Like the Legendary Phoenix, SB 1270 Has Risen from the Ashes

Written by Crystal Howard.

Phoenix image source: narutofanon.wikia.com

On May 23, 2014, the Surface Mining and Reclamation Act (SMARA) reform bill, Senate Bill (SB) 1270 (Pavley), did not make it out of the Senate Appropriations Committee, thus killing the bill for this session. However, like the phoenix, the legendary Arabian bird, SB 1270 rose from the ashes in June by Senate leadership through a rule waiver. The new version of the bill includes further amendments; however, the changes do not address many of the issues that negatively impact the industry. SB 1270 is a toxic bill drafted with the intent to transfer SMARA authority to the State, substantially increase fees to the industry, and create several mandatory provisions that would result in further cost increases and uncertainty within the mining industry. We also suspect that the change in annual fees is an attempt to funnel money to The Sierra Fund to facilitate remediation of a number of legacy metal mines.

Some of the new amendments in the June 11, 2014 version of the bill include:

1. Fees
   1. The maximum revenue generated from fees is increased to $5.5 million from $3.5 and adjusted annually by the consumer price index (CPI).
   2. The maximum fee is still unknown, but they did add the following “fees paid by an active or idle mining operation in the 2015-16 and 2016-17 fiscal years shall be no more than 15% greater than the fee paid in the 2014-15 fiscal year for that mine”
   3. The question is: “how much will they increase after 2016-17″?
2. Section 2770 “what is required to operate”
   1. We all know we are required to have a permit (if not vested), reclamation plan and Financial Assurance; however, the author of the bill has now added the following:
      “Financial assurances for reclamation have been approved and adjusted annually.”

      Thus, if a mine fails to submit their annual FACE they are no longer in compliance…which also means, if the lead agency fails to approve the FACE annually, the mine may not be in compliance.

3. Third party appeals on Reclamation Plan approvals
   1. The ability for a third party to appeal a reclamation plan approval was removed in one instance, but the author left it as an option if the State Mine Inspector is the lead agency and if the local lead agency approved the plan not in compliance with SMARA.

There are additional amendments as well, but these examples show the trend of the process this bill has taken. Many groups have taken the position of “Oppose Unless Amended.” Therefore, the author amends the bill adding more requirements but not removing the items that were causing the issue to begin with, or they only slightly change the items that caused opposition but still leave the door open for them to achieve what they wanted in the beginning. Then, the authors can tell each committee that they have amended the bill as requested by the opposition and it should be passed by the committee. All the while, each amendment has made the bill more restrictive and costly to the industry.

The best position to take with this bill is one taken by a coalition consisting of the California Chamber of Commerce, California Asphalt Pavement Association, Associated General Contractors and others where they changed their position from “Oppose Unless Amended” to simply “Oppose.” Their letter clearly identified the issues with the bill and presented a clear argument that SB 1270 was not necessary due to provisions required in SB 447 (Lara) and by the recent Special Review Panel (SRP) initiated by the Director of the Department of Conservation (DOC).

Due to the apparent unwillingness of the author of the bill to work with the opposition, it is easy to ask, “What is the motive behind these changes?” To identify a possible motive we look to the sponsor of the bill, the Sierra Fund. They are an environmental organization out of Nevada City with the mission to “increase and organize investment in protecting and restoring the natural resources and communities of the Sierra Nevada region.” Is it just a coincidence that a big part of the amendments to SMARA are surrounding fees?

It is also interesting to note that the Sierra Fund recently published (May 2014) a report entitled “Environmental Health Outreach Program 2013-14: A Pilot Outreach Program to Provide Education about Human Exposure Potential to Legacy Mining Pollution in the Sierra.” The goals of the program are “to prevent and reduce exposure to mercury from locally caught fish in Sierra communities, and to raise awareness about mercury in the fish and other mine-related toxins, among community members, leaders, and healthcare providers. The long term goal is to build a movement to clean up sources of legacy mining pollution in the Sierra.” It is also interesting to note that one of the co-sponsors of the program was, Senator Fran Pavley the author of SB 1270. This information definitely makes us think that the Mine Reclamation Account, which is created by SB 1270, is a possible source of funding for the Sierra Fund.

From the onset of this bill, the term “legacy” mine, was used to justify the need for SB 1270. However, legacy mines are not construction aggregate extraction facilities, they are old metal mines. California has regulated mining for metals out of the state. It is our opinion that the construction aggregates industry should not be stuck with the bill to clean up the old legacy mines in the Sierras.

It should also not be forgotten that a review of the SMARA program has already been scheduled as a result of SB 447. It requires the DOC to submit a report on the activities and status of SMARA conformance to the legislature by January 1, 2018. Thus, before we decide to make sweeping changes to SMARA, we should allow the completion of the report required by SB 477. Then, if lead agency compliance is found to be lacking, changes can be implemented.

We should also not forget that the Director of the DOC created a SRP to complete an objective and systematic examination of the internal operations of the Office of Mine Reclamation (OMR). The SRP issued a final report listing several recommendations for OMR to implement. We should let those recommendations be implemented to see if the system improves before we start legislating change.

If SB 1270 is a tool for a funding source for the Sierra Fund to accomplish its Mission and satisfy the goals of their recent pilot program, this is definitely the wrong reason for full scale SMARA reform. The provisions of SMARA are too vital to the livelihoods of those within this industry and we cannot afford to sit on the sidelines. Let’s make sure SMARA reform is based on good information and not personal agendas.

What is the next step for the Bill? It will be sent back to the Senate Appropriations Committee; however, according to the author, they have no intention of moving the bill this session.

Crystal Howard is an economist and market analyst for EnviroMINE, Inc.