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