WASHINGTON - A federal court has ruled
that the U.S. Environmental Protection Agency must close a loophole
that -- for more than 25 years -- has made it easy for mining
companies, coal ash dumps, and a host of other polluting industries to
skip out on costly cleanups by declaring bankruptcy. The case concerned
EPA's failure to issue "financial assurances" standards that ensure
that polluting industries will always remain financially able to clean
up dangerous spills and other contaminated sites.

Attorneys Lisa Evans and Jan Hasselman with the public interest law
firm Earthjustice represented the Sierra Club and environmental groups
in New Mexico, Nevada, and Idaho in the case, decided late yesterday by
U.S. District Judge William Alsup, based in San Francisco.

Environmental advocates hailed the decision as a victory that paves
the way for new federal rules that would require hardrock and phosphate
mine operators, metal finishers, wood treatment facilities, and other
industries to post bonds covering the cost of potential future
cleanups.

"By not promulgating financial assurance requirements, EPA has
allowed companies that otherwise might not have been able to operate
and produce hazardous waste to potentially shift the responsibility for
cleaning up hazardous waste to taxpayers," Judge Alsup wrote in the
decision. The undisputed evidence before the Court demonstrated that
such financial assurance requirements result in better environmental
protection and faster and more thorough cleanups.

When the Superfund law was passed in 1980, lawmakers gave EPA three
years to start putting financial assurance regulations in place. More
than 25 years later, these regulations remain unwritten. Under the
terms of the decision, EPA has until May 4 to identify the industries
that will be first subject to these financial assurance requirements.

"This victory paves the way for the new administration to correct a
longstanding environmental problem while saving taxpayers billions of
dollars at the same time," said Earthjustice attorney Jan Hasselman,
who argued the case before Judge Alsup. "New standards will push
companies that deal with toxic substances towards more responsible
practices."

Perhaps the industries most impacted by the decision are hardrock
and phosphate mining. The Environmental Protection Agency (EPA) ranks
the mining industry as the nation's top toxic polluter, reporting more
toxic releases annually than any other industry. The industry generates
more than 2 billion pounds of toxic waste each year and has polluted
more than 40 percent of western watershed headwaters. Without financial
assurance regulations, it has been easy for mine operators to walk away
from sites contaminated with cyanide, lead, arsenic, mercury and other
toxins, and they have done so time after time.

In 2004, the EPA reported that 63 hardrock mining sites were listed
as Superfund sites on the agency's National Priority List (NPL), EPA's
list of the most contaminated Superfund sites, with an estimated
cleanup cost of $7.8 billion. Of that, $2.4 billion was expected to
come from taxpayers. Another 93 mining sites were being eyed for
inclusion on the Superfund NPL list.

One of those Superfund sites is the Molycorp/Chevron molybdenum mine
near Questa, New Mexico. The Taos-based organization Amigos Bravos has
long called for Molycorp to take responsibility for the toxins it
released during the mine's 40-year history, contaminating the Red River
and nearby groundwater aquifers. In 2002, after much of the damage was
already done, the company agreed to set aside $152 million for cleanup.
But total cleanup costs could reach $400 million, and observers wonder
if the scale of destruction would have been less if Molycorp knew at
the outset it would be held responsible.

"This victory will encourage mine operators to act more responsibly,
hopefully preventing future problems in New Mexico," said Brian
Shields, executive director of Amigos Bravos. "Now that companies know
that they are responsible for cleaning up after themselves, there's a
strong incentive for them to improve their waste management practices."

Perhaps the most far-reaching example of irresponsible mining
operations is Asarco, which declared bankruptcy in 2005. The
century-old mining and smelting company left behind 94 Superfund sites
in 21 states, with a total cleanup cost estimated at more than $1
billion, far more than the $62 million trust the company set aside for
cleanup.

In Idaho, Asarco is among mining companies responsible for
contamination spread across the 1,500-square-mile Coeur d'Alene River
basin. Cleanup work is likely to last for generations. EPA has
estimated the cost of the first 30 years at $359 million.

The Idaho Conservation League is also watching prospective cleanup
costs mount from 17 contaminated sites caused by phosphate mining.

"We're heartened by this victory and hope that it will help relieve
taxpayers of a financial burden and keep our rivers and streams clean,"
said Justin Hayes, Program Director of the Idaho Conservation League.

In Nevada, 27 mining companies had declared bankruptcy as of July
2000, creating some of the country's highest potential taxpayer
liability.

"This victory comes at a crucial time for communities impacted by
Nevada's mining industry," said John Hadder, executive director of
Great Basin Resource Watch. "The gold mine bankruptcies from the 1990s
left our state riddled with contaminated sites. But from now on, we
hope to benefit from the stronger protections brought by this court
win."

Another industry potentially impacted by the decision are coal-fired
power plants, responsible for generating 131 million tons of toxic coal
ash per year. The industry has been in the spotlight in the wake of
immense toxic spills at two Tennessee Valley Authority sites. When coal
ash is dumped in mines and waste ponds, financial assurance for cleanup
is rarely required.

"We hope that the municipal utilities and coops that now own most of
the Peabody Prairie State Energy power plant in downstate Illinois take
notice of this decision," said Kathy Andria, Waste & Recycling
chair of the Illinois chapter of Sierra Club.  Prairie State plans to
dump 60 million tons of coal combustion waste on a 4,000-acre site of
old strip-mined land near farms and homes. "After the recent disasters
in Tennessee and Alabama, we want to make sure Peabody and its partners
have the cash to pay for any problems that could arise in the future.
More importantly, we hope that cash will serve as an incentive for them
to act responsibly to keep surrounding communities and water resources
safe."

Read the decision (PDF)