BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 1142|
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                                   THIRD READING 


          Bill No:  AB 1142
          Author:   Gray (D)
          Amended:  9/1/15 in Senate
          Vote:     21  

           SENATE NATURAL RES. & WATER COMMITTEE:  8-0, 7/14/15
           AYES:  Pavley, Allen, Hertzberg, Hueso, Jackson, Monning,  
            Vidak, Wolk
           NO VOTE RECORDED:  Stone

           SENATE APPROPRIATIONS COMMITTEE:  5-0, 8/27/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NO VOTE RECORDED:  Bates, Nielsen

           ASSEMBLY FLOOR:  73-1, 6/4/15 - See last page for vote

           SUBJECT:   Mining and geology:  surface mining


          SOURCE:    Author

          DIGEST:   This bill contains several major amendments to the  
          Surface Mining and Reclamation Act (SMARA). Some of these  
          amendments were proposed by the Governor's Office stakeholder  
          process on mining law reform.  Specifically, the bill contains  
          amendments on annual mine inspections, financial assurances and  
          the approval of financial surety documents, reclamation plans,  
          enforcement, the role of the State Mining and Geology Board  
          including appeals, and other technical changes.  The bill is  
          linked to SB 209 (Pavley) by contingent enactment amendments  
          made to both bills in the Appropriations Committees of both  
          houses. SB 209 deals with other aspects of SMARA. 









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          ANALYSIS: 

          Existing law: 

          1)Establishes the Department of Conservation (DOC) one of whose  
            purposes is to administer the Surface Mining and Reclamation  
            Act (SMARA) which is the primary state statute that applies to  
            surface mining activities in California for both hard metals,  
            minerals, and sand and gravel. DOC has administratively  
            created the Office of Mine Reclamation (OMR) as the primary  
            mine regulator for California. 

          2)Prohibits, generally, 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)Provides, in SMARA, as follows: 

             a)   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. 

             b)   Section 2773 directs the reclamation plan to address  
               issues such as re-vegetation, 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 protection, topsoil  
               salvage, tailing and mine waste management, and a variety  
               of other topics. 

             c)   Section 2773.3 provides additional protections for  
               Native American sites from hard rock mining (gold and  
               silver). 

             d)   Directs that local lead agencies are generally  
               responsible for ensuring that reclamation plans are adopted  
               pursuant to the California Environmental Quality Act  







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               (CEQA).  

             e)   Requires annual inspections of mines to be 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. 

             f)   Permits, under specific circumstances, for the State  
               Mining and Geology Board to become the lead agency when the  
               local lead agency fails to fulfill its statutory  
               responsibilities.  This process is quasi-judicial with  
               appeals possible to the SMGB and for judicial review. 

             g)   Protects local land use siting or permitting decisions  
               of local governments, while at the same time SMARA imposes  
               administrative and compliance responsibilities on local  
               governments in their capacity as local lead agencies.

             h)   Collects fees to pay for the administrative costs of the  
               mine regulatory 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.  This issue is addressed in SB 209 (Pavley). 

             i)   Requires annual inspections, although SMARA 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. 

             j)   Does not explicitly allow local lead agencies to inspect  
               mines owned by those local lead agencies. 

          This bill proposes numerous changes to SMARA, which can be  
          summarized as follows:  

          1)Bifurcates, consistent with the Governor's stakeholder group  







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            recommendations, in Section 4 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. It contains procedures for approval of  
            financial assurances and appeals of inadequate financial  
            assurances to the SMGB. 

          2)Amends section 2772 of the Public Resources Code which  
            contains many of the provisions for mine reclamation plans.  
            These are not identical to the stakeholder group  
            recommendations but achieve many of the same objectives. 

          3)Establishes, although facially very complex, new procedures  
            that include timelines, appeal procedures, periods for review  
            and comment back and forth between lead agencies and the  
            department both for reclamation plan approvals and financial  
            assurance adequacy determinations. Options to ensure  
            compliance are set forth when noncompliance is identified by  
            the department. 

          4)Adds appeal procedures to the State Mining and Geology Board  
            and provisions for the Board to provide notice, hearing, and  
            orders to comply to lead agencies when warranted. 

          5)Contains, in Section 11, a new provision that improves the  
            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. 

          6)Makes numerous technical and clarifying changes to SMARA.

          Background
          
          The 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. Governor Brown in a signing  
          message to recent legislation called for a "top to bottom"  







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          review of SMARA. The administration convened a stakeholder group  
          that met several times in 2015 and reviewed several  
          SMARA-related issues. 

          The Senate Natural Resources and Water Committee Science Fellow  
          in 2012 identified many examples of failed SMARA implementation  
          that involved 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.

          Comments

          Author's amendments in Senate Appropriations resolved many of  
          the issues identified in the Senate Natural Resources and Water  
          Committee. These include the following: 
          
          1)Incorporation of regulatory provisions from the State Mining  
            and Geology Board regarding the approval of reclamation plans  
            and financial assurances in several places throughout the  
            bill; 

          2)Deletion of phrases such as "substantially complies" in favor  
            of complete compliance and a definition of "substantial" so  
            that operators know what is expected of them. The department  
            has additional authority to require the re-submission of  
            documents that are not complete and that do not incorporate  
            the comments of sister regulatory agencies such as the  
            Department of Fish and Wildlife or regional water boards;  
            Appeals to the SMGB will turn on whether there was actual  
            compliance with SMARA. 

          3)Improved communication procedures between lead agencies and  
            the department regarding development and approval of  
            reclamation plans and financial assurance mechanisms and  
            procedures to deal with incomplete or noncompliant documents; 

          4)More complete and functional enforcement process that includes  
            improved communications between local lead agencies and the  







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            department as well as improved procedures for orders to comply  
            directed at operators to be implemented; 

          5)Operator options to correct deficiencies identified during an  
            annual inspection; 

          6)establishing a training program for mine inspectors and  
            qualifications for those inspectors; 

          7)A new enforcement protocol with deadlines and appeals  
            procedures with established deadlines; and

          8)A more-defined role for the SMGB when it is necessary for it  
            to assume some local lead agency authorities such as when they  
            approve reclamation plans or financial assurances that are  
            inconsistent with SMARA. 
                 
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes

          According to the Senate Appropriations Committee, there are  
          unknown costs to the Surface Mining and Reclamation Account  
          (special) for additional review by the director of reclamation  
          plans and financial assurances.


          SUPPORT:   (Verified9/1/15)


          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.







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          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 


          OPPOSITION:   (Verified9/1/15)


          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

          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  







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          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  
          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  







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          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 has been amended along with many provisions of the  
          bill, and it is not known if the opposition has been removed or  
          not. 

          Section 2774, dealing with inspections, is viewed by the  
          opposition coalition as a key provision to make sure that  
          inspections and any necessary enforcement actually occur. As  
          originally drafted, the opposition said that the bill weakens  
          inspections by allowing inspections only for the purpose of  
          ensuring that operations are in compliance with the reclamation  
          plan, rather than SMARA as a whole. 

          Given the amendments in Senate Appropriations, the more likely  
          concern of the opposition is whether documents from other  
          reviewing agencies, such as the Department of Fish and Wildlife  
          and regional water boards, would be automatically included in  
          reclamation plans in advance of the approval of those plans. The  
          bill currently provides that comments from reviewing agencies  
          must be included and complied with in the context of appeals to  
          the SMGB.  An author's amendment would allow such conditions of  







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          approval and mitigation from other reviewing agencies to be  
          included in an appendix prepared within 60 days of the approval  
          of a reclamation plan. Such provisions would then become subject  
          to subsequent annual inspections. 

          ASSEMBLY FLOOR:  73-1, 6/4/15
          AYES:  Achadjian, Travis Allen, Baker, Bigelow, Bloom, Bonilla,  
            Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,  
            Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,  
            Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gonzalez, Gray, Grove,  
            Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Linder, Lopez, Low, Maienschein,  
            Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Obernolte,  
            O'Donnell, Olsen, Patterson, Perea, Quirk, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
          NOES:  Levine
          NO VOTE RECORDED:  Alejo, Gomez, Gordon, Nazarian, Rendon, Ting

          Prepared by:William Craven / N.R. & W. / (916) 651-4116
          9/2/15 11:47:21


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