BILL ANALYSIS Ó AB 1142 Page 1 Date of Hearing: April 11, 2106 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 1142 (Gray) - As Amended March 16, 2016 SUBJECT: Mining and geology: surface mining SUMMARY: Makes numerous changes to the Surface Mining and Reclamation Act (SMARA) that are all part of the year-long stakeholder process convened by the Governor's office in 2015 to recommend substantive and procedural changes to the state's mining laws. EXISTING LAW: 1)Creates SMARA, which prohibits a person from conducting surface mining operations unless the lead agency for the operation issues a surface mining permit and approves a reclamation plan and financial assurances for reclamation. Depending on the circumstances, a lead agency can be a city, county, the San Francisco Bay Conservation and Development Commission, or the California State Mining and Geology Board (Board). Reclamation plans and financial assurances must be submitted to the Director of the Department of Conservation (DOC) for review. 2)Requires the Board to impose an annual reporting fee for each AB 1142 Page 2 active or idle mining operation. Specifies that the maximum fee for any single mining operation may not exceed $4,000 annually and may not be less than $100 annually, as adjusted for the cost of living, for the purpose of carrying out SMARA. 3)Provides a mechanism by which the Board can strip a local agency of its lead agency status for failure to implement state law; the Board then serves as the lead agency. 4)Requires the Board to adopt regulations that establish state policy for the reclamation of mined lands in accordance with the intent of SMARA. 5)Requires lead agencies to require financial assurances for each surface mining operation to ensure reclamation is performed in accordance with the surface mining operation's approved reclamation plan. 6)Requires the financial assurance to remain in effect for the duration of the surface mining operation and until the reclamation is complete. Requires the amount of financial assurance to be adjusted annually to account for new lands disturbed by surface mining operations, inflation, and reclamation of lands accomplished in accordance with the approved reclamation plan. 7)Requires lead agencies to conduct annual mine inspections to determine compliance with SMARA. 8)Establishes administrative penalties of not more than $5,000 per day from the original date of noncompliance for operators who violate or fail to comply with an order by the lead agency or the director. AB 1142 Page 3 9)Prohibits a state or local agency from acquiring or utilizing sand, gravel, aggregates, or other mineral products from surface mining operations unless the operation is identified on the AB 3098 List (a reference to the 1992 bill that established the list), which identifies all of the following surface mining operations: a) Surface mining operations for which a report has been submitted to DOC that indicates that: (1) a reclamation plan and financial assurances have been approved pursuant to SMARA; (2) the operations are in compliance with the state's reclamation standards; (3) the operations are in compliance with the state's financial assurance guidelines; and, (4) the annual reporting fee has been submitted to DOC. b) Surface mining operations for which an appeal is pending before the Board, provided that the appeal has not been pending before the Board for more than 180 days. c) Surface mining operations for which an inspection is required and for which an inspection notice has been submitted by the lead agency that indicates both compliance with the approved reclamation plan and that sufficient financial assurances have been approved and secured. 10)Allows, until January 1, 2019, a surface mine operator whose operations are not in compliance with its approved reclamation plan to remain on the AB 3098 List if the operator stipulated to an order to comply with the lead agency or DOC. THIS BILL: 1)Requires DOC to provide an accounting of how mining fee revenue is spent. AB 1142 Page 4 2)Defines "reclamation" and "financial assurances", 3)Allows DOC to appeal financial assurance approvals that they believe are inadequate to the Board. 4)Clarifies the financial assurance and reclamation plan appeal process to the Board, establishes time frames for hearings, specifies issues that need to be considered, and clarifies under what circumstances the Board can decline to hear appeals. 5)Clarifies what must be included in a reclamation plan, including requiring maps, diagrams, and calculations in the reclamation plan be done by appropriately licensed professionals. 6)Requires lead agencies to certify that the proposed reclamation plan is complete and compliant with applicable statutes and regulations. 7)Allows DOC to make a determination of incompleteness and remand the reclamation plan back to the lead agency for improvements prior to approval. Sets a deadline of 30 days for DOC to notify a lead agency and the operator that a reclamation plan is incomplete. Sets deadline of 30 days for DOC to prepare written comments on the reclamation plan after notifying that a reclamation plan is incomplete. 8)Prohibits a financial assurance mechanism shall not be released without the consent of the lead agency and DOC. AB 1142 Page 5 9)Clarifies how a lead agency may cause the forfeiture of financial assurance mechanism when an operator is financially incapable of completing reclamation in accordance with its approved reclamation plan 10)Requires the Board to develop a form for submission of financial assurances. 11)Establishes a formal process for review of financial assurance cost estimate (FACE) by DOC, and includes the ability of the DOC to require consultations with lead agencies when they do not agree with the DOC's assessment of the FACE. Requires lead agencies to explain in writing why the lead agency is not modifying the FACE pursuant to comments made by the DOC. 12)Allows a lead agency employee, under specified conditions, to conduct inspections of surface mining operations conducted by the lead agency. 13)Specifies that if the operator does not request an inspection date or the lead agency is unable to inspect on the requested date, the lead agency must provide a minimum five days written notice of a pending inspection or a date that is agreed upon by the operator. Deletes the requirement for a lead agency to conduct an inspection within 6 months of receipt of the report and instead requires inspections at 12-month intervals. 14)Requires that DOC to establish an inspection training program that all inspectors must complete by July 1, 2020. Requires inspectors to retake the training at least every five years. AB 1142 Page 6 15)Requires inspection reports to be submitted to the DOC within 90 days and specify what is to be included in the reports. 16)Requires lead agency to outline intended plan of action to remedy violations noted in inspection report. 17)Allows DOC or the Board to apply to the small claims court or superior court to collect unpaid administrative fees. Allows the lead agency or DOC to assess administrative penalties on operators who do not pay annual reporting fees. FISCAL EFFECT: According to the Senate Appropriations Committee, there are unknown costs to the Surface Mining and Reclamation Account for additional review by the director of reclamation plans and financial assurances. COMMENTS: 1)Governor's stakeholder group. SMARA was passed into law in 1975, and its intent remains unchanged. SMARA states: It is the intent of the Legislature to create and maintain an effective and comprehensive surface mining and reclamation policy with regulation of surface mining operations so as to assure that: (a) Adverse environmental effects are prevented or minimized and that mined lands are reclaimed to a usable AB 1142 Page 7 condition which is readily adaptable for alternative land uses. (b) The production and conservation of minerals are encouraged, while giving consideration to values relating to recreation, watershed, wildlife, range and forage, and aesthetic enjoyment. (c) Residual hazards to the public health and safety are eliminated. In the Governor's signing statement for SB 447 (Lara, 2013), Chapter 417, Statutes of 2013, he called for a top-to-bottom review of SMARA. Multiple stakeholder group meetings have been held to discuss the administration's concerns with SMARA. Issues that are under discussion include: a) Meaningful reclamation of disturbed mine lands; b) Adequate financial assurance; c) Financial assurances are not released until reclamation is complete; AB 1142 Page 8 d) Financial assurance can be used for reclamation if the mine owner does not reclaim their mine; e) Quality inspections of mines occur annually; f) When inspectors find non-compliance, enforcement is clear, timely, and meaningful; g) The Board has tools to improve local SMARA implementation; h) Reporting fees and penalties are paid by operators and that fees cover the cost of the program; and, i) Inappropriate exemptions from SMARA are stopped. The goal of these talks is to amend SMARA to meet its intent. DOC released language on these issues and solicited feedback from stakeholders. This language was amended into this bill and SB 209 (Pavley), and, therefore, the current bill is the product of the Governor's stakeholder process. AB 1142 Page 9 1)Reclamation. There are over a thousand active mines in California that remove aggregate for building material, metals, and minerals. California is the only state in the U.S. where surface mine reclamation is not regulated by the state. Local governments, including cities and counties, are the lead agencies for most mines. However, DOC and the Board oversee their permitting, inspection, and enforcement actions. Mining operators are required under SMARA to develop and implement reclamation plans, which will return the mine to a condition where it can be used for another purpose after the mining operation is complete. Annual reports and inspections are supposed to ensure that mining operators are making progress toward reclamation. However, there are instances when the mine operator cannot be located or is unable to complete the mine reclamation. Financial assurances are required to make sure there will be resources available to reclaim the mine. The state and lead agencies have an interest in properly reclaimed mines, because a surface mine is a large hole in the ground and can have many dangerous features. If the mine is reclaimed, the land can be returned to another use. If it is not, the state or the lead agency could be responsible for protecting the public from the dangers of the mine, cleaning up the mine, and reclaiming the mine. AB 1142 creates a new layer of DOC review of reclamation plans to ensure they are complete and to give the Director an opportunity to improve the plans. AB 1142 also attempts to improve financial assurances by making sure they are adequate and prevent the release of mechanisms prior to completion of reclamation by requiring both the DOC and lead agency to agree to their release. 2)Inspections. Lead agencies are required to annually inspect mines to ensure they are complying with their permits, reclamation plan, and SMARA. Permit conditions imposed by a regional water quality control board or the Department or Fish and Wildlife can be included in a SMARA permit. These AB 1142 Page 10 conditions can include requirements that deal with water quality issues and streambed alterations. In addition, mine inspectors are the inspectors most often in the mine and the last inspector in the mine before it closes. Often mine inspectors play a vital role in ensuring compliance with other environmental laws. However, lead agencies in the past have not always inspected mines frequently or adequately. AB 1142 requires the DOC to establish an inspection training program and for inspectors to retake the program every five years. 3)Enforcement. The largest compliance problem DOC faces is that many mines do not file annual reports or pay their fees. Most lead agencies do not take enforcement actions except in rare, egregious cases. According to one lead agency, last year all of their 10 compliance orders were settled prior to a public hearing. However, the administration has stated that when inspections indicated non-compliance, the problems identified are often never fixed. It is important that lead agencies have the tools to bring mines into compliance. AB 1142 allows the lead agency or DOC to assess administrative penalties of operators who do not pay annual reporting fees. AB 1142 provides the Board with more tools to work with lead agencies to address problems with their implementation of SMARA, such as remedial plans or taking away some of their powers. REGISTERED SUPPORT / OPPOSITION: Support None on file AB 1142 Page 11 Opposition None on file Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092