BILL ANALYSIS Ó SENATE COMMITTEE ON NATURAL RESOURCES AND WATER Senator Fran Pavley, Chair 2015 - 2016 Regular Bill No: AB 1142 Hearing Date: July 14, 2015 ----------------------------------------------------------------- |Author: |Gray | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Version: |July 1, 2015 Amended | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|William Craven | | | | ----------------------------------------------------------------- Subject: Mining and geology: surface mining. BACKGROUND AND EXISTING LAW 1. The Surface Mining and Reclamation Act (SMARA) is the primary state statute that applies to the surface mining activities in California for both hard metals, minerals, and sand and gravel. It is administered by the Department of Conservation (DOC) , which has administratively created the Office of Mine Reclamation (OMR) as the primary mine regulator for California. 2. SMARA generally prohibits surface mining unless a permit is obtained from DOC, a reclamation plan is approved, and financial assurances have been approved. Local land use permits are also required. 3. Section 2772 generally sets forth the types of information that are to be contained in reclamation plans. This includes such features as the ownership information of the operation, the quantity and type of minerals that will be extracted, dates to initiate and terminate mining, depth of mining, legal descriptions of the property to be mined, and numerous other types of information that have been traditionally required. 4. Section 2773 directs the reclamation plan to address issues such as revegetation, erosion control, soil stability, topography, and stream characteristics. Importantly, it also directs the State Mining and Geology Board (SMGB) to promulgate reclamation standards that include wildlife habitat, stream AB 1142 (Gray) Page 2 of ? protection, topsoil salvage, tailing and mine waste management, and a variety of other topics. 5. Section 2773.3 provides additional protections for Native American sites from hard rock mining (gold and silver). 6. Local lead agencies are generally responsible for ensuring that reclamation plans are adopted pursuant to CEQA. 6. Annual inspections of mines are conducted by the lead agency, and those inspections form the basis for surety documents (called "financial assurances" in SMARA) that can be used to pay for any mine reclamation costs in the event a mine operator defaults on the obligation to reclaim a mine at the end of its useful life. In most circumstances, the lead agency is responsible for developing an adequate financial assurances surety. 7. Normally under SMARA, the lead agency is the local land use permitting agency, although SMARA provides for SMGB to become the lead agency in cases where the local agency does not fulfill its statutory obligations. This process is quasi-judicial with appeals possible to the SMGB. 8. SMARA does not affect the local land use siting or permitting decisions by local governments. It does, however, impose administrative and compliance responsibilities on local governments in their capacity as local lead agencies. 9. SMARA is a fee-based program. Minimum fees of $100 apply to most mines, and the maximum is $4,000. The overall program costs are capped by statute at $3.5 million, adjusted for inflation. The caps on mine operators and the overall program costs have generated no increase in revenue to DOC for several years. In fact, DOC often has greater expenditure authority than available fee revenues in annual budget bills. 10. SMARA requires annual inspections, although does not specify the training that mine inspectors should have, nor does it require DOC to offer training to local lead agencies or others who may wish to inspect mines. 11. SMARA does not explicitly allow local lead agencies to inspect mines owned by those local lead agencies. AB 1142 (Gray) Page 3 of ? 12. SMARA contains procedures for other state agencies (such as Department of Fish and Wildlife and regional water boards) to include their regulatory provisions in reclamation plans. 13. Mine inspectors are currently expected to check for compliance with all regulatory issues at the annual inspections, including those from local governments, those imposed by SMARA, and others from the Department of Fish and Wildlife and regional water boards. 14. DOC has identified many flaws in the administration of SMARA. These include the lack of inspections, inadequate financial assurances, and a labyrinthine enforcement process that is fundamentally broken. 15. Governor Brown in a signing message to recent legislation called for a "top to bottom" review of SMARA. 16. The administration convened a stakeholder group that met several times in 2015 and reviewed several SMARA-related issues. Those recommendations are completely contained in SB 209 (Pavley) and aspects of those recommendations are contained in this bill. 17. The Senate Natural Resources and Water Committee Science Fellow in 2012 identified many examples of failed SMARA implementation that involves both local and state government. Highlights of this review indicated that more than 100 closed mines have not begun reclamation, that the rate of conducting required annual inspections hovers in the 25% and 50% range for cities and counties, respectively, and that financial assurance surety documents are updated by 27 percent of the counties and only 20 percent of the cities. The data collection system of DOC has been criticized for data gaps. The Committee report was based on reported data. PROPOSED LAW This bill proposes numerous changes to SMARA, many of which are technical, some of which are non-controversial, and some of which should be specifically identified for the Committee's consideration. This section will focus on the latter category of proposed changes in the order in which they appear in the bill. AB 1142 (Gray) Page 4 of ? 1. Consistent with the Governor's stakeholder group recommendations, this bill in Section 4 bifurcates the term "financial assurances" to mean both a current financial assurance cost estimate (FACE) and a financial assurance mechanism that is at least equal to the current approved financial assurance cost estimate. It also continues existing practice that the review of financial assurances shall not be considered a project for purposes of CEQA. 2. Section 6 of the bill amends section 2772 of the Public Resources Code which contains many of the provisions for mine reclamation plans. The proposed amendment in Section 2772 (b) makes compliance with section 2772, 2773, and 2773.3 non-mandatory since it adds the term "as applicable" in front of those sections. These sections are described in "Existing Law" at points 3-5. This could be interpreted to mean that a reclamation plan would not be required to comply with these provisions that previously had applied to reclamation plans. 3. Amendments in section 7 of the bill (section 2772.1) would do all of the following: a) Imply that DOC shall be responsible for completing the CEQA process for reclamation plans which under current law is undertaken by local lead agencies. See Existing Law, # 6). b) Makes non-mandatory Sections 2772, 2773, and 2773.3 which set forth standards for reclamation plans and protections for Native American sites. c) Suggests that variations to reclamation standards may be proposed in a technical report created by a California-licensed professional, without limitation. d) Allows "substantial" compliance with the specified reclamation provisions; e) Provides 15 days for the director to determine if a reclamation plan or plan amendment is complete, and 45 days after that determination to comment to the lead agency on the proposed reclamation plan. f) Allows mitigation measures proposed by other state agencies AB 1142 (Gray) Page 5 of ? to be excluded from the bonding requirements of a financial assurances when separate financial assurances are required by such agencies. Also seems to prohibit the use of performance requirements by other state agencies under certain circumstances. This provision is drafted very unclearly. See Comment 3. 4. Section 8 of the bill (Section 2773.1 of the Public Resources Code) would: a) Bifurcate the financial assurances mechanism and the financial assurance cost estimate, as proposed by the Governor's stakeholder process. It also would make other conforming amendments as proposed by the stakeholder process. b) In a very unclear provision, it would seem to allow a financial assurance cost estimate to indirectly modify an approved reclamation plan without complying with CEQA in instances in which the financial assurance cost estimate may modify the estimate of the time needed to complete reclamation including any monitoring studies required by the reclamation plan. 5. Section 9 of the bill deals with the internal process between the lead agency and the director to approve financial assurances. This section would: a) allow the lead agency to provide a preliminary determination to the director the financial assurance cost estimate is adequate, complete, and consistent with Section 2773.1. It excludes compliance with Article 11 of the SMGB regs and the SMGB financial guidelines. b) It proposes time limits for the director to determine if the submission is incomplete and time limits for the director to comment. c) It establishes a new, smaller scale separate financial assurance procedure based on the annual inspection. Timelines are proposed for the director to determine completeness and to comment. d) This section contains several new timelines, processes, procedures for approval and commenting on financial assurances, AB 1142 (Gray) Page 6 of ? and appeals. One noteworthy provision would allow financial assurances to be adequate if it uses specified forms adopted by the SMGB. However, it is not clear that those forms reflect the improvements in the financial assurances process sought by the administration or, indeed, whether they reflect the changes in the financial assurances process otherwise proposed in this bill. 6. Section 10 of the bill proposes significant changes to the required annual inspections. a) Inspections would be limited to compliance with its reclamation plan, rather than to compliance with this chapter and the permit conditions imposed by other state agencies. b) Inspections could be carried out by a licensed state geologist, license civil engineer, licensed landscape architect, licensed forester, or a lead agency employee who is experienced in land reclamation who had not been employed by the surface mining operation being inspected during the previous 12 months, except that a lead agency employee may inspect surface mining operations conducted by another department within the local agency. c) The prescribed time to submit the inspection to the department would be extended from 30 to 90 days. d) The director would be required to inform lead agencies of each surface mining operation within the jurisdiction of each lead agency. e) After 2018, a lead agency employee who is not one of the licensed professionals referred to in in (b), above, is allowed to conduct inspections, and at some point must complete an inspection workshop provided by the department. f) The section states that it does not impose qualifications or standards on employees designated by a local, state, or federal agency to perform inspections of real property under separate provisions of local, state, or federal law, including the Porter-Cologne Water Quality Act, the federal Clean Water Act, or the Fish and Game Code, among others. 7. Section 11 contains a new provision that improves the AB 1142 (Gray) Page 7 of ? administrative penalty collection procedure and has built-in due process safeguards for the operator. The department would be able to undertake collection activities itself rather than using the Attorney General, and depending on the amount of unpaid penalties, could undertake collection either in small claims or superior courts. ARGUMENTS IN SUPPORT According to the author, this bill modernizes SMARA. He notes that the Governor called for a "top to bottom" review of SMARA in signing SB 447 (Lara) in 2013. The author also acknowledges that the administrative requirements of SMARA are not being properly and fully implemented by local lead agencies including proper inspections and annual financial assurance reviews. The author contends that the bill strengthens SMARA by ensuring better communication between local lead agencies, operators, and the department. He feels the bill sets forth appropriate and timely inspection schedules while promoting management flexibility for regulators and ensuring that operators' compliance obligations are clear. The author believes that the bill incorporates several of the administration's reform concepts and he points to a list of such reforms including but not limited to: the new ability of the director to appeal the approval of a financial assurance to the SMGB, the inclusion of specified maps in the reclamation plan, clarifying the incorporation of documents and standards into reclamation plans, the provision allowing local lead agency employees to inspect mines following a workshop, a new timeline for the director to determine if a financial assurance or reclamation plan is complete, and the new provision requiring concurrence by the director with the lead agency regarding the release to the operator of the financial assurance mechanism. A coalition headed by the California Chamber of Commerce believes the bill clarifies the duties and responsibilities of mine operators, lead agencies, and the state, as well as makes procedural improvements to the annual inspection process, the financial assurance process, the reclamation plan approval process, and other provisions of SMARA. The Chamber says that a new inspection form and requiring inspections to be performed by licensed professionals will improve the integrity of annual AB 1142 (Gray) Page 8 of ? inspections. As for financial assurances, the Chamber supports the provision that requires annual reviews of financial assurances to ensure that those financial assurances are adequate to reclaim the site upon the default of the operator. It also suggests that the provisions allowing the department to determine that a financial assurance is "complete" will drive local lead agencies to work harder to make sure that these financial assurances are adequate. The department is provided a new appeal right to the SMGB for inadequate financial assurance documents. The Chamber asserts that the proposed amendment allowing various documents that comprise a reclamation plan to be displayed on a chart will allow the incorporation by reference of specified documents. An assortment of mining companies sent in separate letters arguing that the bill modernizes and clarifies SMARA and improves communication. The California Labor Federation indicated that it supported the bill based on a provision (since removed) that was intended to protect jobs. RCRC supports the training provision for local government personnel to inspect mines, as well as the removal of a provision from SMARA that prohibits a state licensed professional from conducting a mine inspection for the lead agency who had been employed by any surface mining operation within the jurisdiction of the lead agency in any capacity during the previous 12 months. ARGUMENTS IN OPPOSITION A coalition that includes The Sierra Fund, the California League of Conservation Voters, Sierra Club and others focus on section 2774 in their letter. That section, dealing with inspections, is viewed by the coalition as a key provision to make sure that inspections and any necessary enforcement actually occur. 1. Their main points on this section: a) The bill weakens inspections by allowing inspections only for the purpose of ensuring that operations are in compliance with AB 1142 (Gray) Page 9 of ? the reclamation plan, rather than SMARA as a whole. b) The bill extends the time period by 60 days for lead agencies to notify the department of the results of the inspection, thus potentially allowing a greater period of non-compliance. c) This section eliminates the requirement for the lead agency to notify the department of the filing of a mine permit application within 30 days. d) The proposed new financial assurance cost estimate review process requires the operator to prepare the document, rather than the lead agency. It also allows the lead agency to approve the financial assurance cost estimate prior to submitting it to the department for review. e) The documents from sister agencies such as Fish and Wildlife and regional water boards would no longer be incorporated into a reclamation plan and thus not subject to the annual inspections. 2. This coalition believes that an industry attorney's blog post from earlier this year confirms the view that the intent of AB 1142 is to weaken the inspection process. That blog states, "AB 1142 clarifies that mine inspectors conducting a SMARA inspection are not authorized to inspect operations for purposes of evaluating compliance with other laws including California's clean water law, the Porter-Cologne Water Quality Control Act, or the federal Clean Water Act." This blog was published in March by the law firm Harrison, Temblador, Hungerford, and Johnson LLP. 3. While focused primarily on Section 2774, the coalition expressed concern with other language in the bill that would fail to protect the land and the public from poorly managed mining operations. COMMENTS 1. As noted earlier, this bill and SB 209 (Pavley) are the two main vehicles for SMARA reform. Both seek to amend many of the same sections of SMARA. In a couple of instances, both seek to amend SMARA in identical ways, based on the recommendations of the governor's stakeholder process. Beyond that, however, the two bills are very different. AB 1142 (Gray) Page 10 of ? There is, of course, no requirement on a legislator to tailor a bill precisely as recommended by a governor's stakeholder process. There are multiple ways to achieve similar objectives in this area of the law. That said, the goal of the governor's stakeholder process was intended to achieve a "top to bottom" review of SMARA and to recommend solutions. The stakeholder process considered topics as diverse as reclamation plans, financial assurances, inspections, mining board oversight options, fees, penalty collection, the abuse of exemptions from SMARA, and vested rights. It made recommendations on each of these topics, all of which are contained in SB 209, and a selective few of which are contained in AB 1142. 2. The most significant departures from the stakeholder recommendations are contained in the Proposed Law sections 2, 3, 5, and 6, although the approval and review procedures for financial assurances (Proposed Law, section 4) also needs significant review by the department to ensure that it is workable on a practical basis, and meets the department's objectives, even if the author chooses to adopt a different approach from the stakeholder group language. Section 9 of the bill needs to be amended to add the regulations and Financial Guidelines of the SMGB, and, as with Section 4, to make sure that the new proposed procedures are workable on a practical basis while meeting the department's objectives. Proposed Law sections 2,3,5, and 6 would do all of the following if those provisions become effective: a) The proposed amendment in Section 2772 (b) makes compliance with section 2772, 2773, and 2773.3 non-mandatory since it adds the term "as applicable" in front of those sections. These are the provisions that define the information that is included in reclamation plans, the issues that are to be addressed, including soil stability and revegetation, both of which are key to public safety, water quality, and the ultimate successful reclamation of a site. The reclamation standards of the SGMB would be excluded. These protect wildlife habitat and deal with tailing and mine waste management among other topics. The provision for protection of Native American sites would no longer be mandatory. AB 1142 (Gray) Page 11 of ? b) Allows "substantial" rather than complete compliance with reclamation plans; suggests that DOC shall be responsible for completing the CEQA process for reclamation plans rather than lead agencies; and repeats the language making non-mandatory the points identified in (a) set forth above. There is language to the effect that reclamation plans can be altered any circumstances which needs to be deleted or at least qualified. c) Allows mitigation measures proposed by other state agencies to be excluded from the bonding requirements of a financial assurances when separate financial assurances are required by such agencies. Also seems to prohibit the use of performance requirements by other state agencies under certain circumstances. This provision is drafted very unclearly and is repeated here as in indication of how convoluted the drafting is in many places in this bill: "To the extent those conditions of approval and mitigation measures are not subject to separate lead agency or other state or federal agency bonding or performance requirements, those conditions and measures shall be subject to the financial assurances requirements of this article." 3. As an aside, one of the goals of the SMARA reform, in the minds of the opposition to AB 1142 and many of the stakeholders who participated in the Governor's process, is to make the law accessible to the general public. The sentence quoted above would not satisfy that goal. Moreover, it raises the substantive question of the appropriate consideration of performance requirements that may be imposed by other agencies. It is just an example of the many drafting issues in the current version of the bill that would confound a member of the public trying to understand state mining law. 4. Staff Recommendation. Staff recommends that the bill be amended to rectify all of the problems raised in Comment 2 and other technical issues that exist elsewhere in the bill. Assuming the author agrees with this first step, staff would recommend that the Committee encourage the author to commence further negotiations with the department, the administration, and other stakeholders. At the same time, the author may want to consider engaging with the author of SB 209 to determine if some sort of successful collaboration can be achieved. AB 1142 (Gray) Page 12 of ? The technical issues include, for example, moving the remnant of 2770(c) into 2773.4 that deals with the renewals of financial assurances, a review with the department of various proposed timelines, new procedures, incorporated documents, and deadlines for commenting on financial assurances and proposed or amended reclamation plans, appeals, and the qualifications of those who inspect mines. To facilitate a discussion on such issues, staff is recommending that the deadlines proposed in Section 7 and 9 be left as blanks that can be restored at a later date as part of a larger discussion of these technical issues. These amendments should not be interpreted to foreclose other technical issues raised by the department or other stakeholders that are offered as ways to make this bill function as well as possible and that are accepted by the author. AB 1142 (Gray) Page 13 of ? SUPPORT A. Teichert & Son Associated Builders and Contractors of California 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 Labor Federation California Manufacturers & Technology Association CalPortland Company CEMEX Chemical Industry Council of California Fullerton chamber of Commerce George Reed, Inc. Granite Construction Co Granite Rock Company Lehigh Hanson National Federation of Independent Businesses P.W. Gillibrand Co., Inc. Robertson's Rural County Representatives of California Searles Valley Minerals Southwest California Legislative Council Southwest California Legislative Council Specialty Minerals Inc. Superior Ready Mix Concrete The Associated General Contractors United Contractors Vulcan Materials Company AB 1142 (Gray) Page 14 of ? OPPOSITION Azul Sierra Club California California League of Conservation Voters California Native Plant Society Center for Biological Diversity Claim-GV Clean Water Action Coastal Environmental Rights Foundation Endangered Habitats League Environment California Environmental Justice Coalition for Water Environmental Working Group The Sierra Fund San Juan Ridge Taxpayers Association Trout Unlimited Wholly H20 Wolf Creek Community Alliance -- END --