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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