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
          
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          |Version: March 9, 2016          |Policy Vote: N.R. & W. 8 - 1    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: April 25, 2016    |Consultant: Narisha Bonakdar    |
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          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.







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                 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: 








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             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.








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          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.


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