BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 900 (Jackson) - State lands: coastal hazard removal and remediation program ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 9, 2016 |Policy Vote: N.R. & W. 8 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: April 25, 2016 |Consultant: Narisha Bonakdar | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 900 requires the State Lands Commission (SLC), upon appropriation of funding by the Legislature, to administer a coastal hazard removal and remediation program within two years. The bill also requires, for fiscal year 2017-18, the transfer of $2 million to the Land Bank Fund (LBF) to implement the program, and requires the transfer of an amount sufficient to bring the unencumbered LBF balance to $2 million in subsequent years. Fiscal Impact: $2 million per year transferred from the General Fund to the LBF in FY 2017-18, and up to $2 million per year transferred thereafter to ensure that the unencumbered funds in the LBF available for implementation equal $2 million. According to the SLC, One-time cost of $100,000 to complete the in-depth inventory of legacy wells. SB 900 (Jackson) Page 1 of ? Annual costs of approximately $50,000 to survey and monitor oil seepage. Annual costs of approximately $200,000 to remove coastal hazards. Cost pressures up to $390 million to plug and abandon legacy wells. (See staff comments.) Minor and absorbable costs to the SLC to report activities and accomplishments to the legislature. Minor and absorbable costs to the Division of Oil, Gas and Geothermal Resources for permitting and consultation activities related to plugging and abandoning wells. Background: The SLC is an independent commission comprised of the Lieutenant Governor, the State Controller, and the Director of Finance. The Commission manages the state's 4 million acres of tidelands, submerged lands, and the beds of navigable rivers, streams, lakes, bays, estuaries, inlets, and straits. In the marine context, the SLC has broad authority over sovereign lands including rivers and sloughs, lakes, tidelands, and submerged lands. It also manages energy and mineral resource development through leases, has an oil spill prevention program at marine oil terminals and offshore platforms, and has an invasive species prevention program from large ocean-going vessels. Remnants of man-made structures dating back to the late 1800s remain along California's coastline, and tidal and submerged lands. When no responsible parties can be identified, the state, as owner of the land on which these legacy wells and other coastal structures are located, is responsible for removing and remediating these hazards. According to a February 9, 2015 staff report to the commission regarding SB 900, a preliminary review of internal files indicates that approximately 195 improperly abandoned wells from oil development between 1890 and 1938 remain on state offshore lands in or near Santa Barbara County. This internal review also indicates there are at least 26 abandoned wells from oil development between 1938 and 1950. Abandonment records for these wells are unavailable, though SLC staff note that these wells are likely not abandoned to current standards. Proposed Law: SB 900 (Jackson) Page 2 of ? The bill would require, upon appropriation of funding by the Legislature, that the SLC administer a coastal hazard removal and remediation program to: Conduct an inventory of the legacy oil and gas wells and other hazards along the coast. Survey and monitor oil seepage in state waters and request studies to determine and address oil seepage locations, rates, environmental impacts, and possible mitigation measures. Begin removal of coastal hazards, as defined, from lands within the SLC's jurisdiction. In co-operation with the Division of Oil, Gas and Geothermal Resources, the SLC may abandon legacy oil and gas wells, as defined in the bill, that present a hazard to public health and safety, and the environment. The bill would also authorize the SLC to seek private or philanthropic funding to assist with its coastal hazard removal and remediation program. Staff Comments: The SLC estimates that approximately 195 legacy wells exist on California's coastline, and that the average cost to properly plug and abandon a well is between $1.1 million and $2 million. The bill states that the SLC may, in cooperation with the Division of Oil, Gas and Geothermal Resources, seek to plug and abandon wells that present a hazard to the public health and safety, and the environment. While plugging and abandoning efforts are not required under the bill, this provision could create costs pressures in the hundreds of millions. SB 900 (Jackson) Page 3 of ? Staff notes that the Constitutional authority to appropriate funds rests with the Legislative branch of government, and the appropriation of funds allows for the oversight and monitoring of programs. Staff recommends the bill be amended to delete the continuous appropriation and make the program subject to review in the annual budget act, thus allowing oversight and monitoring of the program. -- END --