BILL ANALYSIS 1 ----------------------------------------------------------------- | | | SENATE COMMITTEE ON NATURAL RESOURCES AND WATER | | Senator Darrell Steinberg, Chair | | 2007-2008 Regular Session | | | ----------------------------------------------------------------- BILL NO: AB 837 HEARING DATE: July 10, 2007 AUTHOR: Levine URGENCY: No VERSION: June 26, 2007 CONSULTANT: Bill Craven FISCAL: Yes SUBJECT: Oil and gas leases. BACKGROUND AND EXISTING LAW The California Coastal Sanctuary Act of 1994 generally prohibits new leases for oil and gas development in all state waters that are designated as a coastal sanctuary. The act defines those waters as those subject to tidal influence but not including parts of San Francisco Bay, and it also excludes state waters subject to an existing oil or gas lease that is in effect on January 1, 1995, unless that lease is deeded or otherwise reverts to the state after that date. Under the terms of the Act, new leases may be approved only upon a presidential finding that the nation faces a severe energy supply interruption, that the governor finds the energy resources in the sanctuary will help alleviate the crisis, and the Legislature acts to amend the Act. The Act authorizes the State Lands Commission to enter into a lease if it determines that oil and gas beneath state-owned tidal and submerged lands is being drained by wells upon adjacent federal lands and if it determines that such a lease is in the best interests of the state. A second provision in the Public Resources Code, Section 6872.5, authorizes the commission to adjust the boundaries of existing leases to encompass all of an oil or gas field that is partially contained within an existing lease under specified conditions. Existing law also contains specific provisions for oil and gas drilling in the Santa Barbara Channel. PROPOSED LAW This bill would prohibit the commission from issuing a new lease or lease extension from coastal tidelands or submerged lands in state waters within the Santa Barbara Channel if such lease or lease extension would be developed from an existing or new offshore oil platform. ARGUMENTS IN SUPPORT According to the author, this bill would diminish the risk of oil spills in coastal waters and forestall other environmental effects from offshore oil development. The author contends the bill is consistent with the current position of the state which is to oppose new leases in federal waters off the California coast. The author acknowledges that this bill would affect one current project. Venoco, Inc. has applied for an extension of lease boundaries from the State Lands Commission. The author relates that the project calls for up to 30 new and redrilled wells from the existing Platform Holly. Venoco received a state lease in 1949. In 1993 it relinquished half the lease in Santa Barbara County to take a lease in Orange County. According to the author, the company is now interested in regaining the entirety of its former Santa Barbara lease. The commission is expected to release its EIR later this year. In its Notice of Preparation, it stated that the proposed project has a reasonable possibility of an oil spill during the lifetime of the project that could have a significant effect on the environment and that other aspects of the project also could have a significant effect on the environment. No formal positions on the bill were received by the City of Goleta or the county of Santa Barbara. Background materials provided by the author indicate that Goleta's formal policy is to oppose new leases in the western Santa Barbara Channel. The county is uncertain if the project will meet its odor abatement requirements. ARGUMENTS IN OPPOSITION None were received. However, the author's background materials indicate that Venoco considers its application to be authorized as a vested right since it has had operations in this lease since 1968. That issue would likely be resolved by the commission unless this bill first becomes effective and preempts the approval of the requested lease boundary extension. COMMENTS It should be noted that the Notice of Preparation cited by the author represents the beginning of the CEQA process. The Governor and the California Ocean Protection Council have strongly opposed federal legislation that would have expanded oil and gas drilling in the Outer Continental Shelf and lift the 25-year ban on off-shore oil drilling in California and other coastal states, despite any revenue consequences to the state. SUPPORT None Received OPPOSITION Association of the California Independent Petroleum Association Plains Exploration and Production Company