H-1162.1          _______________________________________________

                                  HOUSE BILL 1574

                  _______________________________________________

State of Washington              54th Legislature             1995 Regular Session

By Representatives Elliot, Sheldon, Fuhrman, Valle, McMorris, Schoesler and Radcliff

Read first time 01/31/95.  Referred to Committee on Natural Resources.

Clarifying the existing authority of the department of ecology and the department of natural resources to require performance security for metals mining and milling operations.

     AN ACT Relating to clarifying the existing authority of the department of ecology and the department of natural resources to require performance security for metals mining and milling operations; and amending RCW 78.56.110, 78.56.120, and 78.44.087.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

     Sec. 1.  RCW 78.56.110 and 1994 c 232 s 11 are each amended to read as follows:

     (1) The department of ecology ((and the department of natural resources)) shall not issue necessary permits to an applicant for a metals mining and milling operation until the applicant has deposited with the department of ecology a performance security which is acceptable to ((both agencies)) the department of ecology based on the requirements of subsection (2) of this section.  This performance security may be:

     (a) Bank letters of credit ((acceptable to both agencies));

     (b) A cash deposit;

     (c) Negotiable securities ((acceptable to both agencies));

     (d) An assignment of a savings account;

     (e) A savings certificate in a Washington bank; or

     (f) A corporate surety bond executed in favor of the department of ecology by a corporation authorized to do business in the state of Washington under Title 48 RCW ((and acceptable to both agencies)).

     The ((agencies)) department of ecology may, for any reason, refuse any performance security not deemed adequate.

     (2) The performance security shall be conditioned on ((the faithful performance of)) compliance by the applicant or operator in meeting the following obligations:

     (a) Compliance ((with the laws of the state of Washington pertaining to metals mining and milling operations and with the related rules and permit conditions established by state and local government with respect to those operations as defined in RCW 78.44.031(17) and the construction, operation, reclamation, and closure of a metals mining and milling operation)) by the applicant or operator with the requirements established by the department of ecology pursuant to chapter 78.56 RCW or in permits or other approval documents issued by the department of ecology for a metals mining and milling operation;

     (b) Postclosure environmental monitoring as determined by the department of ecology ((and the department of natural resources)); and

     (c) Provision of sufficient funding as determined by the department of ecology for cleanup of potential problems revealed during or after closure.

     (3) The department of ecology ((and the department of natural resources shall jointly)) may, if it deems appropriate, adopt rules for determining the amount of the performance security, requirements for the performance security, requirements for the issuer of the performance security, and any other requirements necessary for the implementation of this section.

     (4) The department of ecology ((and the department of natural resources, acting jointly,)) may increase or decrease the amount of the performance security at any time to compensate for any alteration in the operation that affects meeting the obligations in subsection (2) of this section.  At a minimum, the ((agencies)) department shall ((jointly)) review the adequacy of the performance security every two years.

     (5) Liability under the performance security shall be maintained until the obligations in subsection (2) of this section are met to the satisfaction of the department of ecology ((and the department of natural resources)).  Liability under the performance security may be released only upon written notification by the department of ecology((, with the concurrence of the department of natural resources)).

     (6) Any interest or appreciation on the performance security shall be held by the department of ecology until the obligations in subsection (2) of this section have been met to the satisfaction of the department of ecology ((and the department of natural resources)).  At such time, the interest shall be remitted to the applicant or operator.  However, if the applicant or operator fails to comply with the obligations of subsection (2) of this section, the interest or appreciation may be used by ((either agency)) the department of ecology to comply with the obligations.

(7) A single performance security, when acceptable to both the department of ecology and the department of natural resources, may be utilized by both agencies to satisfy the requirements of this section and RCW 78.44.087.

     Sec. 2.  RCW 78.56.120 and 1994 c 232 s 12 are each amended to read as follows:

     The department of ecology may, with staff, equipment, and material under its control, or by contract with others, remediate or mitigate any impact of a metals mining and milling operation when it finds that the operator or permit holder has failed to comply with relevant statutes, rules, or permits, and the operator or permit holder has failed to take adequate or timely action to rectify these impacts.

     If the department intends to remediate or mitigate such impacts, the department shall issue an order to submit performance security requiring the permit holder or surety to submit to the department the amount of moneys posted pursuant to ((chapter 232, Laws of 1994)) RCW 78.56.110.  If the amount specified in the order to submit performance security is not paid within twenty days after issuance of the notice, the attorney general upon request of the department shall bring an action on behalf of the state in a superior court to recover the amount specified and associated legal fees.

     The department may proceed at any time after issuing the order to submit performance security to remediate or mitigate adverse impacts.

     The department shall keep a record of all expenses incurred in carrying out any remediation or mitigation activities authorized under this section, including:

     (1) Remediation or mitigation;

     (2) A reasonable charge for the services performed by the state's personnel and the state's equipment and materials utilized; and

     (3) Administrative and legal expenses related to remediation or mitigation.

     The department shall refund to the surety or permit holder all amounts received in excess of the amount of expenses incurred.  If the amount received is less than the expenses incurred, the attorney general, upon request of the department of ecology, may bring an action against the permit holder on behalf of the state in the superior court to recover the remaining costs listed in this section.

     ((If the department of natural resources finds that reclamation has not occurred according to the standards required under chapter 78.44 RCW in a metals mining and milling operation, then the department of natural resources may cause reclamation to occur pursuant to RCW 78.44.240.  Upon approval of the department of ecology, the department of natural resources may reclaim part or all of the metals mining and milling operation using that portion of the surety posted pursuant to chapter 232, Laws of 1994 that has been identified for reclamation.))

     Sec. 3.  RCW 78.44.087 and 1994 c 232 s 23 are each amended to read as follows:

(1) The department shall not issue a reclamation permit until the applicant has deposited with the department an acceptable performance security on forms prescribed and furnished by the department.

(2) A public or governmental agency shall not be required to post surface mine reclamation performance security nor shall a permit holder be required to post surface ((mining)) mine reclamation performance security with ((more than one state or local agency)) any agency other than the department.

(3) This performance security may be:

     (((1))) (a) Bank letters of credit acceptable to the department;

     (((2))) (b) A cash deposit;

     (((3))) (c) Negotiable securities acceptable to the department;

     (((4))) (d) An assignment of a savings account;

     (((5))) (e) A savings certificate in a Washington bank on an assignment form prescribed by the department;

     (((6))) (f) Assignments of interests in real property within the state of Washington; or

     (((7))) (g) A corporate surety bond executed in favor of the department by a corporation authorized to do business in the state of Washington under Title 48 RCW and authorized by the department.

(4) The performance security shall be conditioned upon the faithful performance of the requirements set forth in this chapter and of the rules adopted under it.

(5) The department shall have the authority to determine the amount of the performance security using a standardized performance security formula developed by the department.  The amount of the security shall be determined by the department and based on the estimated costs of completing reclamation according to the approved reclamation plan or minimum standards and related administrative overhead for the area to be surface mined during (a) the next twelve‑month period, (b) the following twenty-four months, and (c) any previously disturbed areas on which the reclamation has not been satisfactorily completed and approved.

(6) The department may increase or decrease the amount of the performance security at any time to compensate for a change in the disturbed area, the depth of excavation, a modification of the reclamation plan, or any other alteration in the conditions of the mine that affects the cost of reclamation.  The department may, for any reason, refuse any performance security not deemed adequate.

(7) Liability under the performance security shall be maintained until reclamation is completed according to the approved reclamation plan to the satisfaction of the department unless released as hereinafter provided.  Liability under the performance security may be released only upon written notification by the department.  Notification shall be given upon completion of compliance or acceptance by the department of a substitute performance security.  The liability of the surety shall not exceed the amount of security required by this section and the department's reasonable legal fees to recover the security.

(8) Any interest or appreciation on the performance security shall be held by the department until reclamation is completed to its satisfaction.  At such time, the interest shall be remitted to the permit holder; except that such interest or appreciation may be used by the department to effect reclamation in the event that the permit holder fails to comply with the provisions of this chapter and the costs of reclamation exceed the face value of the performance security.

     ((Except as provided in this section, no other state agency or local government shall require performance security for the purposes of surface mine reclamation and only one agency of government shall require and hold the performance security.)) (9) A single performance security, when acceptable to both the department of natural resources and the department of ecology, may be utilized to satisfy the requirements of this section and RCW 78.56.110.

(10) The department may enter into written agreements with federal agencies in order to avoid redundant bonding of surface mines straddling boundaries between federally controlled and other lands within Washington state.

     ((The department and the department of ecology shall jointly require performance security for metals mining and milling operations regulated under chapter 232, Laws of 1994.))

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