Amendment SSA1-SB1

SENATE SUBSTITUTE AMENDMENT 1, TO SENATE BILL 1

February 5, 2013 - Offered by Senators Jauch and Lehman.

SB1-SSA1,2,2 An Act to repeal 293.43 (3) (a) and 293.43 (5); to amend 70.375 (2) (a), 70.375 (5) (intro.), 70.395 (1e), 70.395 (2) (dc) 1., 70.395 (2) (dc) 2., 70.395 (2) (dc) 3., 70.395 (2) (g) (intro.), 227.42 (4), 281.93 (3), 283.63 (3), 285.81 (3), 289.05 (2), 289.27 (3), 289.29 (5), 293.31 (1), 293.35 (5), 293.43 (title), 293.43 (1m), 293.43 (2), 293.43 (3) (c), 293.43 (4), 293.45 (1) and (2), 293.49 (1) (a) (intro.), 293.49 (1) (a) 3., 293.49 (2) (intro.) and 293.51 (3); to repeal and recreate 293.43 (1) and 293.43 (3) (b) (intro.); and to create 20.192 (1) (g), 70.375 (7), 70.395 (2) (L), 238.14, 289.645 (4) (g), 293.313, 293.37 (2) (gm), 293.42, 293.43 (2m), 293.44, 293.45 (2m), 293.49 (4g), 293.51 (2m) and 293.64 of the statutes; relating to: regulation of metallic mining, an occupation tax on iron mining, and making an appropriation.

Analysis by the Legislative Reference Bureau

Regulation of metallic mining

Processing application for mining permit

Under current law, a person who proposes to mine for metallic minerals must obtain a mining permit from the Department of Natural Resources (DNR), as well as any other permit, license, certification, or other authorization that is required under other environmental and natural resources laws (approval).

Current law requires DNR to prepare an environmental impact statement (EIS) for every proposed metallic mine. After the EIS is finalized, DNR must hold a public hearing (called the master hearing), that includes a public informational hearing and a contested case hearing with sworn testimony and the opportunity for cross-examination, before acting on the application for the mining permit and other approvals. Current law does not specify a time, after the application for a mining permit is filed, within which DNR must act on a mining permit application. It does require the master hearing to be held between 120 days and 180 days after DNR issues the EIS and requires DNR to act on the permit application within 90 days after the completion of the record for the master hearing.

Under this substitute amendment, DNR must hold a public informational hearing after the EIS for a proposed metallic mine is finalized. After the public informational hearing, the substitute amendment requires DNR to hold a contested case hearing covering the application for the mining permit and other approvals if any person notifies DNR that the person wishes to be a party within 30 days after DNR provides notice about the contested case hearing. The substitute amendment requires DNR to give the notice no more than 520 days after the application for the mining permit is complete, unless the deadline is extended as provided in the substitute amendment. The substitute amendment authorizes DNR to extend the deadline for a total of not more than 180 days if the applicant changes its proposal for the mine or if additional time is needed to ensure collaboration with a federal agency with responsibilities related to the proposed mine or to evaluate new information related to the mine. The substitute amendment authorizes the applicant to extend the deadline as often and for as long as it decides is necessary. The substitute amendment also authorizes DNR and the applicant to negotiate an agreement for a timeline for processing the mining permit application that includes a different deadline for DNR to provide notice of the contested case hearing.

The substitute amendment requires that the contested case hearing on a proposed metallic mine be concluded and the record of the hearing be completed no more than 680 days after the application for the mining permit is complete, except that if the deadline for providing notice concerning the contested case hearing is extended, the deadline for concluding the hearing and completing the record of the hearing is extended by the same number of days. The substitute amendment requires DNR to act on the application for the mining permit and other approvals no more than 730 days after the application for the mining permit is complete, except that if the deadline for providing notice concerning the contested case hearing is extended, the deadline for acting on the applications is extended by the same number of days.

Processing application for prospecting permit

Under current law, a person may not prospect for metallic ore without a prospecting permit from DNR. Prospecting is examining an area to determine the quantity and quality of metallic minerals by means other than drilling, for example, by excavating. Under current law, an EIS is not mandatory for proposed prospecting. DNR determines whether it must prepare an EIS for prospecting in the same way that it determines whether it must prepare an EIS for other actions for which an EIS is not mandatory. Under current law, the rest of the procedure for processing an application for a prospecting permit is similar to that for processing the application for a mining permit.

This substitute amendment provides an expedited procedure for processing a prospecting permit if the application for the permit shows that less than 10,000 tons of material is proposed to be excavated. Under the expedited process:

1. An EIS is not required.

2. DNR must hold a public informational hearing.

3. DNR must act on the application for the prospecting permit and, generally, for other approvals covered in the informational hearing no later than 60 days after the application for the prospecting permit is complete.

4. No contested case hearing is available on the application for the permit or for other approvals covered in the informational hearing.

For an application for a prospecting permit to which the expedited process does not apply, the substitute amendment makes changes to the permitting process that are the similar to those made for processing the application for a mining permit, including the deadlines for DNR action.

Notice of intent

Under current law, a person who intends to apply for a permit for mining or prospecting for metallic ore must notify DNR before collecting data intended to be used to support the application.

This substitute amendment requires a person who intends to apply for a permit for mining for metallic ore, but not for prospecting, to provide notice of that intent at least 12 months before filing the application.

Collaboration

This substitute amendment requires DNR to do all of the following in relation to proposed metallic mining:

1. Provide assistance to a person who notifies DNR of the person's intent to apply for a mining or prospecting permit during the processes related to obtaining a permit.

2. Work and consult with American Indian tribes and bands during the processes related to proposed mining in which the tribes and bands have an interest.

3. Work with and provide assistance to other regulatory agencies, including local and federal agencies, during the processes relating to proposed mining in which the agencies have an interest.

4. Seek to enter into a memorandum of understanding with any federal agency with responsibilities related to a potential mining operation covering timelines and other issues of mutual concern.

5. Seek to be the lead agency in matters related to processing an application for a mining permit that are undertaken in coordination with a federal agency.

Irrevocable trust

Currently, DNR's rules on metallic mining require a person to whom a mining permit is issued to establish an irrevocable trust to ensure adequate funds to undertake preventive measures to avoid adverse environmental consequences and to take measures in response to a spill of hazardous substances or the failure of a mining waste facility to contain the waste. DNR determines the level of funding required based on the likelihood of the need for preventive or response measures and the range of costs of the measures.

Under this substitute amendment, the level of funding for the irrevocable trust for a metallic mine is equal to the sum of the following:

1. Twenty percent of the amount of the bond or other security required under current law to ensure the availability of funds for reclamation of the mining site.

2. Twenty percent of the amount of the bond or other security required under current law as proof of financial responsibility for closure and long-term care of the mining waste facility.

Recycling tipping fee

Current law imposes several fees, often referred to as tipping fees, on generators of solid waste that are based on the tonnage of solid waste disposed of at solid waste disposal facilities. The recycling tipping fee is $7 per ton. Under current law there are some exemptions from the recycling tipping fee and the other tipping fees.

The substitute amendment exempts metallic prospecting and mining waste from the recycling tipping fee.

Groundwater

Under current law, among other conditions, to approve the application for a permit for metallic mining DNR must find that the proposed mine will comply with groundwater laws and rules. Under the groundwater laws, DNR and the Department of Health Services establish groundwater quality standards for substances that contaminate groundwater. Also under current law, for certain facilities, such as waste disposal facilities, the groundwater law requires DNR to establish a three-dimensional design management zone (DMZ) within the property boundaries. DNR's current rules require the applicant for a mining permit to submit information based on predictive modeling to demonstrate whether there is a reasonable certainty that a mining waste facility will result in the violation of a groundwater standard beyond the DMZ. There is no time frame specified for this modeling.

This substitute amendment requires an applicant for a mining permit to submit information based on predictive modeling to demonstrate whether there is a reasonable certainty that a mining waste facility will result in the violation of a groundwater standard beyond the DMZ within 250 years after the facility is planned to be closed.

Currently, for metallic mining waste sites, in addition to the DMZ, DNR's rules provide for a mandatory intervention boundary that is generally 150 feet from the outer waste boundary. Under the rules, if a preventive action limit or an enforcement standard is exceeded beyond the mandatory intervention boundary, DNR must require a response by the operator.

This substitute amendment provides that DNR and an applicant for a mining permit may agree to use a mandatory intervention boundary that is a longer distance, up to 600 feet, from the outer waste boundary.

The substitute amendment also requires DNR to study whether, in connection with metallic mining, groundwater standards should apply in an aquifer containing saline (salty) water and to report its conclusions to the legislature.

Mining waste characterization

Current law requires DNR to promulgate rules for the identification and regulation of metallic mining wastes. This substitute amendment requires DNR to adopt, in those rules, standards of the American Society for Testing and Materials for testing and other methodologies related to the evaluation of mining waste.

Occupation tax on mining

Under current law, the state imposes a net proceeds occupation tax on the mining of metallic minerals in this state. The tax is based, generally, on a percentage of net income from the sale of ore or minerals after certain mining processes have been applied to the ore or minerals. The tax rates are annually adjusted to reflect the change in gross national product. Gross national product, generally, measures the output generated by U.S. enterprises, regardless of whether those enterprises are located in this country.

Under this substitute amendment, instead of paying a net proceeds occupation tax based on net income, a person who is mining ferrous minerals in this state would pay a tax equal to $2.412 for each 2,240 pounds of ferrous minerals extracted from mines in this state, based on a three-year average. The tax rate would be annually adjusted to reflect the change in the gross domestic product.

Under current law, a person who intends to apply for a mining permit must make three payments of $50,000 each to the investment and local impact fund. Under the substitute amendment, a person who intends to apply for a mining permit must instead make three payments of $100,000 each to the investment and local impact fund.

Under current law, the revenue collected from the net proceeds occupation tax is deposited into the investment and local impact fund. The fund is managed by the local impact fund board (the board). The revenue is then, generally, distributed to the counties and municipalities in which metallic minerals are being mined. The substitute amendment allows the board to provide grants to units of local government to prepare economic impact studies related to sites at or near the units of local government on which exploration or prospecting is being conducted for the potential mining of ferrous minerals.

Under the substitute amendment, 70 percent of the revenue collected from the tax on extracting ferrous metallic minerals in this state, as created in the substitute amendment, is deposited into the investment and local impact fund and 30 percent of the revenue is used for a regional Wisconsin diversification program that the substitute amendment requires the Wisconsin Economic Development Corporation (WEDC) to establish. The substitute amendment authorizes WEDC to use the moneys it receives for the regional Wisconsin diversification program for the purpose of making business diversification grants or loans in coordination with appropriate units of local government to businesses that are located in close proximity to, but no more than 100 miles from, the site of a mine for ferrous metallic minerals. The substitute amendment also authorizes WEDC to use those moneys for the purpose of catastrophe abatement or response, as determined by WEDC.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB1-SSA1,1 Section 1. 20.192 (1) (g) of the statutes is created to read:

SB1-SSA1,6,3 20.192 (1) (g) Regional Wisconsin diversification program. All moneys received under s. 70.395 (1e) for grants, loans, and disbursements under s. 238.14.

SB1-SSA1,2 Section 2. 70.375 (2) (a) of the statutes is amended to read:

SB1-SSA1,6,12 70.375 (2) (a) In Except as provided in sub. (7), with respect to mines not in operation on November 28, 1981, there is imposed upon persons engaged in mining metalliferous minerals in this state a net proceeds occupation tax effective on the date on which extraction begins to compensate the state and municipalities for the loss of valuable, irreplaceable metalliferous minerals. The amount of the tax shall be determined by applying the rates established under sub. (5) to the net proceeds of each mine. The net proceeds of each mine for each year are the difference between the gross proceeds and the deductions allowed under sub. (4) for the year.

SB1-SSA1,3 Section 3. 70.375 (5) (intro.) of the statutes is amended to read:

SB1-SSA1,7,3 70.375 (5) Rates. (intro.) The Except as provided in sub. (7), the tax to be assessed, levied and collected upon persons engaging in mining metalliferous minerals in this state shall be computed at the following rates:

SB1-SSA1,4 Section 4. 70.375 (7) of the statutes is created to read:

SB1-SSA1,7,11 70.375 (7) Per ton rate. (a) Notwithstanding subs. (2) and (5), for mines in operation after December 31, 2012, the tax assessed, levied, and collected from a person engaged in mining ferrous minerals in this state is an amount equal to $2.412 for each 2,240 pounds of ferrous minerals extracted by the person from mines in this state, based on the average annual amount extracted during the current year and the previous 2 years, not including any year in which the person is not extracting ferrous minerals from mines in this state.

SB1-SSA1,7,16 (b) Beginning in 2014, and in each year thereafter, the department shall change the dollar amount rate under par. (a) to reflect the percentage change in the gross domestic product implicit price deflator from the 4th quarter of the 2nd preceding year to the 4th quarter of the preceding year, as determined by the federal department of commerce.

SB1-SSA1,5 Section 5. 70.395 (1e) of the statutes is amended to read:

SB1-SSA1,8,2 70.395 (1e) Distribution. Fifteen days after the collection of the tax under ss. 70.38 to 70.39, the department of administration, upon certification of the department of revenue, shall transfer the amount collected in respect to mines not in operation on November 28, 1981, to the investment and local impact fund, except that the department of administration shall transfer 70 percent of the amount collected from each person under s. 70.375 (7) to the investment and local impact fund and 30 percent of the amount collected from each person under s. 70.375 (7) to the appropriation under s. 20.192 (1) (g) for the regional Wisconsin diversification program under s. 238.14.

SB1-SSA1,6 Section 6. 70.395 (2) (dc) 1. of the statutes is amended to read:

SB1-SSA1,8,7 70.395 (2) (dc) 1. Each person intending to submit an application for a mining permit shall pay $50,000 $100,000 to the department of revenue for deposit in the investment and local impact fund at the time that the person notifies the department of natural resources under s. 293.31 (1) of that intent.

SB1-SSA1,7 Section 7. 70.395 (2) (dc) 2. of the statutes is amended to read:

SB1-SSA1,8,11 70.395 (2) (dc) 2. A person making a payment under subd. 1. shall pay an additional $50,000 $100,000 upon notification by the board that the board has distributed 50% of the payment under subd. 1.

SB1-SSA1,8 Section 8. 70.395 (2) (dc) 3. of the statutes is amended to read:

SB1-SSA1,8,16 70.395 (2) (dc) 3. A person making a payment under subd. 2. shall pay an additional $50,000 $100,000 upon notification by the board that the board has distributed all of the payment under subd. 1. and 50% of the payment under subd. 2.

SB1-SSA1,9 Section 9. 70.395 (2) (g) (intro.) of the statutes is amended to read:

SB1-SSA1,8,20 70.395 (2) (g) (intro.) The board may distribute the revenues received by the investment and local impact fund under sub. (1e) or proceeds thereof in accordance with par. (h) for the following purposes, as the board determines necessary:

SB1-SSA1,10 Section 10. 70.395 (2) (L) of the statutes is created to read:

SB1-SSA1,9,2 70.395 (2) (L) Notwithstanding any other provision under this subsection, the board may provide grants to local governmental units, as defined in s. 238.133 (1) (b), to prepare economic impact studies related to sites at or near the local governmental units on which exploration or prospecting is being conducted for the potential mining of ferrous minerals or that are the subject of a preapplication process for a permit to mine ferrous minerals.

SB1-SSA1,11 Section 11. 227.42 (4) of the statutes is amended to read:

SB1-SSA1,9,5 227.42 (4) This section does not apply if a hearing on the matter was conducted as a part of a hearing under s. 293.43 293.44.

SB1-SSA1,12 Section 12. 238.14 of the statutes is created to read:

SB1-SSA1,9,8 238.14 Regional Wisconsin diversification program. The corporation may use moneys appropriated under s. 20.192 (1) (g) only as follows:

SB1-SSA1,9,15 (1) The corporation may make a grant or loan of those moneys to a business that is located within 100 miles from the site of a mine for ferrous metallic minerals in this state, and the corporation shall give preference for that grant or loan to a business that is located in close proximity to the site of the mine. In making a grant or loan under this subsection, the corporation shall coordinate with an appropriate local governmental unit, as defined in s. 238.133 (1) (b), to make that grant or loan on a competitive basis for the purpose of business diversification.

SB1-SSA1,9,18 (2) The corporation may disburse those moneys for the purpose of catastrophe abatement or response related to a mine for ferrous metallic minerals, as determined by the corporation.

SB1-SSA1,13 Section 13. 281.93 (3) of the statutes is amended to read:

SB1-SSA1,9,21 281.93 (3) Mining hearing. Subsections (1) and (2) do not apply if a hearing on the matter is conducted as a part of a hearing under s. 293.43 293.44.

SB1-SSA1,14 Section 14. 283.63 (3) of the statutes is amended to read:

SB1-SSA1,9,24 283.63 (3) Subsections (1) and (2) do not apply if a hearing on the permit application is conducted as a part of a hearing under s. 293.43 293.44.

SB1-SSA1,15 Section 15. 285.81 (3) of the statutes is amended to read:

SB1-SSA1,10,2 285.81 (3) Mining hearing. Subsections (1) and (2) do not apply if a hearing on the matter is conducted as a part of a hearing under s. 293.43 293.44.

SB1-SSA1,16 Section 16. 289.05 (2) of the statutes is amended to read:

SB1-SSA1,10,21 289.05 (2) With the advice and comment of the metallic mining council, the department shall promulgate rules for the identification and regulation of metallic mining wastes. The rules promulgated to identify metallic mining wastes and to regulate the location, design, construction, operation and maintenance of facilities for the disposal of metallic mining wastes shall be in accordance with any or all of the provisions under this chapter and chs. 30 and 283. The rules shall take into consideration the special requirements of metallic mining operations in the location, design, construction, operation and maintenance of facilities for the disposal of metallic mining wastes as well as any special environmental concerns that will arise as a result of the disposal of metallic mining wastes. In promulgating the rules, the department shall give consideration to research, studies, data and recommendations of the U.S. environmental protection agency on the subject of metallic mining wastes arising from the agency's efforts to implement the resource conservation and recovery act. In the rules, the department shall adopt the standards of the American Society for Testing and Materials for testing and other methodologies related to the evaluation of mining waste. After the department promulgates rules adopting those standards, the department may modify or replace the rules to reflect new technologies or industry practices.