BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1270 (Pavley) - Surface mining operations.
Amended: May 7, 2014 Policy Vote: NR&W 7-2
Urgency: No Mandate: Yes (see staff comment)
Hearing Date: May 19, 2014 Consultant: Marie Liu
This bill may meet the criteria for referral to the Suspense
File.
Bill Summary: SB 1270 would create the Division of Mines within
the Department of Conservation (DOC), which would be responsible
for the DOC's role under mining laws, and would amend the roles
of the State Mining and Geology Board (SMGB) so that it is an
appeals and rule-making body.
Fiscal Impact:
Unknown costs to the Mine Reclamation Account (special) for
judicial review of lead agency actions. (see staff comment
#2, amendment A would remove cost)
Unknown costs, likely no more than the low- to mid- tens of
thousands of dollars, from the Mine Reclamation Account
(special) for additional meetings of the SMGB to hear
appeals regarding a lead agency's approval of a reclamation
plan and financial assurances. (see staff comment #2,
amendment B would remove cost)
Unknown savings, but likely in the mid-tens of thousands of
dollars, to the Mine Reclamation Account (special) for the
simplification of basis to establish the annual reporting
fee for a mine.
Unknown increased revenues, likely in the high hundreds of
thousands, to the Mine Reclamation Account (special) by
changing the fee restrictions.
Background: The Surface Mining and Reclamation Act of 1975
(SMARA, PRC �2710 et seq.) regulates surface mining operations
to minimize environmental impacts and to provide for the
reclamation of mined lands to a usable condition while
encouraging the production, conservation, and protection of the
state's mineral resources. SMARA applies to the mining of hard
metals minerals, and sand and gravel. SMARA generally requires a
surface mining operation to obtain a mining permit, to have an
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approved reclamation plan, and to have secured financial
assurances. Financial assurances are surety documents that can
be used to pay for any mine reclamation costs in the event that
a mine operator defaults on its obligation to reclaim a mine at
the end of its useful life.
1.The role of lead agency: SMARA is administered by the DOC's
Office of Mine Reclamation and the SMGB, but allows local
entities to operate as the lead agency and issue mining
permits if the local entity has adopted an ordinance governing
mining activities that meet specified requirements. However,
reclamation plans and financial assurances must be submitted
to the director DOC for review (�2774).
Mines are required to be inspected annually, and are the basis
for establishing financial assurance amounts.
2.Oversight of local agencies: Existing law establishes the
procedures by which the director can submit comments to a lead
agency regarding its pending approval of a reclamation plan
and financial assurances and the lead agency's required
response to such comments.
Individuals may appeal specific lead agency actions, including
denying approval of a reclamation plan, to the SMGB
(�2770(e)).
3.Revoking of local agency responsibilities: Existing law
enables the SMGB to assume the role of the lead agency, except
for local permitting authority, if the lead agency is failing
to fulfill its statutory obligations, including if the lead
agency approves a reclamation plan and financial assurances
that are not consistent with SMARA (�2774.4). The SMGB is
required to restore powers to the lead agency within three
years if the lead agency takes corrective actions.
4.Reporting fees and lead agency fees: The owner of a mining
operation must annually report to the DOC with specified
information including, among other things, contact
information, the location of the mine, the approval date of
the operation's reclamation plan, proof of annual inspection
by the lead agency, proof of financial assurances, and total
production for each mineral commodity produced in the previous
year. Under �2207(d), the SMGB is required to collect an
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annual reporting fee on each active or idle mining operation.
These reporting fees must be at least $100, but no more than
$4,000, and they must cover the DOC's costs in implementing
SMARA. The actual fee amount is based on the total assessed
value of the mine, the acreage disturbed by mining activities,
and the acreage subject to the reclamation plan. Existing law
also caps the total revenue generated by the reporting fees at
$3.5 million. The fee minimums and maximums are adjusted
according to the California Consumer Price Index. Fee revenues
are deposited into the Mine Reclamation Account.
Lead agencies may also impose a fee upon each mining operation
to cover its reasonable costs under SMARA (�2207(e)).
5.Other provisions: Existing law outlines the process by which a
mine would be declared abandoned without commencing
reclamation, at which point the financial assurances can be
forfeited to conduct and complete the reclamation.
Proposed Law: This bill would create a new division within the
DOC, the Division of Mines, which would be headed by the State
Mine Inspector (SMI). The SMI would be appointed by the director
of DOC and must be a registered geologist or professional
engineer. The SMI would assume the existing responsibilities of
the director of DOC.
1.The role of lead agency: This bill would require that the lead
agency review the sufficiency of the financial assurances at
least annually as part of the annual mine inspection. This
bill would also establish professional requirements for
persons that conduct annual inspections.
2.Oversight of local agencies: This bill would revise the
process by which SMI (previously the director), may review
reclamation plan and financial assurances before the lead
agency's approval of those documents. Specifically the bill
allows the SMI to seek judicial review of a lead agency's
approval of a reclamation plan and financial assurances if the
SMI has submitted comments and is dissatisfied with a lead
agency's response.
This bill would allow an individual to appeal a lead agency's
approval, in additional to a lead agency's denial, of a
reclamation plan to the SMGB.
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3.Revoking of local agency responsibilities: This bill would
allow a lead agency to voluntarily relinquish its
responsibilities to the state. When the state takes over for a
lead agency, the SMI, instead of the SMGB, will resume the
responsibilities of the lead agency. This bill would also make
numerous changes to specify that the powers and
responsibilities of the lead agency apply to the SMI when the
SMI is acting as a lead agency.
The SMGB would remain as the appeals and rule-making body.
This bill would establish additional procedures and
requirements for a lead agency to later restore its authority.
4.Reporting fees and lead agency fees: This bill would change
the method by which the reporting fee is assessed. Instead of
being based on the produced value of the mine, the fee will be
based on a cost per acre and other factors in an approved
reclamation plan. The existing caps for both the reporting fee
would be reset at an unspecified amount and the minimum
reporting fee would be raised from $100 to $1,000. The bill
would also specify that the reporting fee must be sufficient
to cover of costs of SMGB and the DOC under SMARA.
This bill would specify that if the SMI is acting as lead
agency, it may impose a fee on a mine operator to cover its
reasonable costs under SMARA.
5.Other provisions: This bill would also:
This bill would establish additional notifications and
requirements that must be completed before an operator's
financial assurance is forfeited.
Require a reclamation plan to include a schedule with
timelimits for the completion of reclamation.
Allow the SMI, in addition to the Attorney General, to
seek an injunction on a surface mine that presents an
imminent and substantial endangerment to the public health
or the environment.
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This bill would require the SMI to report to the
director of DOC and the SMGB annually, beginning January 1,
2018, on the activities of the Abandoned Mines Land Unit,
including, among other things, a prioritized assessment of
the abandoned sites that present an imminent danger to
public health, safety, welfare, and the environment.
Staff Comments:
1.The role of lead agency: This bill establishes a number of
procedural requirements for both the SMI and the lead
agencies. DOC estimates that these changes will not
significantly change its costs to administer SMARA. There may
be cost to the lead agencies costs to administer SMARA, though
these costs would not be reimbursable by the state because the
lead agency has fee authority on the mine operators to recover
any costs.
2.Oversight of local agencies: By allowing the SMI to seek
judicial review of a lead agency's approval of reclamation
plan and financial assurances, this bill could result in the
SMI incurring, potentially significant, legal costs. The legal
costs are completely dependent on the SMI's use of this
voluntary authority. However, the author has proposed to
delete the SMI's ability to seek judicial review and instead
rely on the SMGB as an appeals body, which would remove the
potential costs. (See amendment A)
This bill potentially increases the number of appeals to the
SMGB because an individual would be able to appeal both a lead
agency's approval and denial of a reclamation plan and
financial assurances, not just the denials. It is unknown to
what extent the number of appeals may increase, though staff
notes that each meeting of the SMGB costs approximately
$4,000. However, the author has proposed to remove this
provision, which would remove the potential costs. (See
amendment B)
3.Revoking of local agency responsibilities: Under this bill,
the SMI would act as the lead agency instead of the SMGB if a
local agency's responsibilities were revoked. Changing the
body which will act on behalf of the local agency should have
no bearing on how frequently this action occurs, especially
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since the decision to revoke the local's authority would
remain the judgment of the SMGB. Staff notes that it is not
common for the state to revoke the local's authority under
SMARA. According to the DOC, the last ten requests for the
SMGB to revoke a local's authority have all been denied.
This bill, by specifying that the SMI may charge a regulatory
fee to recover its costs when acting as a lead agency
(parallel to the local agency's existing ability), will ensure
that they state activities are funded when it revokes a
local's authority.
4.Reporting fees and lead agency fees: This bill changes the
annual reporting fees collected under SMARA by raising the
total amount of fees that may be collected to an unspecified
level, raising the maximum individual fee to an unspecified
level, increasing the minimum individual fee from $100 to
$1000, and by changing the basis for which the fee is charged.
Presumably the sum of these changes will result in increased
fee revenue to the Mine Reclamation Account. However, no such
total fee increase is required if there are no increases in
costs to the DOC or SMGB to administer SMARA. It is possible
that this new fee structure will change the amount of an
individual mine operator's reporting fee, perhaps
substantially, but without a substantial increase to the total
amount collected.
The author has submitted amendments to set the total revenue
maximum at $5.5 million and to eliminate the cap on the
individual mine fee. The amendments would also limit the rate
of increase on an individual mine operator's reporting fee as
a result of these changes and would require the SMGB to report
to the Legislature on the programs revenues and expenditures
as well as the program's overall budgetary needs.
This bill may also create some savings by simplifying how the
fee amount is set for each mine. Under existing law, the fee
is largely based on the production value of the mine. Using
the production value as part of the basis for setting the fee
amount requires the mine operator on report on projected
production amounts and annual fee adjustments as the
production value changes from year to year. Under this bill,
the fee amount would be based on acreage, eliminating the need
to report production values for purpose of setting fees and to
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annually adjust fees, which will substantially reduce
workload. Additionally, having a steady reporting fee amount
will enable DOC to invoice electronically as well as receive
electronic payments. DOC has indicated that changing the fee
basis will reduce staffing costs significantly, though the
savings has not yet been quantified.
5.Other provisions: This bill will enable the SMI to seek an
injunction instead of requiring the Attorney General to take
this action on behalf of the director. This provision has the
potential to reduce legal costs; however these savings are
unknown and uncertain.
Proposed Author Amendments: The author proposes the following:
A.To delete the ability for the SMI to seek judicial review of a
lead agency's approval of a reclamation plan.
On page 26, line 10 through 14, delete "If the State Mine
Inspector is dissatisfied with the lead agency's approval, the
State Mine Inspector may seek judicial review of that approval
pursuant to Section 1094.5 of the Code of Civil Procedure
within 30 days of notice of the lead agency's action."
And insert: "The State Mine Inspector may appeal the lead
agency's approval to the SMGB within 30 days of the lead
agency's action."
On page 26, lines 17 and 18, delete "whether judicial review
of the approval was obtained or not."
B.To delete the ability for a person to appeal a lead agency's
or SMI's approval of a reclamation plan.
On page 14, line 38 and 29, delete "approval or"
On page 15, line 8, delete "approval or"
C.To delete the maximum reporting fee which is unspecified in
the latest version of the bill and limit the rate which the
fee may be increased.
On page 9, on lines 3 and 4, delete "The fee for each active
and idle mining operation shall not exceed __ dollars ($___)."
And insert:
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Fees paid by an active or idle mining operation in fiscal
years 2015-16 and 2016-17 shall be no more than 15% greater
than the fee paid in fiscal year 2014-15 for any such mine.
(B) On or before January 1, 2016, the State Mining and Geology
Board shall provide a detailed report to the Legislature on
the revenues and expenses of the Mine Reclamation Account. The
report shall also identify the minimum revenue requirements of
the SMGB and the Division of Mines to implement this article
and Section 2207.
D.To specify the maximum revenue generated by reporting fees is
$5.5 million.
On page 9, line 14, delete "____ dollars ($___)" and insert
"5,500,000 dollars ($5.5 million)"