BILL ANALYSIS Ó AB 1142 Page 1 Date of Hearing: May 27, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1142 (Gray) - As Amended May 5, 2015 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill modifies the Surface Mining and Reclamation Act of 1975 (SMARA). Specifically, this bill: AB 1142 Page 2 1)Requires a surface mine operator to request a date for their next annual inspection as part of their annual report. If the operator does not request an inspection date or the lead agency is unable to inspect on the requested date, requires the lead agency to provide a minimum 30 days written notice of a pending inspection or a date that is agreed upon by the operator. Deletes the requirement for a lead agency to conduct an inspection within six months of receipt of the report and instead requires annual inspections. 2)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. 3)Creates a new financial assurance cost estimate (FACE) process and requires the operator to provide the FACE to the Department of Conservation (DOC) and the lead agency for review. Allows DOC to comment on the FACE. Allows 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 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. 4)By April 1 of each year, requires DOC to provide each lead agency with a notice listing each active or idle surface mining operation within the lead agency's jurisdiction. By July 1 of each year, requires the lead agency to provide the DOC Director with specified information. Requires DOC to request similar information on any new or omitted operations. 5)Requires the form provided by DOC to include all of DOC's current information for each operation. AB 1142 Page 3 6)Allows the DOC Director or Board to apply to the small claims court or superior court to collect unpaid administrative penalties. FISCAL EFFECT: 7)Increased DOC costs of $1 million or more to develop a new database to fulfill new form and notification requirements (GF or special fund). According to DOC, a new data collection system that incorporates the electronic filing of documents is necessary to meet the requirements of the bill. Annual reports, financial assurance cost estimates, reclamation plan amendments and permit amendments would all need to be filed online by the lead agency to enable the database to provide form letters based upon the information submitted by the lead agency. Due to state information technology procurement requirements, it is not feasible to procure an updated database management system and meet the deadlines of the bill. 8)Initial DOC costs of approximately $775,000 for the first year to review and organize existing files, coordinate with the lead agency to obtain missing information and document reclamation plan requirements (GF or special fund). 9)Ongoing annual DOC costs of approximately $500,000 to review the reclamation plan, check for any updates to the reclamation plan and associated permits, review inspection and annual reports, and examine GIS data for each operation that submits a financial assurance cost estimate (GF or special fund). AB 1142 Page 4 SMARA is funded through a variety of sources. The Mine Reclamation Account (MRA) receives revenue from two sources: 1) a $14 daily fee paid by mines in cities and counties where the SMGB acts as the lead agency; and 2) annual regulatory fees paid by mine operators (reporting fees). Total annual revenue from the daily fee is about $180,000. For the reporting fees, DOC is required to adopt a fee schedule designed to cover its cost in carrying out the act, including reclamation plan and financial assurance review, mine inspection, and enforcement. However, existing law establishes annual caps on reporting fees for both an individual mine operator (about $5,000 in 2014-15) and total reporting fee revenue (about $4.5 million in 2014-15). Individual mine reporting fees are based on the total value of the minerals extracted. Both caps are adjusted annually for inflation. In 2015-16, total mine reporting fee revenue is expected be $3.5 million, roughly $1 million less than the cap. The Surface Mining and Reclamation Account (SMARA) is funded by a portion of royalties collected from mining activities on federal land. Under state law, the first $2 million provided to California is deposited in the SMARA, to be used to administer the Act. The remaining federal mining revenues provided to California-estimated to be $93 million in 2015-16-are used to fund K-14 education. The Bosco-Keene Renewable Resources Investment Fund (RRIF) receives 30% ($1.2 million in 2015-16) of the royalties provided to the state from geothermal leases on federal lands. The AB 1142 Page 5 remaining federal royalties go to local agencies (40%) and the California Energy Commission (30%), to support geothermal related activities, including exploration, research, and development activities. This bill increases expenditures to an extent that would require the MRA cap to be increased through statute in order to cover costs. Other alternatives include transferring funds from a portion of the SMARA account (which is currently funding K-14 education), the RRIF (if appropriate) or the General Fund. COMMENTS: 1)Purpose. According to the author, 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. The administration has convened a stakeholder process to identify the potential issues within SMARA that may require legislative action. This bill proposes solutions to multiple identified issues. According to the author, this bill should move forward while the stakeholder process continues. 1)Background. There are over a thousand active mines in California that remove aggregate for building material, metals, and minerals. Unlike any other state, most surface mines in California are regulated by local government agencies. AB 1142 Page 6 The Surface Mining and Reclamation Act of 1975 (SMARA) 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. 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. DOC and the Board of Mining and Geology oversee lead agency permitting, inspection and enforcement actions. 3)SMARA review and update. The Governor has called for a top to bottom review of SMARA. 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; c) Reclamation must be complete before financial assurances are released. d) Financial assurance may be used for reclamation if the mine owner does not reclaim the mine; e) Annual, quality inspections of every mine occur; f) When inspectors find non-compliance enforcement is clear, timely, and meaningful; AB 1142 Page 7 g) The Board has tools to improve local SMARA implementation; h) Reporting fees and penalties are paid by operators and fees cover the cost of the program; i) Inappropriate exemptions from SMARA are eliminated. On April 15, 2015, DOC developed legislative language to improve the quality of reclamation plans in order to assist lead agencies and DOC with reviews and inspections. The group continues to meet to address remaining issues. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081