A divided appellate court panel has upheld a 2004 regulation that gives the director of the state Department of Conservation the final say over whether reclamation of a surface mine has fulfilled the mine’s reclamation plan.

Mining and aggregate interests contested the regulation adopted by the State Mining and Geology Board. They argued that under the Surface Mining and Reclamation Act (SMARA), the local agency is the lead agency, and only it can determine when reclamation is complete.

But in a 2-1 decision, the Third District Court of Appeal disagreed, ruling, “[W]e discern no clear legislative intent that lead agencies should have exclusive power to determine whether mined lands have been adequately reclaimed as would justify releasing the mine operator from further financial liability.”

Under SMARA, every surfacing mining operation must have a reclamation plan and financial assurances. The financial assurances, which are often bonds, may be released only when the miner satisfies the reclamation plan’s terms. Counties and cities serve as lead agencies under SMARA unless the Mining and Geology Board finds that a local government’s SMARA enforcement is lacking.

Two years ago, the Mining and Geology Board adopted regulation 3805.5(d) (in Title 14 of the California Code of Regulations), which states, “Prior to sending written notification and release of financial assurances as provided under [Public Resources Code § 2773.1], the lead agency shall obtain written concurrence of the director that the completion of reclamation of the mined land disturbed by the surfacing mining operation is in accordance with the requirements of the lead agency-approved reclamation plan.”

The Mineral Associations Coalition, California Mining Association, Construction Materials Association of California, and Southern California Rock Products Association filed a lawsuit seeking to have the regulation declared invalid. They argued that the regulation was not permissible under SMARA because the statute provides the director only with an advisory role. Sacramento County Superior Court Judge Loren McMaster upheld the regulation.

On appeal, the mining groups argued that the regulation gives the director a veto power not contemplated by SMARA. The organizations cited an analysis prepared in 2003 by the Legislative Counsel’s office of the regulation when it was only a proposal. The Legislative Counsel concluded the regulation was not allowed under SMARA.

The majority of the three-judge Third District panel disagreed in an opinion that leaned heavily on the state Supreme Court’s decision in People ex rel. Dept. of Conservation v. El Dorado County, (2005) 36 Cal.4th 971 (see CP&DR Legal Digest, September 2005). In that case, the state Supreme Court ruled that the director of the Department of Conservation could sue a county over mining and reclamation plans the county had approved. The Third District noted that the state Supreme Court determined that SMARA gives the director “a substantial interest in reclamation plans and financial assurances being both legally consistent with SMARA and practically adequate to accomplish SMARA’s goals and state reclamation policy promulgated thereunder.”

“The state Supreme Court’s pronouncements in El Dorado,” wrote Third District Justice Kathleen Butz, “refute the associations’ claim that the Legislature relegated the director to a mere advisory role in achieving SMARA compliance. Although, as a general principle, the director has a secondary role when compared to the lead agency’s, there is no doubt that the director has important statutorily rooted responsibilities to ensure that reclamation is completed satisfactorily and that financial assurances are adequate to cover the cost.”

The court said the Legislative Counsel’s analysis had been “discredited” by the decision in El Dorado. The court also rejected the argument that the regulation gives the director an unfettered veto power. “Rather, it is the last step in an integrated process by which the lead agency makes, and the director reviews, the final decision to release the mine operator’s financial assurance,” Butz wrote.

In a dissenting opinion, Justice George Nicholson said that the case at hand was different from El Dorado, a case that involved a county’s alleged failures under SMARA.

“Unless the lead agency fails to fulfill its responsibilities, the director has no authority to countermand the decisions of the lead agency. The home rule nature of the statutory scheme is interrupted only when home rule breaks down,” Nicholson wrote.

“El Dorado was not about home rule; it was about whether the director has standing to petition for judicial relief when the director believes home rule has failed,” Nicholson continued. “This case presents the very different question of who has primary responsibility.”

The Case:
Mineral Associations Coalition v. State Mining and Geology Board, No.C049201, 06 C.D.O.S. 3021, 2006 DJDAR 4359. Filed April 12, 2006.

The Lawyers:
For Mineral Associations Coalition: Patrick Mitchell, Downey Brand, (916) 773-2100.
For State Mining and Geology Board: Mary Hackenbracht, attorney general’s office, (510) 622-2100.