BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1142| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. AB 1142 Page 2 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 AB 1142 Page 3 (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 AB 1142 Page 4 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" AB 1142 Page 5 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 AB 1142 Page 6 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. AB 1142 Page 7 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 AB 1142 Page 8 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 AB 1142 Page 9 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 AB 1142 Page 10 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 **** END ****