BILL ANALYSIS                                                                                                                                                                                                              1

          |                                                                 |
          |                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.
          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. 

          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  

          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  

          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. 



          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. 

          None Received

          Association of the California Independent Petroleum Association
          Plains Exploration and Production Company