Government Access to, and Use of, Security Funds

Overview of BC Law

In BC, the Chief Inspector may, after giving notice to remedy a failure to complete the reclamation program or to comply with permit conditions, apply all or part of the security toward payment of the cost of the work required.¹⁴⁶

Although these are relatively strong legal requirements, they remain largely dependent on the Chief Inspector’s discretion, without any oversight. Other jurisdictions set more specific rules on the circumstances in which the regulatory authority should apply the security to complete work.

Issue

Legal provisions do not adequately ensure that the government will have access to the necessary mine security funds or will utilize them as required.

Recommended Solutions

Mandate forfeiture of security where mine reclamation is not completed within set time limits

[Tags: Security; Bonds; Assurance; Surety; Reclamation; Time Limit; Release]

In Montana, legal provisions provide that the security may be forfeited where reclamation is not begun in accordance with the reclamation plan within 30 days of notification.¹⁴⁷  Forfeiture will also occur if reclamation is not completed within two years of abandonment or completion.¹⁴⁸  Similarly, in Oregon, legislation provides that the security will be forfeited to the government if the miner fails to comply with a government notice or to complete approved reclamation within three years of the operation’s termination.¹⁴⁹ These clear requirements help promote prompt site reclamation.

Allow government to access security where a miner fails to comply with government-issued orders

[Tags: Security; Bonds; Assurance; Surety; Forfeiture; Release; Non-compliance; Pollution]

As indicated above, security for mines in BC can be used by the government where a program for reclamation is not being completed or permit conditions are not being met. However, under BC legislation there are no clear legal requirements providing that security can be used where a miner fails to comply with a specific order.  Instead, an inspector is limited to applying to the Supreme Court for an order directing the miner to comply.¹⁵⁰ In contrast, in Alberta the law permits the regulatory authority to access and use security funds where a miner fails to comply with environmental protection order, emergency environmental protection orders or enforcement orders.¹⁵¹

Make miner liable for government clean-up costs that exceed the available security

[Tags: Security; Bonds; Assurance; Surety; Liability; Responsible; Government Costs]

Due to the uncertainty surrounding mine clean-up costs, it is important not to limit a miner’s liability to the security posted for the mine.

Under BC legislation, if an inspector deems that work may be necessary in, on or about a closed mine to avoid danger to persons or property, or to abate pollution of the land and watercourses affected by the mine, the inspector may carry out work to remove or alleviate the danger or remedy the pollution.¹⁵² The costs to complete this work are paid from the consolidated revenue fund.  The amount spent plus interest becomes a debt due to the government, and forms a lien and charge on the mine or mineral title in favour of the government.¹⁵³ No transfer of title or other dealing with the mine may take place until the debt is paid and the notice cancelled. However, the minister retains broad discretion to cancel this notice with or without payment.¹⁵⁴  As such, these legal provisions do not ensure that public funds expended for clean-up costs that exceed the available security will be recovered. In contrast:

• In Victoria (Australia), the regulatory authority is legally empowered to recover as a debt due to the Crown any amount by which clean-up costs exceed the amount of the security,¹⁵⁵  thereby ensuring that the public purse is not burdened by incomplete mine closure and clean-up costs where inadequate security has been posted;
• In New Zealand, clean-up costs incurred by the regulatory authority that exceed the security are deemed a debt due to the regulatory authority by the miner;¹⁵⁶ and
• In Alberta, legal provisions provide that if the security proves insufficient, the government may recover from the miner any additional costs that the regulatory authority incurs to complete the required reclamation.¹⁵⁷ The Alberta legislation works under the “joint and several liability” system, where joint venture partners are each 100% responsible for the costs, rather than being responsible for their proportionate share.¹⁵⁸