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The U.S. Environmental Protection Agency (“EPA”) has recently announced that it would take steps to finalize rules establishing financial responsibility requirements for hard rock mines under section 108(b) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).

Section 108(b) gives the EPA the authority to require certain facilities to have some type of financial security mechanism in place – such as a bond or insurance policy – that can be used to pay for spills or cleanups should a mining or mineral processing company declare bankruptcy or be otherwise unable to conduct necessary response activities. CERCLA requires the financial responsibility to be consistent with the degree of risk associated with the production, transportation, treatment, storage or disposal of hazardous substances.

In 2009, the EPA published a notice in the Federal Register designating the hard rock mining industry as its priority for the development of financial responsibility requirements. In making this determination, the EPA cited a heightened “risk” associated with hard rock mining which increase the likelihood of releases of hazardous substances.

The framework for the new regulations assigns financial responsibility amounts based on a facility’s characteristics (i.e., open pits, waste rock, tailings, heap leach, process ponds, water management, and operations, maintenance and monitoring). Natural resources damages and health assessment costs would be separate fixed amounts imposed on each facility. The financial responsibility requirements are intended to be separate and distinct from other federal closure and reclamation bonding requirements imposed under other statutes.
Continue Reading Miners and States take Notice, the EPA is Updating its CERCLA Financial Responsibility Requirements

Rare earth elements are found in nearly every aspect of our lives. Televisions, smartphones, tablets, computers, stereos, and cars all contain rare earth elements. Our national security also relies on rare earths in precision-guided missiles, radar, night-vision goggles, lasers, satellites, fighter jets, and submarines. Virtually every aspect of modern society relies in part on…

On Tuesday, May 5, 2015, the Internal Revenue Service (“IRS”) released proposed regulations defining qualifying income for Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships that are taxed as a partnership rather than a corporation.

Being taxed as a MLP has many advantages. While shareholders in a corporation face double taxation  ̶  paying taxes first at the corporate level, and then at the personal level when those earnings are received as dividends  ̶  owners of a partnership are taxed only once, when they receive distributions. The absence of taxes at the company level gives MLPs a lower cost of capital than is typically available to corporations, allowing the MLPs to pursue projects that might not be feasible for corporations.

To qualify as a MLP, at least 90% of the entity’s gross income must be “qualifying income.” Previously, there had been no detailed list of what constitutes qualifying income.

These proposed regulations use the term “qualifying activities” to describe activities relating to minerals or natural resources that generate qualifying income. The IRS has now provided an exclusive list of operations that constitute qualifying activities. The activities addressed include exploration, development, mining or production, processing, refining, transportation, and marketing of any natural resource.
Continue Reading New Rules on MLPs & Qualifying Income: What Oil Services and Exploration Companies Need to Know

The Nevada Supreme Court recently decided that the rule against perpetuities does not apply to area-of-interest provisions in commercial mining agreements. While you should not expect this case to become a summer blockbuster starring George Clooney, it nonetheless provides certainty for area-of-interest provisions in older mining agreements in Nevada (and lends insights into how…

On Wednesday, July 23, 2014, the U.S. House of Representatives Subcommittee on Energy and Mineral Resources held an oversight hearing, titled “American Metals and Mineral Security: An examination of the domestic critical minerals supply and demand chain.”  During the hearing, a panel of witnesses spoke on the benefits of securing a supply of minerals through domestic mining.  This panel included representatives from GE Global Research and the National Defense Industrial Association, among others.

The hearing demonstrated support for H.R. 761, the National Strategic and Critical Minerals Production Act.  H.R. 761 passed the House (246-178) on September 18, 2013, and is awaiting Senate approval.  The purpose is to “more efficiently develop domestic sources of the minerals and mineral materials of strategic and critical importance to United States.”  Key sections of H.R. 761 introduce mandates for streamlining the permitting process for mineral development and limits the permitting review period to 30 months. Continue Reading U.S. House Hearing Supports Legislation for Development of Domestic Minerals (H.R. 761)

On April 29th, the California Geological Survey (CGS) released production data from 2012 indicating that the production of construction aggregate (sand, gravel and crushed stone) increased for the first time since 2007 in California.  Construction aggregate production increased by 7.3 percent to 121.3 million tons (valued at $1.162 billion).  Portland cement production also increased by…

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Here Stoel Rives shares insight and analysis about key mineral law developments. Drawing on a very active natural resources practice, we aim to keep readers informed about the legal aspects of news that impacts exploration and development of all things mineral.