Natural Resources and Mining Law Blog
California Mining Update
AB 1142 and SB 209: What operators need to know about SMARA modernization
Changes will be effective January 1, 2017
by
Kerry Shapiro
This article was first published in The Conveyor magazine, a publication of CalCIMA.
On April 18, 2016, Governor Jerry Brown signed into law two bills that together provide the most significant update to the California Surface Mining and Reclamation Act (SMARA) in 25 years. Assembly Bill (AB) 1142 (Gray) and Senate Bill (SB) 209 (Pavley) are the outgrowth of more modest changes in recent years, and of a promise by the Governor, in 2013, to reform SMARA from “top to bottom.” Although the bills are not effective until January 1, 2017, operators must be aware of their changes and start planning for their implementation.
Most important in the near term are changes to SMARA’s inspections process, financial assurance approval process, reclamation plan requirements, and inspector qualifications.
Inspections Process
Beginning in 2017, operators must request, on their annual reports, an inspection date within 12 months of their prior inspection. For inspections conducted in 2016, the 12-month date will be triggered for 2017.
Financial Assurances
The annual inspection date is the starting point for wholly new annual financial assurance review and approval processes. Note the plural—under AB 1142 and SB 209, SMARA will now have (1) a process for financial assurance cost estimates (FACEs) for new or amended reclamation plans and (2) another process for annual FACE updates. Each process sets new steps and deadlines that are tied to the annual inspection date. Moreover, each process provides the Department of Conservation (DOC) a new right to formally consult with lead agencies and operators during the FACE review process, and to give DOC a new right to appeal a lead agency’s approval of a FACE. Annual financial assurance review was already a SMARA requirement, but the new legislation formalizes the review process to provide greater clarity and transparency.
Corporate self-bonding is now permitted for companies worth more than $35 million, subject to regulations which will be approved by the SMGB. Multiple operations can combine their assets to pass the financial test, but self-bonding is limited to 75% of the value of an operator’s FACE(s).
Reclamation Plans
Beginning in 2017, each new reclamation plan must be consolidated in a single document with all relevant charts, appendices, and so on. Plan maps must be of higher quality and supported as necessary by surveys from licensed land surveyors or engineers. Plans should be easier to use and administer but more challenging and expensive to put together.
Fees
AB 1142 and SB 209 raise the maximum annual fee for operations from $4,000 to $10,000 (adjusted by the Social Security Cost-of-Living Adjustment (COLA)), with the increase to be phased in over the next four years.
Compliance
AB 1142 and SB 209 still allow lead agencies and the DOC to issue Notices of Violation, but they are now required to provide more information to the operator about the alleged violations. Lead agencies and the DOC must also give operators two opportunities to enter into a stipulated Order to Comply, and operators subject to stipulated Orders to Comply can remain on the SMARA § 2717 list.
Other changes
AB 1142 and SB 209 modernize SMARA in many other ways. These changes generally fall into two categories: (1) how lead agencies administer SMARA, and (2) how operators comply with it.
On the administrative side, the bills:
- Re-organize the process by which the SMGB can assume control of a lead agency’s authority to give the SMGB more options, short of a full takeover, to promote compliance.
- Provide lead agencies operating borrow pits more relaxed idle mine standards and less frequent inspections.
- Subject state-licensed inspectors to heightened qualifications, but relax their conflict-of-interest rules.
- Allow lead agency employees, not just licensed professionals, to serve as inspectors of lead agency-managed operations.
- Rename the Office of Mine Reclamation the “Division of Mine Reclamation” and establish as the Division’s head a new “Supervisor of Mine Reclamation.”
- Raise the total annual revenue cap for all reporting fees from $3.5 to $8 million per year (again, COLA-adjusted), and require the DOC Director to file a new fees report to the Legislature.
- As mentioned, add a new SMARA section that allows the DOC Director to appeal a lead agency’s approval of a financial assurance cost estimate (FACE) to the State Mining & Geology Board (SMGB).
On the compliance side, AB 1142 and SB 209:
- Impose new steps and deadlines for lead agency review of reclamation plans.
- Streamline the hearing and seizure requirements in cases of financial incapability or abandonment, and allow lead agencies to use forfeited assurances for “remediation” where they are insufficient for full reclamation.
Summary and Additional Resources
AB 1142 and SB 209 represent a significant SMARA overhaul. Operators should decide when they want their annual inspections (and hence FACE approvals) to take place; shore up their FACEs; and, for projects in process, review the technical and organizational requirements for reclamation plans.
Education workshops for implementation of AB 1142 and SB 209 are in the planning stages. In the meantime, more information (including a handy presentation) is available on Jeffer Mangels’ website: 2016 SMARA Modernization.