Financial Assurance Fact Sheet
Well-established Minnesota state law requires mining companies to have bankruptcy-proof financial resources in place to cover possible environmental cleanup costs before it will issue a permit to operate. PolyMet will fully comply with Minnesota law and meet its reclamation obligations.
Why are there not full details about financial assurance in the supplemental draft Environmental Impact Statement?
- Financial assurance is a function of Minnesota’s permitting process, specifically the Permit to Mine, and not the EIS process. It is not typical for financial assurance to be included in an EIS as it is in the PolyMet environmental review. However, at the request of federal agencies, a brief overview of financial assurance is included in the SDEIS.
- The DNR determines the appropriate amount of financial assurance and financial assurance mechanism during the permitting process. It also oversees much of the reclamation work.
- The type of financial instrument, amount and full scope of financial need is determined during permitting. That process has not yet been initiated.
How do we know that the law and the state’s ability to enforce it will protect taxpayers from the possibility of bankruptcy?
- Financial assurance laws are commonly used in federal and state permitting programs to account for uncertainty in long term care obligations. Like a trust fund or endowment, funds are established to be able to self generate enough annual revenue to cover projected future costs on an annual basis.
- While there may be uncertainty associated with how long treatment will be required in financial assurance estimates, the annual care or treatment costs for PolyMet will be determined during permitting and in accordance with state law. Scientific studies and the results from a successful pilot water treatment plant will be used in making these determinations.
- Minnesota’s rules for financial assurance for non-ferrous mining were established in the early 1990s after many years of study and with input from numerous agencies and groups, including environmental groups. The law and funds are administered by the DNR.
- One of the provisions of Minnesota’s law, which sets it apart from other states’ financial assurance laws, is that it requires detailed review of all of the costs of reclamation annually, and adjusts the financial requirements of the company accordingly.
- The state has the authority to deny or revoke the permit if the company does not comply. It also can assess civil penalties for non-compliance.
How will financial assurance funds be directed?
- Funds will be spent over time on a wide range of work including reclaiming the open pit, in this case backfilling some of it with waste rock; reclaiming and sealing the tailings basin; treating water; removing buildings and equipment that will no longer be used; and re-vegetating, restoring, reclaiming or replacing wetlands.
How will PolyMet fund the financial assurance?
- The state will determine the most appropriate type of funding during the permitting process. It could select from any number of possibilities including trust funds or escrow accounts, surety bonds, letters of credit, certificates of deposit or insurance policies. Whatever instrument it selects, it has to be bankruptcy proof, continuously in place and readily available to regulators.
View a PDF of the financial assurance fact sheet.
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