because of a lack of
coordination. Furthermore, Interior noted that BLM and the Forest Service
have been discussing the Forest Service’s proposed revisions to the
standard lease terms and conditions for new leases to further protect the
government from potential liability associated with selenium
contamination, but that such discussions are necessarily detailed and
time consuming, and the lack of agreement to date does not constitute a
lack of coordination. In this context, the Forest Service also noted that it
places great value on its collaborative relationship with BLM, and is
committed to working with BLM to improve coordination and information
sharing. We have made changes to the report to provide additional
context and clarification regarding the agencies’ coordination efforts.
Nevertheless, while we acknowledge that BLM and the Forest Service
have begun efforts to improve their coordination on these issues, we
continue to believe that they would benefit from a clearer process for
coordinating in a timely manner and elevating issues to the headquarters
level when necessary.


As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies to the Secretaries of
Agriculture, Defense, and the Interior; the Administrator of the
Environmental Protection Agency; the Chief of the Forest Service; the
Assistant Secretary for Indian Affairs; the Directors of the Bureau of Land
Management and Fish and Wildlife Service; appropriate congressional
committees; and other interested parties. In addition, the report will be
available at no charge on the GAO website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact
me at (202) 512-3841 or mittala@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Key contributors to this report are listed in appendix VI.




Anu K. Mittal
Director, Natural Resources
  and Environment




Page 48                              GAO-12-505 Phosphate Mining on Federal Land
Appendix I: Scope and Methodology
             Appendix I: Scope and Methodology




             This appendix details the methods we used to examine the issues
             surrounding the oversight and cleanup of phosphate mines on federal
             lands. 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.

             For all objectives, we focused our report on agencies’ and mine
             operators’ activities in Idaho for two primary reasons. First, phosphate-
             mining operations on federal land are generally limited to the Western
             Phosphate Field, and all but one of these operations are located in Idaho.
             Second, the occurrence of selenium contamination resulting from
             phosphate-mining operations on federal lands is currently limited to
             Idaho; such contamination has not been discovered in neighboring states
             containing portions of the Western Phosphate Field.

             To address the first objective, we reviewed federal laws and regulations
             relevant to the federal agencies’ oversight of phosphate-mining
             operations on federal land in Idaho, including the National Environmental
             Policy Act (NEPA), the Mineral Leasing Act, the Clean Water Act, and the
             Endangered Species Act. In addition, we reviewed relevant agency
             documents and reports created both before and after 1996. These include
             Bureau of Land Management (BLM) and Forest Service land-use plans;
             BLM records of decision for new mine plans, and associated NEPA
             documents; BLM instructional memorandums; BLM lease and bond
             abstracts; and correspondence between BLM and the Forest Service
             regarding lease stipulations. We interviewed officials with the Bureau of
             Indian Affairs (BIA), BLM, the Fish and Wildlife Service (FWS), and the
             Office of Natural Resources Revenue within Interior; the Forest Service;
             the Environmental Protection Agency (EPA); the Army Corps of
             Engineers; and the Idaho Department of Environmental Quality (IDEQ).
             We also interviewed representatives of the three Idaho phosphate mine
             operators and visited the three phosphate mines operating as of June
             2011, and twelve of the sixteen mines where selenium contamination has
             been detected. To obtain additional perspectives beyond those offered by
             agency officials and mine operators, we also interviewed representatives
             from the Shoshone-Bannock Tribes, on whose reservation one of the


             Page 49                             GAO-12-505 Phosphate Mining on Federal Land
Appendix I: Scope and Methodology




largest phosphate mines is located, and from regionally-focused
environmental advocacy groups, including the Idaho Conservation
League and the Greater Yellowstone Coalition.

To address the second objective, we interviewed officials from BIA, BLM,
FWS, the Forest Service, EPA, IDEQ, the mine operators, and the
Shoshone-Bannock Tribes, and reviewed documents and reports on the
status of assessment and cleanup efforts and related settlement
agreements under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA). To determine the amount
federal and state agencies have spent on these actions and the amount
each agency received in reimbursement from mine operators, we
obtained expenditure and collections data from each agency where
available from fiscal year 2001 through fiscal year 2011. Specifically, for
EPA, we collected data from EPA’s Superfund Cost Recovery Package
Imaging and On-Line System, which included EPA’s expenditures at each
mine, as well as information on funds received from mine operators. For
BLM, we received data from BLM’s Management Information System for
fiscal years 2001–2008 and from Interior’s Financial and Business
Management System for fiscal years 2009–2011. Because BLM’s data
from these systems applied to cleanup work at Idaho phosphate mines
generally, we also collected mine-specific expenditure information where
available, including from the cost documentation packages that BLM
submitted to the mine operators for six mines as part of settlement
agreements to which BLM was a party. We received information on funds
BLM received from mine operators from Interior’s Federal Financial
System. For the Forest Service, we received data from the Forest
Service’s Foundation Financial Information System, which included the
Forest Service’s expenditures at each mine and funds received from mine
operators. For FWS, we collected data from cost documentation
packages submitted to the mine operators for five mines and the
areawide investigation where FWS was a party to a settlement
agreement, and from the Federal Financial System for additional
expenditures as well as funds received from mine operators. For BIA,
officials estimated their annual expenditures based on records kept
internally showing hours worked on cleanup at phosphate mines in Idaho.
For IDEQ, we received data from the department’s General Online
Reporting System, which included IDEQ’s costs as well as funds received
from mine operators.

To evaluate the reliability of these data and determine their limitations, we
reviewed the data obtained from each agency’s system as well as the
cost documentation packages generated by the agencies and sent to


Page 50                               GAO-12-505 Phosphate Mining on Federal Land
Appendix I: Scope and Methodology




mine operators. For each of these data sources, we analyzed related
documentation, examined the data to identify obvious errors or
inconsistencies, and compared the data we received with other published
data sources, where possible. We also interviewed officials from each
agency to obtain information on the internal controls of their data
systems. On the basis of our evaluation of these sources, we concluded
that the expenditure data we collected and analyzed were sufficiently
reliable for our purposes.

For all agencies, at least some of the expenditures they reported included
expenses paid to cover indirect costs associated with work performed by
the agencies, which is in accordance with the terms of many of the
settlement agreements. However, these indirect costs were not included
in all of the expenditure data shared with us. Therefore, in order to report
similar types of expenditures across agencies, we applied agency-specific
historic annual indirect cost rates to those expenditures we received
where it was not already included. In order to determine costs in constant
2012 dollars, we adjusted the amounts reported to us for inflation by
applying the fiscal year chain-weighted gross domestic product price
index, with fiscal year 2012 as the base year.

To determine estimated remaining costs for future cleanup actions at the
sites, we interviewed EPA, Forest Service, and BLM officials, and
reviewed reports from phosphate mines where CERCLA removal actions
have occurred or have been approved and mines with recently approved
reclamation plans that include measures to prevent selenium
contamination. EPA and Forest Service officials provided information
regarding likely cost drivers for cleanup at phosphate mines, and, to
provide context, EPA officials identified hardrock mines in the region with
similar general characteristics where these cost drivers are expected to
be applied.

To address the third objective, we first reviewed BLM, Forest Service, and
EPA regulations; BLM and Forest Service manuals; and BLM
memorandums to obtain agency financial assurance standards and
procedures. We then obtained financial assurance data from records
maintained by Idaho-based officials with BLM, the Forest Service, and
EPA, which included data on bonds held by Idaho state agencies for
operations on federal land. We also interviewed officials from these
agencies to obtain insights into agency financial assurance practices and
the extent to which current financial assurances are sufficient to cover
future cleanup actions. We evaluated the reliability of BLM financial
assurance data by interviewing BLM officials and corroborating the data


Page 51                              GAO-12-505 Phosphate Mining on Federal Land
Appendix I: Scope and Methodology




maintained by BLM officials in Idaho with data maintained in BLM’s
centralized database, known as LR2000. We evaluated the reliability of
Forest Service and EPA data by interviewing agency officials, examining
agency records, and cross-checking these data to the bonds amounts
listed in CERCLA settlement agreements. We determined that the
financial assurance data from BLM, the Forest Service, and EPA were
sufficiently reliable for the purpose of determining the types and amounts
of financial assurances in place for phosphate mining operations in Idaho.

We conducted this performance audit from May 2011 through April 2012
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.




Page 52                             GAO-12-505 Phosphate Mining on Federal Land
Appendix II: Information on 18 Phosphate Mines
                                        Appendix II: Information on 18 Phosphate
                                        Mines Overseen by Federal Agencies in
                                        Southeastern Idaho, and CERCLA Cleanup

Overseen by Federal Agencies in Southeastern
                                        Expenditures



Idaho, and CERCLA Cleanup Expenditures

                                        This appendix provides information on the acres disturbed, CERCLA lead
                                        agency, and surface land ownership at 18 phosphate mines in
                                        southeastern Idaho (table 3), and the agency assessment and cleanup
                                        expenditures at the 16 of those mines with selenium contamination
                                        (table 4).

Table 3: Acres Disturbed, CERCLA Lead Agency, and Surface Land Ownership at 18 Phosphate Mines in Southeastern Idaho

                                                                                             Surface Land Ownership
                                                        CERCLA lead                       Forest
Mine                           Acres disturbeda         agency                   BLM      Service       Tribal       State      Private
Ballard                                      640        EPA                                                            •            •
Blackfoot Bridgeb                             90                                  •                                                 •
Champ                                        390        Forest Service                        •
Conda                                       1,510       EPA                       •                                                 •
Diamond Gulch                                 30        Forest Service                        •
Dry Valley                                   340        IDEQ                      •                                                 •
Dry Valley, South Extensionb                 540                                  •           •                        •            •
Enoch Valley                                 580        EPA                                   •                                     •
Gay                                         4,740       EPA                                                •
Georgetown Canyon                            250        IDEQ                                  •                                     •
Henry                                       1,070       EPA                       •                                    •            •
Mountain Fuel                                720        Forest Service                        •
North Maybe                                  600        Forest Service                        •                                     •
Rasmussen Ridge     b
                                             760                                              •                        •
Smoky Canyon                                2,510       Forest Service                        •                                     •
South Maybe Canyon                           600        Forest Service                        •
South Rasmussenb                             390                                              •                        •
Wooley Valley                                810        Forest Service            •           •                                     •
                                        Source: BLM, Forest Service, and IDEQ.
                                        a
                                         Acres disturbed represent estimates as of December 31, 2011, and include all acreages that have
                                        also been reclaimed.
                                        b
                                         This is an active mine that is not being assessed under CERCLA.




                                        Page 53                                         GAO-12-505 Phosphate Mining on Federal Land
                                                Appendix II: Information on 18 Phosphate
                                                Mines Overseen by Federal Agencies in
                                                Southeastern Idaho, and CERCLA Cleanup
                                                Expenditures




Table 4: Assessment and Cleanup Expenditures at the 16 Contaminated Phosphate Mines in Southeastern Idaho, from Fiscal
Years 2001 through 2011

Dollars in thousands (2012 constant dollars).

                                                                                                                                        Total
                                                                                                                  Total agency reimbursed by
                                                                                                                 expenditures mine operatorsb
                                                                                                                             a
 Mine                          FS        IDEQ                EPA              BLM         BIA          FWS
 Ballard/ Enoch              $377        $405              $1,496               $11         $0          $20               $2,310                  $1,806
              c
 Valley/ Henry
 North Maybe                1,735           88                  85               80          0            32                2,019                  1,671
 Smoky Canyon               1,263          168                335                39          0            57                1,862                  1,094
 Conda                           0         427                902                65          0            37                1,432                  1,321
 Gay                             0              0             224                37       380             10                  650                   179
 South Maybe                  336               3                 0              13          0             0                  352                   113
 Canyon
 Wooley Valley/               172           37                    1                0         0             0                  210                     0
                c
 Diamond Gulch
 Rasmussen Ridge               85               0                 0              77          0             0                  162                     0
 Champ/ Mountain              122               1                 0                7         0             0                  131                     8
     c
 Fuel
 South Rasmussen                 0          40                    0                0         0             0                   40                     0
 Georgetown                      2          15                    0                0         0             0                   18                     0
 Canyon
 Dry Valley                      4              0                 0                0         0             0                    4                     0
 Activity
 Project                    4,410               0             319            2,178           0             0                6,908                     0
            d
 management
 Areawide                        0       2,630                    0                0      551             38                3,179                  2,349
 investigation
 Total agency              $8,506       $3,815             $3,362          $2,507        $891          $195              $19,276                      -
 expenditures
 Total reimbursed          $2,166       $3,388             $2,693             $143          $0         $152                     -                 $8,542
 by mine operators
                                                Source: GAO analysis of agency data.

                                                Notes: Numbers may not total because of rounding.
                                                a
                                                    Expenditures and reimbursements include agency-specific administrative, or indirect, costs.
                                                b
                                                 In some cases, mine operators have contributed additional amounts that the agencies expect to use
                                                to defray future costs. Because the agencies have not yet expended these amounts, this table does
                                                not reflect these amounts.
                                                c
                                                    Expenditures for these mines were reported as combined by one or more agencies.
                                                d
                                                 Project management includes activities that spanned multiple mines—for example, planning and
                                                consulting over the overall cleanup process in the area. For BLM, this category also includes all mine-
                                                specific work that was not covered by a cost recovery agreement with a mine operator.




                                                Page 54                                              GAO-12-505 Phosphate Mining on Federal Land
Appendix III: Comments from EPA
             Appendix III: Comments from EPA




             Page 55                           GAO-12-505 Phosphate Mining on Federal Land
Appendix III: Comments from EPA




Page 56                           GAO-12-505 Phosphate Mining on Federal Land
Appendix IV: Comments from the
             Appendix IV: Comments from the Department
             of Agriculture



Department of Agriculture




             Page 57                                     GAO-12-505 Phosphate Mining on Federal Land
Appendix V: Comments from the Department
             Appendix V: Comments from the Department
             of the Interior



of the Interior




             Page 58                                    GAO-12-505 Phosphate Mining on Federal Land
Appendix V: Comments from the Department
of the Interior




Page 59                                    GAO-12-505 Phosphate Mining on Federal Land
Appendix V: Comments from the Department
of the Interior




Page 60                                    GAO-12-505 Phosphate Mining on Federal Land
Appendix VI: GAO Contact and Staff
                  Appendix VI: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Anu K. Mittal, (202) 512-3841 or mittala@gao.gov
GAO Contact
                  In addition to the contact named above, Steve Gaty (Assistant Director),
Acknowledgments   Andrea Wamstad Brown, Casey L. Brown, Antoinette Capaccio, Leslie K.
                  Pollock, Rebecca Shea, Carol Herrnstadt Shulman, and Rajneesh Verma
                  made key contributions to this report.




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