Legislature(2003 - 2004)
04/05/2004 03:30 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 486-MINING RECLAMATION ASSURANCES/FUND CHAIR SCOTT OGAN called the Senate Resources Standing Committee meeting to order at 3:30 p.m. Present were Senators Thomas Wagoner, Ben Stevens, Fred Dyson and Chair Scott Ogan. Senator Ralph Seekins arrived at 3:43 p.m. The first order of business to come before the committee was CSHB 486(FIN). MS. JANET BURLESON-BAXTER, Legislative Liaison, Department of Natural Resources (DNR), stated that the Senate version of this bill, SB 339, passed out of this committee previously. The House Finance Committee made one change on page 3, lines 7 and 11. Chair Ogan acknowledged those. She said the department intends to draft regulations to address any questions about the financial instruments that are mentioned in the bill. The amendment adds that it has to do that and the department supports it. MS. BAXTER explained further that there are three changes. State law says that mining operations have to reclaim disturbed land and was changed in the 1990s to accommodate predominantly a placer mining industry. Large mining has evolved over the last 10 years. Currently, the cap for reclaiming disturbed acres is $750 per acre, which works for the placer industry, but is inadequate to reclaim a large mine. This bill keeps the $750 cap in place for the placer industry and allows for a negotiated settlement for a reasonable reclamation by the industry, the applicant and the DNR. It also expands the number of financial instruments the department can use for reclamation. The state has some bonds in the $26 million range, but that is on a voluntary basis; the state has no statutory authority to do that. Thirdly, it provides for a trust that the bonding company can put money into that over time accrues interest. DNR anticipates having a number of instruments at the beginning of an operation, but at the end of the project, predominantly cash would be used from the accrued interest. MR. BOB LOEFFLER, Director, Division of Mining, Land and Water, Department of Natural Resources (DNR), said he was available to answer questions. CHAIR OGAN asked what financial tests a company would have to undergo. MR. LOEFFLER replied that they would be like a net worth statement or the ratio of assets compared to liabilities. He could also use a bond rating from Moody or Standard and Poor. CHAIR OGAN asked if he anticipated factoring in the fluctuating price of minerals. MR. LOEFFLER replied no, because the bonds are to assure that the state has the ability to reclaim the land should a company default. The bonds become more important during the times of low metal prices, because land costs the same to reclaim no matter what the price of the metal is. CHAIR OGAN asked if instead of having companies post a bond, they could opt to provide other financial assurances. MR. LOEFFLER replied yes and explained that this bill proposes that they have an opportunity to provide financial assurance in a variety of ways, the same thing as a bond. They could provide a letter of credit, certificate of deposit, a corporate guarantee that meets the financial tests, a surety bond or they could actually provide cash in a trust fund. Typically, he would expect a company to use a suite of those to meet the state's bond requirements. CHAIR OGAN exhorted him to do a good job. SENATOR WAGONER moved to pass CSHB 486(FIN), version /D, from committee with individual recommendations and attached fiscal note. There were no objections and it was so ordered.
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