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
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          |Author:    |Gray                   |           |                 |
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          |Version:   |July 1, 2015    Amended                              |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|William Craven                                       |
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                    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  







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          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. 








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          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. 









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          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  








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          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,  








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          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  








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          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  








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          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  








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          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. 








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          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. 








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          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.  









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          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. 






































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          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 


















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          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





          
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