Amendment SSA1-SB488

LRBs0340/2

RCT/JK/MPG/MGG:jld&kjf:ph

2011 - 2012 LEGISLATURE

SENATE SUBSTITUTE AMENDMENT 1, TO 2011 SENATE BILL 488

March 6, 2012 - Offered by Joint Committee on Finance.

SB488-SSA1,2,2 An Act to amend 20.566 (7) (title), 70.375 (2) (a), 70.395 (1e), 70.395 (2) (dc) 1., 70.395 (2) (dc) 2., 70.395 (2) (dc) 3., 70.395 (2) (dg), 289.645 (3), 293.01 (18), 293.32 (2), 293.35 (5), 293.43 (3) (b) (intro.), 293.49 (1) (a) (intro.) and 293.49 (2) (intro.); and to create 20.192 (1) (q), 20.566 (7) (w), 25.17 (1) (jd), 25.49 (2m), 70.375 (2b), 70.375 (2c), 70.395 (2) (gm), 227.43 (1) (bd), 238.14, 281.34 (5) (am), 293.01 (2m), 293.01 (4e), 293.01 (4m), 293.13 (1) (c), 293.31 (7), 293.35 (4), 293.43 (5) (bm), 293.43 (6), 293.495 and 293.50 (4) of the statutes; relating to: the process for issuance of prospecting and mining permits for certain iron mining, standards for activities related to iron mining, fees related to iron mining, the net proceeds occupation tax on iron mining, and making appropriations.

Analysis by the Legislative Reference Bureau

Processing of application for iron 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 (approval) that is required under other environmental and natural resources laws. The law requires DNR to prepare an environmental impact statement (EIS) for every proposed metallic mine and to hold an informational meeting on a preliminary version of the EIS. After the EIS is finalized, DNR must hold a public hearing, including a contested case hearing, before acting on the application for the mining permit and other environmental and natural resources approvals. Current law does not specify a time, after the application for a mining permit is filed, within which DNR must act on a metallic mining permit application. It does require the mining hearing to be held between 120 days and 180 days after DNR issues the EIS and requires DNR to act on the permit within 90 days after the completion of the record for the public hearing.

This substitute amendment establishes additional deadlines for DNR to act on the application for a mining permit if the proposed mine is an iron mine and DNR determines, based on information provided by the applicant, that it is not likely that any of the areas disturbed by the mining will contain significant amounts of sulfide minerals (nonsulfide iron mine). Under the substitute amendment, DNR must generally hold the informational meeting on the preliminary EIS for a proposed nonsulfide iron mine within 270 days after the application for the permit is complete and must generally issue or deny the mining permit application within 270 days after that informational meeting concludes. The applicant may propose any number of extensions to the deadlines and any extensions proposed by the applicant automatically take effect. DNR may not propose more than three extensions for any one permit application. If DNR and the applicant do not agree to an extension proposed by DNR, including the length of the extension, DNR may request a hearing examiner appointed by the administrator of the Division of Hearing and Appeals in the Department of Administration (the division) to resolve the disagreement. The hearing examiner determines whether there is good cause for an extension and, if so, specifies the length of the extension. The deadlines may also be extended by DNR if the U.S. Army Corps of Engineers notifies DNR that an extension is necessary to allow DNR and the U.S. Army Corps of Engineers to jointly prepare the EISs for the proposed nonsulfide iron mine.

The substitute amendment requires the administrator of the division to appoint a hearing examiner to conduct the informational meeting and the public hearing on the application for a mining permit for proposed nonsulfide iron mining and to appoint the same hearing examiner to resolve any disagreements over extensions of deadlines for DNR actions. The substitute amendment requires the hearing examiner to conduct a conference with the parties before the hearing on the permit application, to determine which issues will be considered at the hearing, and to establish a schedule that will allow DNR to act on the mining permit application by the deadline specified under the substitute amendment.

Other changes to the laws regulating iron mining

Current law requires a person who proposes to conduct metallic mining to pay fees to DNR that equal the costs that DNR incurs in connection with the proposed mining.

Under this substitute amendment, the fees that must be paid to DNR by a person who proposes to conduct nonsulfide iron mining may not exceed $2,000,000, except that, as under current law, the person is also required to pay the full costs of the preparation of the EIS for the proposed mining.

Current law imposes on generators of solid waste several fees based on the tonnage of solid waste disposed of at solid waste disposal facilities. This kind of fee is often referred to as a tipping fee. 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 iron mining waste from the recycling tipping fee.

Current law (often called the mining moratorium law) prohibits DNR from issuing a mining permit for the mining of a sulfide ore body until DNR makes two determinations, based on information provided by the applicant. A sulfide ore body is a mineral deposit in which metals are mixed with sulfide minerals. The determinations are that a mining operation in the United States or Canada has operated in a sulfide ore body with an acid generating capacity for at least ten years without polluting groundwater or surface water from acid drainage or the release of heavy metals and that such a mining operation has been closed for at least ten years without polluting groundwater or surface water from acid drainage or the release of heavy metals.

The substitute amendment exempts a proposal for a nonsulfide iron mine from the mining moratorium law.

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, DNR determines whether it must prepare an EIS for a prospecting permit in the same way that it determines whether it must prepare an EIS for other actions for which an EIS is not specifically required.

The substitute amendment specifies that DNR is not required to prepare an EIS for a prospecting permit for nonsulfide iron ore. The substitute amendment also provides that DNR is not required to hold a hearing on a prospecting permit for nonsulfide iron ore.

Under the substitute amendment, if an iron mining operation is located in an area ceded by the Chippewa to the United States, any wetland mitigation that is authorized or required by DNR must occur within the ceded territory.

Current law requires a person who proposes to construct a high capacity well to obtain approval from DNR. Under the law, if DNR determines that a high capacity well may impair the water supply of a public water utility, DNR may not approve the proposed high capacity well unless it includes conditions that will ensure that the water supply of the public utility will not be impaired.

The substitute amendment provides that, if DNR determines that a high capacity well proposed in connection with iron mining may impair a privately owned well, DNR may not approve the proposed high capacity well unless it includes conditions that will ensure that the privately owned well will not be impaired.

Net proceeds occupation tax

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. Under the substitute amendment, for the first 60 months in which a person is extracting ferrous metallic minerals in this state, the annual amount of the tax imposed on that person is the greater of the amount of the net proceeds occupation tax computed for that person or an amount equal to $416,667 for each month in which extraction occurs. If the amount of the net proceeds occupation tax computed for that person is less than the minimum amount required under the substitute amendment, the person may claim the difference between the net proceeds occupation tax amount and the minimum amount paid as a credit against the tax imposed in subsequent years as long as the person's tax liability is not less than the minimum amount, less any credit the person claims for construction fees, as allowed under current law.

Under current law, in addition to paying the net proceeds occupation tax, a person who intends to apply for a mining permit must make an additional 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 also make an additional three payments of $75,000 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 revenue is then, generally, distributed to the counties and municipalities in which metallic minerals are being mined.

Under the substitute amendment, 70 percent of the revenue collected from the net proceeds occupation tax on extracting ferrous metallic minerals in this state is deposited into the investment and local impact fund, 10 percent of the revenue is deposited into a mining transportation fund, and 20 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. Under the substitute amendment, the local impact fund board disburses moneys from the mining transportation fund for highway, rail, or shipping infrastructure relating to mining for ferrous metallic minerals. 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:

SB488-SSA1, s. 1 Section 1. 20.192 (1) (q) of the statutes is created to read:

SB488-SSA1,5,4 20.192 (1) (q) Regional Wisconsin diversification program. From the economic development fund, all moneys received under s. 70.395 (1e) for grants, loans, and disbursements under s. 238.14.

SB488-SSA1, s. 2 Section 2. 20.566 (7) (title) of the statutes is amended to read:

SB488-SSA1,5,7 20.566 (7) (title) Investment and local impact fund; mining transportation fund.

SB488-SSA1, s. 3 Section 3. 20.566 (7) (w) of the statutes is created to read:

SB488-SSA1,5,11 20.566 (7) (w) Mining transportation fund. From the mining transportation fund, all moneys received under s. 70.395 (1e) to be disbursed under s. 70.395 (2) (gm).

SB488-SSA1, s. 4 Section 4. 25.17 (1) (jd) of the statutes is created to read:

SB488-SSA1,5,13 25.17 (1) (jd) Mining transportation fund (s. 70.395 (2) (gm));

SB488-SSA1, s. 5 Section 5. 25.49 (2m) of the statutes is created to read:

SB488-SSA1,5,16 25.49 (2m) The moneys transferred under s. 70.395 (1e) to the appropriation account under s. 20.192 (1) (q).

SB488-SSA1, s. 6 Section 6. 70.375 (2) (a) of the statutes is amended to read:

SB488-SSA1,6,6 70.375 (2) (a) In Except as provided in subs. (2b) and (2c), 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.

SB488-SSA1, s. 7 Section 7. 70.375 (2b) of the statutes is created to read:

SB488-SSA1,6,13 70.375 (2b) Minimum tax. With respect to mines in operation after December 31, 2011, beginning with the first month of extraction, for the first 60 months in which a person is extracting ferrous metallic minerals in this state, the amount of the tax imposed on that person is the greater of the tax computed under sub. (2) for the year in which extraction occurs or an amount equal to $416,667 for each month in which extraction occurs.

SB488-SSA1, s. 8 Section 8. 70.375 (2c) of the statutes is created to read:

SB488-SSA1,6,25 70.375 (2c) Credit. With respect to mines in operation after December 31, 2011, if a person subject to sub. (2b) would have paid less tax under sub. (2) than under sub. (2b), the person may claim as a credit against the tax imposed under sub. (2) or (2b) an amount equal to the difference between the amount paid under sub. (2b) and the amount that the person would have paid under sub. (2), except that the person may not claim a credit amount that would result in less than the total minimum tax liability computed under sub. (2b), less any credit amount claimed under s. 70.395 (2) (dg), for the first 60 months in which a person is extracting ferrous metallic minerals in this state. The person may carry forward the amount of any unused credit under this subsection to claim against the person's tax liability in subsequent years until the total amount of the credit is used.

SB488-SSA1, s. 9 Section 9. 70.395 (1e) of the statutes is amended to read:

SB488-SSA1,7,10 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 extracting ferrous metallic minerals to the investment and local impact fund, 20 percent to the appropriation under s. 20.192 (1) (q) for the regional Wisconsin diversification program under s. 238.14, and 10 percent to the mining transportation fund.

SB488-SSA1, s. 10 Section 10. 70.395 (2) (dc) 1. of the statutes is amended to read:

SB488-SSA1,7,15 70.395 (2) (dc) 1. Each person intending to submit an application for a mining permit shall pay $50,000 $75,000 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.

SB488-SSA1, s. 11 Section 11. 70.395 (2) (dc) 2. of the statutes is amended to read:

SB488-SSA1,7,19 70.395 (2) (dc) 2. A person making a payment under subd. 1. shall pay an additional $50,000 $75,000 upon notification by the board that the board has distributed 50% of the payment under subd. 1.

SB488-SSA1, s. 12 Section 12. 70.395 (2) (dc) 3. of the statutes is amended to read:

SB488-SSA1,7,24 70.395 (2) (dc) 3. A person making a payment under subd. 2. shall pay an additional $50,000 $75,000 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.

SB488-SSA1, s. 13 Section 13. 70.395 (2) (dg) of the statutes is amended to read:

SB488-SSA1,8,12 70.395 (2) (dg) Each person constructing a metalliferous mining site shall pay to the department of revenue for deposit in the investment and local impact fund, as a construction fee, an amount sufficient to make the construction period payments under par. (d) 5. in respect to that site. Any person paying a construction fee under this paragraph may credit against taxes due under s. 70.375 an amount equal to the payments that the taxpayer has made under this paragraph, provided that the credit does not reduce the taxpayer's liability under s. 70.375 below the amount needed to make the first-dollar payments under par. (d) 1., 2. and 2m. for that year in respect to the taxpayer's mine. The taxpayer may use the credit to reduce the taxpayer's liability under s. 70.375 below the minimum amount required under s. 70.375 (2b). Any amount not creditable because of that limitation in any year may be carried forward.

SB488-SSA1, s. 14 Section 14. 70.395 (2) (gm) of the statutes is created to read:

SB488-SSA1,8,18 70.395 (2) (gm) There is created a mining transportation fund under the jurisdiction and management of the investment and local impact board, as created under s. 15.435. The board may disburse moneys from the mining transportation fund, as it determines is necessary, for highway, rail, or shipping infrastructure related to mining ferrous metallic minerals in this state.

SB488-SSA1, s. 15 Section 15. 227.43 (1) (bd) of the statutes is created to read:

SB488-SSA1,8,24 227.43 (1) (bd) Assign a hearing examiner to preside over the informational meeting under s. 293.43 (3) (b) and over the hearing under s. 293.43 (1m) for an application for a permit to mine for ferrous minerals and assign the same hearing examiner to any request under s. 293.495 (3) (c) 1. for the same mining permit application.

SB488-SSA1, s. 16 Section 16. 238.14 of the statutes is created to read:

SB488-SSA1,9,2 238.14 Regional Wisconsin diversification program. The corporation may use moneys received under s. 20.192 (1) (q) only as follows:

SB488-SSA1,9,9 (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 unit of local government, as defined in s. 238.133 (1) (b), to make that grant or loan on a competitive basis for the purpose of business diversification.

SB488-SSA1,9,12 (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.