Mining Lawyer: SB 108, A first step in solving the interim management plan problem (Part 2)

October 17, 2011

Kerry Shapiro

This three-part blog series on California SB 108, a bill which changes provisions in the Surface Mining and Reclamation Act of 1975 (SMARA) pertaining to "idle" mines, is based on a paper I first presented at the CalCIMA Conference in October 2011. If you have not yet read part one of this three-part series, which gives background on the Interim Management Plan problem, you will want read that first.

SB 108: What it Does

Revised Definition of "Idle": SB 108 addresses only one of the substantive issues discussed above, by changing the current definition of "Idle" in SMARA Section 2727.1 to look at the curtailment of production by more than 90 percent of the maximum annual production within any of the last five years, rather than by more than 90 percent of the previous historical maximum annual production. See SB 108 (a copy is attached to this paper). This avoids some of the record problems discussed above and likely limits the
number of operations falling within the definition of idle.

Additional Renewals of IMPs: Currently SMARA allows for renewal of an IMP for an additional 5-year period. SB 108 clarifies that an IMP may be renewed for additional 5-year periods at the expiration of each 5-year period. SMARA Section 2770(h)(2)(A)

Limited Window to Change Mine Status: Although not a substantive change to address the overall IMP problem, perhaps the most significant and practical benefit of SB 108 is the change of status provision. SB 108 adds new SMARA Section 2777.5, to authorize operators to file amended annual reports for prior years in order to revise mineral production or to change mine status from active to idle. One impact of this is to allow mine operators that may have failed to timely file an IMP in prior years (and thus could be subject to claims by OMR of abandonment notwithstanding resumption of production in subsequent years) to either correct production numbers for prior years (thereby avoiding claims of past idleness and failure to prepare a timely IMP) or to properly identify, i.e., change the status of the mine as having been idle in prior years and allow for the filing of a "retrospective" or "late" IMP (thereby avoiding potential claims of abandonment).

SB 108: Factors to Consider

The foregoing opportunity to avoid classification as "idle" or "abandoned" arising out of past production reporting problems, or to reclassify an operation as "idle" is a welcome change. However, it should be emphasized that the bill provides a limited window of time for the filing of missing, corrected or modified reports and for obtaining approval of such a "retrospective" or "late" IMP. Such corrections must be made on or before July 1, 2013 in connection with the filing of the 2012 Annual Report. See [Proposed] Section 2775(a). The opportunity to correct a past, inaccurate classification for an operation that was, or might have been, idle under the pre-SB 108 statute, and to seek approval of an IMP for the period of such idleness in order to obtain the benefit of SB 108 requires a review and a decision by operators concerning whether and how to amend past reports.

For operations that may have been idle and did not apply for IMPs, operators should note that the need for such a benefit was not eliminated by increases in production in subsequent years, as such operations could still be the subject of lead agency or OMR investigation of past failures (for example, OMR has done this on occasion as leverage to seek upgrades to existing older reclamation plans). Such decisions could be complicated as they require an analysis of past operations and a definition of "mineral production."

In light of the various ambiguities and due process flaws of the existing IMP statute, decisions concerning filings to change status or otherwise modify past annual reports could be complicated and may require balancing of the benefits of a change of status against risks of voluntarily engaging in a retrospective Idle/IMP process.

SB 108: Who is Affected?

The SMGB recently provided statistics on a number of mines that either were reported as idle without IMPs, or reported as active when they might have in fact been idle. According to the SMGB's summary of the 2009 annual reports, there were 97 mines reported as "idle" in the SMARA database. All but six of these mines had production in the last ten years. If true, an approved IMP theoretically should be on file for all of these idle mines. According to SMGB, only 35 of the 91 "idle" mines with production reported an approved IMP in 2009. Thus, potentially 56 mines that failed to file an IMP could have run afoul of the abandoned definition in the statute. Additionally, the SMGB Executive Officer believes lead agencies may have incorrectly approved IMPs for mines that were abandoned under statutory definitions. SMGB Information Report 2010-07, p. 12-13.

In addition to the 97 mines listed as idle, another 180 mines were reported as "active" with no production.1 Under statutory definitions, it is possible that a number of these mines are misreported, and should actually be reported as "idle". One hundred of these mines had no production in either 2008 or 2009, and SMGB may believe they are possibly deemed "abandoned" by statute. SMGB Information Report 2010-07, p. 13.

Many of these mines identified by the SMGB Information Report as being idle without IMPs, or reported as active when they were in fact idle, theoretically could benefit from the limited window to correct reports and/or seek a change of status that would be provided in SB 108, if enacted. Moreover, these recent SMGB findings appear consistent with earlier OMR research. At the March 8, 2007 meeting of the SMGB's Surface Mining Standards Committee, OMR reported the following:

  • For 2005, 277 idle mines reported active status;
  • 53 mines reported low (idle) production in 2005, but high (active) production in 2004;
  • 224 mines reported low (idle) production in both 2004 and 2005; and,
  • 133 mines reported zero production in both 2004 and 2005.
In May 2007, OMR informed the SMGB Committee that that production information for 1,029 mines that reported an "active" status in 2005 was reviewed. Approximately 316 of these "active" mines reported production levels that might suggest an "idle" status, and OMR was considering at that time practical steps that could be taken to ensure (1) idle mines have approved IMPs in place and (2) abandoned mines be required to commence and complete reclamation. SMGB Executive Officer's Report, July 12, 2007, p. 4. One approach OMR considered at that time in situations where significant mining was occurring but at levels below the statutory trigger was to look at a five-year average annual production rather than the previous maximum annual production. Id. p. 4. Using this alternative approach (similar to the 5-year look-back language in SB 108) OMR believed the list of 316 "active" mines in 2005 that might have been "idle" back then would have been reduced to 154 mines.

In part three of this series, I will discuss unresolved problems with SB 108 and offer ideas to address them.




1 Also, SMGB noted that 66 mines were identified as "Closed - No intent to Resume" in the OMR database but have not yet been reclaimed. See SMGB Information Report 2010-07, p. 12-13.

The chaptered bill of California Senate Bill 108 can be found here.

If you would like a copy of the PowerPoint presentation on this topic, which I delivered at the CalCIMA conference, please send your request to cjames@jmbm.com.




kerryshapirocropped.jpgKerry Shapiro has a comprehensive government, land use, environmental, and natural resources practice, with extensive experience working with NEPA, CEQA, the Endangered Species Acts, the Mining Law of 1872, FLPMA, the Mineral Materials Act, SMARA, and the Clean Water Act, in relation to various entitlements and public land matters and related litigation, at federal, state, and local levels. Kerry has also specialized in representing the construction and building materials industry on mineral extraction and land development projects for over 20 years, and has secured entitlements for the largest federally-approved sand and gravel project in the United States, obtained the first-ever vested rights confirmation from the State of California for the largest construction aggregate deposit in California, and successfully represented clients before the Ninth Circuit Court of Appeals on federal endangered species and mining law matters. Contact Kerry at KShapiro@jmbm.com or 415.398.8080.