BILL ANALYSIS Ó AB 1142 Page 1 Date of Hearing: April 27, 2015 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 1142 (Gray) - As Amended April 6, 2015 SUBJECT: Mining and geology: surface mining SUMMARY: Makes numerous and significant changes to the Surface Mining and Reclamation Act of 1975 (SMARA). EXISTING LAW: 1)Creates SMARA, which prohibits a person from conducting surface mining operations unless the lead agency for the operation issues a surface mining permit and approves a reclamation plan and financial assurances for reclamation. Depending on the circumstances, a lead agency can be a city, county, the San Francisco Bay Conservation and Development Commission, or the California State Mining and Geology Board (Board). However, reclamation plans and financial assurances must be submitted to the Director of the Department of Conservation (DOC) for review. 2)Provides a mechanism by which the Board can strip a local agency of its lead agency status for its failure to implement state law, the Board then serves as the lead agency. AB 1142 Page 2 3)Requires the Board to adopt regulations that establish state policy for the reclamation of mined lands in accordance with the intent of SMARA. 4)Requires lead agencies to require financial assurances of each surface mining operation to ensure reclamation is performed in accordance with the surface mining operation's approved reclamation plan. 5)Requires the financial assurance to remain in effect for the duration of the surface mining operation and until the reclamation is complete. Requires the amount of financial assurance to be adjusted annually to account for new lands disturbed by surface mining operations, inflation, and reclamation of lands accomplished in accordance with the approved reclamation plan. 6)Requires the lead agencies to conduct annual mine inspections to determine compliance with SMARA. 7)Prohibits a state or local agency from acquiring or utilizing sand, gravel, aggregates, or other mineral products from surface mining operations unless the operation is identified on the AB 3098 List (a reference to the 1992 bill that established the list), which identifies all of the following surface mining operations: a) Surface mining operations for which a report has been submitted to DOC that indicates that: (1) a reclamation plan and financial assurances have been approved pursuant to SMARA; (2) the operations are in compliance with the state's reclamation standards; (3) the operations are in compliance with the state's financial assurance guidelines; and, (4) the annual reporting fee has been submitted to AB 1142 Page 3 DOC; b) Surface mining operations for which an appeal is pending before the Board, provided that the appeal has not been pending before the Board for more than 180 days; and, c) Surface mining operations for which an inspection is required and for which an inspection notice has been submitted by the lead agency that indicates both compliance with the approved reclamation plan and that sufficient financial assurances have been approved and secured. 8)Allows, until January 1, 2019, a surface mine operator whose operations are not in compliance with its approved reclamation plan to remain on the AB 3098 list if the operator stipulated to an order to comply with the lead agency and or DOC. THIS BILL: 1)Requires a surface mine operator, as part of their annual report, to request a date for their next annual inspection. If the operator does not request an inspection date or the lead agency is unable to inspect on that date, the lead agency shall provide a minimum 30 days written notice of a pending inspection or a date that is agreed upon by the operator. 2)Removes the January 1, 2019 sunset on the provision allowing surface mining operators, whose operations are not in compliance with its approved reclamation plan, to remain on the AB 3098 list if the operator stipulated to an order to comply with the lead agency and/or DOC. 3)Prohibits adjustment of financial assurances that are in excess of the of the amount determined necessary to perform reclamation in accordance with the surface mining operation's AB 1142 Page 4 approved reclamation plan. 4)Codifies regulations dealing with the modification or release of financial assurance and narrows the review of the surface mining operation to the approved reclamation plan instead of allowing for review of whether the plan meets reclamation plan standards and whether the surface mining operator is complying with the other requirements and intent of SMARA. 5)Allows an operator to request the lead agency and the Director to jointly inspect and review a request for full or partial release of a financial assurance instrument and sets a timeline for the inspection of 90 days after the request with a requirement for a decision on the request 45 days after the inspection. 6)Deletes requirement that lead agency conduct an inspection within six months of receipt of the surface mining operation report and instead requires inspections annually. Limits inspection to compliance with its reclamation plan instead of compliance with the reclamation plan and with the other requirements and intent of SMARA. 7)Requires a mine inspection to be conducted by a state licensed geologist, state licensed civil engineer, state licensed landscape architect, state licensed forester, or a qualified mine inspector trained through the curriculum developed by the bill. Allows a lead agency employee who is a qualified mine inspector to inspect a surface mine operation conducted by another department within the local agency. 8)Creates a new financial assurance cost estimate (FACE) process where the operator provides the FACE to DOC and the lead agency for review. Allows DOC to comment on the FACE. Allows AB 1142 Page 5 the lead agency to evaluate DOC's comments and provide a response to the comments. Requires the lead agency to accept or reject the FACE within 60 days of receipt of the DOC's comments or the due date for the comments, if comments are not received. Creates an appeal process and timelines if the lead agency determines the FACE is inadequate. 9)Requires, no later than April 1 of each year, DOC to provide each lead agency with a notice listing each active or idle surface mining operation within the lead agency's jurisdiction. 10)Requires, no later than July 1 of each year, the lead agency to provide the Director with the following information for each surface mine operation: a) A copy of any permit or reclamation plan amendments. b) A statement that there have been no changes during the previous year, as applicable. c) The date of each surface mining operation's last inspection. d) The date of each surface mining operation's last FACE review. 11) Requires DOC to request similar information on any new or omitted operations. 12)Requires the form provided by DOC to include all of DOC's AB 1142 Page 6 current information for each operation. 13)Exempts the review and approval of FACE from the California Environmental Quality Act. 14)Allows the surface mine operator to fulfill the inspection requirement with a third party selected by the operator if the lead agency has not inspected the mine on the inspection date requested or provided a 30 day-notice of a pending inspection. 15)Requires the State Geologist, in coordination with the Director, Board, lead agencies, and interested parties, to develop a curriculum for training mine inspectors. 16)Prohibits mine inspectors from inspecting mines for purposes of evaluating compliance with local, state, or federal law besides SMARA including, but not limited to the Porter-Cologne Water Quality Control Act, the federal Clean Water Act, and the Fish and Game Code. 17)Requires the lead agency, DOC, and the Board to take into account and seek to minimize the impact of any proposed enforcement action on the number of existing jobs supported directly or indirectly by the operation. FISCAL EFFECT: Unknown AB 1142 Page 7 COMMENTS: 1)Author's statement. SMARA was first adopted in 1975 and underwent significant revisions in the early 1990s and more modest revisions to address implementation challenges in recent years. Recently concerns have arisen that the checks and balances of the system may not be working properly and the Governor, in signing SB 447 (Lara, 2013) called for a "top to bottom" review of the Act. The administration has recently convened a stakeholder process to identify the potential issues within SMARA that may require legislative action. AB 1142 (Gray) proposes solutions to multiple identified issues. While the stakeholder process continues, AB 1142 should move forward and may be amended to include further identified solutions. 2)Governor's stakeholder group. SMARA was passed into law in 1975 and its intent remains unchanged. SMARA states: It is the intent of the Legislature to create and maintain an effective and comprehensive surface mining and AB 1142 Page 8 reclamation policy with regulation of surface mining operations so as to assure that: (a) Adverse environmental effects are prevented or minimized and that mined lands are reclaimed to a usable condition which is readily adaptable for alternative land uses. (b) The production and conservation of minerals are encouraged, while giving consideration to values relating to recreation, watershed, wildlife, range and forage, and aesthetic enjoyment. (c) Residual hazards to the public health and safety are eliminated. As stated above, the Governor has called for a top to bottom review of SMARA. The goal of these talks is to amend SMARA to meet its intent. Multiple stakeholder group meetings have been held to discuss the administration's concerns with SMARA. Issues that are under discussion include: a) Meaningful reclamation of disturbed mine lands; b) Adequate financial assurance; AB 1142 Page 9 c) Financial assurances are not released until reclamation is complete; d) Financial assurance can be used for reclamation if the mine owner does not reclaim their mine; e) Annual, quality inspections of mine occur; f) When inspectors find non-compliance enforcement is clear, timely, and meaningful; g) The Board has tools to improve local SMARA implementation; h) Reporting fees and penalties are paid by operators and that fees cover the cost of the program; and, i) Inappropriate exemptions from SMARA are stopped. On April 15, 2015, DOC developed language that they assert will improve the quality of reclamation plans, which will assist lead agencies and the DOC in both the review and inspection checklist process. Language on the other issues will be developed over time. Parts of AB 1142 would run counter to the direction the Governor's stakeholder group is headed by making several changes that would result less meaningful reclamation, inadequate financial assurance, a reduction in the quality of inspection and meaningful enforcement. AB 1142 Page 10 3)Reclamation. There are over a thousand active mines in California that remove aggregate for building material, metals, and minerals. California is the only state in the U.S. where surface mine reclamation is not regulated by the state. Local governments including cities and counties are the lead agencies for most mines. However, DOC and the Board oversee their permitting, inspection, and enforcement actions. Mining operators are required under SMARA to develop and implement reclamation plans, which will return the mine to a condition where it can be used for another purpose after the mining operation is complete. Annual reports and inspections are supposed to ensure that mining operators are making progress to reclamation. However, there are instances when the mine operator cannot be located or is unable to complete the mine reclamation. Financial assurances are required to make sure there will be resources available to reclaim the mine. The state and lead agencies have an interest in properly reclaimed mines, because a surface mine is a large hole in the ground and can have many dangerous features. If the mine is reclaimed, the land can be returned to another use. If it is not, the state or the lead agency could be responsible for protecting the public from the dangers of the mine, cleaning up the mine, and reclaiming the mine. AB 1142 would prohibit adjustment of financial assurances that are in excess of the of the amount determined necessary to perform reclamation in accordance with the surface mining operation's approved reclamation plan and limit the review of the financial assurance by the lead agency. This would stop a lead agency from increasing financial assurances to cover new conditions such as if the mine was deeper or wider than the approved reclamation plan allowed. Lead agencies would also not be able to increase the financial assurance to cover increases in the prevailing wage. AB 1142 would also prohibit lead agencies from considering whether the reclamation plan is AB 1142 Page 11 sufficient and if the mine is violating any other requirements of SMARA before releasing the financial assurances. 4)Inspections. Lead agencies are required to annually inspect mines to ensure they are complying with their permits, reclamation plan, and SMARA. Permit conditions imposed by a regional water quality control board or the Department or Fish and Wildlife, which can include requirements that deal with water quality issues and streambed alterations can be included in a SMARA permit. In addition, mine inspectors are the inspectors most often in the mine and the last inspector in the mine before it closes. Often mine inspectors play a vital role in ensuring compliance with other environmental laws. However, lead agencies in the past have not always inspected mine frequently. AB 1142 sets up a process for operators to request a date for a mine inspection and sets up a training component for mine inspectors. However, AB 1142 also allows mine operators to inspect their own mines and prohibits mine inspectors from looking at compliance with other important environmental laws. 5)Enforcement. The largest compliance problem DOC faces is that many mines do not file annual reports or pay their fees. Most lead agencies do not take enforcement actions except in rare egregious cases. According to one lead agency, last year all of their 10 compliance orders were settled prior to a public hearing. However, the administration has stated that when inspections indicated non-compliance, the problems identified are often never fixed. It is important that lead agencies have the tools to bring mines into compliance. SB 447, until 2019, allows surface mine operators whose operations are not in compliance with its approved reclamation plan to remain on the AB 3098 list if the operator stipulated to an order to comply AB 1142 Page 12 with the lead agency and or DOC. AB 1142 proposes to make SB 447 permanent. However, there is not one example of this provision being used. Prior to removing the sunset on this provision, it is important to judge whether this provision improves compliance with SMARA. AB 1142 also proposes to make lead agencies take into account and seek to minimize the impact of any proposed enforcement action on the number of existing jobs supported directly or indirectly by the surface mining operation. Surface mines operations are important to many economies and most lead agencies only use enforcement as a last resort. If an operation is seriously out of compliance, lead agencies should enforce on that operation. This provision could lead to larger mines with many employees taking compliance with SMARA less seriously than smaller mines. This also results in a precedent where public health is pitted against employment. The goal of SMARA should be to have sufficient mines in California to meet the state's demand for aggregate, metals, and minerals, that those mines are removing material in an environmentally responsible way, and that the mine's disturbed lands are reclaimed and returned to good use. Compliance with SMARA is the only way that will happen. 6)Related and Prior legislation. SB 209 (Pavley) makes numerous and significant changes to the Surface Mining and Reclamation Act of 1975 (SMARA). This bill is awaiting hearing in the Senate Appropriations Committee. SB 1270 (Pavely, 2013) would create the Division of Mines within DOC, which would be responsible for the DOC's role under mining laws, and would amend the roles of the State Mining and Geology AB 1142 Page 13 Board so that it is an appeals and rule-making body. This bill was held in the Senate Appropriations Committee. SB 447 (Lara), Chapter 417, Statutes of 2013, allows, until January 1, 2019, a surface mine operator whose operations are not in compliance with its approved reclamation plan, to remain on the AB 3098 list if the operator stipulated to an order to comply with the lead agency and or DOC. 7)Suggested Amendments. The author and committee may wish to consider to following amendments to resolve the concerns listed above: a) Remove the deletion of the January 1, 2019 sunset on the provision allowing surface mining operators whose operations are not in compliance with its approved reclamation plan to remain on the AB 3098 list if the operator stipulated to an order to comply with the lead agency and or DOC. b) Remove the language from Section 2773.1 that states, "An operator shall not be required to adjust financial assurances that are in excess of the amount determined necessary to perform reclamation in accordance with the surface mining operation's approved reclamation plan" and insert, "An operator shall only be required to replace a financial assurance mechanism already in place to bond for the reclamation of the surface mining operation where the Financial Assurance Cost Estimate identifies a need to increase the amount of the financial assurance mechanism." c) Remove Sec. 5 (Section 2773.11) from the bill. d) In Section 2774, remove the minimum 30-day written notice of a pending inspection and replace with a 5-day AB 1142 Page 14 notice. e) Remove the language from Section 2774 that states, "An operator shall not be required to adjust financial assurances that are in excess of the amount determined necessary to perform reclamation in accordance with the surface mining operation's approved reclamation plan provided that financial assurance mechanism remains in effect" and insert, "An operator shall only be required to replace a financial assurance mechanism already in place to bond for the reclamation of the surface mining operation where the Financial Assurance Cost Estimate identifies a need to increase the amount of the financial assurance mechanism." f) Remove the language from Section 2774 that states, "(h) (1) If a surface mining operation is not inspected by the lead agency on the date requested by the operator pursuant to Section 2207 and the operator has not received a 30-day notice of pending inspection from the lead agency as provided in subdivision (e), the operator may send a notice to the lead agency and the director stating the operator's intent to have the surface mining operation inspected by a third party who has not been employed in any capacity by the operator in the previous 12 months and who is a state-licensed geologist, state-licensed civil engineer, state-licensed landscape architect, or state-licensed forester who is experienced in land reclamation. An inspector retained by the operator pursuant to this section shall provide the lead agency a 15-day notice of the inspector's intended inspection date for the operation and shall provide a reasonable opportunity for a representative of the lead agency to attend the inspection." g) Remove the language from Section 2774 that states, "(5) Absent express authorization under this chapter, mine AB 1142 Page 15 inspectors shall not inspect operations for the purpose of evaluating compliance with separate provisions of local, state, or federal law, including, but not limited to, the Porter-Cologne Water Quality Control Act (Division 7 (commencing with Section 13000) of the Water Code), the federal Clean Water Act (33 U.S.C. Sec. 1251 et seq.), and the Fish and Game Code." h) Remove the language from Section 2774.1 that states, "(g) In exercising enforcement authority pursuant to this section, the lead agency, the director, or the board, as appropriate, shall take into account and seek to minimize the impact of any proposed enforcement action on the number of existing jobs supported directly or indirectly by the surface mining operation." i) Insert language provided by author's office allowing the Board or DOC to apply to small claims court for unpaid administrative penalties. REGISTERED SUPPORT / OPPOSITION: Support Allied Concrete & Supply Co., Inc. Associated Builders and Contractors of California Associated General Contractors BoDean Brown Sand, Inc. AB 1142 Page 16 California Asphalt Pavement Association California Building Industry Association California Business Properties Association California Chamber of Commerce California Construction and Industrial Materials Association California Independent Petroleum Association California Manufacturers and Technology Association California-Nevada Conference of Operating Engineers California State Council of Laborers CalPortland Company CEMEX Granite Construction Company Granite Rock Company Knife River Corporation Livingston's Concrete Service, Inc. National Federation of Independent Businesses Puente Ready Mix, Inc. P.W. Gillibrand Co., Inc. Robertson's Ready Mix Rural County Representatives of California Searles Valley Minerals Stimpel-Wiebelhaus Associates, Inc. Superior Ready Mix Concrete United Contractors Werner Corporation Opposition California League of Conservation Voters California Native Plant Society Center for Biological Diversity Center for Environmental Health Coastal Environmental Rights Foundation Clean Water Action Coalition for Clean Air Environmental Working Group Environment California AB 1142 Page 17 Sierra Club Sierra Fund (unless amended) Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092