November 13, 2019

Contemplating a Domestic Regulatory and Enforcement Framework for Deep Seabed Mining

Kartik S. Madiraju

Demand for basic and rare-earth minerals is expected to increase substantially in the coming decades, both domestically in the United States, and around the globe. Some estimates predict that global mineral demand will be 60 percent higher in 2050 than it is today. For more traditional minerals such as copper and nickel, demand could triple in that time. The United States relies heavily on imports for its rare-earth mineral resources—these minerals include yttrium, scandium, and neodymium. Between 2014 and 2017, the United States obtained a staggering 80 percent of its rare-earth mineral resources from China. Globally, China has about one-quarter of the world’s land-based deposits of rare-earth minerals and supplies nearly all the world’s rare-earth minerals. See Jessica Aldred, The Future of Deep Seabed Mining, The Maritime Executive, Mar. 1, 2019; Rare Earth Mineral Commodity Summary, National Minerals Information Center, U.S. Geological Survey (2019); Doug Struck, Treasures of the Deep: Tapping a Mineral-Rich Ocean Floor, Trust Magazine, Aug. 13, 2018. These minerals are used in technologies ranging from wind turbine magnets to LED screens to guided missile technology. While the United States’ need for these minerals to revolutionize its energy, high-tech, and defense industries cannot be understated, continuing to rely on a single trading partner for these minerals is proving increasingly untenable.

Deep seabed mining (DSM)––the use of mining technology to harvest minerals deposited on the crust or just above the surface of the seafloor––is an industry that could provide the United States with access to vast deposits of various minerals without needing to rely on trading partners. DSM employs a variety of methods to access polymetallic nodules (clusters of minerals embedded in the mud of the seafloor), polymetallic sulfides (sulfide deposits found in hydrothermal vents and near seafloor volcanoes), and cobalt crusts (concentrated mineral deposits found up to a foot underground near underwater mountains). Previously thought to be economically unfeasible and unnecessary given the supply of land minerals, DSM is now an economically viable and attractive option.

The seafloor is thought to contain billions of tons of mineral deposits. One rough estimate calculated that a small portion of the sea floor, the Clarion-Clipperton Zone (CCZ), contained 6,000 times more titanium than all land reserves combined. Other areas were calculated to have several times more cobalt, yttrium, and significant amounts of copper, lithium, and manganese. A 2012 European Commission Report estimated that as much as 10 percent of the world’s mineral requirements could come from DSM by 2030. See, e.g., James R. Hein et al., Deep-Ocean Mineral Deposits as a Source of Critical Metals for High- and Green-Technology Applications: Comparison with Land-Based Resources, 51 Ore Geology Rev. 1 (2013); Blue Growth: Opportunities for Marine and Maritime Sustainable Growth, European Commission (2012); see also Paul A.J. Lusty & Bramley J. Murton, Deep-Ocean Mineral Deposits: Metal Resources and Windows into Earth Processes, 14 Elements 301 (2018). As a result, deep seabed mining of sulfide deposits could compete economically with land mining of sulfides. Indeed, hundreds of millions of dollars are being invested in DSM, and a cost-benefit analysis of DSM found that nodule recovery was profitable, to the tune of $2.2 billion dollars a year. Other analyses also have suggested that DSM is profitable in other parts of the world. See Jessica Aldred, The Future of Deep Seabed Mining, Chinadialogue Ocean, Feb. 25, 2019; Rahul Sharma, Deep-Sea Mining: Economic, Technical, Technological and Environmental Considerations for Sustainable Development, 45 Mar. Technol. Soc. J. 28 (2011); Cardno, An Assessment of the Costs and Benefits of Mining Deep-sea Minerals in the Pacific Island Region, Pacific Community, Suva, Fiji (2016).

It comes as no surprise then, that the International Seabed Authority is providing exploration contracts to several member states, with expiry dates in the next decade. Although the United States is not an International Seabed Authority member and therefore cannot apply for exploratory contracts in international waters, the United States National Oceanic and Atmospheric Administration (NOAA) has already granted two exploratory licenses to companies planning to engage in DSM in U.S. waters. See Notice of Extension of Deep Seabed Hard Mineral Exploration Licenses, 82 Fed. Reg. 42,327 (Sept. 7, 2017).

Deep seabed mining, therefore, is not a far-off futuristic dream, but rather an economically feasible and technologically practical concept that is poised to become a large industry in the near future. However, as is the case with many if not all industries, the expansion of DSM comes with various environmental risks. Although the seafloor covers more than half the world’s surface, little is known about the ecosystems and natural phenomena that exist in the abyss. There is widespread agreement that DSM will necessarily impact the seabed, the water above it, and surrounding areas. Environmental groups point to the potential destruction of habitats, the loss of as yet undiscovered species, and the disruption caused by excavating the top crust as environmental impacts that have not been fully evaluated. The concern over environmental impacts has already led to a lawsuit filed by the Center for Biological Diversity over NOAA exploration permits issued to deep seabed mining companies. The complaint, since settled, alleged that insufficient analysis of the environmental impacts of DSM violates the National Environmental Policy Act, and therefore that the permits were invalid. See Complaint, Center for Biological Diversity v. Pritzker, No. 15-0723 (D.D.C. May 13, 2015).

The growing concern over environmental impacts highlights an even greater challenge: the lack of any clear regulatory regime to govern DSM, the actors, and the environmental impacts. Because DSM has not been viewed as a full-fledged industry until now, the United States has not developed legal and regulatory infrastructure to deal with issues such as permitting and environmental impact analysis.

The only existing law related to DSM is the Deep Seabed Hard Mineral Resources Act (DSHMRA), which Congress enacted nearly 40 years ago. 30 U.S.C. § 1441 et seq. (1980). The DSHMRA has the makings of a robust regulatory regime. For example, the DSHMRA contemplated environmental impact statements, only provides for exploratory permits rather than extraction itself, and has a penalty provision for those who violate permitting requirements. See 30 U.S.C. § 1413(a) (permitting), § 1419 (protection of the environment), and §§ 1461–1467 (penalties and enforcement). But the fact that Congress explicitly wrote in sections 1401(b) and 1441(3) of the Act that the law was meant to be a placeholder for an eventual international treaty on DSM serves to highlight that the DSHMRA was not, and is not, equipped to regulate an entire industry. Id. §§ 1401(b), 1441(3). Forty years later, the United States is not a party to the International Seabed Authority, has not signed on to UNCLOS (United Nations Convention on the Law of the Sea), and does not appear to have any commitments to an international treaty on DSM in the future. That leaves the country with a barebones statute to contend with a multibillion-dollar industry at its doorstep. Also, the statute is silent on extraction itself, how DSM is to be conducted, how much of each mineral can be extracted under a given permit, what happens to regulated entities that pollute or over-extract, and how regulated entities can appeal permitting decisions or obtain recourse for adverse judgments. The DSHMRA also makes no mention of reclamation or cleanup, two crucial parts of statutes that regulate land-based mining.

Courts also have had no occasion to interpret the statute or adjudicate disputes between agencies and regulated entities, thus depriving this industry of a body of law that could be used as guidance and precedent. The lack of a regulatory framework for an industry that is now ready to take flight will lead to uncertainty for regulated entities, the inefficient allocation of resources for regulating bodies, and ultimately run the risk of ineffective extraction and widespread environmental damage. Fortunately, the DSHMRA does not exist in a vacuum—there are several comprehensive pieces of legislation that govern mining and water pollution, which can be used as a framework for a fully formed law on DSM.

The Role of Permitting and Point Sources in Deep Seabed Mining

DSM presents a unique challenge for comprehensive regulation because it involves not only mining, but waters of the United States as well. Any discharge of pollution, and other potential impacts caused by DSM, would necessarily have impacts on water quality, marine life, and other water resources crucial to the United States. Rather than start from scratch, taking inspiration from existing statutes that govern water quality, for example, could provide key elements of a regulatory framework applicable to DSM, and some cautionary tales as well.

The Clean Water Act (CWA), 33 U.S.C. § 1251, regulates pollution from mining-related activities, although the statute did not contemplate DSM as a form of mining specifically. Section 404 established a program regulating the discharge of “dredged” or “fill” material into waters of the United States (which, importantly, includes discharge into the coastal waters and the ocean, as detailed in section 403 of the CWA). 33 U.S.C. § 1344 (permits for dredged or fill material); see also 33 U.S.C. § 1343 (discharges into the oceans or coastal waters). While section 404 does not strictly fall under the National Pollutant Discharge Elimination System (NPDES) of the CWA, the permitting system is quite similar, and permits obtained for mining discharge still must comply with relevant regulations established by the NPDES program under section 402; thus the two permitting systems act in concert. See 33 U.S.C. §§ 1342 (establishing the national permitting system) and 1344 (establishing permitting for mining operations). Instead of the administrator of the Environmental Protection Agency (EPA), the U.S. Army Corps of Engineers reviews applications for permits to discharge mining fill material into waterways and the ocean, in conjunction with guidelines established by the EPA. 33 U.S.C. § 1344(d). A plethora of existing regulations cover which materials can be discharged, in what quantity, and the requirements of permitting. See, e.g., 40 C.F.R. § 125.123 (ocean discharge permit requirements); 40 C.F.R. § 228.15 (location of ocean dumping sites); 33 C.F.R. § 323.2 (definitions).

The CWA’s regulation of point source discharges through permitting under section 402 has generally been a success, providing both regulatory certainty for businesses, and a simple way to target and measure sources of pollution. Applied to DSM, a permitting system that covers both exploration and extraction that mimics the NPDES system could be a cornerstone of regulating DSM. Since the DSHMRA already has permitting provisions, including sections for enforcement and monitoring, the statute could direct either the EPA administrator, NOAA, or the U.S. Army Corps of Engineers to establish extraction criteria and pollutant discharge limits on DSM activities.

Importantly, DSM extraction methods that have been explored graft naturally onto a NPDES-like permitting system. Whether mining discharge or runoff is a point source largely depends on where one selects their starting point. For example, most scholars believe that the bulk of seabed minerals exist as “nodules”—tiny clumps of minerals that are strewn across the seafloor, or near thermal vents. Sections of seafloor, or each clump itself, could constitute a point source. Alternatively, the extraction methods currently developed involve using long pipes to essentially “vacuum” mineral deposits after excavating them. The CWA defines point sources as pipes, ditches, ships, or smokestacks. See 33 U.S.C. § 1362(14). This would seem to include any pipes conducting mining waste or fill material off-site. Those who engage in DSM need only monitor specific extraction points within their entire operation for emissions, making compliance more cost-effective and predictable.

In cases where DSM extraction generates readily dispersing pollutants, the measurement and monitoring of discharges becomes a challenge. Excavating the sea floor can raise sediments or release processing chemicals that will dissolve or disperse into the ocean during operations—here, the NPDES permitting system would probably fall short. Even if a certain DSM operation could not be treated as a point source, periodic stocktaking of biodiversity, the stability of thermal vents, and water quality could inform regulatory bodies. For example, if an extraction permit awarded to a certain mining entity covered a given surface area “parcel” of seafloor, the company could be held responsible for that parcel as a column of ocean extending from the seafloor to the surface. The company and regulatory bodies would monitor water quality and other indicators of environmental health periodically, and violations could be penalized.

Mining companies are already applying for exploratory permits from NOAA through the DSHMRA. These permits are merely to explore the seabed. Very soon, however, that exploration will result in discovery, and invariably, the prospect of extraction. The nature of deep seabed minerals as localized clumps, or around specific natural structures like thermal vents, coupled with the enclosed pipeline format of underwater excavation and extraction, make treating DSM activities under sections 402 or 404 of the CWA reasonable and effective regulatory choices. The DSHMRA can provide regulatory coverage to a very large proportion of DSM by drawing from the CWA and implementing a permitting system that has emissions and effluent criteria, extraction limitations, and monitoring requirements or establishes limits on dredged materials.

The permit itself will provide the clarity and predictability regulated entities require to engage in DSM while remaining compliant. Regulated entities can use the permit and reapply for expanded extraction periodically, thereby staggering the growth of DSM in lockstep with the ability to regulate and monitor properly. And, just as the CWA charges the EPA administrator with the authority and the responsibility to alter emission criteria and permit requirements as new information becomes available, scientific research that expands our knowledge of the impacts of DSM can inform permitting under the DSHMRA. The flexibility of the CWA would therefore address and protect the sensitivity of biodiversity or environmental systems to deep seabed mining as knowledge of DSM and its impact becomes more broadly available.

Regulatory Concepts from Mining Law

Although the CWA provides very useful templates for regulating DSM, it deals primarily with discharges and runoff––essentially by-products of mining, which are centered on the actual physical extraction of resources. For example, the CWA is not equipped to provide guidance on what constitutes a defined “mine” for DSM purposes; nor does the CWA provide any guidance on mine reclamation or cleanup. These key issues are central to DSM, and a complete regulatory framework under the DSHMRA would include a definition of a deep seabed mine, as well as a procedure for reclamation or cleanup of mined areas.

On land, the Surface Mining Control and Reclamation Act (SMCRA) is a comprehensive statute, enacted in 1977, primarily for the purpose of addressing the environmental impacts of coal mining in the United States. 30 U.S.C. § 1201. Because pre-WWII coal mining and strip mining created devastating environmental and public health impacts, the SMCRA has two main pillars: setting mine operating standards, and ensuring that mining sites are cleaned up or reclaimed. 30 U.S.C. § 1265 (environmental operating standards) and 30 U.S.C. § 1258 (reclamation plan requirements). Although these provisions focus almost entirely on coal mining, the principles are cross-applicable to other forms of mining. See 30 U.S.C. § 1201. For example, requiring mining companies to comply with air and water quality laws in each mining site is not dependent on the type of mining conducted, nor are provisions requiring mining companies to submit a reclamation or cleanup strategy along with their permit application.

The SMCRA issues five-year permits for coal mining on federal and non-federal lands. The permit application process and requirements, detailed in sections 1256 (permit requirements), 1257 (permit application process), and 1258 (reclamation plan requirements), are comprehensive and require mining companies to account for potential runoff; discharge into water streams; the direction of prevailing winds; and the impacts of mining activity on the land, flora, and fauna; as well as whether the mining activity will destabilize any geological formations. 30 U.S.C. §§ 1256–1258.

Reclamation plans must identify the land subject to mining, its condition prior to mining, what type of use that land could support before mining, and what use is proposed for the land afterward. 30 U.S.C. § 1258(a)(1), (2), (3), and (5). Applicants for a mining permit are required to detail the potential economic output of such land and describe the restoration activities needed to return the land to useable condition after mining operations cease.

Working in tandem with reclamation is the requirement under the SMCRA that all permit applicants post sufficient bond as a guarantee against the costs of reclamation and cleanup, as well as pay into a Reclamation Fund from the profits of their activities. 30 U.S.C. § 1259. The bonding requirement, detailed in section 1259, backed up by the Reclamation Fund, provides a financial “safety net” in case mining companies are unable to pay for the full reclamation of a mining site.

The DSHMRA does not speak to reclamation or to financing cleanup of mining activities. However, both concepts are highly relevant to DSM. Because DSM is necessarily extractive, and its impacts are difficult to gauge, a thoughtful component of DSM regulation would require permit applicants to put forward a strategy for restoring deep seabed mining sites. For example, if a permit covered a certain square mileage area of the sea floor, the company could be made responsible for evaluating the biodiversity and soil and water quality of that area, and for ensuring that those conditions are restored once mining activity has ceased. Because the DSHMRA already has a permitting framework in place (albeit skeletal), 30 U.S.C. §§ 1413–1417, the conditions for permitting can be altered to include a reclamation plan requirement.

The Reclamation Fund and bonding requirement of the SMCRA are key provisions that can be adapted for deep seabed mines. Interestingly, although the DSHMRA did create a fund, that fund was created as a trust for money to be used toward the United States’ obligations under a potential international treaty for DSM. 30 U.S.C. § 1472 (detailing the Deep Seabed Revenue Sharing Trust Fund). When the DSHMRA was enacted, Congress believed it to be a transitional statute that would eventually be displaced by an international treaty. Since then, it is increasingly clear that a treaty covering DSM is not going be ratified in the short term. Therefore, the DSHMRA’s provision on a treaty fund could be repurposed to invest funds for reclamation projects or cleanup of sites. Currently, the SMCRA obtains funds from a fee levied on the revenues of mining companies; the DSHMRA could do something similar, or invest funds from permit application fees, or appropriate funds from elsewhere.

Although the DSHMRA does not speak to bonding, this aspect of surface mining regulation can be easily grafted onto a DSM regulatory framework. The SMCRA’s bonding provision has recently come under criticism from environmental advocates because it allowed then-profitable coal companies to rely solely on their financial strength as a guarantee for future ability to pay for reclamation. As history has shown, many of these companies then struggled, and eventually became insolvent. Environmental advocates have called for the elimination of this self-bonding option, to force mining companies to post bond, so that the risk of their insolvency does not prejudice the regulating agency’s ability to carry out a cleanup in their stead. See The Alliance for Appalachia, Coal Mining Reclamation: Bonding Policy Recommendations (2018); Jayni Foley Hein et al., Self-Bonding in an Era of Coal Bankruptcy, Institute for Policy Integrity (2016). Applied to DSM, and especially considering the industry’s infancy, excising the portion of bonding that allows for self-bonding might be a wise approach. It is possible that mining companies engaging in DSM, many of which may be start-ups, are taking on a financial risk. The DSHMRA would do well to shield the government from the possibility that a deep seabed mine site needs a costly cleanup, but no funds are available to conduct the reclamation.

The SMCRA, which regulates surface mining, addresses two key issues that are unique to all mining: conditioning permitting on a pledge to restore the site mined, and requiring a financial commitment to help fund that reclamation. DSM permits may define sites by surface area or otherwise, but within the confines of a deep seabed mine, there must be regulations in place that will address cleanup, reclamation, and how those post-mining activities will be financed. Tasking mining companies with the financial responsibility and the logistical responsibilities of a cleanup encourages private actors to account for the financial risks their extractive activity poses. Additionally, the research these companies will conduct to develop their reclamation plan will aid regulating bodies in understanding how much would be required to reclaim a deep seabed mining site, whether the mining site’s metes and bounds have been properly defined, and whether the permit applicant is adequately equipped to deal with the environmental consequences of DSM.

Who Should Regulate?

The CWA and the SMCRA are two treasure troves of regulatory examples that can be relied upon to address properly the dual challenge of DSM––regulating water and regulating mines. However, sometimes more important than what is regulated is who regulates and how. A vastly complex regulatory framework will do very little to provide certainty for regulated entities, and, if that framework is impossible to navigate, accomplish very little in the way of enforcement. Ideally, DSM will be regulated efficiently and transparently, and the authorities involved will not have conflicting jurisdictions that will cause monumental headaches for federal judges tasked with interpreting such regulations.

There are candidates for regulatory authority: the DSHMRA itself grants implementing authority to NOAA, and it is NOAA that was recently sued for issuing a permit. See 30 U.S.C. § 1403(14) (defining Administrator as the Administrator of NOAA); Center for Biodiversity v. Pritzker, No. 15-0723 (D.D.C. May 13, 2015). However, considering Congress’ stated intent that the DSHMRA was to be transitional, it is not clear whether a robust DSHMRA that actually does the job of regulating would be once again entrusted to NOAA for administration.

Provisions taken from the Clean Water Act involve the U.S. Army Corps of Engineers, which evaluates CWA permits for mining projects, and the EPA, which administers the overall permitting system for all industries. See Permit Program under CWA §§ 402 and 404, U.S. Environmental Protection Agency. Complicating matters further, provisions taken from the SMCRA involve the Department of the Interior, which decides where mines can be sited, how much can be extracted, and how reclamation must proceed. See 30 U.S.C. § 1 (establishing the U.S. Bureau of Mines within the authority of the Department of the Interior).

It is possible that one singular agency possesses the requisite expertise, funding, and enforcement power to deal with DSM as a whole. NOAA does not administer permit programs the way the EPA and the U.S. Army Corps of Engineers do; similarly, the EPA may not have as much institutional knowledge regarding coastal, ocean, and deep seabed issues as NOAA might. Tasking just one agency with regulating the entire DSM industry will prove challenging, and may require Congress to give additional powers to that agency, or may force an agency to promulgate wide-ranging rules. Such a move could prove contentious politically, and in the courts, as we have seen with the “Waters of the United States Rule” and the Clean Power Plan Rule.

The allure of creating another agency from scratch, to regulate only deep seabed issues, is arguably outweighed by the goal of not complicating regulation. Perhaps a middle-of-the-road option, one that contemplates a regulatory panel that has representation from the EPA, NOAA, the Department of the Interior, and the U.S. Army Corps of Engineers, would help build consensus around rulemaking and permitting, and would pool resources for monitoring and enforcement. A joint task force of sorts, combining the agencies’ expertise, might help address the unique challenges posed by DSM, while giving sufficient independence to fashion regulations. That panel itself could be the administrative body that would hear grievances and appeals, and its decisions could be considered final by reviewing federal courts. Regardless of the structure of the regulating body, one aspect that must be present is a provision for judicial review of regulatory decisions and enforcement by federal courts.

International Considerations

While contemplating a domestic regulatory framework for DSM, the United States will eventually need to make a decision on international DSM. The United Nations and the International Seabed Authority have proposed draft regulations governing DSM in international waters and are allowing nations to obtain exploration contracts and permits in areas such as the Clarion-Clipperton Zone near Hawaii. See Draft Regulations on Exploitation of Mineral Resources in the Area, International Seabed Authority, ISBA Doc. 24/LTC/WP.1/Rev.1 (July 9, 2018); Deep Seabed Minerals Contractors, International Seabed Authority (2019) (listing foreign nation permit holders to explore the Clarion-Clipperton Zone for minerals, including China, the United Kingdom, Belgium, and Germany). These areas of the ocean contain vast resources, resources in which the United States will have or already has a strategic interest.

Developing domestic regulations and laws on DSM while concurrently stepping into the forum of international regulation of DSM will allow the United States to be ready for the industry at home, while shaping that industry globally. We cannot know if the United States will participate in a UN or International Seabed Authority treaty just yet. For now, however, we can look to existing domestic statutes to understand how we might regulate DSM at home. DSM is here, and will grow rapidly. We have the tools and examples to respond with a clear, effective, and environmentally aware regulatory framework—let us use them.


Kartik S. Madiraju

Mr. Madiraju is an attorney with Lieff Cabraser Heimann & Bernstein in New York, New York. He may be reached at