HPS: Guaranteeing The Job Is Done Right
State and federal laws not only require mitigation for impacts to jurisdictional wetlands and surface waters, but also require that mitigation conducted by the applicant be financially guaranteed. This guarantee, known as a financial assurance, allows the agencies to finish the necessary mitigation (or hire someone to do so)—at the applicant’s expense—if the applicant fails to do so.
The amount of financial assurance must be in an amount equal to 110 percent of the cost estimate for conducting all aspects of mitigation, including items like exotic species management and monitoring, and the assurance mechanism (such as a bond or trust account) must be in place before the first spade of dirt is turned. Where, as is the case here, the mining operations will occur over a period of more than three years, state law requires that the initial financial assurance be in an amount equal to 110 percent of the estimated mitigation costs for wetlands and other surface waters affected in the first 3 years of operation. Each year thereafter, that amount must be updated to add 110 percent of the estimated mitigation costs for the next year of operationsand subtract any amounts already expended. This ensures that the financial assurance always stays “ahead of” the wetland impacts requiring mitigation. This process continues until all of the mitigation has been constructed and deemed “successful” by both the state and federal governments—i.e., it is functioning as it is supposed to, and only after a set period of “hands off” monitoring can the financial assurance be fully released. In other words, HPS will always have a plan that looks forward threeyears ahead of actual mining.
So what exactly is covered by the financial assurances demonstration? Financial assurances must be provided to cover all the construction, mitigation, management, and monitoring costs associated with the HPS mitigation plan, with a 10% contingency factor, based on cost estimates from a variety of professionals specializing in the type of work or materials that will be needed as part of the mitigation. For example, plant nurseries provide quotes for purchasing the types and quantities of wetland shrubs and trees proposed to be planted as part of reclamation. The first three years of HPS mitigation are expected to include grading, contouring, planting preparation, muck stockpiling, wetland planting, vegetation/exotics maintenance, and wetland monitoring and reporting, as well as a few other mitigation activities. Based upon current costs, HPS will provide more than $3 million in financial assurance to cover the first three years of mitigation activities associated with the proposed phosphate mining project. This includes $1.5 million for the wetland mitigation planting, $750,000 for grading and planting, $850,000 for muck stockpiling, nearly $100,000 for vegetation maintenance, and over $50,000 for wetland monitoring and reporting.
State reclamation rules also have timing requirements for completing the reclamation. While HPS has planned faster reclamation than is required by law, should HPS fall behind the state-mandated schedule, separate state regulations would require the company to commit additional financial security that would cover the cost of reclaiming the land that is currently behind schedule, as well as the land scheduled for reclamation over the next five years. This security could only be released when reclamation catches up to the state-approved schedule.
Additionally, mine operators must submit annual reports to the state that include the progress of mitigation activities and updated financial information. This will allow the state to monitor whether HPS is complying with its obligations and has the means to restore the land responsibly.