(1)Existing law vests exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state to the State Lands Commission. Existing law confers the powers of the commission as to leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted. Existing law authorizes the commission to let leases for the extraction of oil and gas from coastal tidelands or submerged lands in state waters and beds of navigable rivers and lakes within the state in accordance with specified provisions of law.

Existing law, notwithstanding those provisions or any other provision of law, prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the California Coastal Sanctuary, which includes certain state waters subject to tidal influence, unless either (1) the President of the United States has found a severe energy supply interruption and has ordered distribution of the Strategic Petroleum Reserve, the Governor finds that the energy resources of the sanctuary will contribute significantly to the alleviation of that interruption, and the Legislature subsequently acts to amend the law to allow the extraction, or (2) the commission determines that the oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.

This bill would prohibit the commission or a local trustee, as defined, of granted public trust lands from entering into any new lease or other conveyance authorizing new construction of oil- and gas-related infrastructure upon tidelands and submerged lands within state waters associated with Pacific Outer Continental Shelf leases issued after January 1, 2018. The bill would require the commission or a local trustee when approving or disapproving any lease renewal, extension, amendment, or modification authorizing new construction of oil- and gas-related infrastructure upon tidelands and submerged lands within state waters associated with Pacific Outer Continental Shelf leases issued after January 1, 2018, to follow a specified process. The bill would provide that these provisions do not prevent specified activities, including, among others, issuance by the commission of leases pursuant to exceptions applicable to the California Coastal Sanctuary described above. The bill would authorize the commission to establish regulations for the implementation of these provisions. By adding to the duties of local agencies when approving or disapproving leases, this bill would impose a state-mandated local program.

(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(1)Existing law vests exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state to the State Lands Commission. Existing law confers the powers of the commission as to leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted. Existing law authorizes the commission to let leases for the extraction of oil and gas from coastal tidelands or submerged lands in state waters and beds of navigable rivers and lakes within the state in accordance with specified provisions of law.

Existing law, notwithstanding those provisions or any other provision of law, prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the California Coastal Sanctuary, which includes certain state waters subject to tidal influence, unless either (1) the President of the United States has found a severe energy supply interruption and has ordered distribution of the Strategic Petroleum Reserve, the Governor finds that the energy resources of the sanctuary will contribute significantly to the alleviation of that interruption, and the Legislature subsequently acts to amend the law to allow the extraction, or (2) the commission determines that the oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.

This bill would prohibit the commission or a local trustee, as defined, of granted public trust lands from entering into any new lease or other conveyance authorizing new construction of oil- and gas-related infrastructure upon tidelands and submerged lands within state waters associated with Pacific Outer Continental Shelf leases issued after January 1, 2018. The bill would require the commission or a local trustee when approving or disapproving any lease renewal, extension, amendment, or modification authorizing new construction of oil- and gas-related infrastructure upon tidelands and submerged lands within state waters associated with Pacific Outer Continental Shelf leases issued after January 1, 2018, to follow a specified process. The bill would provide that these provisions do not prevent specified activities, including, among others, issuance by the commission of leases pursuant to exceptions applicable to the California Coastal Sanctuary described above. The bill would authorize the commission to establish regulations for the implementation of these provisions. By adding to the duties of local agencies when approving or disapproving leases, this bill would impose a state-mandated local program.

(2)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

(1)Existing law vests exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state to the State Lands Commission. Existing law confers the powers of the commission as to leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted. Existing law authorizes the commission to let leases for the extraction of oil and gas from coastal tidelands or submerged lands in state waters and beds of navigable rivers and lakes within the state in accordance with specified provisions of law.

Existing law, notwithstanding those provisions or any other provision of law, prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the California Coastal Sanctuary, which includes certain state waters subject to tidal influence, unless either (1) the President of the United States has found a severe energy supply interruption and has ordered distribution of the Strategic Petroleum Reserve, the Governor finds that the energy resources of the sanctuary will contribute significantly to the alleviation of that interruption, and the Legislature subsequently acts to amend the law to allow the extraction, or (2) the commission determines that the oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.

This bill would prohibit the commission or a local trustee, as defined, of granted public trust lands from entering into any new lease or other conveyance authorizing new construction of oil- and gas-related infrastructure upon tidelands and submerged lands within state waters associated with Pacific Outer Continental Shelf leases issued after January 1, 2018. The bill would require the commission or a local trustee when approving or disapproving any lease renewal, extension, amendment, or modification authorizing new construction of oil- and gas-related infrastructure upon tidelands and submerged lands within state waters associated with Pacific Outer Continental Shelf leases issued after January 1, 2018, to follow a specified process. The bill would provide that these provisions do not prevent specified activities, including, among others, issuance by the commission of leases pursuant to exceptions applicable to the California Coastal Sanctuary described above. The bill would authorize the commission to establish regulations for the implementation of these provisions. By adding to the duties of local agencies when approving or disapproving leases, this bill would impose a state-mandated local program.

Existing law vests exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state to the State Lands Commission. Existing law confers the powers of the commission as to leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted. Existing law authorizes the commission to let leases for the extraction of oil and gas from coastal tidelands or submerged lands in state waters and beds of navigable rivers and lakes within the state in accordance with specified provisions of law.

Existing law, notwithstanding those provisions or any other provision of law, prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the California Coastal Sanctuary, which includes certain state waters subject to tidal influence, unless either (1) the President of the United States has found a severe energy supply interruption and has ordered distribution of the Strategic Petroleum Reserve, the Governor finds that the energy resources of the sanctuary will contribute significantly to the alleviation of that interruption, and the Legislature subsequently acts to amend the law to allow the extraction, or (2) the commission determines that the oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.

This bill would prohibit the commission or a local trustee, as defined, of granted public trust lands from entering into any new lease or other conveyance or from entering into any lease renewal, extension, or modification that authorizes a lessee to engage in any activity upon tidelands and submerged lands in the California Coastal Sanctuary that would result in the increase of oil or natural gas production from, or facilitate additional development of, or exploration for, oil or natural gas from, federal waters. authorizing new construction of oil- and gas-related infrastructure upon tidelands and submerged lands within state waters associated with Outer Continental Shelf leases issued after January 1, 2018. The bill would provide that these provisions do not prevent specified activities, including, among others, issuance by the commission of leases pursuant to exceptions applicable to the California Coastal Sanctuary described above. The bill would authorize the commission to establish regulations for the implementation of these provisions.

Existing law vests exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state to the State Lands Commission. Existing law confers the powers of the commission as to leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted. Existing law authorizes the commission to let leases for the extraction of oil and gas from coastal tidelands or submerged lands in state waters and beds of navigable rivers and lakes within the state in accordance with specified provisions of law.

Existing law, notwithstanding those provisions or any other provision of law, prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the California Coastal Sanctuary, which includes certain state waters subject to tidal influence, unless either (1) the President of the United States has found a severe energy supply interruption and has ordered distribution of the Strategic Petroleum Reserve, the Governor finds that the energy resources of the sanctuary will contribute significantly to the alleviation of that interruption, and the Legislature subsequently acts to amend the law to allow the extraction, or (2) the commission determines that the oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.

This bill would prohibit the commission and the local trustees or a local trustee, as defined, of granted public trust lands from entering into any new lease or other conveyance or from entering into any lease renewal, extension, or modification that authorizes a lessee to engage in new or additional exploration, development, or production of oil or natural gas upon lands owned by the state and under the jurisdiction of the commission that are located seaward of the ordinary high water mark for tidal waterways and the ordinary low water mark for navigable nontidal waterways any activity upon tidelands and submerged lands in the California Coastal Sanctuary that would result in the increase of oil or natural gas production from from, or facilitate additional development of, or exploration for, oil or natural gas from, federal waters. The bill would apply the provide that these provisions do not prevent specified activities, including, among others, issuance by the commission of leases pursuant to exceptions applicable to the California Coastal Sanctuary to these provisions. Sanctuary described above. The bill would authorize the commission to establish guidelines regulations for the implementation of these provisions.

Existing law vests exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state to the State Lands Commission. Existing law confers the powers of the commission as to leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted. Existing law authorizes the commission to let leases for the extraction of oil and gas from coastal tidelands or submerged lands in state waters and beds of navigable rivers and lakes within the state in accordance with specified provisions of law.

Existing law, notwithstanding those provisions or any other provision of law, prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the California Coastal Sanctuary, which includes certain state waters subject to tidal influence, unless either (1) the President of the United States has found a severe energy supply interruption and has ordered distribution of the Strategic Petroleum Reserve, the Governor finds that the energy resources of the sanctuary will contribute significantly to the alleviation of that interruption, and the Legislature subsequently acts to amend the law to allow the extraction, or (2) the commission determines that the oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.

This bill would prohibit the commission and the local trustees of granted public trust lands from entering into any new lease or other conveyance or from entering into any lease renewal, extension, or modification that authorizes a lessee to engage in new or additional exploration, development, or production of oil or natural gas upon lands owned by the state and under the jurisdiction of the commission that are located seaward of the ordinary high water mark for tidal waterways and the ordinary low water mark for navigable nontidal waterways that would result in the increase of oil or natural gas production from federal waters. The bill would apply the exceptions applicable to the California Coastal Sanctuary to these provisions. The bill would authorize the commission to establish guidelines for the implementation of these provisions.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1775

Author:(Muratsuchi and Limón)

As Amended Ver:August 24, 2018

Majority vote

Original Committee Reference: NAT. RES.

SUMMARY: Prohibits the State Lands Commission (SLC) or a local trustee from entering into any new lease authorizing new construction of oil-and-gas-related infrastructure upon tidelands and submerged lands within state waters associated with Pacific Outer Continental Shelf (POCS) leases issued after January 1, 2018. Specifically, this bill:

1. Prohibits SLC or a local trustee from entering into any new lease authorizing new construction of oil-and-gas-related infrastructure upon tidelands and submerged lands within state waters associated with POCS leases issued after January 1, 2018.
2. Specifies that the prohibition does not apply to existing oil and gas produced from state waters and that SLC retains the authority to issue new leases in state waters under certain circumstances outlined in the CCSA.
3. Specifies that the prohibition does not apply to activities to repair or maintain pipelines or other existing infrastructure used to convey oil and gas, including ensuring the safe operation of existing infrastructure.
4. Authorizes SLC to establish regulations for the implementation of these provisions.
5. Requires upon receipt of an application for a lease renewal, extension, amendment, or modification to new construction of oil-and-gas-related infrastructure upon tidelands and submerged lands within state waters associated with POCS leases issued after January 1, 2018 the SLC to notify the public, allow public comment, hold a public hearing on the matter and consider the impacts and necessity of the application.
6. Defines Pacific Outer Continental Shelf to mean all submerged lands lying seaward of California, Hawaii, Oregon and Washington and outside of the area of lands beneath state navigable waters.

The Senate amendments require the SLC, upon receipt of an application for a lease renewal, extension, amendment, or modification to new construction of oil-and-gas-related infrastructure upon tidelands and submerged lands within state waters associated with POCS leases issued after January 1, 2018, to notify the public, allow public comment, hold a public hearing on the matter and consider the impacts and necessity of the application. Limits application of the bill to leases associated with the POCS.

EXISTING LAW:

1. Requires the SLC to be the steward and manager of the state's public trust lands. SLC has direct administrative control over the state's public trust lands and oversight authority over public trust lands granted by the Legislature to local governments.
2. Grants, in trust, public trust lands to over 70 local public agencies (local trustees) to be managed for the benefit of all the people of the state pursuant to the Public Trust Doctrine and terms of the applicable granting statutes.
3. Authorizes lands owned by the state and under the jurisdiction of SLC to be leased by SLC for purposes such as grazing leases and leases for commercial, industrial, and recreational purposes.
4. Pursuant to the California Coastal Sanctuary Act (CCSA):
   1. Makes findings and declarations that offshore oil and gas production in certain areas of state waters poses an unacceptably high risk of damage and disruption to the marine environment of the state. (State waters generally extend out three nautical miles from the shore.)
   2. Establishes the California Coastal Sanctuary, which includes all state waters subject to tidal influence west of the Carquinez Bridge, except oil or gas leases in effect on January 1, 1995, unless the lease is deeded or otherwise reverts to the state after that date.
   3. Generally prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the Sanctuary.
   4. Authorizes SLC to enter into any lease for the extraction of oil or gas from state-owned tide and submerged lands in the Sanctuary if SLC determines that those oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.
   5. Authorizes SLC to adjust the boundaries of an existing offshore oil and gas lease to encompass all of an oil and gas field partially contained in the lease.
5. Pursuant to the Outer Continental Shelf (OCS) Lands Act,
   1. Defines the OCS as all submerged lands lying between the seaward extent of the state jurisdiction and the seaward extent of federal jurisdiction.
   2. Defines the POCS as all submerged lands lying between the seaward extent of California, Hawaii, Oregon and Washington and outside the area of lands beneath navigable waters.
   3. Declares, among other things, that it is the United States (U.S.) policy that the OCS is a vital national resource reserve held by the federal government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner that is consistent with the maintenance of competition and other national needs.
   4. Requires the Department of the Interior (Interior) to prepare, periodically revise, and maintain an oil and gas leasing program that consists of a schedule of proposed lease sales indicating, as precisely as possible, the size, timing, and location of leasing activity that the Interior determines will best meet national energy needs for the five-year period following its approval or reapproval. Gives priority leasing consideration to areas where the combination of previous experience; local, state, and national laws and policies; and, expressions of industry interest indicate that potential leasing and development activities could be expected to proceed in an orderly manner.

FISCAL EFFECT: According to the Senate Appropriations Committee, potentially significant revenue losses, likely in the millions or tens of millions, due to possibly forgone future leases that would generate revenue for the General Fund.

COMMENTS:

1. Offshore Oil. Since 1938, SLC has had jurisdiction over the leasing of oil and gas from offshore state lands. Between 1938 and 1968, over 50 offshore oil and gas leases were issued by SLC. In a manner common to most oil and gas leases, the leases that SLC issued were either devoid of a fixed end date or were subsequently amended to remove an end date. The lease terms typically provide that the leases last as long as oil and gas is being produced in paying or commercial quantities. Once production ceases, the leases are to be quitclaimed back to SLC.

Two August 1968 leases, one to Continental Oil Company and the other to Standard Oil Company, were the last new offshore oil and gas leases that SLC entered into prior to the January 1969 Santa Barbara oil spill. The spill was the result of a well drilling blow-out at an offshore platform located in the federal OCS off the coast of Santa Barbara County. The cause was inadequate protective wellpipe casing. The event lasted 11 days and spilled between 80,000 and 100,000 barrels of crude oil. Two hundred square miles of ocean and 35 miles of California coastline were oiled and thousands of animals were killed.

At its February 1969 meeting, SLC deferred the acceptance of outstanding bids for new leases and subsequently deferred deadlines for additional drilling from existing leases. Since then, the SLC has not entered into any new offshore oil and gas leases. In 1994, the CCSA removed all state lands underlying the Pacific Ocean from SLC's oil and gas general leasing authority. The CCSA contains two limited exceptions that allow SLC to approve new offshore oil and gas production in state waters. One exception is if SLC determines that state oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and a new oil and gas lease is in the best interests of the state. The other exception allows SLC to adjust the boundaries of an existing offshore oil and gas lease to encompass all of an oil and gas field partially contained in the lease.

Generally, state lands extend three miles from the coast; beyond this distance is under federal jurisdiction. The federal government imposed a moratorium on new leases in federal waters off of California in 1984; in 1990, President George H.W. Bush used section 12(a) of the OCS Lands Act to prevent leases for 10 years off the coast of California and other states. This freeze on leases was extended through 2012 by President Bill Clinton. President George W. Bush terminated the freeze in 2008, but no new leases were issued off the California coast following this termination. President Barack Obama issued an Executive Order extending the moratorium on new leases from December of 2016 through 2022 under section 12(a) of the OCS Lands Act.

Existing oil and gas production continues to negatively impact California's coast. In 1997, a pipeline owned by Houston-based Nuevo Energy off the Santa Barbara County coast ruptured due to a faulty weld and spilled crude oil into the ocean about two and a half miles from the shore. The oil spread approximately four miles, oiling wildlife and killing hundreds of seabirds. In 2015, a pipeline owned by Houston-based Plains All American Pipeline ruptured, spilling up to 140,000 gallons of heavy crude oil along the Gaviota coast in Santa Barbara County. It is estimated that as much as 21,000 gallons of the oil went down a storm culvert onto cliffs and into the Pacific Ocean, ultimately stretching over nine miles of California coastline. These events highlight the persistent risk of existing oil infrastructure in the state.

In January 2018, the Trump Administration announced its plan to lift the moratorium put in place by President Obama, opening 90% of federal waters, including off the California's coast, to new drilling leases. In a tweet, United States Secretary of the Interior Ryan Zinke (Secretary Zinke) indicated that Florida could be exempted from new leases due to concerns about impacts on the tourism industry, but this decision has not been reflected in the Bureau Of Ocean Energy Management's (BOEM) proposed OCS oil and gas leasing plan. Secretary Zinke also testified at a U.S. Senate Energy Committee that he doubts oil and gas explorations would occur in the Pacific region and indicated that would be reflected in the next draft of BOEM's proposed OCS oil and gas leasing plan. The next draft has not yet been released. According to a recent Public Policy Institute of California poll, 69% of Californians opposed drilling off the California Coast.

1. Rights-of-ways. Currently, SLC and local trustees have 19 right-of-way leases to allow pipelines that transport oil and natural gas produced in federal waters across state waters. Once onshore, the oil or gas can be processed and transported to a refinery to be turned into transportation fuels. If new oil and gas leases are issued by the federal government, the product would need to be transported for processing, refinement, and to market. This bill prohibits SLC from issuing a new right-of-way lease or renewing an existing lease if that action will result in the increase of oil or natural gas production from federal waters. Many of the current leases have expiration dates, and these dates extend to 2031. Existing pipelines that have a valid lease and spare capacity may still be able to transport increased oil or natural gas production from federal waters. In addition, oil or natural gas could be barged to shore. However, that would add significantly to the cost of production. Finally, the federal government could condemn the necessary land to construct the pipeline. That action would likely be lengthy and costly as well. While this bill would not cut off every possible avenue to increase oil and gas production, it would provide significant roadblocks, which may deter potential lease holders if the POCS is opened for new leases.

Ahead of the Trump Administration's only public hearing in California to discuss the revised federal offshore drilling plan on February 8, SLC sent a letter to the federal government condemning both the plan and the public participation process, while stating unequivocally that California will not approve new pipeline or allow use of existing pipelines to transport oil from new leases ashore. This statement is consistent with the intent of this bill.

Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0005088

 THIRD READING  

Bill No: AB 1775

Author:

:

Vote:

SENATE NATURAL RES. & WATER COMMITTEE: 7-2, 6/26/18

AYES: Hertzberg, Allen, Hueso, Jackson, McGuire, Monning, Stern

NOES: Stone, Vidak

SENATE APPROPRIATIONS COMMITTEE: 5-1, 8/16/18

AYES: Portantino, Beall, Bradford, Hill, Wiener

NOES: Nielsen

NO VOTE RECORDED: Bates

ASSEMBLY FLOOR: 45-24, 5/30/18 - See last page for vote

SUBJECT: State lands: leasing: oil and gas

SOURCE: Author

DIGEST:

This bill bars the State Lands Commission (commission) or a local trustee of public trust lands from entering into any new lease or conveyance to authorize new construction of oil- and gas-related infrastructure upon state tide and submerged lands associated with federal Pacific Outer Continental Shelf leases issued after January 1, 2018 (new federal leases), with certain exceptions. This bill also imposes public notice, comment and process requirements should the commission or a local trustee consider a lease renewal, extension, amendment or modification to authorize the new construction of oil- and gas-related infrastructure associated with new federal leases.

Senate Floor Amendments of 8/24/18 add provisions related to lease renewal, extension, amendment or modification and make technical and clarifying changes.

ANALYSIS:

Existing federal law:

1. Establishes the Outer Continental Shelf Lands Act (OCSLA)(43 U.S.C. §§1331 et seq.) that defines the OCS as all submerged lands lying between the seaward extent of the state jurisdiction and the seaward extent of federal jurisdiction.
2. Declares, pursuant to the OCSLA, among other things, that it is the national policy that the OCS is a vital national resource reserve held by the federal government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, as specified.
3. Requires the Department of Interior (DOI) to prepare, periodically revise, and maintain an oil and gas leasing program that consists of a schedule or proposed lease sales indicating, as precisely as possible, the size, timing, and location of leasing activity that DOI determines will best meet national energy needs for the five-year period following its approval or re-approval.

Existing state law:

1. Establishes the commission in the Natural Resources Agency. The commission has exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state, including leasing for oil and gas production offshore. The commission also issues right-of-way leases for pipelines necessary to support offshore oil and gas infrastructure.
2. Confers the powers of the commission as to the leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted (local trustee).
3. Establishes the California Coastal Sanctuary Act of 1994 (Public Resources Code (PRC) §§6240 et seq.) which removed the authority of the commission to issue new oil and gas leases for unleased tide and submerged lands underlying the Pacific Ocean with limited exceptions – in the event of an energy supply emergency resulting in certain government actions, as specified, and if a state oil and gas reservoir is being drained from federal waters.

This bill:

1. Modifies the California Coastal Sanctuary Act.
   1. The commission or a local trustee are prohibited from entering into any new lease or conveyance to authorize new construction of oil- and gas-related infrastructure upon state tide and submerged lands associated with federal Pacific OCS leases issued after January 1, 2018.
   2. The commission or a local trustee are required to do the following if an application for a lease renewal, extension, amendment, or modification to authorize new construction of oil- and gas-related infrastructure upon state tide and submerged lands associated with federal Pacific OCS leases issued after January 1, 2018:
      1. Provide notice of the application on the agenda of the next public meeting, as specified.
         1. No further action to approve the lease renewal, extension, amendment or modification shall be taken until 180 days after the notice is provided.
      2. Consider, at a minimum, the following prior to approving the lease renewal, extension, amendment, or modification:
         1. Whether it is necessary to protect the marine environment or to ensure human health and safety,
         2. Whether it provides a benefit to the state beyond additional lease revenues, and
         3. Whether it will impact the volume of oil and gas transported across state waters.
      3. Shall not approve any lease renewal, extensions, amendment, or modification that will increase the volume of oil and gas conveyed across state waters at the same public meeting where it is first presented.
      4. Accept public comments at the meeting where it votes to approve or disapprove any lease renewal, extension, amendment, or modification that increases the volume of oil and gas conveyed across state waters.
      5. Approve the lease renewal, extension, amendment, or modification only by vote of the commission or governing board of the local trustee, as applicable.
   3. Exceptions to these leasing limitations include for the repair or maintenance of pipelines or other infrastructure necessary for safe operations, any activity to convey oil or gas produced from state waters, and those already allowed under the Act.
   4. The commission is authorized to establish regulations for implementation of these new requirements, and certain relevant terms are defined.

Background

California is a major oil and gas producing state from both onshore and offshore fields under its jurisdiction and from federal waters adjacent to the state. In general, state waters extend out 3 miles from the state’s coastline, and federal waters are beyond that.

Beginning in 1921 and repeatedly since, the Legislature has passed laws that exclude offshores areas of the state from oil and gas leasing. The state has repeatedly foregone additional potential revenue from the exploitation offshore oil and gas. No new OCS leases have been issued off of California since the mid-1980s.

However, in January 2018, the Trump Administration announced plans to reopen the current federal leasing plan and specifically included all of the California OCS in its initial proposal.

Comments

Is a new tidelands lease always required to support new federal Pacific OCS leases? It is likely that any new federal OCS leases sought would be located in southern California near existing oil- and gas-production related infrastructure in state and federal waters. It is unclear that a new tidelands lease or conveyance for new construction would necessarily be required in this circumstance, and the public process and transparency requirements in this bill would ensure the public is aware and informed about any changes to existing leases.

The state has few options to inhibit new OCS leasing and, it is important to note, that existing leases remain in effect that may have excess capacity available.

A strong majority of Californians oppose oil and gas drilling off the coast. According to a recent Public Policy Institute of California poll, 69% of Californians opposed drilling off the California Coast.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local: Yes

According to the Senate Appropriations Committee, potentially significant revenue losses, likely in the millions or tens of millions, due to possibly forgone future leases that would generate revenue for the General Fund.

SUPPORT: (Verified 8/23/18)

350 Bay Area

350 South Bay Los Angeles

Audubon California

Azul

Benioff Ocean Initiative

Blue Business Council

California Coastal Protection Network

California Coastkeeper Alliance

California League of Conservation Voters

California Nurses Association

California Voices for Progress

Californians for Western Wilderness

Carpinteria Valley Association

Center for Biological Diversity

Central Coastal Alliance United for a Sustainable Economy

Citizens Planning Association

City of Beverly Hills

City of Dana Point

City of Goleta

City of Hermosa Beach

City of Manhattan Beach

City of Oxnard

City of Palos Verdes Estates

City of Redondo Beach

City of Santa Barbara

Clean Water Action

Climate Hawks Vote

Coastwalk California

Community Environmental Council

Cordell Marine Sanctuary Foundation

County of Santa Barbara

Defenders of Wildlife

East Bay Regional Park District

Environment California

Environmental Defense Center

Environmental Defense Fund

Environmental Entrepreneurs

Environmental Protection Information Center

Food & Water Watch

Fossil Free California

Friends of the Earth – U.S.

Fund for Santa Barbara

Get Oil Out!

Great Old Broads for Wilderness

Greater Farallones Association

Heal the Bay

Honorable Dianne Feinstein, United States Senator

Honorable Salud Carbajal, Representative, 24^th District of California, U.S. Congress

Humboldt Baykeeper

Idle No More SF Bay

Inland Ocean Coalition & Colorado Ocean Coalition

Institute for Fisheries Resources

Klamath Forest Alliance

League of California Cities

League of Women Voters of California

Leonardo DiCaprio Foundation

Long Beach 350

Los Angeles Waterkeeper

Marine Conservation Institute

Monterey Bay Aquarium

Monterey Coastkeeper & the Otter Project

Natural Resources Defense Council

Nature Rights Council

NextGen California

O’Neill Sea Odyssey

Ocean Conservancy

Ocean Conservation Research

Oceana

Orange County Coastkeeper & Inland Empire Waterkeeper

Pacific Coast Federation of Fishermen’s Association

Pacific Environment

Plastic Pollution Coalition

Resources Legacy Fund

Russian Riverkeeper

San Diego 350

San Diego Coastkeeper

San Francisco Baykeeper

Santa Barbara Channelkeeper

Save Our Shores

Service Employees International Union

Seventh Generation Advisors

Sierra Club California

SoCal 350 Climate Action

South Bay Cities Council of Governments

South Yuba River Citizens League

Surfrider Foundation

The 5 Gyres Institute

The Center for Oceanic Awareness, Research, and Education

The Last Plastic Straw

The Nature Conservancy

The North Coast Stream Flow Coalition

The Ocean Foundation

Turtle Island Restoration Network

Unite Here, AFL-CIO

UPSTREAM

West Marin Standing Together

Wholly H20

Wildcoast

Wishtoyo Chumash Foundation

Yak Tityu Tityu Yak Tilhini Northern Chumash Tribe of San Luis Obispo County

Zero Waste USA

Numerous Individuals

OPPOSITION: (Verified 8/16/18)

California Chamber of Commerce

California Independent Petroleum Association

California Manufacturers & Technology Association

Orange County Business Council

Oxnard Chamber of Commerce

San Gabriel Valley Economic Partnership

The Chamber Long Beach Area Chamber of Commerce

Western States Petroleum Association

Wilmington Chamber of Commerce

ARGUMENTS IN SUPPORT: According to the author, “[e]xpanded oil and gas development off our coast significantly increase the risk of oil spills, which endanger the ocean, our environment and wildlife, and our coastline. Additionally offshore production threatens California’s ocean-based economy, which generated $662 billion in wages, and $1.7 trillion in GDP, according to a report published by the National Oceanic and Atmospheric Administration.”

“AB 1775 provides the [commission] with the authority to deny expanded offshore drilling by prohibiting the issuance of new leases” and the author concludes by noting that “California will be able to protect the environment, our coast, and our economy from the risks posed by offshore drilling and production.”

ARGUMENTS IN OPPOSITION: Writing in opposition, the Western States Petroleum Association (WSPA) notes that “[s]pecifically this bill repeals existing authority from the [commission] to issue or extend a lease or conveyance for oil and natural gas production if the lease would result in an increase of production from federal waters.” WSPA argues that:

• AB 1775 takes authority away from the commission on state tidelands leases, and
• AB 1775 could force unintended environmental and fiscal consequences by avoiding the use of safer pipelines to transport oil, potential revenues losses and litigation expense.

WSPA notes that the commission has the existing authority to deny any petroleum leases on state tidelands under its jurisdiction already.

ASSEMBLY FLOOR: 45-24, 5/30/18

AYES: Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bonta, Caballero, Calderon, Carrillo, Chau, Chávez, Chiu, Chu, Cunningham, Eggman, Friedman, Cristina Garcia, Eduardo Garcia, Gloria, Gonzalez Fletcher, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Rodriguez, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Bigelow, Brough, Chen, Choi, Cooley, Dahle, Flora, Fong, Gallagher, Grayson, Harper, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Salas, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Burke, Cervantes, Cooper, Daly, Frazier, Gipson, Gray, Medina, Rubio

Prepared by:

8/27/18 19:30:21

**** END ****

 THIRD READING  

Bill No: AB 1775

Author:

:

Vote:

SENATE NATURAL RES. & WATER COMMITTEE: 7-2, 6/26/18

AYES: Hertzberg, Allen, Hueso, Jackson, McGuire, Monning, Stern

NOES: Stone, Vidak

SENATE APPROPRIATIONS COMMITTEE: 5-1, 8/16/18

AYES: Portantino, Beall, Bradford, Hill, Wiener

NOES: Nielsen

NO VOTE RECORDED: Bates

ASSEMBLY FLOOR: 45-24, 5/30/18 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill modifies the California Coastal Sanctuary Act to bar the State Lands Commission (commission) or a local trustee of public trust lands from entering into any new lease or conveyance to authorize new construction of oil- and gas-related infrastructure upon state tide and submerged lands associated with federal Outer Continental Shelf leases issued after January 1, 2018, with certain exceptions. This bill further authorizes the commission to establish regulations for implementation of these new requirements, and defines certain relevant terms.

ANALYSIS:

Existing federal law:

1. Establishes the Outer Continental Shelf Lands Act (OCSLA)(43 U.S.C. §§1331 et seq.) that defines the OCS as all submerged lands lying between the seaward extent of the state jurisdiction and the seaward extent of federal jurisdiction.
2. Declares, pursuant to the OCSLA, among other things, that it is the national policy that the OCS is a vital national resource reserve held by the federal government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner that is consistent with the maintenance of competition and other national needs.
3. Requires the Department of Interior (DOI) to prepare, periodically revise, and maintain an oil and gas leasing program that consists of a schedule or proposed lease sales indicating, as precisely as possible, the size, timing, and location of leasing activity that DOI determines will best meet national energy needs for the five-year period following its approval or re-approval.

Existing state law:

1. Establishes the commission in the Natural Resources Agency.
   1. The commission has exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state, including leasing for oil and gas production offshore. The commission also issues right-of-way leases for pipelines necessary to support offshore oil and gas infrastructure.
2. Confers the powers of the commission as to the leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted.
3. Establishes the California Coastal Sanctuary Act of 1994 (Public Resources Code (PRC) §§6240 et seq.) which removed the authority of the commission to issue new oil and gas leases for unleased tide and submerged lands underlying the Pacific Ocean with limited exceptions – in the event of an energy supply emergency resulting in certain government actions, as specified, and if a state oil and gas reservoir is being drained from federal waters. Legislative findings state that “offshore oil and gas production in certain areas of state waters poses an unacceptably high risk of damage and disruption to the marine environment of the state.” (PRC §6241)

This bill modifies the California Coastal Sanctuary Act to bar the commission or a local trustee from entering into any new lease or conveyance to authorize new construction of oil- and gas-related infrastructure upon state tide and submerged lands associated with federal OCS leases issued after January 1, 2018, with exceptions for the repair or maintenance of pipelines or other infrastructure necessary for safe operations, any activity to convey oil or gas produced from state waters, and those already allowed under the Act. This bill further authorizes the commission to establish regulations for implementation of these new requirements, and defines certain relevant terms.

Background

California is a major oil and gas producing state from both onshore and offshore fields under its jurisdiction and from federal waters adjacent to the state. In 2016, 11.5 million barrels were produced from the state’s offshore fields and an additional 6.1 million barrels from federal OCS waters offshore California. In general, state waters extend out 3 miles from the state’s coastline, and federal waters are beyond that.

Beginning in 1921 and repeatedly since, the Legislature has passed laws that exclude offshores areas of the state from oil and gas leasing. The California Sanctuary Act, described above, generally banned new oil and gas leases in state waters. No new OCS leases have been issued off of California since the mid-1980s. There are no locations offshore California in the current five-year federal leasing schedule/plan in effect (2017-2022).

However, in January 2018, the Trump Administration announced plans to reopen the current federal leasing plan and specifically included all of the California OCS in its initial proposal.

Comments

Is a new tidelands lease always required to support new federal OCS leases? This bill definitively inhibits the exploitation of new federal OCS leases in central and northern California where there is little-to-no existing oil- and gas-production related infrastructure in state waters. However, it is more likely that any new federal OCS leases sought would be located in southern California near existing oil- and gas-production related infrastructure in state and federal waters. It is unclear that a new tidelands lease or conveyance for new construction would necessarily be required in this circumstance. For example, an amendment to an existing lease might be sufficient to facilitate production from new federal OCS leases.

Deliberate government actions have repeatedly foregone offshore oil and gas revenue. As noted above, the policy of various levels of state government over many years has been to purposefully limit or seek to limit oil and gas revenue to the state from offshore sources in both state and federal waters.

Options are limited for the state to inhibit new OCS leasing. The commission and local trustees currently have 19 right-of-way leases for pipelines to transport oil and gas produced in federal waters across state waters to shore. If new OCS leases are issued, the product would typically need to be transported onshore for processing. This bill prevents that to the extent that transport is intended to be by a new pipeline. While it is possible that the federal government could undertake condemnation proceedings to obtain the necessary land for a new pipeline, it is likely this action would be contested.

Existing leases remain in effect. Any excess capacity in existing pipelines serving the OCS – which may be considerable – would remain available for use regardless. Existing right-of-way leases reviewed by the Senate Natural Resources and Water Committee staff do not limit the source of oil or gas in the pipeline.

A strong majority of Californians oppose oil and gas drilling off the coast. According to a recent Public Policy Institute of California poll, 69% of Californians opposed drilling off the California Coast. Poll respondents who indicated that the condition of the ocean and beaches were very important to the economy and quality of life for California’s future were overwhelmingly opposed across all political, demographic and regional groups.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, potentially significant revenue losses, likely in the millions or tens of millions, due to possibly forgone future leases that would generate revenue for the General Fund.

SUPPORT: (Verified 8/23/18)

350 Bay Area

350 South Bay Los Angeles

Audubon California

Azul

Benioff Ocean Initiative

Blue Business Council

California Coastal Protection Network

California Coastkeeper Alliance

California League of Conservation Voters

California Nurses Association

California Voices for Progress

Californians for Western Wilderness

Carpinteria Valley Association

Center for Biological Diversity

Central Coastal Alliance United for a Sustainable Economy

Citizens Planning Association

City of Beverly Hills

City of Dana Point

City of Goleta

City of Hermosa Beach

City of Manhattan Beach

City of Oxnard

City of Palos Verdes Estates

City of Redondo Beach

City of Santa Barbara

Clean Water Action

Climate Hawks Vote

Coastwalk California

Community Environmental Council

Cordell Marine Sanctuary Foundation

County of Santa Barbara

Defenders of Wildlife

East Bay Regional Park District

Environment California

Environmental Defense Center

Environmental Defense Fund

Environmental Entrepreneurs

Environmental Protection Information Center

Food & Water Watch

Fossil Free California

Friends of the Earth – U.S.

Fund for Santa Barbara

Get Oil Out!

Great Old Broads for Wilderness

Greater Farallones Association

Heal the Bay

Honorable Dianne Feinstein, United States Senator

Honorable Salud Carbajal, Representative, 24^th District of California, U.S. Congress

Humboldt Baykeeper

Idle No More SF Bay

Inland Ocean Coalition & Colorado Ocean Coalition

Institute for Fisheries Resources

Klamath Forest Alliance

League of California Cities

League of Women Voters of California

Leonardo DiCaprio Foundation

Long Beach 350

Los Angeles Waterkeeper

Marine Conservation Institute

Monterey Bay Aquarium

Monterey Coastkeeper & the Otter Project

Natural Resources Defense Council

Nature Rights Council

NextGen California

O’Neill Sea Odyssey

Ocean Conservancy

Ocean Conservation Research

Oceana

Orange County Coastkeeper & Inland Empire Waterkeeper

Pacific Coast Federation of Fishermen’s Association

Pacific Environment

Plastic Pollution Coalition

Resources Legacy Fund

Russian Riverkeeper

San Diego 350

San Diego Coastkeeper

San Francisco Baykeeper

Santa Barbara Channelkeeper

Save Our Shores

Service Employees International Union

Seventh Generation Advisors

Sierra Club California

SoCal 350 Climate Action

South Bay Cities Council of Governments

South Yuba River Citizens League

Surfrider Foundation

The 5 Gyres Institute

The Center for Oceanic Awareness, Research, and Education

The Last Plastic Straw

The Nature Conservancy

The North Coast Stream Flow Coalition

The Ocean Foundation

Turtle Island Restoration Network

Unite Here, AFL-CIO

UPSTREAM

West Marin Standing Together

Wholly H20

Wildcoast

Wishtoyo Chumash Foundation

Yak Tityu Tityu Yak Tilhini Northern Chumash Tribe of San Luis Obispo County

Zero Waste USA

Numerous Individuals

OPPOSITION: (Verified 8/16/18)

California Chamber of Commerce

California Independent Petroleum Association

California Manufacturers & Technology Association

Orange County Business Council

Oxnard Chamber of Commerce

San Gabriel Valley Economic Partnership

The Chamber Long Beach Area Chamber of Commerce

Western States Petroleum Association

Wilmington Chamber of Commerce

ARGUMENTS IN SUPPORT: According to the author, “[f]or decades, the federal government has respected California’s policy to keep new drilling operations out of state and federal waters off our coast. However, on January 4^th, 2018, the Federal administration announced a proposal to open up over 90% of the OCS nationwide to new leasing for oil and gas production, including six new leases in the federal waters off of California’s coast.”

“Expanded oil and gas development off our coast significantly increase the risk of oil spills, which endanger the ocean, our environment and wildlife, and our coastline. Additionally offshore production threatens California’s ocean-based economy, which generated $662 billion in wages, and $1.7 trillion in GDP, according to a report published by the National Oceanic and Atmospheric Administration.”

“AB 1775 provides the [commission] with the authority to deny expanded offshore drilling by prohibiting the issuance of new leases” and the author concludes by noting that “California will be able to protect the environment, our coast, and our economy from the risks posed by offshore drilling and production.”

ARGUMENTS IN OPPOSITION: Writing in opposition, the Western States Petroleum Association (WSPA) notes that “[s]pecifically this bill repeals existing authority from the [commission] to issue or extend a lease or conveyance for oil and natural gas production if the lease would result in an increase of production from federal waters.” WSPA argues that:

• AB 1775 takes authority away from the commission on state tidelands leases, and
• AB 1775 could force unintended environmental and fiscal consequences by avoiding the use of safer pipelines to transport oil, potential revenues losses and litigation expense.

WSPA notes that the commission has the existing authority to deny any petroleum leases on state tidelands under its jurisdiction already.

ASSEMBLY FLOOR: 45-24, 5/30/18

AYES: Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bonta, Caballero, Calderon, Carrillo, Chau, Chávez, Chiu, Chu, Cunningham, Eggman, Friedman, Cristina Garcia, Eduardo Garcia, Gloria, Gonzalez Fletcher, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Rodriguez, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Bigelow, Brough, Chen, Choi, Cooley, Dahle, Flora, Fong, Gallagher, Grayson, Harper, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Salas, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Burke, Cervantes, Cooper, Daly, Frazier, Gipson, Gray, Medina, Rubio

Prepared by:

8/23/18 12:17:52

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 1775 (Muratsuchi) - State lands: leasing: oil and gas

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

This bill would prohibit the State Lands Commission (SLC) or a local trustee from entering into a new lease that authorized construction of new infrastructure related to oil or natural gas upon tidelands and submerged lands within state waters that are associated with the Outer Continental Shelf (OCS) leases issued after January 1, 2018.

Fiscal Impact:

Potentially significant revenue losses, likely in the millions or tens of millions, due to possibly forgone future leases that would generate revenue for the General Fund.

Background:

The California Coastal Sanctuary (Sanctuary) includes all state waters subject to tidal influence west of the Carquinez Bridge, except oil or gas leases in effect on January 1, 1995, unless the lease is deeded or otherwise reverts to the state after that date. Existing law generally prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the Sanctuary. However, SLC may enter into a lease for the extraction of oil or gas from state-owned tide and submerged lands in the Sanctuary if SLC determines that those oil or gas deposits are being drained by wells from adjacent federal lands and the lease is in the best interest of the state.

Since 2001, SLC adopted several resolutions opposing the resumption or expansion of federal offshore oil and gas lease sales in the outer continental shelf (OCS). The foundation for each resolution was the same: the danger of an oil spill like the 1969 Santa Barbara oil spill was too high and oil development and potential spills would adversely affect fishing, tourism, and environmental, recreational, economic, scenic, and other values. The resolutions are also based on and expressive of the state’s policy and practice of not issuing new offshore leases. The Obama administration prohibited offshore drilling in the Pacific OCS until 2022.

However, on April 28, 2017, President Trump issued Executive Order 13795 that included direction to Secretary of the Interior to revise the Obama administration’s prohibition. In January 2018, the Trump Administration announced its plan to open up 90 percent of the OCS nationwide for new oil and gas production, including six new leases in the federal waters off the California coast.

Proposed Law:

This bill would modify the California Coastal Sanctuary Act to bar the commission or a local trustee from entering into any new lease or conveyance that would authorize new construction of infrastructure related to oil and gas extraction upon state tide and submerged lands associated with federal OCS leases issued after January 1, 2018, with exceptions for the repair or maintenance of pipelines or other infrastructure necessary for safe operations, any activity to convey oil or gas produced from state waters, and those already allowed under the Act. The bill would further authorize the commission to establish regulations for implementation of these new requirements, and define certain relevant terms.

Related Legislation:

SB 1147 (Hertzberg, 2018) would create a fund to pay for the decommissioning of abandoned offshore oil and gas infrastructure, among other things. (This bill is before the Assembly Natural Resources Committee.)

SR 73 (McGuire, 2018) urges the President and the U.S. Congress to permanently protect the California coast and supports the current moratorium on offshore leasing in federal waters. (This resolution is enrolled.)

SB 834 (Jackson, 2018) would bar the commission from issuing new leases or amending or renewing existing leases to facilitate oil or gas exploration, development and production for new leases in federal waters. (This bill is before the Assembly Natural Resources Committee.)

AJR 29 (Limón, Chapter 19, Statutes of 2018) states the Legislature’s support for the current moratorium on offshore leasing in federal waters.

HR 70 (Baker, 2018) urges the President and the U.S. Congress to permanently protect the California coast and supports the current moratorium on offshore leasing in federal waters. (No action has been taken on this resolution as of June 20, 2018.)

Staff Comments:

While there are potential revenue losses associated with lease restrictions, staff notes that SLC has not approved a new offshore lease since 1968.

-- END --

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Robert Hertzberg, Chair

2017 - 2018 Regular

Bill No: AB Hearing Date: June 26, 2018

Subject: State lands: leasing: oil and gas

BACKGROUND AND EXISTING LAW

1. California is a major oil and gas producing state from both onshore and offshore fields under its jurisdiction and from federal waters adjacent to the state. In 2016, 11.5 million barrels were produced from the state’s offshore fields and an additional 6.1 million barrels from federal Outer Continental Shelf (OCS) waters offshore California. In general, state waters extend out 3 miles from the state’s coastline, and federal waters are beyond that.
2. Existing law establishes the State Lands Commission (commission) in the Natural Resources Agency. The commission has exclusive jurisdiction over ungranted tidelands and submerged lands owned by the state. The commission has had exclusive jurisdiction over the leasing of offshore state lands for oil and gas production since 1938. The commission also issues right-of-way leases for pipelines necessary to support offshore oil and gas infrastructure, and onshore oil and gas infrastructure located in tidelands may also require a commission lease.
3. Existing law confers the powers of the commission as to the leasing or granting of rights or privileges to lands owned by the state upon a local trustee of granted public trust lands to which those lands have been granted.
4. The Legislature, beginning in 1921 and repeatedly since, has passed laws that exclude offshore areas of the state from oil and gas leasing.
5. According to the commission, it issued over fifty offshore oil and gas leases between 1938 and 1968. In general, lease terms provide for the leases to remain in effect so long as oil and gas production continues in paying or commercial quantities. When production ceases, a lease should be quitclaimed back to the commission once the infrastructure has been removed and the lease terms satisfied.
6. In January 1969 a blowout occurred on a well drilled from one of the platforms in federal waters off of Santa Barbara which resulted in a spill of approximately 80,000 – 100,000 barrels of crude oil. This spill oiled two hundred square miles of ocean and thirty-five miles of state coastline, and killed thousands of animals. The commission has not issued any new oil and gas leases since.
7. The California Coastal Sanctuary Act of 1994 (Public Resources Code (PRC) §§6240 et seq.) extended the California coastal sanctuary which removed the authority of the commission to issue new oil and gas leases for unleased tide and submerged lands underlying the Pacific Ocean with limited exceptions – in the event of an energy supply emergency resulting in certain government actions, as specified, and if a state oil and gas reservoir is being drained from federal waters. Legislative findings state that “offshore oil and gas production in certain areas of state waters poses an unacceptably high risk of damage and disruption to the marine environment of the state.” (PRC §6241)
8. The federal Outer Continental Shelf Lands Act (OCSLA)(43 U.S.C. §§1331 et seq.) defines the OCS as all submerged lands lying between the seaward extent of the state jurisdiction and the seaward extent of federal jurisdiction.
   1. The OCSLA declares, among other things, that it is the national policy that the OCS is a vital national resource reserve held by the federal government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner that is consistent with the maintenance of competition and other national needs.
   2. There are 38 existing active oil and gas leases under the OCSLA in federal waters offshore California. The leases cover almost 189,000 acres and include 23 oil and gas platforms and 213 miles of pipeline. Of the 23 platforms, 20 are used for oil and gas production, one is used for processing and two (Gail and Grace) are beginning the process of decommissioning. All 23 of the platforms are located off southern California (primarily offshore Santa Barbara, but also Ventura, Los Angeles, and Orange Counties).
9. The Department of Interior (DOI) is required to prepare, periodically revise, and maintain an oil and gas leasing program that consists of a schedule or proposed lease sales indicating, as precisely as possible, the size, timing, and location of leasing activity that DOI determines will best meet national energy needs for the five-year period following its approval or re-approval.
   1. Priority leasing considerations are provided to areas where the combination of previous experience; local, state and national laws and policies; and expressions of industry interest indicate that potential leasing and development activities could be expected to proceed in an orderly manner.
   2. The federal government imposed a moratorium on new leases in federal waters off of California in 1984. In 1990, President George H. W. Bush prevented leases from being issued in federal OCS waters offshore California and other states for 10 years under the OCSLA. President Bill Clinton extended this freeze through 2012. President George W. Bush, however, terminated the freeze in 2008, but no new leases were subsequently issued. President Barack Obama instituted a moratorium on new leases under the OCSLA from December 2016 through 2022.
   3. As a result, there are no locations offshore California in the current five-year federal leasing schedule/plan (2017 – 2022).
10. However, in January 2018, the Trump Administration announced plans to reopen the current federal leasing plan and specifically included all of the California OCS in its initial proposal. DOI Secretary Zinke stated in testimony before the U.S. Senate that he doubted that oil and gas exploration would occur in the Pacific region. However, the Bureau of Ocean Energy Management’s (BOEM’s) proposed 2019 – 2024 OCS oil and gas leasing plan has not yet been updated to reflect that (if it will).
11. The potential reopening of federal OCS oil and gas leasing off the coast generated considerable immediate resistance in California. Numerous state entities (including, for example, the Secretary of California Natural Resources Agency, the commission, the Attorney General, the Ocean Protection Council and the California Coastal Commission) opposed the proposed leasing, as did Governor Brown. Both of the state’s U.S. Senators, many members of its Congressional delegation and members of the Legislature also publicly oppose new leasing.
    1. Many factors are cited in opposing renewed oil and gas operations offshore in the federal OCS. These include identified flaws in the process currently being following by federal authorities, insignificant benefit of increased OCS oil and gas production to the state, significant risks to the coastal economy now valued at $44.5 billion annually (including to tourism, recreation, and fisheries, among other things), significant risks to the environment (including marine protected areas), and scenic and other values, lack of apparent industry interest, changes to the energy markets, and climate change, among other things.

PROPOSED LAW

This bill would modify the California Coastal Sanctuary Act to bar the commission or a local trustee from entering into any new lease or conveyance to authorize new construction of oil- and gas-related infrastructure upon state tide and submerged lands associated with federal OCS leases issued after January 1, 2018, with exceptions for the repair or maintenance of pipelines or other infrastructure necessary for safe operations, any activity to convey oil or gas produced from state waters, and those already allowed under the Act. The bill would further authorize the commission to establish regulations for implementation of these new requirements, and define certain relevant terms.

ARGUMENTS IN SUPPORT

According to the author, “[f]or decades, the federal government has respected California’s policy to keep new drilling operations out of state and federal waters off our coast. However, on January 4^th, 2018, the Federal administration announced a proposal to open up over 90% of the OCS nationwide to new leasing for oil and gas production, including six new leases in the federal waters off of California’s coast.”

“Expanded oil and gas development off our coast significantly increase the risk of oil spills, which endanger the ocean, our environment and wildlife, and our coastline. Additionally offshore production threatens California’s ocean-based economy, which generated $662 billion in wages, and $1.7 trillion in GDP, according to a report published by the National Oceanic and Atmospheric Administration.”

“AB 1775 provides the [commission] with the authority to deny expanded offshore drilling by prohibiting the issuance of new leases” and the author concludes by noting that “California will be able to protect the environment, our coast, and our economy from the risks posed by offshore drilling and production.”

ARGUMENTS IN OPPOSITION

Writing in opposition, the Western States Petroleum Association (WSPA) notes that “[s]pecifically this bill repeals existing authority from the [commission] to issue or extend a lease or conveyance for oil and natural gas production if the lease would result in an increase of production from federal waters.” WSPA argues that:

• AB 1775 takes authority away from the commission on state tidelands leases, and
• AB 1775 could force unintended environmental and fiscal consequences by avoiding the use of safer pipelines to transport oil, potential revenues losses and litigation expense.

WSPA notes that the commission has the existing authority to deny any petroleum leases on state tidelands under its jurisdiction already.

COMMENTS

Is a new tidelands lease always required to support new federal OCS leases? This bill would definitively inhibit the exploitation of new federal OCS leases in central and northern California where there is little-to-no existing oil- and gas-production related infrastructure in state waters. However, it is more likely that any new federal OCS leases sought would be located in southern California near existing oil- and gas-production related infrastructure in state and federal waters. It is unclear that a new tidelands lease or conveyance for new construction would necessarily be required in this circumstance. For example, an amendment to an existing lease might be sufficient to facilitate production from new federal OCS leases. The companion measure to this bill, SB 834 (Jackson) – which passed this Committee earlier this year, includes restrictions on amending or renewing existing leases for this reason. Discussions continue regarding this provision. The Committee may wish to direct staff to continue working with the author’s office and others on this issue.

Deliberate government actions have repeatedly foregone offshore oil and gas revenue. The policy of various levels of state government over many years has been to purposefully limit or seek to limit oil and gas revenue to the state from offshore sources in both state and federal waters. As noted above, the Legislature started restricting development almost 100 years ago. In the last twenty years, the Legislature has repeatedly sought moratoria on federal leasing for offshore OCS oil and gas development (AJR 51 (Nava, Chapter 146, Statutes of 2008), AJR 55 (Nava, Chapter 137, Statutes of 2006), AJR 14 (Yee, Chapter 94, Statutes of 2005), SJR 2 (Alpert, Chapter 86, Statutes of 1999)) in addition to recent resolutions passed in response to the current threat. Most of these resolutions passed with bipartisan support. The Legislature has also kept the California Coastal Sanctuary Act in place. The commission as well has repeatedly through the years passed resolutions opposed to the resumption or expansion of federal offshore oil development and production. Governor Brown has also repeatedly publicly sought moratoria on offshore California OCS oil and gas leasing.

Options are limited for the state to inhibit new OCS leasing. The commission and local trustees currently have 19 right-of-way leases for pipelines to transport oil and gas produced in federal waters across state waters to shore. (There is no direct-to-ship oil and gas production offshore California.) If new OCS leases are issued, the product would typically need to be transported onshore for processing. This bill would prevent that to the extent that transport is intended to be by a new pipeline. While it is possible that the federal government could undertake condemnation proceedings to obtain the necessary land for a new pipeline, it is likely this action would be contested. Therefore, this bill presents a roadblock which may help to deter interest in new OCS development (with the exceptions/potential exceptions noted above). That written, there are purpose-built ships to receive crude oil and the Obama Administration relaxed export limitations on crude oil (and U.S. crude oil exports have since increased sharply).

Otherwise, generally speaking, the state’s authority does not extend into the OCS, although the Air Resources Board, due to a specific set of circumstances, does have authority to regulate ocean-going vessel fuel use.

Other states have taken the same approach to discouraging offshore oil development. State legislators in New York have also introduced legislation to inhibit interest in offshore OCS oil and gas leases by denying the issuance of new leases or the amendment of existing leases for oil and gas-related infrastructure in state waters needed to support it. Rhode Island, New Jersey and South Carolina legislators have introduced similar bills. The New Jersey bill has been signed into law.

Keeping the commission to its word. The commission wrote a letter to BOEM in February 2018 that, among other things, indicated that it would take the action proposed by this bill – not issue new leases to all new construction for the development of new oil and gas development, exploration and production for any new federal OCS leases offshore California. (The commission letter included a pledge to not modify existing leases too.)

Existing leases remain in effect. Any excess capacity in existing pipelines serving the OCS – which staff discussions with regulatory staff suggest may be considerable – would remain available for use. The existing right-of-way leases that Committee staff have reviewed do not limit the source of oil or gas in the pipeline.

A strong majority of Californians oppose oil and gas drilling off the coast. According to a recent Public Policy Institute of California poll, 69% of Californians opposed drilling off the California Coast. Poll respondents who indicated that the condition of the ocean and beaches were very important to the economy and quality of life for California’s future were overwhelmingly opposed across all political, demographic and regional groups.

Does new leasing off the coast of California make economic sense? According to Reuters, recent lease sales in the Gulf of Mexico have stuck near where existing infrastructure is in place – not explored new locations. In a recent auction, only 1% of the offered locations in the Gulf of Mexico were purchased. The high cost of offshore development is seen as a deterrent given the current price of oil and the boom in domestic onshore production. Additionally, newly available potential reserves in other countries may be more attractive.

Recent history of offshore oil and gas production. Oil and gas production from the state’s tidelands peaked in the 1960s and has been more or less monotonically declining since. Over the last five years (2011 – 2016), total state oil production has been about 200 million barrels annually on average and the offshore component of that has been about 6 – 7% or 13 – 14 million barrels. Oil and gas production from the federal OCS off of California, in contrast, started to increase in the early 1980s with a relatively sharp peak in oil production in the early 1990s (about 70 million barrels of oil in 1995) before steadily falling from about 30 million barrels of oil in 2003 to 18 million barrels in 2014. The failure of Line 901 in May 2015 resulted in the Refugio oil spill and took the principal pipeline bringing oil from nearby federal and state waters onshore offline where it remains. As a result federal OCS oil production was only 6.1 million barrels in 2016.

Recent related legislation

SB 1147 (Hertzberg, 2018) would create a fund to pay for the decommissioning of abandoned offshore oil and gas infrastructure, among other things. (This bill is before the Assembly Natural Resources Committee.)

SR 73 (McGuire, 2018) urges the President and the U.S. Congress to permanently protect the California coast and supports the current moratorium on offshore leasing in federal waters. (This resolution is enrolled.)

SB 834 (Jackson, 2018) would bar the commission from issuing new leases or amending or renewing existing leases to facilitate oil or gas exploration, development and production for new leases in federal waters. (This bill is before the Assembly Natural Resources Committee.)

AJR 29 (Limón, Chapter 19, Statutes of 2018) states the Legislature’s support for the current moratorium on offshore leasing in federal waters.

HR 70 (Baker, 2018) urges the President and the U.S. Congress to permanently protect the California coast and supports the current moratorium on offshore leasing in federal waters. (No action has been taken on this resolution as of June 20, 2018.)

SB 188 (Jackson, 2017) would bar the commission from issuing new leases or renewing existing leases to facilitate oil or gas exploration, development and production in federal waters. (This bill was held on the Assembly Appropriations Committee suspense file.)

SR 51 (McGuire, 2017) urges the President and the U.S. Congress to permanently protect the California coast and supports the current moratorium on offshore leasing in federal waters. (This resolution is enrolled.)

SR 35 (Jackson, 2017) urges the President and the U.S. Congress to permanently protect the California coast and supports the current moratorium on offshore leasing in federal waters. (This resolution is enrolled.)

SUPPORT

The 5 Gyres Institute

350 Bay Area

350 South Bay Los Angeles

Audubon California

Azul

Benioff Ocean Initiative

California Coastal Protection Network

California Coastkeeper Alliance

California League of Conservation Voters

California Voices for Progress

Californians for Western Wilderness

California Nurses Association

Carpinteria Valley Association

Center for Biological Diversity

The Center for Oceanic Awareness, Research, and Education (COARE)

Central Coastal Alliance United for a Sustainable Economy (CAUSE)

Citizens Planning Association

City of Beverly Hills

City of Dana Point

City of Goleta

City of Hermosa Beach

City of Manhattan Beach

City of Oxnard

City of Palos Verdes Estates

City of Redondo Beach

City of Santa Barbara

Clean Water Action

Climate Hawks Vote

Coastwalk California

Community Environmental Council

Cordell Marine Sanctuary Foundation

County of Santa Barbara

Defenders of Wildlife

East Bay Regional Park District

Environment California

Environmental Defense Center

Environmental Defense Fund

Environmental Protection Information Center

The Honorable Dianne Feinstein, United States Senator

Food & Water Watch

Fossil Free California

Friends of the Earth – U.S.

Fund for Santa Barbara

Get Oil Out!

Great Old Broads for Wilderness

Greater Farallones Association

Heal the Bay

Humboldt Baykeeper

Idle No More SF Bay

Inland Ocean Coalition & Colorado Ocean Coalition

Institute for Fisheries Resources

Klamath Forest Alliance

The Last Plastic Straw

League of California Cities

League of Women Voters of California

Leonardo DiCaprio Foundation

Long Beach 350

Los Angeles Waterkeeper

Marine Conservation Institute

Monterey Bay Aquarium

Monterey Coastkeeper & the Otter Project

Natural Resources Defense Council

The Nature Conservancy

Nature Rights Council

NextGen California

The North Coast Stream Flow Coalition

O’Neill Sea Odyssey

Ocean Conservancy

Ocean Conservation Research

The Ocean Foundation

Oceana

Orange County Coastkeeper & Inland Empire Waterkeeper

Pacific Coast Federation of Fishermen’s Association

Pacific Environment

Plastic Pollution Coalition

Resources Legacy Fund

Russian Riverkeeper

San Diego 350

San Diego Coastkeeper

San Francisco Baykeeper

Santa Barbara Channelkeeper

Save Our Shores

Service Employees International Union (SEIU)

Seventh Generation Advisors

Sierra Club California

SoCal 350 Climate Action

South Bay Cities Council of Governments

South Yuba River Citizens League

Surfrider Foundation

Turtle Island Restoration Network

Unite Here, AFL-CIO

West Marin Standing Together

Wholly H20

Wildcoast

Wishtoyo Chumash Foundation

Yak Tityu Tityu Yak Tilhini Northern Chumash Tribe of San Luis Obispo County

Zero Waste USA

Numerous Individuals

OPPOSITION

California Chamber of Commerce

California Independent Petroleum Association

California Manufacturers & Technology Association

Orange County Business Council

Oxnard Chamber of Commerce

San Gabriel Valley Economic Partnership

The Chamber Long Beach Area Chamber of Commerce

Western States Petroleum Association

Wilmington Chamber of Commerce

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1775

Author:()

As Amended Ver:

Majority vote

SUMMARY: Prohibits the State Lands Commission (SLC) or a local trustee from entering into any new lease or other conveyance authorizing new construction of oil-and-gas-related infrastructure upon tidelands and submerged lands within state waters associated with Outer Continental Shelf (OCS) leases issued after January 1, 2018.

EXISTING LAW:

1. Requires the SLC to be the steward and manager of the state's public trust lands. SLC has direct administrative control over the state's public trust lands and oversight authority over public trust lands granted by the Legislature to local governments.
2. Grants, in trust, public trust lands to over 70 local public agencies (local trustees) to be managed for the benefit of all the people of the state pursuant to the Public Trust Doctrine and terms of the applicable granting statutes.
3. Authorizes lands owned by the state and under the jurisdiction of SLC to be leased by SLC for purposes such grazing leases and leases for commercial, industrial, and recreational purposes.
4. Pursuant to the California Coastal Sanctuary Act (CCSA):
   1. Makes findings and declarations that offshore oil and gas production in certain areas of state waters poses an unacceptably high risk of damage and disruption to the marine environment of the state. (State waters generally extend out three nautical miles from the shore.)
   2. Establishes the California Coastal Sanctuary (Sanctuary), which includes all state waters subject to tidal influence west of the Carquinez Bridge, except oil or gas leases in effect on January 1, 1995, unless the lease is deeded or otherwise reverts to the state after that date.
   3. Generally prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the Sanctuary.
   4. Authorizes SLC to enter into any lease for the extraction of oil or gas from state-owned tide and submerged lands in the Sanctuary if SLC determines that those oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.
   5. Authorizes SLC to adjust the boundaries of an existing offshore oil and gas lease to encompass all of an oil and gas field partially contained in the lease.
5. Pursuant to the OCS Lands Act,
   1. Defines the OCS as all submerged lands lying between the seaward extent of the state jurisdiction and the seaward extent of federal jurisdiction.
   2. Declares, among other things, that it is the United States (U.S.) policy that the OCS is a vital national resource reserve held by the federal government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner that is consistent with the maintenance of competition and other national needs.
6. Requires the Department of the Interior (Interior) to prepare, periodically revise, and maintain an oil and gas leasing program that consists of a schedule of proposed lease sales indicating, as precisely as possible, the size, timing, and location of leasing activity that the Interior determines will best meet national energy needs for the five-year period following its approval or reapproval. Gives priority leasing consideration to areas where the combination of previous experience; local, state, and national laws and policies; and expressions of industry interest indicate that potential leasing and development activities could be expected to proceed in an orderly manner.

FISCAL EFFECT: According to the Assembly Appropriations Committee, there is a potential for an unknown amount of future forgone General Fund revenue, however unlikely, since SLC has not approved a new offshore lease since 1968.

COMMENTS:

1. Author's statement:

For decades, the federal government has respected California's policy to keep new drilling operations out of state and federal waters off of our coast. However, on January 4th, 2018, the Trump administration announced a proposal to open up over 90% of the OCS nationwide to new leasing for oil and gas production, including six new leases in the federal waters off of California's coast.

Expanded oil and gas development off of our coast significantly increases the risk of oil spills, which endanger the ocean, our environment and wildlife, and our coastline. Additionally, offshore production threatens California's ocean-based economy, which generated $662 billion in wages and $1.7 trillion in GDP, according to a report published by National Oceanic and Atmospheric Administration.

AB 1775 provides the States Lands Commission with the authority to deny expanded offshore drilling by prohibiting the issuance of new leases or the renewal, extension, or modification of any existing lease that authorizes a lessee to engage in new or additional exploration, development, or production of oil or natural gas. By ensuring that new and renewed leases are not granted, California will be able to protect the environment, our coast, and our economy from the risks posed by offshore drilling and production.

1. Offshore Oil. Since 1938, SLC has had jurisdiction over the leasing of oil and gas from offshore state lands. Between 1938 and 1968, over 50 offshore oil and gas leases were issued by SLC. In a manner common to most oil and gas leases, the leases that SLC issued were either devoid of a fixed end date or were subsequently amended to remove an end date. The lease terms typically provide that the leases last as long as oil and gas is being produced in paying or commercial quantities. Once production ceases, the leases are to be quitclaimed back to SLC.

Two August 1968 leases, one to Continental Oil Company and the other to Standard Oil Company, were the last new offshore oil and gas leases that SLC entered into prior to the January 1969 Santa Barbara oil spill. The spill was the result of a well drilling blow-out at an offshore platform located in the federal OCS off the coast of Santa Barbara County. The cause was inadequate protective wellpipe casing. The event lasted 11 days and spilled between 80,000 and 100,000 barrels of crude oil. Two hundred square miles of ocean and 35 miles of California coastline were oiled and thousands of animals were killed.

At its February 1969 meeting, SLC deferred the acceptance of outstanding bids for new leases and subsequently deferred deadlines for additional drilling from existing leases. Since then, the SLC has not entered into any new offshore oil and gas leases. In 1994, the CCSA removed all state lands underlying the Pacific Ocean from SLC's oil and gas general leasing authority. The CCSA contains two limited exceptions that allow SLC to approve new offshore oil and gas production in state waters. One exception is if SLC determines that state oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and a new oil and gas lease is in the best interests of the state. The other exception allows SLC to adjust the boundaries of an existing offshore oil and gas lease to encompass all of an oil and gas field partially contained in the lease.

Generally, state lands extend three miles from the coast; beyond this distance is under federal jurisdiction. The federal government imposed a moratorium on new leases in federal waters off of California in 1984; in 1990, President George H.W. Bush used section 12(a) of the OCS Lands Act to prevent leases for 10 years off the coast of California and other states. This freeze on leases was extended through 2012 by President Bill Clinton. President George W. Bush terminated the freeze in 2008, but no new leases were issued off the California coast following this termination. President Barack Obama issued an Executive Order extending the moratorium on new leases from December of 2016 through 2022 under section 12(a) of the OCS Lands Act.

Existing oil and gas production continue to negatively impact California's coast. In 1997, a pipeline owned by Houston-based Nuevo Energy off the Santa Barbara County coast ruptured due to a faulty weld and spilled crude oil into the ocean about two and a half miles from the shore. The oil spread approximately four miles, oiling wildlife and killing hundreds of seabirds. In 2015, a pipeline owned by Houston-based Plains All American Pipeline ruptured, spilling up to 140,000 gallons of heavy crude oil along the Gaviota coast in Santa Barbara County. It is estimated that as much as 21,000 gallons of the oil went down a storm culvert onto cliffs and into the Pacific Ocean, ultimately stretching over nine miles of California coastline. These events highlight the persistent risk of existing oil infrastructure in the state.

In January 2018, the Trump Administration announced its plan to lift the moratorium put in place by President Obama, opening 90% of federal waters, including off the California's coast, to new drilling leases. In a tweet, United States Secretary of the Interior Ryan Zinke (Secretary Zinke) indicated that Florida could be exempted from new leases due to concerns about impacts on the tourism industry, but this decision has not been reflected in the Bureau Of Ocean Energy Management's (BOEM) proposed OCS oil and gas leasing plan. Secretary Zinke also testified at a U.S. Senate Energy Committee that he doubts oil and gas explorations would occur in the Pacific region and indicated that would be reflected in the next draft of BOEM's proposed OCS oil and gas leasing plan. The next draft has not yet been released.

1. Right-of-ways. Currently, SLC and local trustees have 19 right-of-way leases to allow pipelines that transport oil and natural gas produced in federal waters across state waters. Once onshore, the oil or gas can be processed and transported to a refinery to be turned into transportation fuels. If new oil and gas leases are issued by the federal government, the product would need to be transported for processing, refinement, and to market. This bill prohibits SLC from issuing a new right-of-way lease or renewing an existing lease if that action will result in the increase of oil or natural gas production from federal waters. Many of the current leases have expiration dates, and these dates extend all the way to 2031. Existing pipelines that have a valid lease and spare capacity may still be able to transport increased oil or natural gas production from federal waters. In addition, oil or natural gas could be barged to shore. However, that would add significantly to the cost of production. Finally, the federal government could condemn the necessary land to construct the pipeline. That action would likely be lengthy and costly as well. While this bill would not cut off every possible avenue to increase oil and gas production, it would provide significant roadblocks, which may deter potential lease holders if the Pacific OCS is opened for new leases.

Ahead of the Trump Administration's only public hearing in California to discuss the revised federal offshore drilling plan on February 8, SLC sent a letter to the federal government condemning both the plan and the public participation process, while stating unequivocally that California will not approve new pipeline or allow use of existing pipelines to transport oil from new leases ashore. This statement is consistent with the intent of this bill.

Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0003042

Date of Hearing: April 25, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1775

Author:(Muratsuchi) – As Amended Ver:April 18, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill prohibits the State Lands Commission (SLC) or a local trustee from entering into any new lease or other conveyance authorizing new construction of oil-and-gas-related infrastructure upon tidelands and submerged lands within state waters associated with Outer Continental Shelf (OCS) leases issued after January 1, 2018.

FISCAL EFFECT:

There is a potential for an unknown amount of future forgone GF revenue, however unlikely, since SLC has not approved a new offshore lease since 1968.

COMMENTS:

1. Background. The California Coastal Sanctuary (Sanctuary) includes all state waters subject to tidal influence west of the Carquinez Bridge, except oil or gas leases in effect on January 1, 1995, unless the lease is deeded or otherwise reverts to the state after that date. Existing law generally prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the Sanctuary. However, SLC may enter into a lease for the extraction of oil or gas from state-owned tide and submerged lands in the Sanctuary if SLC determines that those oil or gas deposits are being drained by wells from adjacent federal lands and the lease is in the best interest of the state.

Since 2001, SLC adopted several resolutions opposing the resumption or expansion of federal offshore oil and gas lease sales in the outer continental shelf (OCS). The foundation for each resolution was the same: the danger of an oil spill like the 1969 Santa Barbara oil spill was too high and oil development and potential spills would adversely affect fishing, tourism, and environmental, recreational, economic, scenic, and other values. The resolutions are also based on and expressive of the state’s policy and practice of not issuing new offshore leases. The Obama administration prohibited offshore drilling in the Pacific OCS until 2022.

However, on April 28, 2017, President Trump issued Executive Order 13795 that included direction to Secretary of the Interior to revise the Obama administration’s prohibition. In January 2018, the Trump Administration announced its plan to open up 90% of the OCS nationwide for new oil and gas production, including six new leases in the federal waters off the California coast.

1. Purpose. Currently, SLC and local trustees have 19 right-of-way leases to allow pipelines that transport oil and natural gas produced in federal waters across state waters. Once onshore, the oil or gas can be process and transported to refineries to become transportation fuels. If new oil and gas leases are issued by the federal government, the product would need to be transported for processing and refinement, then to market.

This bill gives SLC the authority to deny expanded offshore drilling by prohibiting the issuance of new right-of-way leases or the renewal, extension, or modification of any existing lease for new oil or gas exploration, development, or production.

According to the author, “By ensuring new and renewed leases are not granted, California will be able to protect the environment, our coast, and our economy from the risks posed by offshore drilling and production.”

1. Similar Legislation. SB 188 (Jackson),of the current Legislative Session, prohibits the SLC or local trustees from entering into any lease renewal, extension, or modification that authorizes a lessee to engage in activities that would result in increased oil or natural gas production from federal waters. SB 188 was held in this committee on suspense. This bill differs from SB 188 because it applies to leases issued after January 1, 2018 and new construction.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 9, 2018

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Al Muratsuchi, Acting Chair

ABPCA Bill Id:AB 1775 (

Author:Muratsuchi) – As Amended Ver:March 22, 2018

SUBJECT: State lands: leasing: oil and gas

SUMMARY: Prohibits the State Lands Commission (SLC) or a local trustee from entering into any new lease or entering into any lease renewal, extension, or modification in the California Coastal Sanctuary that would result in an increase of oil or natural gas production from, or facilitate additional development of or exploration for, oil or natural gas from federal waters.

EXISTING LAW:

1. Requires the SLC to be the steward and manager of the state's public trust lands. SLC has direct administrative control over the state's public trust lands and oversight authority over public trust lands granted by the Legislature to local governments.
   
2. Grants, in trust, public trust lands to over 70 local public agencies (local trustees) to be managed for the benefit of all the people of the state pursuant to the Public Trust Doctrine and terms of the applicable granting statutes.
3. Authorizes lands owned by the state and under the jurisdiction of SLC to be leased by SLC for purposes such grazing leases and leases for commercial, industrial, and recreational purposes.
4. Pursuant to the California Coastal Sanctuary Act (CCSA):
   
   1. Makes findings and declarations that offshore oil and gas production in certain areas of state waters poses an unacceptably high risk of damage and disruption to the marine environment of the state. (State waters generally extend out three nautical miles from the shore.)
      
   2. Establishes the California Coastal Sanctuary (Sanctuary), which includes all state waters subject to tidal influence west of the Carquinez Bridge, except oil or gas leases in effect on January 1, 1995, unless the lease is deeded or otherwise reverts to the state after that date.
   3. Generally prohibits a state agency or state officer from entering into any new lease for the extraction of oil or gas from the Sanctuary.
   4. Authorizes SLC to enter into any lease for the extraction of oil or gas from state-owned tide and submerged lands in the Sanctuary if SLC determines that those oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and the lease is in the best interest of the state.
   5. Authorizes SLC to adjust the boundaries of an existing offshore oil and gas lease to encompass all of an oil and gas field partially contained in the lease.
      
5. Pursuant to the federal Outer Continental Shelf (OCS) Lands Act,
   
   1. Defines the OCS as all submerged lands lying between the seaward extent of the state jurisdiction and the seaward extent of federal jurisdiction.
      
   2. Declares, among other things, that it is the U.S. policy that the OCS is a vital national resource reserve held by the federal government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner that is consistent with the maintenance of competition and other national needs.
      
6. Requires the Department of the Interior (Interior) to prepare, periodically revise, and maintain an oil and gas leasing program that consists of a schedule of proposed lease sales indicating, as precisely as possible, the size, timing, and location of leasing activity that the Interior determines will best meet national energy needs for the five-year period following its approval or reapproval. Gives priority leasing consideration to areas where the combination of previous experience; local, state, and national laws and policies; and expressions of industry interest indicate that potential leasing and development activities could be expected to proceed in an orderly manner.

THIS BILL:

1. Prohibits the SLC or a local trustee from entering into any new lease or entering into any lease renewal, extension, or modification in the Sanctuary that would result in an increase of oil or natural gas production from, or facilitate additional development of or exploration for, oil or natural gas from, federal waters.
2. Specifies that the prohibition does not apply to existing oil and gas produced from state waters and that SLC retains the authority to issue new leases in state waters under certain circumstances outlined in the CCSA.
3. Specifies that the prohibition does not apply to activities to repair, replace, or maintain pipelines or other existing infrastructure used to convey oil and gas, including ensuring the safe operation of existing infrastructure.
4. Authorize SLC to establish regulations for the implementation of these provisions.
5. Defines “development” to mean those activities taking place following the discovery of oil and natural gas, including geophysical activity, drilling, platform construction, pipeline construction, and operation of all onshore support facilities that are performed for the purpose of ultimately producing the resources discovered.
6. Defines “exploration” to mean the process of searching for oil and natural gas, including any drilling, whether on or off known geological structures, including the drilling of a well in which a discovery of oil or natural gas is made and the drilling of any additional delineation well after the discovery that is needed to delineate any reservoir and enable a lessee to determine whether to proceed with the development and production.
7. Defines “production” to mean those activities that take place after the successful completion of any means for the removal of oil and natural gas, including that removal, field operations, transfer of resources to shore, operation monitoring, maintenance, and work-over drilling.
8. Defines “federal waters” to mean those waters and submerged lands lying seaward of the three mile nautical limit that appertain to the United States and are subject to federal jurisdiction and control.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s statement:

For decades, the federal government has respected California’s policy to keep new drilling operations out of state and federal waters off of our coast. However, on January 4th, 2018, the Trump administration announced a proposal to open up over 90% of the OCS nationwide to new leasing for oil and gas production, including six new leases in the federal waters off of California’s coast.

Expanded oil and gas development off of our coast significantly increases the risk of oil spills, which endanger the ocean, our environment and wildlife, and our coastline. Additionally, offshore production threatens California’s ocean-based economy, which generated $662 billion in wages and $1.7 trillion in GDP, according to a report published by National Oceanic and Atmospheric Administration.

AB 1775 provides the States Lands Commission with the authority to deny expanded offshore drilling by prohibiting the issuance of new leases or the renewal, extension, or modification of any existing lease that authorizes a lessee to engage in new or additional exploration, development, or production of oil or natural gas. By ensuring that new and renewed leases are not granted, California will be able to protect the environment, our coast, and our economy from the risks posed by offshore drilling and production.

1. Offshore Oil. Since 1938, SLC has had jurisdiction over the leasing of oil and gas from offshore state lands. Between 1938 and 1968, over 50 offshore oil and gas leases were issued by SLC. In a manner common to most oil and gas leases, the leases that SLC issued were either devoid of a fixed end date or were subsequently amended to remove an end date. The lease terms typically provide that the leases last as long as oil and gas is being produced in paying or commercial quantities. Once production ceases, the leases are to be quitclaimed back to SLC.

Two August 1968 leases, one to Continental Oil Company and the other to Standard Oil Company, were the last new offshore oil and gas leases that SLC entered into prior to the January 1969 Santa Barbara oil spill. The spill was the result of a well drilling blow-out at an offshore platform located in the federal OCS off the coast of Santa Barbara County. The cause was inadequate protective wellpipe casing. The event lasted 11 days and spilled between 80,000 and 100,000 barrels of crude oil. Two hundred square miles of ocean and 35 miles of California coastline were oiled and thousands of animals were killed.

At its February 1969 meeting, SLC deferred the acceptance of outstanding bids for new leases and subsequently deferred deadlines for additional drilling from existing leases. Since then, the SLC has not entered into any new offshore oil and gas leases. In 1994, the CCSA removed all state lands underlying the Pacific Ocean from SLC’s oil and gas general leasing authority. The CCSA contains two limited exceptions that allow SLC to approve new offshore oil and gas production in state waters. One exception is if SLC determines that state oil or gas deposits are being drained by means of producing wells upon adjacent federal lands and a new oil and gas lease is in the best interests of the state. The other exception allows SLC to adjust the boundaries of an existing offshore oil and gas lease to encompass all of an oil and gas field partially contained in the lease.

Generally, state lands extend three miles from the coast; beyond this distance is under federal jurisdiction. The federal government imposed a moratorium on new leases in federal waters off of California in 1984; in 1990, President George H.W. Bush used section 12(a) of the OCS Lands Act to prevent leases for 10 years off the coast of California and other states. This freeze on leases was extended through 2012 by President Bill Clinton. President George W. Bush terminated the freeze in 2008, but no new leases were issued off the California coast following this termination. President Barack Obama issued an Executive Order extending the moratorium on new leases from December of 2016 through 2022 under section 12(a) of the OCS Lands Act.

Existing oil and gas production continue to negatively impact California’s coast. In 1997, a pipeline owned by Houston-based Nuevo Energy off the Santa Barbara County coast ruptured due to a faulty weld and spilled crude oil into the ocean about two and a half miles from the shore. The oil spread approximately four miles, oiling wildlife and killing hundreds of seabirds. In 2015, a pipeline owned by Houston-based Plains All American Pipeline ruptured, spilling up to 140,000 gallons of heavy crude oil along the Gaviota coast in Santa Barbara County. It is estimated that as much as 21,000 gallons of the oil went down a storm culvert onto cliffs and into the Pacific Ocean, ultimately stretching over nine miles of California coastline. These events highlight the persistent risk of existing oil infrastructure in the state.

In January 2018, the Trump Administration announced its plan to lift the moratorium put in place by President Obama, opening 90% of federal waters, including off the California’s coast, to new drilling leases. In a tweet, United States Secretary of the Interior Ryan Zinke (Secretary Zinke) indicated that Florida could be exempted from new leases due to concerns about impacts on the tourism industry, but this decision has not been reflected in the Bureau Of Ocean Energy Management’s (BOEM) proposed OCS oil and gas leasing plan. Secretary Zinke also testified at a U.S. Senate Energy Committee that he doubts oil and gas explorations would occur in the Pacific region and indicated that would be reflected in the next draft of BOEM’s proposed OCS oil and gas leasing plan. The next draft has not yet been released.

1. Right-of-ways. Currently, SLC and local trustees have 19 right-of-way leases to allow pipelines that transport oil and natural gas produced in federal waters across state waters. Once onshore, the oil or gas can be processed and transported to a refinery to be turned into transportation fuels. If new oil and gas leases are issued by the federal government, the product would need to be transported for processing, refinement, and to market. This bill prohibits SLC from issuing a new right-of-way lease or renewing an existing lease if that action will result in the increase of oil or natural gas production from federal waters. Many of the current leases have expiration dates, and these dates extend all the way to 2031. Existing pipelines that have a valid lease and spare capacity may still be able to transport increased oil or natural gas production from federal waters. In addition, oil or natural gas could be barged to shore. However, that would add significantly to the cost of production. Finally, the federal government could condemn the necessary land to construct the pipeline. That action would likely be lengthy and costly as well. While this bill would not cut off every possible avenue to increase oil and gas production, it would provide significant roadblocks, which may deter potential lease holders if the Pacific OCS is opened for new leases.

Ahead of the Trump Administration's only public hearing in California to discuss the revised federal offshore drilling plan on February 8, SLC sent a letter to the federal government condemning both the plan and the public participation process, while stating unequivocally that California will not approve new pipeline or allow use of existing pipelines to transport oil from new leases ashore. This statement is consistent with the intent of this bill. Currently, the author’s office is working with SLC on possible amendments to address any issues SLC may have with this bill.

1. Related/Prior legislation.

SB 188 (Jackson, 2017) would have prohibited the SLC or local trustees from entering into any lease or other conveyance that would result in increased oil or natural gas production from federal waters. SB 188 would have prohibited the SLC or local trustees from entering into any lease renewal, extension, or modification that authorizes a lessee to engage in activities that would result in increased oil or natural gas production from federal waters. SB 188 was held in the Assembly Appropriations Committee.

AJR 29 (Limón), Chapter 19, Statutes of 2018, declares the Legislature's opposition to expanded offshore drilling in federal waters off the California coast. This resolution requests Secretary Zinke to remove California from the proposed BOEM oil and gas leasing plan.

SB 834 (Jackson, 2018) is similar to SB 188. SB 834 is awaiting hearing in Senate Natural Resources and Water Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

350 Bay Area
350 South Bay Los Angeles
Audubon California
Azul
Benioff Ocean Initiative
California Coastal Protection Network

California Coastkeeper Alliance

California League of Conservation Voters
California Voices for Progress
Californians for Western Wilderness

Carpinteria Valley Association

Center for Biological Diversity
Central Coastal Alliance United for a Sustainable Economy
Citizens Planning Association
City of Beverly Hills
City of Goleta
City of Hermosa Beach
City of Manhattan Beach

City of Oxnard
City of Redondo Beach
City of Santa Barbara
Coastwalk California
Community Environmental Council

Cordell Marine Sanctuary Foundation
Clean Water Action
Climate Hawks Vote
Defenders of Wildlife
East Bay Regional Park District

Environment California
Environmental Defense Center
Environmental Defense Fund
Environmental Protection Information Center
Food & Water Watch
Fossil Free California
Friends of the Earth
Fund for Santa Barbara
Get Oil Out!
Great Old Broads for Wilderness
Greater Farallones Association
Heal the Bay
Humboldt Baykeeper
Idle No More SF Bay
Inland Ocean Coalition & Colorado Ocean Coalition
Institute for Fisheries Resources
Klamath Forest Alliance
League of California Cities

League of Women Voters of California
Long Beach 350
Los Angeles Waterkeeper
Marine Conservation Institute
Monterey Coastkeeper & The Otter Project
Natural Resources Defense Council
Nature Rights Council
NextGen California
Oceana
Ocean Conservancy
Ocean Conservation Research
O’Neill Sea Odyssey
Orange County Coastkeeper & Inland Empire Waterkeeper
Pacific Coast Federation of Fishermen’s Association
Pacific Environment
Plastic Pollution Coalition
Russian Riverkeeper
San Diego 350
San Diego Coastkeeper
San Francisco Baykeeper
Santa Barbara Channelkeeper
Save Our Shores
Senator Diane Feinstein
Seventh Generation Advisors
Sierra Club California
SoCal 350 Climate Action
South Bay Cities Council of Governments
South Yuba River Citizens League
Surfrider Foundation
The 5 Gyres Institute
The Center for Oceanic Awareness, Research, and Education
The Last Plastic Straw
The Nature Conservancy
The North Coast Stream Flow Coalition
The Ocean Foundation
Turtle Island Restoration Network
Unite Here, AFL-CIO
Wildcoast
West Marin Standing Together
Wishtoyo Chumash Foundation

Wholly H20

Yak Tityu Tityu Yak Tilhini Northern Chumash Tribe of San Luis Obispo County
Zero Waste USA

18 Individuals

Opposition

California Chamber of Commerce
California Independent Petroleum Association

Western States Petroleum Association

Analysis Prepared by: Michael Jarred / NAT. RES. /