Return of Security

As security is a mine permit condition in BC, the release of security occurs concurrently with the final release of all mine permit obligations. However, other jurisdictions have adopted stronger legal provisions to ensure that securities are not returned until all closure and reclamation costs have been recovered.

Overview of BC Law

When mining activities end, BC legislation requires miners to submit a written request to the Chief Inspector for the return of security and termination of their mine permit.  This request must detail the reclamation activities that have been completed in accordance with requirements of the legislation and the approved reclamation plan.¹⁵⁹ Where all legal conditions under the legislation and mine permit have been fulfilled to the satisfaction of the Chief Inspector and there are no on-going inspection, monitoring, mitigation or maintenance requirements, the miner will be released from all further obligations under the legislation and all remaining security and accrued interest will be returned to the miner.¹⁶⁰ Although these are relatively strong provisions, mine securities in other jurisdictions are not released until the miner has gone through more comprehensive checks and balances.

Issue

The burden of reclamation may fall on taxpayers due to inadequate legal provisions on the release of mine securities.

Recommended Solutions

Require public involvement before security is released

[Tags: Security; Bonds; Assurance; Surety; Public Notice; Public Consultation; Release]

BC legislation and policy contain no explicit opportunities for public involvement before the security is released. In contrast:

• In Montana, securities cannot be released until the public has been provided with an opportunity for a hearing and a hearing has been held if so requested. To ensure the public is aware of the hearing, the regulatory authority must provide reasonable state-wide and local notice of the opportunity for a hearing.¹⁶¹
• In New Mexico, legal provisions provide that any aggrieved persons may object to the release of a bond. Where such an objection is filed, the regulatory authority must hold a hearing before releasing the security.¹⁶²
• In Oregon, the regulatory authority must publish a notice of receipt of a request for release of security for chemical process mines¹⁶³ and the regulatory authority must conduct an informal public hearing to determine whether to approve release.¹⁶⁴
• Under US federal law, the miner is responsible for publishing notice of a request for release of security and for sending notification letters to key persons and organizations.¹⁶⁵
• In Colorado, a miner must publish notice of its request for return of security in a newspaper of general circulation.¹⁶⁶
• In Victoria (Australia), the regulatory authority must carry out prior consultation with landowners and the municipal district before releasing security for mining activities carried out on private lands. ¹⁶⁷

Require site inspection before security is released

[Tags: Security; Bonds; Assurance; Surety; Site Inspection; Compliance; Release]

In BC, the provincial code states that a site inspection will be carried out upon receipt of a request for return of security.¹⁶⁸ As with most other provisions in BC’s mining law, this provision is also subject to the Chief Inspector’s discretion.

In contrast, other jurisdictions, including the US federal government,¹⁶⁹ California¹⁷⁰ and Colorado,¹⁷¹ clearly mandate (without any discretion granted on this issue) that site inspections be completed to determine if the miner has complied with all applicable requirements before security will be returned.

Stagger release of security – retain a percentage of the security for a minimum of 5 years after completion of reclamation to ensure successful reclamation

[Tags: Security; Bonds; Assurance; Surety; Retained; Release; Additional Period]

Even where all legal requirements have been met, environmental conditions may degrade after mine closure. This is demonstrated by the events that occurred at the Clinton Creek Mine in the Yukon, where the territorial government had to undertake significant remediation efforts five years after the federal government recommended that the security be returned to the miner.¹⁷² Various jurisdictions have enacted specific provisions to account for this possibility. For example, in Wyoming the legislation requires that up to 75% of the security be released upon completion of reclamation, with the remaining portion (which must exceed $10,000) held for at least five more years to assure proper re-vegetation and groundwater restoration.¹⁷³ Similar legal requirements for staggered release of security are provided under US federal law¹⁷⁴ and under legislation enacted in West Virginia.¹⁷⁵

Require demonstration of self-sustaining re-vegetation for set time period before release of security

[Tags: Security; Bonds; Assurance; Surety; Reclamation; Successful; Proof; Release]

Several jurisdictions have enacted legislation mandating that site reclamation proceed in a self-sustaining manner for a set period of time before security is released. For example:

• In California, the miner must demonstrate that vegetation has been self-sustaining without irrigation for a minimum of two years before security is released;¹⁷⁶
• In Washington, the regulatory authority is empowered to deny the release of security until it deems that effective re-vegetation has commenced;¹⁷⁷
• In New Mexico, legal provisions require the regulatory authority to retain the amount of security necessary for a third party to re-establish vegetation for a period of twelve years after the last year of augmented seeding, fertilizing, irrigation or other work, unless a post-mining land use is achieved that is inconsistent with the further need for re-vegetation;¹⁷⁸ and
• In Victoria (Australia), when deciding whether to return the security to the miner, the regulatory authority must take into account the possibility that some of the damage caused to the land by the mining activities may not become evident for some time.¹⁷⁹

Secure compensation for property owner by way of bond

[Tags: Security; Bonds; Assurance; Surety; Free, Prior and Informed Consent; Compensation]

In BC, government policy recognizes that the mineral title (claim) holder may be required to provide a reasonable security (bond) as part of the negotiated compensation agreement with the property owner. If the two parties are unable to agree on an amount, the Chief Gold Commissioner may offer guidance.¹⁸⁰ In Idaho “the owners or rightful occupants of the surface ground may demand satisfactory security from the miners”.¹⁸¹ Where such security is refused or not provided, the surface owners or occupants “may enjoin such miners from working such ground until such security is given”.¹⁸² Rather than having the Chief Gold Commissioner offer advice on the amount, it may be preferable to follow Idaho’s lead where, “the court granting the writ of injunction shall fix the amount and nature of the security”.¹⁸³ In the Philippines, to guarantee compensation, the miner must post a bond with a regional director prior to commencing operations. The amount of the bond is to be determined based on the type of property affected and the prevailing property prices in the area of the mining operation, with surety or sureties satisfactory to the regional director.¹⁸⁴ Similarly, in Finland, if the landowner so demands, the miner must post security for any damage that may occur before exploration can begin.¹⁸⁵

Require baseline survey to quantify landowner compensation for loss and damage

[Tags: Security; Bonds; Assurance; Surety; Free, Prior and Informed Consent; Compensation]

Difficulties in accurately establishing adequate compensation will arise if pre-disturbance information is not available or is inadequate. This is recognized in Ghana where miners must, in the presence of both owner or lawful occupier and an officer of the regulatory authority responsible for land valuation, carry out a “survey of the crops and produce a crop identification map for the compensation in the event that mining activities are extended to the areas”.¹⁸⁶ This legal provision should be drafted and applied with care as practical experience in Ghana suggests that compensation under this provision has failed to adequately take into account potentially higher future value of young crops, and has failed to distinguish between higher and lower value crops.¹⁸⁷  Such records of baseline conditions will help support the compensation valuation process.

Clearly define landowner losses and damages to be compensated

[Tags: Security; Bonds; Assurance; Surety; Free, Prior and Informed Consent; Compensation]

As indicated above, BC legislation broadly mandates compensation for “loss or damage” caused by mining activities. However, this broad definition may result in disputes between the recorded holder and the surface land owner as to the scope of the harm. In Ghana, compensation principles are clearly defined in legislation, which lists specific items that compensation may be required for, including deprivation of particular uses and loss of crop earnings and expected income.¹⁸⁸

In Victoria (Australia), clearly defined losses and damages that are payable to the owner or occupier of private lands are also specified in the mining legislation, including:¹⁸⁹

• damage to any improvements on the land;
• loss of amenity, including recreation and conservation values;
• loss of opportunity to make any planned improvement on the land; and
• any decrease in the market value of the owner or occupier’s interest in the land.

In addition, the amount of compensation may also include reasonable incidental expenses incurred in moving (if it is so necessary), and may be increased by up to 10% “to compensate the owner or occupier for intangible and non-pecuniary disadvantages that are not otherwise compensable”.¹⁹⁰ In Papua New Guinea, specific losses and damages for which compensation must be paid are also outlined in the mining legislation. These include compensation for being deprived of the possession or use of the natural surface of the land and social disruption.¹⁹¹ In addition, landholders of any land or improvements, adjoining or in the vicinity of the land covered by the mining activity that is injured or that depreciates in value as a result of the mining activity are also entitled to compensation.¹⁹²

Establish clear timelines for landowner compensation

[Tags: Free, Prior and Informed Consent, Compensation; Security; Bonds; Assurance; Surety]

Under BC legislation, there are no legal requirements pertaining to when compensation must be provided to property owners. Conversely, in Ghana, both the Constitution and the mining legislation mandate that “prompt payment of fair and adequate compensation” be made. This provides greater certainty to those whose surface interests have been impacted and who require compensation.¹⁹³

In Papua New Guinea, a strict approach to compensation payment has been adopted whereby the recorded holder may not enter the land until compensation has been paid or a compensation agreement has been registered.¹⁹⁴ In Sweden no mining activities may begin until security has been posted to compensate landowners for any damages or encroachment that occurs as a consequence of future exploration work.¹⁹⁵ Similarly, in Finland, no exploration work may commence until compensation has been paid to the landowner.¹⁹⁶