(1)Existing law establishes the State Lands Commission in the Natural Resources Agency and prescribes the functions and duties of the commission. Under existing law, the commission has jurisdiction over various state lands, including coastal lands.

This bill would, upon appropriation of moneys by the Legislature, require the commission to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. The bill would authorize the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation whenever the gift and the terms and conditions thereof will aid in actions undertaken to administer that program. The bill would require the commission, on or before January 1 of each year, until January 1, 2026, to submit a report to the Legislature on the activities and accomplishments of the program from the prior year. The bill would require the commission, on or before January 1, 2027, to submit a report to appropriate committees in the Legislature that covers the life of the program and includes information necessary to aid the Legislature in determining the effectiveness of the program and the extent to which funding for the program should be reauthorized. The bill would make these provisions inoperative on July 1, 2028.

(2)Existing law, with specified exceptions, generally requires the State Lands Commission, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes. Existing law establishes the Land Bank Fund, a continuously appropriated fund, from which the commission may expend moneys for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.

This bill would require that, for the 201819 fiscal year, out of those funds deposited into the General Fund by the commission, the sum of $2,000,000 be transferred to the Land Bank Fund and be available, upon appropriation in the annual Budget Act, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program. The bill would require that, for each fiscal year from the 201920 fiscal year to the 202728 fiscal year, inclusive, an amount sufficient to bring the unencumbered balance of the Land Bank Fund available for the purpose of implementing the program to $2,000,000 be transferred to that fund and be available, upon an appropriation in the annual Budget Act, for the purpose of implementing the program.

(1)Existing law establishes the State Lands Commission in the Natural Resources Agency and prescribes the functions and duties of the commission. Under existing law, the commission has jurisdiction over various state lands, including coastal lands.

This bill would, upon appropriation of moneys by the Legislature, require the commission to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. The bill would authorize the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation whenever the gift and the terms and conditions thereof will aid in actions undertaken to administer that program. The bill would require the commission, on or before January 1 of each year, until January 1, 2026, to submit a report to the Legislature on the activities and accomplishments of the program from the prior year. The bill would require the commission, on or before January 1, 2027, to submit a report to appropriate committees in the Legislature that covers the life of the program and includes information necessary to aid the Legislature in determining the effectiveness of the program and the extent to which funding for the program should be reauthorized. The bill would make these provisions inoperative on July 1, 2028.

(2)Existing law, with specified exceptions, generally requires the State Lands Commission, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes. Existing law establishes the Land Bank Fund, a continuously appropriated fund, from which the commission may expend moneys for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.

This bill would require that, for the 201819 fiscal year, out of those funds deposited into the General Fund by the commission, the sum of $2,000,000 be transferred to the Land Bank Fund and be available, upon appropriation in the annual Budget Act, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program. The bill would require that, for each fiscal year from the 201920 fiscal year to the 202728 fiscal year, inclusive, an amount sufficient to bring the unencumbered balance of the Land Bank Fund available for the purpose of implementing the program to $2,000,000 be transferred to that fund and be available, upon an appropriation in the annual Budget Act, for the purpose of implementing the program.

(1)Existing law establishes the State Lands Commission in the Natural Resources Agency and prescribes the functions and duties of the commission. Under existing law, the commission has jurisdiction over various state lands, including coastal lands.

This bill would, upon appropriation of moneys by the Legislature, require the commission to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. The bill would authorize the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation whenever the gift and the terms and conditions thereof will aid in actions undertaken to administer that program. The bill would require the commission commission, on or before January 1 of each year, until January 1, 2026, to annually submit a report to the Legislature on the activities and accomplishments of the program. program from the prior year. The bill would require the commission, on or before January 1, 2027, to submit a report to appropriate committees in the Legislature that covers the life of the program and includes information necessary to aid the Legislature in determining the effectiveness of the program and the extent to which funding for the program should be reauthorized. The bill would make these provisions inoperative on July 1, 2028.

(2)Existing law, with specified exceptions, generally requires the State Lands Commission, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes. Existing law establishes the Land Bank Fund, a continuously appropriated fund, from which the commission may expend moneys for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.

This bill would require that, for the 201819 fiscal year, out of those funds deposited into the General Fund by the commission, the sum of $2,000,000 be transferred to the Land Bank Fund and be available, upon appropriation in the annual Budget Act, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program. The bill would require that, commencing with the 201920 fiscal year and for each fiscal year thereafter, from the 201920 fiscal year to the 202728 fiscal year, inclusive, an amount sufficient to bring the unencumbered balance of the Land Bank Fund available for the purpose of implementing the program to $2,000,000 be transferred to that fund and be available, upon an appropriation in the annual Budget Act, for the purpose of implementing the program.

(1)Existing law establishes the State Lands Commission in the Natural Resources Agency and prescribes the functions and duties of the commission. Under existing law, the commission has jurisdiction over various state lands, including coastal lands.

This bill would, upon appropriation of moneys by the Legislature, require the commission to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. The bill would authorize the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation whenever the gift and the terms and conditions thereof will aid in actions undertaken to administer that program. The bill would require the commission to annually report to the Legislature the activities and accomplishments of the program.

(2)Existing law, with specified exceptions, generally requires the State Lands Commission, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes. Existing law establishes the Land Bank Fund, a continuously appropriated fund, from which the commission may expend moneys for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.

This bill would require that, for the 201819 fiscal year, out of those funds deposited into the General Fund by the commission, the sum of $2,000,000 be transferred to the Land Bank Fund and be available, upon appropriation in the annual Budget Act, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program. The bill would require that, commencing with the 201920 fiscal year and each fiscal year thereafter, an amount sufficient to bring the unencumbered balance of the Land Bank Fund available for the purpose of implementing the program to $2,000,000 be transferred to that fund and be available, upon an appropriation in the annual Budget Act, for the purpose of implementing the program.

(1)Existing law establishes the State Lands Commission in the Natural Resources Agency and prescribes the functions and duties of the commission. Under existing law, the commission has jurisdiction over various state lands, including coastal lands.

This bill would, upon appropriation of moneys by the Legislature, require the commission to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. The bill would authorize the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation whenever the gift and the terms and conditions thereof will aid in actions undertaken to administer that program. The bill would require the commission to annually report to the Legislature the activities and accomplishments of the program.

(2)Existing law, with specified exceptions, generally requires the State Lands Commission, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes. Existing law establishes the Land Bank Fund, a continuously appropriated fund, from which the commission may expend moneys for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.

This bill would require that, for the 201819 fiscal year, out of those funds deposited into the General Fund by the commission, the sum of $2,000,000 be transferred to the Land Bank Fund and be available, upon appropriation in the annual Budget Act, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program. The bill would require that, commencing with the 201920 fiscal year and each fiscal year thereafter, an amount sufficient to bring the unencumbered balance of the Land Bank Fund available for the purpose of implementing the program to $2,000,000 be transferred to that fund and be available, upon an appropriation in the annual Budget Act, for the purpose of implementing the program.

SENATE THIRD READING

STR Bill Id:SB 44

Author:(Jackson)

As Amended Ver:May 26, 2017

Majority vote

SENATE VOTE: 33-6

SUMMARY: Requires, upon appropriation of funding by the Legislature, that the State Lands Commission (SLC) administer a coastal hazard removal and remediation program (program). Specifically, this bill:

1. Requires, upon appropriation by the Legislature, SLC to, within two years, administer a coastal hazard and legacy oil and gas well removal and remediation program. The program includes completing an assessment of legacy oil and gas wells and coastal hazards; surveying, studying, and monitoring oil seepage in state waters and tidelands and partnering with experts to facilitate innovative solutions; and, in cooperation with the Division of Oil, Gas, and Geothermal Resources (DOGGR), beginning the process to remediate certain improperly abandoned legacy oil and gas wells.
2. Requires SLC to prioritize activities undertaken by the program based upon available resources.
3. Authorizes SLC to seek and accept on behalf of the state any gift, bequest, devise, or donation, as specified, to assist in funding the program.
4. Requires SLC to annually report to the Legislature on the activities and accomplishments of the program from January 1, 2018 until January 1, 2026.
5. Defines "coastal hazards" and "legacy oil and gas wells" for the purposes of the program.
6. Requires that, for the fiscal year (FY) 2018/2019, out of those funds deposited into the General Fund by SLC from tideland oil revenues that the sum of $2 million be transferred to the Land Bank Fund (LBF) and be available, upon appropriation, for the purpose of implementing the program.
7. Starting with the FY 2019/2020 and each fiscal year thereafter until FY 2027/2028, inclusive, an amount sufficient to bring the unencumbered balance of the fund available for the purpose of implementing this program up to $2 million be transferred to the fund from tideland oil revenues and be available, upon appropriation, for the purpose of implementing this program.
8. Requires SLC to prepare and submit to the Legislature, including appropriate policy and fiscal committees, information about this program useful to determining the effectiveness of the program, as specified, by January 1, 2027.
9. Sunsets the program on July 1, 2028.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. $2 million per year transferred from the General Fund to the LBF in FY 2017-18, and up to $2 million per year transferred thereafter until January 1, 2028 to ensure that the unencumbered funds in the LBF available for implementation equal $2 million. SLC cannot expend transferred funds unless they are appropriated in the Budget Act.
2. Up to $396 million to plug and abandon legacy wells. (Up to $2 million per well for 198 wells.)
3. One-time cost of $350,000 to complete the in-depth inventory of legacy wells.
4. Increased SLC annual implementation costs over ten years of $250,000 to survey and monitor oil seepage and remove coastal hazards.
5. Minor and absorbable costs to the report activities and accomplishments to the Legislature.
6. Minor and absorbable costs to DOGGR for permitting and consultation activities related to plugging and abandoning wells.

COMMENTS: SLC is an independent commission comprised of the Lieutenant Governor, the State Controller, and the Director of Finance. Established in 1938, SLC manages the state's 4 million acres of tidelands and submerged lands and the beds of navigable rivers, streams, lakes, bays, estuaries, inlets, and straits. In the marine context, SLC has broad authority over sovereign lands, including rivers and sloughs, lakes, tidelands, and submerged lands. It also manages energy and mineral resource development through leases, has an oil spill prevention program at marine oil terminals and offshore platforms, and has an invasive species prevention program from large ocean-going vessels.

Weather systems and extreme storms can cause dangerous coastal hazards to surface on shorelines. When funding is available, SLC removes coastal hazards. Coastal hazards can include remnants of coastal structures, piers, oil wells, pilings, deteriorated electric cables, and old pipes. Many coastal hazards are located on public trust lands set aside for commerce, navigation, fishing, and recreation, and can impede coastal use and threaten public health and safety.

The Summerland Oil Field in Santa Barbara County was the world's first offshore oil drilling operation and predates any regulatory framework. While the visual infrastructure has been removed, the wells were not properly capped and continue to leak oil into the ocean and Santa Barbara's beaches.

SLC has developed a limited coastal hazard removal program that has operated when funding has been available. The program was initiated when an inventory performed in the mid-1980s found over 400 coastal hazards in Los Angeles, Santa Barbara, and Ventura Counties. While some hazards were traced to responsible parties, most were not and consequently became the responsibility of the state. SLC has completed eight hazard removal projects since 2001. In August, 2015, SLC directed staff to conduct an initial assessment of the Becker Onshore Well (in the Summerland Oil Field).

SLC also inventories and remediates abandoned mine hazards on state school lands, in consultation with the Department of Fish and Wildlife and the State Office of Historic Preservation.

At SLC's December 6, 2016 hearing, staff provided an update on its efforts to inventory legacy oil and gas wells. SLC staff and DOGGR worked together to develop an inventory of legacy oil and gas wells and other hazards, including oil seepage locations, along the state's coast. Their results were divided into three categories – high priority legacy wells (Category 1), medium priority wells of concern (Category 2), and low priority wells of concern (Category 3). Legacy wells have little-to-no well abandonment history, are located offshore, were likely plugged and abandoned prior to 1938, and were drilled by operators no longer in business (meaning any additional work is the state's responsibility). The wells of concern generally are newer, have some documentation regarding their abandonment and have a current or prior operator that is still in business. SLC staff identified 198 Category 1 wells, of which 190 are located in the Summerland oil field. The remaining eight wells were in the Elwood and Rincon fields nearby. The staff report included a list of next steps for ongoing work to assess and identify further hazards and prioritize remediation. In addition to SLC's efforts last year to identify wells of concern, storms that occurred in February 2017 revealed additional unknown and leaking legacy wells in the same vicinity.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0001699

Date of Hearing: August 23, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 44

Author:(Jackson) – As Amended Ver:May 26, 2017

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

SUMMARY:

This bill, subject to an appropriation for this purpose, requires the State Lands Commission (SLC) to administer a coastal hazard removal and remediation program within two years of receiving funding.

This bill also requires, for fiscal year 2017-18, the transfer of $2 million to the Land Bank Fund (LBF) to implement the program, and requires the transfer of an amount sufficient to bring the unencumbered LBF balance to $2 million in subsequent years until January 1, 2028. Additionally, this bill:

1. Requires SLC, in cooperation with the Division of Oil, Gas, and Geothermal Resources (DOGGR), to begin the process of remediating improperly abandoned legacy oil and gas wells that have a high risk of leaking oil and are hazardous to public health and safety and the environment.
2. Authorizes SLC to seek and accept on behalf of the state any gift, bequest, devise, or donation, as specified, to assist in funding the program.
3. Requires SLC to annually report to the Legislature on the activities and accomplishments of the program from January 1, 2018 until January 1, 2026.
4. Requires SLC to prepare and submit to the Legislature, including appropriate policy and fiscal committees, information about this program useful to determining the effectiveness of the program, as specified, by January 1, 2027.
5. Sunsets the program on July 1, 2028.

FISCAL EFFECT:

1. $2 million per year transferred from the General Fund to the LBF in FY 2017-18, and up to $2 million per year transferred thereafter until January 1, 2028 to ensure that the unencumbered funds in the LBF available for implementation equal $2 million. SLC cannot expend transferred funds unless they are appropriated in the Budget Act.
2. Up to $396 million to plug and abandon legacy wells. (Up to $2 million per well for 198 wells.)
3. One-time cost of $350,000 to complete the in-depth inventory of legacy wells.
4. Increased SLC annual implementation costs over ten years of $250,000 to survey and monitor oil seepage and remove coastal hazards.
5. Minor and absorbable costs to the report activities and accomplishments to the legislature.
6. Minor and absorbable costs to DOGGR for permitting and consultation activities related to plugging and abandoning wells.

COMMENTS:

1. Backround and Purpose. SLC is an independent commission comprised of the Lieutenant Governor, the State Controller, and the Director of Finance. It manages the state’s 4 million acres of tidelands, submerged lands, and the beds of navigable rivers, streams, lakes, bays, estuaries, inlets, and straits. In the marine context, SLC has broad authority over sovereign lands including rivers and sloughs, lakes, tidelands, and submerged lands. It also manages energy and mineral resource development through leases, has an oil spill prevention program at marine oil terminals and offshore platforms, and has an invasive species prevention program from large ocean-going vessels.

Remnants of man-made structures dating back to the late 1800s remain along California’s coastline, and tidal and submerged lands. When no responsible parties can be identified, the state, as owner of the land on which these legacy wells and other coastal structures are located, is responsible for removing and remediating these hazards.

At SLC’s December 6, 2016 hearing, staff provided an update on its coordinated efforts with DOGGR to inventory legacy oil and gas wells. SLC staff identified 198 Category 1 (high-priority) legacy wells of which 190 were located in the Summerland oil field. The remaining eight wells were in the Elwood and Rincon fields nearby. The staff report included a list of next steps for ongoing work to assess and identify further hazards and prioritize remediation.

On February 27, 2017, staff was notified of oil well heads exposed due to recent storm-induced significant sand erosion at Summerland Beach. Commission staff investigated and found five well casings and a steam vessel exposed on the west end of the beach and two well casings on the east end. Two of the casings were leaking oil visibly and two had previously not been catalogued. All of the exposed wells were legacy wells.

According to the author, “Research the Commission completed in 2016 identified approximately 200 improperly capped “orphan” oil wells that risk contaminating our coastal waters through the continual seepage of oil. SB 44 redirects up to $2 million dollars annually to a fund set aside for the remediation of these improperly abandoned legacy wells. With this fund, the [SLC] can begin identifying precisely which old wells are leaking oil and prioritize remediation to address the highest risk wells first.”

1. Previous Legislation. Last year, Senator Jackson introduced SB 900, which would have established a coastal hazard remediation program at SLC and provided up to $500,000 in annual funding from tideland oil revenues, as specified, to the program. Governor Brown vetoed SB 900; his veto statement read, in part:

This bill would transfer $500,000 from the General Fund to the Land Bank Fund and would require additional transfer of funds that would be available upon appropriation for coastal hazard removal and remediation.

I am directing the Department of Conservation to work with the State Lands Commission to develop an inventory of legacy oil and gas wells and other hazards along the California coastline to determine the oil seepage locations, rates and environmental impacts.

Having this information will better inform what remedial actions might be warranted for both the short and long term, and appropriate ways of funding the needed actions.

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

Date of Hearing: July 10, 2017

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Cristina Garcia, Chair

SBPCA Bill Id:SB 44

Author:(Jackson) – As Amended Ver:May 26, 2017

SENATE VOTE: 33-6

SUBJECT: State lands: coastal hazard and legacy oil and gas well removal and remediation program

SUMMARY: Requires, upon appropriation of funding by the Legislature, that the State Lands Commission (SLC) administer a coastal hazard removal and remediation program (program).

EXISTING LAW:

1. Establishes SLC as an independent commission comprised of the Lieutenant Governor, the State Controller, and the Director of Finance and grants SLC with jurisdiction over state lands, including coastal lands.
2. Requires SLC to inventory and remediate, where necessary, abandoned mine hazards on state school lands.

THIS BILL:

1. Requires, upon appropriation by the Legislature, SLC to, within two years, administer a coastal hazard and legacy oil and gas well removal and remediation program. The program includes completing an assessment of legacy oil and gas wells and coastal hazards; surveying, studying, and monitoring oil seepage in state waters and tidelands and partnering with experts to facilitate innovative solutions; and, in cooperation with the Division of Oil, Gas, and Geothermal Resources (DOGGR), beginning the process to remediate certain improperly abandoned legacy oil and gas wells.
   
2. Requires SLC to prioritize activities undertaken by the program based upon available resources.
3. Authorizes SLC to seek and accept on behalf of the state any gift, bequest, devise, or donation, as specified, to assist in funding the program.
4. Requires SLC to annually report to the Legislature on the activities and accomplishments of the program from January 1, 2018 until January 1, 2026.
5. Defines “coastal hazards” and “legacy oil and gas wells” for the purposes of the program.
6. Requires that, for the fiscal year (FY) 2018/2019, out of those funds deposited into the General Fund by SLC from tideland oil revenues that the sum of $2 million be transferred to the Land Bank Fund (Fund) and be available, upon appropriation, for the purpose of implementing the program.
7. Starting with the FY 2019/2020 and each fiscal year thereafter until FY 2027/2028, inclusive, an amount sufficient to bring the unencumbered balance of the fund available for the purpose of implementing this program up to $2 million be transferred to the fund from tideland oil revenues and be available, upon appropriation, for the purpose of implementing this program.
8. Requires SLC to prepare and submit to the Legislature, including appropriate policy and fiscal committees, information about this program useful to determining the effectiveness of the program, as specified, by January 1, 2027.
9. Sunsets the program on July 1, 2028.

FISCAL EFFECT: According to the Senate Appropriations Committee, $2 million per year transferred from the General Fund to the Fund in FY 2017-18, and up to $2 million per year transferred thereafter until July 1, 2028, to ensure that the unencumbered funds in the Fund available for implementation equal $2 million.

Implementation costs will consist of the following for 10 years unless the program is reauthorized by July 1, 2028:

1. One-time cost of $350,000 to complete the in-depth inventory of legacy wells;
   
2. Annual costs of approximately $50,000 to survey and monitor oil seepage;
   
3. Annual costs of approximately $200,000 to remove coastal hazards;
   
4. Up to $396 million to plug and abandon legacy wells (up to $2 million per well for 198 wells);
   
5. Minor and absorbable costs to the commission to report activities and accomplishments to the Legislature; and,
   
6. Minor and absorbable costs to DOGGR for permitting and consultation activities related to plugging and abandoning wells.

COMMENTS:

1. Author statement:

The [SLC] has a demonstrated history of successfully remediating oil wells located in California’s tidelands, and has taken a leading role in removing the coastal hazards related to legacy oil development like wood and steel pilings, railroad irons, pipelines, and wooden beams and structures. Research the Commission completed in 2016 identified approximately 200 improperly capped “orphan” oil wells that risk contaminating our coastal waters through the continual seepage of oil.

SB 44 redirects up to $2 million dollars annually to a fund set aside for the remediation of these improperly abandoned legacy wells. With this fund, the [SLC] can begin identifying precisely which old wells are leaking oil and prioritize remediation to address the highest risk wells first.

1. Background. SLC is an independent commission comprised of the Lieutenant Governor, the State Controller, and the Director of Finance. Established in 1938, SLC manages the state’s 4 million acres of tidelands and submerged lands and the beds of navigable rivers, streams, lakes, bays, estuaries, inlets, and straits. In the marine context, SLC has broad authority over sovereign lands, including rivers and sloughs, lakes, tidelands, and submerged lands. It also manages energy and mineral resource development through leases, has an oil spill prevention program at marine oil terminals and offshore platforms, and has an invasive species prevention program from large ocean-going vessels.
2. Hazards on state lands. Weather systems and extreme storms can cause dangerous coastal hazards to surface on shorelines. When funding is available, SLC removes coastal hazards. Coastal hazards can include remnants of coastal structures, piers, oil wells, pilings, deteriorated electric cables, and old pipes. Many coastal hazards are located on public trust lands set aside for commerce, navigation, fishing, and recreation, and can impede coastal use and threaten public health and safety.
   
   The Summerland Oil Field in Santa Barbara County was the world's first offshore oil drilling operation and predates any regulatory framework. While the visual infrastructure has been removed, the wells were not properly capped and continue to leak oil into the ocean and Santa Barbara's beaches.
   
   SLC has developed a limited coastal hazard removal program that has operated when funding has been available. The program was initiated when an inventory performed in the mid-1980s found over 400 coastal hazards in Los Angeles, Santa Barbara, and Ventura Counties. While some hazards were traced to responsible parties, most were not and consequently became the responsibility of the state. SLC has completed eight hazard removal projects since 2001. In August, 2015, SLC directed staff to conduct an initial assessment of the Becker Onshore Well (in the Summerland Oil Field).

SLC also inventories and remediates abandoned mine hazards on state school lands, in consultation with the Department of Fish and Wildlife and the State Office of Historic Preservation.

At SLC's December 6, 2016 hearing, staff provided an update on its efforts to inventory legacy oil and gas wells. SLC staff and DOGGR worked together to develop an inventory of legacy oil and gas wells and other hazards, including oil seepage locations, along the state’s coast. Their results were divided into three categories – high priority legacy wells (Category 1), medium priority wells of concern (Category 2), and low priority wells of concern (Category 3). Legacy wells have little-to-no well abandonment history, are located offshore, were likely plugged and abandoned prior to 1938, and were drilled by operators no longer in business (meaning any additional work is the state’s responsibility). The wells of concern generally are newer, have some documentation regarding their abandonment and have a current or prior operator that is still in business. SLC staff identified 198 Category 1 wells, of which 190 are located in the Summerland oil field. The remaining eight wells were in the Elwood and Rincon fields nearby. The staff report included a list of next steps for ongoing work to assess and identify further hazards and prioritize remediation. In addition to SLC's efforts last year to identify wells of concern, storms that occurred in February 2017 revealed additional unknown and leaking legacy wells in the same vicinity.

1. Previous legislation. Last year, Senator Jackson introduced SB 900, which would have established a coastal hazard remediation program at SLC and provided up to $500,000 in annual funding from tideland oil revenues, as specified, to the program. Governor Brown vetoed SB 900; his veto statement read, in part:

This bill would transfer $500,000 from the General Fund to the Land Bank Fund and would require additional transfer of funds that would be available upon appropriation for coastal hazard removal and remediation.

I am directing the Department of Conservation to work with the State Lands Commission to develop an inventory of legacy oil and gas wells and other hazards along the California coastline to determine the oil seepage locations, rates and environmental impacts.

Having this information will better inform what remedial actions might be warranted for both the short and long term, and appropriate ways of funding the needed actions.

REGISTERED SUPPORT / OPPOSITION:

Support

California Catholic Conference

County of Santa Barbara

Heal the Ocean

League of Women Voters of California

12 individuals

Opposition

None on file

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. /

 THIRD READING  

Bill No: SB 44

Author:

:

Vote:

SENATE NATURAL RES. & WATER COMMITTEE: 8-0, 3/14/17

AYES: Hertzberg, Allen, Atkins, Hueso, Jackson, Monning, Stern, Vidak

NO VOTE RECORDED: Stone

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 6-0, 4/19/17

AYES: Wieckowski, Bates, Hill, Lara, Skinner, Stern

NO VOTE RECORDED: Stone

SENATE APPROPRIATIONS COMMITTEE: 5-1, 5/25/17

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Nielsen

NO VOTE RECORDED: Bates

SUBJECT: State lands: coastal hazard and legacy oil and gas well removal and remediation program

SOURCE: Author

DIGEST:

This bill requires the State Lands Commission, upon appropriation of funding by the Legislature, to begin a coastal hazard removal and remediation program to address legacy oil and gas wells within two years, as specified, with up to $2 million in annual funding, and annual legislative reporting. A comprehensive legislative report, as specified, is required prior to the program’s sunset on July 1, 2028.

ANALYSIS:

Existing law:

1. Establishes the State Lands Commission (commission) in the Natural Resources Agency.
   1. Established in 1938, the commission manages the state’s four million acres of tidelands and submerged lands and the beds of navigable rivers, streams, lakes, bays, estuaries, inlets, and straits. In the marine context, the commission has broad authority over sovereign lands, including rivers and sloughs, lakes, tidelands, and submerged lands. It also, among other things, manages tideland energy and mineral resource development through leases, and removes coastal hazards when funding is available.
2. Requires, generally, with specified exceptions, the commission, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes. (Hereafter this is referred to as “tidelands oil revenues.”)
3. Creates, through the Kapiloff Land Bank Act, the continuously appropriated Land Bank Fund (fund), from which the commission may expend money for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.
4. Establishes the Division of Oil, Gas, and Geothermal Resources (DOGGR) – the state’s oil and gas regulator – in the Department of Conservation.

This bill creates and provides funding for a coastal hazard and legacy oil and gas well removal and remediation program at the commission. Specifically, this bill:

1. Requires, upon appropriation by the Legislature, the commission to, within two years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified.
   1. The program includes completing an assessment of legacy oil and gas wells and coastal hazards; surveying, studying and monitoring oil seepage in state waters and tidelands and partnering with experts to facilitate innovative solutions; and, in cooperation with DOGGR, beginning the process to remediate certain improperly abandoned legacy oil and gas wells.
2. Requires the commission to prioritize activities undertaken by the program based upon available resources.
3. Authorizes the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation, as specified, to assist in funding the program.
4. Requires the commission to report to the legislature on the activities and accomplishments of the program, as specified, from January 1, 2018, and annually until January 1, 2026
5. Defines “coastal hazards” and “legacy oil and gas wells” for the purposes of the program. Coastal hazards include legacy oil and gas wells and human-made structures that have been abandoned and pose a hazard to public health and safety, as described. Legacy oil and gas wells are defined consistent with their description above.
6. Requires that, for the fiscal year (FY) 2018/2019, out of those funds deposited into the General Fund by the commission from tideland oil revenues that the sum of $2 million be transferred to the fund and be available, upon appropriation, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program.
   1. Starting with the FY 2019/2020 and each fiscal year thereafter until FY 2027/2028, inclusive, an amount sufficient to bring the unencumbered balance of the fund available for the purpose of implementing this program up to $2 million be transferred to the fund from tideland oil revenues and be available, upon appropriation, for the purpose of implementing this program.
7. Requires that the commission prepare and submit to the Legislature, including appropriate policy and fiscal committees, information about this program useful to determining the effectiveness of the program, as specified, by January 1, 2027.
   1. Required elements of this comprehensive report include a list of the activities and accomplishments of the program; program implementation challenges; program expenditures; information on any gifts or similar accepted on behalf of the program, as specified; and recommendations regarding program re-authorization, including future priorities and any changes recommended to the program.
8. Sunsets the program on July 1, 2028.
9. Contains numerous relevant findings and declarations.

Background

Historical oil and gas development in Santa Barbara County. The Summerland oil field in Santa Barbara County was the world's first offshore oil drilling operation and predates any regulatory framework. Today, the coastline area there contains the scattered vestiges of the rapid and intensive offshore oil development that began before 1900. Most wells were abandoned in the early 1900s when there was little or no oversight. Well removal, capping or plugging, if any, varied and involved rudimentary procedures that do not meet more modern health, safety, and environmental protection requirements. Poorly abandoned wells continue to leak oil into the ocean and onto Santa Barbara's beaches.

Commission clean-up efforts for old oil and gas wells in Santa Barbara County. The commission has a long history of coordinating and undertaking numerous efforts to reduce leakage from old wells at the Summerland oil field. The commission has worked with DOGGR to permit some of this work and has received occasional funding from DOGGR to do so.

Governor Brown’s 2016 veto of a similar bill. Last year, Senator Jackson introduced SB 900 which would have established a coastal hazard remediation program at the commission and provided up to $500,000 in annual funding from tideland oil revenues, as specified, to the program. Governor Brown vetoed SB 900 and his veto statement read, in part:

“This bill would transfer $500,000 from the General Fund to the Land Bank Fund and would require additional transfer of funds that would be available upon appropriation for coastal hazard removal and remediation.”

“I am directing the Department of Conservation to work with the State Lands Commission to develop an inventory of legacy oil and gas wells and other hazards along the California coastline to determine the oil seepage locations, rates and environmental impacts.”

“Having this information will better inform what remedial actions might be warranted for both the short and long-term, and appropriate ways of funding the needed actions.”

Recent commission efforts assessing coastal legacy wells. At the commission’s December 6, 2016 hearing, commission staff provided an update on its efforts to inventory legacy oil and gas wells. Commission staff and DOGGR worked together to develop an inventory of legacy oil and gas wells and other hazards, including oil seepage locations, along the state’s coast. The commission categorized their results into three categories – high priority legacy wells (Category 1), and medium and low priority wells of concern (Categories 2 and 3). Legacy wells have little-to-no well abandonment history, are located offshore, were likely plugged and abandoned prior to 1938 or an unknown date, and were drilled by operators no longer in business (meaning any additional work is the state’s responsibility). The wells of concern generally are newer, have some documentation regarding their abandonment and have a current or prior operator that is still in business. Commission staff identified 198 Category 1 wells of which 190 were located in the Summerland oil field. The remaining eight wells were in the Elwood and Rincon fields nearby. The staff report included a list of next steps for ongoing work to assess and identify further hazards and prioritize remediation. Subsequent to these efforts, February 2017 storms revealed additional unknown and leaking legacy wells in the same vicinity.

Comments

Addresses need. As noted above, recent storm activity definitively shows that improperly plugged and abandoned legacy wells are, at least in part, responsible for some of the oil observed in coastal waters and beaches.

Response to SB 900’s veto message. The recently completed inventory that the commission and DOGGR worked together on addresses the veto message’s comment about assessing the scope of the problem regarding legacy wells and associated coastal hazards. No change in the proposed funding mechanism in this bill compared to SB 900 is proposed, and the potential annual funding level is increased to up to $2 million, although the funding now sunsets at the end of FY 2027/2028.

Related/Prior Legislation

SB 724 (Lara, 2017) temporarily increases, among other things related to the regulation of oil and gas wells and related equipment, to up to $3 million (from $1 million) the amount of funds available every year to address orphan, hazardous and other wells. (This bill is on the Senate Floor.)

SB 900 (Jackson, 2016) would have established a coastal hazard remediation program at the commission and provided up to $500,000 in annual funding from tidelands oil and gas revenues, as specified, to the program that would have otherwise be deposited in the General Fund. (vetoed by Governor Brown)

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, $2 million per year transferred from the General Fund to the Land Bank Fund in FY 2017-18, and up to $2 million per year transferred thereafter until July 1, 2028, to ensure that the unencumbered funds in the Land Bank Fund available for implementation equal $2 million.

Implementation costs will consist of the following for 10 years unless the program is reauthorized by July 1, 2028:

• One-time cost of $350,000 to complete the in-depth inventory of legacy wells.
• Annual costs of approximately $50,000 to survey and monitor oil seepage.
• Annual costs of approximately $200,000 to remove coastal hazards.
• Up to $396 million to plug and abandon legacy wells. (Up to $2 million per well for 198 wells.)
• Minor and absorbable costs to the commission to report activities and accomplishments to the legislature.
• Minor and absorbable costs to DOGGR for permitting and consultation activities related to plugging and abandoning wells.

SUPPORT: (Verified 5/26/17)

California State Controller Betty T. Yee

California Coastal Commission

California Council for Environmental and Economic Balance

Carpinteria Valley Association

County of Santa Barbara

Environmental Defense Center

Environmental Working Group

Food and Water Watch

Get Oil Out!

League of Women Voters of California

City of Santa Barbara

City of Goleta

Supervisor Joan Hartmann, Santa Barbara County

Santa Barbara Audobon Society

Santa Barbara Channelkeeper

Santa Barbara Women’s Political Committee

Sierra Club California

State Lands Commission

Summerland Citizens Association

Summerland Sanitary District

Over 110 individuals

OPPOSITION: (Verified 5/26/17)

None received

ARGUMENTS IN SUPPORT: According to the author, the commission “has a demonstrated history of successfully remediating oil wells located in California’s tidelands, and has taken a leading role in removing the coastal hazards related to legacy oil development like wood and steel pilings, railroad irons, pipelines, and wooden beams and structures. Research the commission completed in 2016 identified approximately 200 improperly capped “orphan” oil wells that risk contaminating our coastal waters through the continual seepage of oil.

“SB 44 redirects up to $2 million dollars annually to a fund set aside for the remediation of these improperly abandoned legacy wells. With this fund, the commission can begin identifying precisely which old wells are leaking oil and prioritize remediation to address the highest risk wells first.”

Writing in support, the commission adds that “oil is a constant presence on Summerland Beach and has resulted in beach closures to prevent adverse public health effects. Beach users regularly see oil on the beach, smell the noxious odors, and live with the negative impacts to the ocean and coastline. SB 44 would enable the commission to remedy these problems, enhance coastal resources, and improve public access to the coastline.”

Prepared by:

5/27/17 18:32:28

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 44 (Jackson) - State lands: coastal hazard and legacy oil and gas well removal and remediation program

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 25, 2017

Bill Summary:

SB 44 requires the State Lands Commission (commission), upon appropriation of funding by the Legislature, to administer a coastal hazard removal and remediation program within two years. The bill also requires, for fiscal year 2017-18, the transfer of $2 million to the Land Bank Fund (LBF) to implement the program, and requires the transfer of an amount sufficient to bring the unencumbered LBF balance to $2 million in subsequent years until January 1, 2028. The commission must submit a report to specified Legislative committees prior to January 1, 2027.

Fiscal Impact:

$2 million per year transferred from the General Fund to the LBF in FY 2017-18, and up to $2 million per year transferred thereafter until January 1, 2028 to ensure that the unencumbered funds in the LBF available for implementation equal $2 million.

Implementation costs will consist of the following for 10 years unless the program is reauthorized by January 1, 2028:

• One-time cost of $350,000 to complete the in-depth inventory of legacy wells.
• Annual costs of approximately $50,000 to survey and monitor oil seepage.
• Annual costs of approximately $200,000 to remove coastal hazards.
• Up to $396 million to plug and abandon legacy wells. (Up to $2 million per well for 198 wells.)
• Minor and absorbable costs to the commission to report activities and accomplishments to the legislature.
• Minor and absorbable costs to the Division of Oil, Gas and Geothermal Resources (DOGGR) for permitting and consultation activities related to plugging and abandoning wells.

Committee Amendments:

Require the commission to submit a report to the relevant committees in the Legislature (the natural resources, environmental quality, appropriations, and budgets committees in each house) and sunsets program on January 1, 2028.

Author Amendments:

Make technical amendments.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

SB 44 (Jackson) - State lands: coastal hazard and legacy oil and gas well removal and remediation program

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

Bill Summary:

SB 44 requires the State Lands Commission (SLC), upon appropriation of funding by the Legislature, to administer a coastal hazard removal and remediation program within two years. The bill also requires, for fiscal year 2017-18, the transfer of $2 million to the Land Bank Fund (LBF) to implement the program, and requires the transfer of an amount sufficient to bring the unencumbered LBF balance to $2 million in subsequent years.

Fiscal Impact:

$2 million per year transferred from the General Fund to the LBF in FY 2017-18, and up to $2 million per year transferred thereafter to ensure that the unencumbered funds in the LBF available for implementation equal $2 million.

• Implementation costs will consist of the following:
• One-time cost of $350,000 to complete the in-depth inventory of legacy wells.
• Annual costs of approximately $50,000 to survey and monitor oil seepage.
• Annual costs of approximately $200,000 to remove coastal hazards.
• Up to $396 million to plug and abandon legacy wells. (See staff comments.)
• Minor and absorbable costs to the SLC to report activities and accomplishments to the legislature.
• Minor and absorbable costs to the Division of Oil, Gas and Geothermal Resources (DOGGR) for permitting and consultation activities related to plugging and abandoning wells.

Background:

The SLC is an independent commission comprised of the Lieutenant Governor, the State Controller, and the Director of Finance. It manages the state’s 4 million acres of tidelands, submerged lands, and the beds of navigable rivers, streams, lakes, bays, estuaries, inlets, and straits. In the marine context, the SLC has broad authority over sovereign lands including rivers and sloughs, lakes, tidelands, and submerged lands. It also manages energy and mineral resource development through leases, has an oil spill prevention program at marine oil terminals and offshore platforms, and has an invasive species prevention program from large ocean-going vessels.

Remnants of man-made structures dating back to the late 1800s remain along California’s coastline, and tidal and submerged lands. When no responsible parties can be identified, the state, as owner of the land on which these legacy wells and other coastal structures are located, is responsible for removing and remediating these hazards.

At the SLC’s December 6, 2016 hearing, staff provided an update on its coordinated efforts with DOGGR to inventory legacy oil and gas wells. SLC staff identified 198 Category 1 (high-priority) legacy wells of which 190 were located in the Summerland oil field. The remaining eight wells were in the Elwood and Rincon fields nearby. The staff report included a list of next steps for ongoing work to assess and identify further hazards and prioritize remediation.

On February 27, 2017, staff was notified of oil well heads exposed due to recent storm-induced significant sand erosion at Summerland Beach. Commission staff investigated and found five well casings and a steam vessel exposed on the west end of the beach and two well casings on the east end. Two of the casings were leaking oil visibly and two had previously not been catalogued. All of the exposed wells were legacy wells.

Proposed Law:

This bill:

1. Upon appropriation by the Legislature, require the SLC to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. This would include:
   1. Completing an assessment of legacy oil and gas wells and coastal hazards,
   2. Surveying, studying and monitoring oil seepage in state waters and tidelands and partner with experts to facilitate innovative solutions, and
   3. In cooperation with DOGGR, beginning the process to remediating certain improperly abandoned legacy oil and gas wells.
2. Require the SLC to prioritize activities undertaken by the program based upon available resources.
3. Authorize the SLC to seek and accept on behalf of the state any gift, bequest, devise, or donation, as specified, to assist in funding the program.
4. Require the SLC to annually report to the Legislature about the program, as specified.
5. Define “coastal hazards” and “legacy oil and gas wells” for the purposes of the program. Coastal hazards include legacy oil and gas wells and human-made structures that have been abandoned and pose a hazard to public health and safety, as described. Legacy oil and gas wells are defined consistent with their description above.
6. Require that, for the fiscal year (FY) 2018-19, out of those funds deposited into the General Fund by the commission from tideland oil revenues that the sum of $2 million be transferred to the fund and be available, upon appropriation, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program.
7. Require, commencing with the FY 2019-20 and each fiscal year thereafter, that an amount sufficient to bring the unencumbered balance of the fund available for the purpose of implementing this program up to $2 million be transferred to the fund from tideland oil revenues and be available, upon appropriation, for the purpose of implementing this program.

Related Legislation:

SB 724 (Lara, 2017) would, among other things related to the regulation of oil and gas wells and related equipment, increase to up to $5 million (from $1 million) the amount of funds available every year to address orphan, hazardous and other wells. The bill is currently pending before the Senate Natural Resources and Water Committee.

SB 900 (Jackson, 2016) would have established a coastal hazard remediation program at the SLC and provided up to $500,000 in annual funding from tidelands oil and gas revenues, as specified, to the program that would have otherwise be deposited in the General Fund. The bill was vetoed by Governor Brown.

Staff Comments:

:

Total cost for mitigation efforts. The SLC estimates that approximately 198 legacy wells exist on California’s coastline, and that the average cost to properly plug and abandon a well is between $1.1 million and $2 million. The bill states that the SLC may, in cooperation with the DOGGR, seek to plug and abandon wells that present a hazard to the public health and safety, and the environment. While plugging and abandoning efforts are not required under the bill, this provision creates costs pressures in the hundreds of millions.

Continuous appropriation. Staff notes that the Constitutional authority to appropriate funds rests with the Legislative branch of government, and the appropriation of funds allows for the oversight and monitoring of programs. Staff recommends the bill be amended to delete the continuous appropriation and make the program subject to review in the annual budget act, thus allowing oversight and monitoring.

Veto message. Governor Brown vetoed a similar bill last year. In his veto message he directed “the Department of Conservation to work with the State Lands Commission to develop an inventory of legacy oil and gas wells and other hazards along the California coastline to determine the oil seepage locations, rates and environmental impacts.” The SLC indicates that this work has been done; however, it is unclear whether the concerns that led to veto have been addressed.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2017 - 2018 Regular

Bill No: SB 44

SUBJECT: State lands: coastal hazard and legacy oil and gas well removal and remediation program

ANALYSIS:

Existing law:

1. Establishes the State Lands Commission (commission) in the Natural Resources Agency and prescribes the functions and duties of the commission: protect the lands and resources entrusted to its care through balanced management, marine protection and pollution prevention, adaptation to climate change, and ensuring public access to these lands and waters for current and future generations. Under existing law, the commission has jurisdiction over various state lands, including coastal lands. The commission is organized into divisions that include the Land Management, External Affairs, Environmental Management and Planning, Mineral Resources Management, and Marine Environmental Protection.
2. Requires the commission, with specified exceptions, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes.
3. Establishes the Land Bank Fund, a continuously appropriated fund, from which the commission may expend moneys for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.
   

This bill: creates and funds a coastal hazard and legacy oil and gas well removal and remediation program at the commission.

Specifically, this bill would:

1. Upon appropriation by the Legislature, require the commission to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. This would include:
   1. Completing an assessment of legacy oil and gas wells and coastal hazards,
   2. Surveying, studying and monitoring oil seepage in state waters and tidelands and partner with experts to facilitate innovative solutions, and
   3. In cooperation with DOGGR, beginning the process to remediating certain improperly abandoned legacy oil and gas wells.
2. Require the commission to prioritize activities undertaken by the program based upon available resources.
3. Authorize the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation, as specified, to assist in funding the program.
4. Require the commission to annually report to the Legislature about the program, as specified.
5. Define “coastal hazards” and “legacy oil and gas wells” for the purposes of the program. Coastal hazards include legacy oil and gas wells and human-made structures that have been abandoned and pose a hazard to public health and safety, as described. Legacy oil and gas wells are defined consistent with their description above.
6. Require that, for the fiscal year (FY) 2018-19, out of those funds deposited into the General Fund by the commission from tideland oil revenues that the sum of $2 million be transferred to the fund and be available, upon appropriation, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program.
7. Require, commencing with the FY 2019-20 and each fiscal year thereafter, that an amount sufficient to bring the unencumbered balance of the fund available for the purpose of implementing this program up to $2 million be transferred to the fund from tideland oil revenues and be available, upon appropriation, for the purpose of implementing this program.
   

Background

1. Summerland Oil Field. The Summerland oil field in Santa Barbara County was the world’s first offshore oil drilling operation and predates any regulatory framework.

The Summerland Oil Field (and Summerland Offshore Oil Field) is (now) an inactive oil field in Santa Barbara County, California, about four miles (6 km) east of the city of Santa Barbara, within and next to the unincorporated community of Summerland. First developed in the 1890s, and richly productive in the early 20th century, the Summerland Oil Field was the location of the world’s first offshore oil wells, drilled from piers in 1896.

In 1894, Henry L. Williams drilled two wells on the beach. He drilled another in 1895 with encouraging results. These results led Williams and others to consider the possibility of pursuing offshore deposits. They constructed piers from the shore seaward and drilled wells from them. This drilling activity led to the discovery of the Summerland Oil Field (offshore area) in 1896. This is the first offshore field developed in the nation, and possibly the world, by means of drilling offshore wells from piers.

Twenty-two companies built fourteen piers before the end of the Century. By 1902, there were approximately 412 wells on these piers, though many were already haphazardly abandoned as they flowed for only a short time. By 1920, only a few of these wells were still active. The majority of production activities from the Summerland piers lasted for only approximately 25 years.

The Summerland Oil Field, which was the first significant field to be developed in Santa Barbara County, produced 3.18 million barrels of oil during its 50-year lifespan, finally being abandoned in 1939-40. The Summerland Offshore Oil Field, produced oil from two drilling platforms in the Santa Barbara Channel before being abandoned in 1996.

By the 1960s offshore oil production began to take off in California, particularly along Santa Barbara County. That is, until January 1969, when Union Oil’s Platform A suffered a blowout six miles off the coast. The result was more than 3.2 million gallons of crude oil were released into the Santa Barbara Channel and on surrounding shorelines.

On January 28, 1969, after drilling 3,500 feet below the ocean floor, a Union Oil Company drilling platform six miles off Santa Barbara, suffered a blowout.

Between 80,000 barrels and 100,000 barrels of oil flowed into the Pacific Ocean and onto beaches, including Summerland – where the U.S. offshore industry began in 1896 with wells drilled from piers.

Problems at the Union Oil platform began when roughnecks began to retrieve the pipe in order to replace a drill bit and pressure became dangerously low, according to a report by the University of California, Santa Barbara (UCSB).

“A natural gas blowout occurred. An initial attempt to cap the hole was successful but led to a tremendous buildup of pressure. The expanding mass created five breaks in an east-west fault on the ocean floor, releasing oil and gas from deep beneath the earth,” UCSB noted.

It would take workers days to control the well – by pumping and drilling mud down the borehole at a rate of 1,500 barrels an hour.

“The techniques, equipment and resources necessary to combat an oil spill of this magnitude did not exist at the time,” said UCSB geologist Keith C. Clarke. “On the eleventh day, chemical mud was successfully used to seal the cracks in the seafloor, but only after approximately three million gallons of oil escaped.”

In the spring following the oil spill, Earth Day was born nationwide. “Many consider the publicity surrounding the oil spill a major impetus to the environmental movement.”

Although the U.S. Environmental Protection Agency will be established the following year – joining several other federal agencies regulating the industry – public opinion turned against offshore exploration.

Today, the region is much cleaner, but, as seen after the 2015 pipeline spill at Refugio State Beach near Santa Barbara, that doesn’t mean it’s free of oil, either naturally released or spilled during extraction. While telling the two apart can be complicated.

1. Summerland Oil Field – Today. Today the coastline area contains the scattered vestiges of the rapid and intensive offshore oil development that began before 1900. Most wells were abandoned in the early 1900s when there was little or no oversight. Well removal, capping or plugging, if any, varied and involved rudimentary procedures that do not meet more modern health, safety, and environmental protection requirements. Poorly abandoned wells continue to leak oil into the ocean and onto Santa Barbara’s beaches.

The commission has long undertaken numerous efforts to reduce leakage from old wells at the Summerland Oil Field. The commission has worked with the Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (DOGGR) – the state oil and gas well regulator – to permit some of this work and has received occasional funding from DOGGR to do so. For example, in October 2016, the commission released a Notice of Preparation for the environmental impact report (EIR) for the Becker Onshore Well abandonment and remediation program at the Summerland oil field. The EIR is expected to be completed later this year, with work under the program starting thereafter.

SB 900 (Jackson, 2016) would have established a coastal hazard remediation program at the commission and provided up to $500,000 in annual funding from tideland oil revenues, as specified, to the program. Governor Brown vetoed SB 900 and directed the Department of Conservation to work with the State Lands Commission to develop an inventory of legacy oil and gas wells and other hazards along the California coastline to determine the oil seepage locations, rates and environmental impacts.

At the commission’s December 6, 2016 hearing, commission staff provided an update on its efforts to inventory legacy oil and gas wells. Commission staff and DOGGR worked together to develop an inventory of legacy oil and gas wells and other hazards, including oil seepage locations, along the state’s coast. The commission categorized their results into 3 categories – high-priority legacy wells (Category 1), and medium- and low-priority wells of concern (Categories 2 and 3). Legacy wells have little-to-no well abandonment history, are located offshore, were likely plugged and abandoned prior to 1938 or an unknown date, and were drilled by operators no longer in business (meaning any additional work is the state’s responsibility). The wells of concern generally are newer, have some documentation regarding their abandonment and have a current or prior operator that is still in business.

Commission staff identified 198 Category 1 wells of which 190 were located in the Summerland oil field. The remaining eight wells were in the Elwood and Rincon fields nearby. The staff report included a list of next steps for ongoing work to assess and identify further hazards and prioritize remediation.

Recently, on February 27, 2017, commission staff were notified of exposed oil well heads at Summerland Beach due to recent storm-induced significant sand erosion. Commission staff investigated and found five well casings and a steam vessel exposed on the west end of the beach and two well casings on the east end. Two of the casings were leaking oil visibly and two had previously not been catalogued. All of the exposed wells were legacy wells.

Comments

Purpose of Bill. According to the author, the commission “has a demonstrated history of successfully remediating oil wells located in California’s tidelands, and has taken a leading role in removing the coastal hazards related to legacy oil development like wood and steel pilings, railroad irons, pipelines, and wooden beams and structures. Research the commission completed in 2016 identified approximately 200 improperly capped “orphan” oil wells that risk contaminating our coastal waters through the continual seepage of oil.”

“SB 44 redirects up to $2 million dollars annually to a fund set aside for the remediation of these improperly abandoned legacy wells. With this fund, the commission can begin identifying precisely which old wells are leaking oil and prioritize remediation to address the highest risk wells first.”

Writing in support, the commission adds that “oil is a constant presence on Summerland Beach and has resulted in beach closures to prevent adverse public health effects. Beach users regularly see oil on the beach, smell the noxious odors, and live with the negative impacts to the ocean and coastline. SB 44 would enable the commission to remedy these problems, enhance coastal resources, and improve public access to the coastline.”

Related/Prior Legislation

SB 724 (Lara, 2017) among other things related to the regulation of oil and gas wells and related equipment, increases to up to $5 million (from $1 million) the amount of funds available every year to address orphan, hazardous and other wells. SB 724 is set to be heard in the Senate Committee on Natural Resources and Water on April 25, 2017.

SB 900 (Jackson, 2016) would have established a coastal hazard remediation program at the commission and provided up to $500,000 in annual funding from tideland oil revenues, as specified, to the program. Governor Brown vetoed SB 900 and his veto statement read, in part:

“This bill would transfer $500,000 from the General Fund to the Land Bank Fund and would require additional transfer of funds that would be available upon appropriation for coastal hazard removal and remediation.”

“I am directing the Department of Conservation to work with the State Lands Commission to develop an inventory of legacy oil and gas wells and other hazards along the California coastline to determine the oil seepage locations, rates and environmental impacts.”

“Having this information will better inform what remedial actions might be warranted for both the short and long-term, and appropriate ways of funding the needed actions.”

DOUBLE REFERRAL:

This measure was heard in Senate Natural Resources and Water Committee on March 14, 2017, and passed out of committee with a vote of 8-0.

SOURCE:

Author

SUPPORT:

California State Controller, Betty T. Yee

California State Lands Commission

Carpinteria Valley Association

City of Goleta

Environmental Defense Center

Environmental Working Group

Food and Water Watch

Get Oil Out!

League of Women Voters of California

Santa Barbara Audobon Society

Santa Barbara Channelkeeper

Santa Barbara County, Supervisor Joan Hartmann

Sierra Club California

Summerland Citizens Association

Summerland Sanitary District

Over 114 individuals

OPPOSITION:

None received

-- END --

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Robert Hertzberg, Chair

2017 - 2018 Regular

Bill No: SB 44 Hearing Date: March 14, 2017

Subject: State lands: coastal hazard and legacy oil and gas well removal and remediation program

BACKGROUND AND EXISTING LAW

1. Existing law establishes the State Lands Commission (commission) in the Natural Resources Agency. Established in 1938, the commission manages the state’s 4 million acres of tidelands and submerged lands and the beds of navigable rivers, streams, lakes, bays, estuaries, inlets, and straits. In the marine context, the commission has broad authority over sovereign lands, including rivers and sloughs, lakes, tidelands, and submerged lands. It also, among other things, manages tideland energy and mineral resource development through leases, and removes coastal hazards when funding is available.
2. Existing law, with specified exceptions, generally requires the commission, on and after July 1, 2006, to deposit all revenue, money, and remittances, derived from mineral extraction leases on state tide and submerged lands, including tideland oil revenue, into the General Fund, to be available upon appropriation by the Legislature for specified purposes. (Hereafter this is referred to as “tidelands oil revenues” for brevity.)
3. Existing law, the Kapiloff Land Bank Act (Public Resources Code (PRC) §§8600 et seq.), creates the continuously appropriated Land Bank Fund (fund), from which the commission may expend money for management and improvement of real property held by the commission, as trustee, to provide open space, habitat for plants and animals, and public access.
4. The Summerland oil field in Santa Barbara County was the world's first offshore oil drilling operation and predates any regulatory framework. Today the coastline area there contains the scattered vestiges of the rapid and intensive offshore oil development that began before 1900. Most wells were abandoned in the early 1900s when there was little or no oversight. Well removal, capping or plugging, if any, varied and involved rudimentary procedures that do not meet more modern health, safety, and environmental protection requirements. Poorly abandoned wells continue to leak oil into the ocean and onto Santa Barbara's beaches.
5. The commission has a long history of coordinating and undertaking numerous efforts to reduce leakage from old wells at the Summerland oil field. The commission has worked with the Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (DOGGR) – the state oil and gas well regulator – to permit some of this work and has received occasional funding from DOGGR to do so. For example, in October 2016, the commission released a Notice of Preparation for the environmental impact report (EIR) for the Becker Onshore Well abandonment and remediation program at the Summerland oil field. The EIR is expected to be completed later this year, with work under the program starting thereafter.
6. Last year, Senator Jackson introduced SB 900 which would have established a coastal hazard remediation program at the commission and provided up to $500,000 in annual funding from tideland oil revenues, as specified, to the program. Governor Brown vetoed SB 900 and his veto statement read, in part:

“This bill would transfer $500,000 from the General Fund to the Land Bank Fund and would require additional transfer of funds that would be available upon appropriation for coastal hazard removal and remediation.”

“I am directing the Department of Conservation to work with the State Lands Commission to develop an inventory of legacy oil and gas wells and other hazards along the California coastline to determine the oil seepage locations, rates and environmental impacts.”

“Having this information will better inform what remedial actions might be warranted for both the short and long-term, and appropriate ways of funding the needed actions.”

1. At the commission’s December 6, 2016 hearing, commission staff provided an update on its efforts to inventory legacy oil and gas wells. Commission staff and DOGGR worked together to develop an inventory of legacy oil and gas wells and other hazards, including oil seepage locations, along the state’s coast. The commission categorized their results into 3 categories – high priority legacy wells (Category 1), and medium and low priority wells of concern (Categories 2 and 3). Legacy wells have little-to-no well abandonment history, are located offshore, were likely plugged and abandoned prior to 1938 or an unknown date, and were drilled by operators no longer in business (meaning any additional work is the state’s responsibility). The wells of concern generally are newer, have some documentation regarding their abandonment and have a current or prior operator that is still in business. Commission staff identified 198 Category 1 wells of which 190 were located in the Summerland oil field. The remaining eight wells were in the Elwood and Rincon fields nearby. The staff report included a list of next steps for ongoing work to assess and identify further hazards and prioritize remediation.
2. Recently, on February 27, 2017, commission staff were notified of exposed oil well heads at Summerland Beach due to recent storm-induced significant sand erosion. Commission staff investigated and found five well casings and a steam vessel exposed on the west end of the beach and two well casings on the east end. Two of the casings were leaking oil visibly and two had previously not been catalogued. All of the exposed wells were legacy wells.

PROPOSED LAW

This bill would create and provide funding for a coastal hazard and legacy oil and gas well removal and remediation program at the commission. Specifically, this bill would:

1. Upon appropriation by the Legislature, require the commission to, within 2 years, administer a coastal hazard and legacy oil and gas well removal and remediation program, as specified. This would include:
   1. Completing an assessment of legacy oil and gas wells and coastal hazards,
   2. Surveying, studying and monitoring oil seepage in state waters and tidelands and partner with experts to facilitate innovative solutions, and
   3. In cooperation with DOGGR, beginning the process to remediating certain improperly abandoned legacy oil and gas wells.
2. Require the commission to prioritize activities undertaken by the program based upon available resources.
3. Authorize the commission to seek and accept on behalf of the state any gift, bequest, devise, or donation, as specified, to assist in funding the program.
4. Require the commission to annually report to the legislature about the program, as specified.
5. Define “coastal hazards” and “legacy oil and gas wells” for the purposes of the program. Coastal hazards include legacy oil and gas wells and human-made structures that have been abandoned and pose a hazard to public health and safety, as described. Legacy oil and gas wells are defined consistent with their description above.
6. Require that, for the fiscal year (FY) 2018/2019, out of those funds deposited into the General Fund by the commission from tideland oil revenues that the sum of $2 million be transferred to the fund and be available, upon appropriation, for the purpose of implementing the coastal hazard and legacy oil and gas well removal and remediation program.
7. Require, commencing with the FY 2019/2020 and each fiscal year thereafter, that an amount sufficient to bring the unencumbered balance of the fund available for the purpose of implementing this program up to $2 million be transferred to the fund from tideland oil revenues and be available, upon appropriation, for the purpose of implementing this program.

Additionally, the bill contains numerous relevant findings and declarations intended to demonstrate the historic and present concerns with the abandoned remnants of oil development along the coast, the risks associated with early oil and gas wells that were abandoned decades before the development of modern standards, the results of the commission’s recent inventory work identifying high priority legacy wells that could leak and present risks to public health and the environment, the regular reports by residents and beach users of oil along the coast and associated noxious odors, and the need for an ongoing funded program to address the multiple issues created by these legacy wells.

ARGUMENTS IN SUPPORT

According to the author, the commission “has a demonstrated history of successfully remediating oil wells located in California’s tidelands, and has taken a leading role in removing the coastal hazards related to legacy oil development like wood and steel pilings, railroad irons, pipelines, and wooden beams and structures. Research the commission completed in 2016 identified approximately 200 improperly capped “orphan” oil wells that risk contaminating our coastal waters through the continual seepage of oil.”

“SB 44 redirects up to $2 million dollars annually to a fund set aside for the remediation of these improperly abandoned legacy wells. With this fund, the commission can begin identifying precisely which old wells are leaking oil and prioritize remediation to address the highest risk wells first.”

Writing in support, the commission adds that “oil is a constant presence on Summerland Beach and has resulted in beach closures to prevent adverse public health effects. Beach users regularly see oil on the beach, smell the noxious odors, and live with the negative impacts to the ocean and coastline. SB 44 would enable the commission to remedy these problems, enhance coastal resources, and improve public access to the coastline.”

ARGUMENTS IN OPPOSITION

None received

COMMENTS

Response to SB 900’s veto message. The recently completed inventory that the commission and DOGGR worked together on addresses the veto message’s concern about assessing the scope of the problem regarding legacy wells and associated coastal hazards. It appears from the December 2016 hearing commission staff report that work will continue to refine that assessment. Although outside this committee’s jurisdiction, this bill continues to rely on tideland oil revenues – which are now essentially General Fund moneys – to pay for the proposed program. Committee staff note that the annual allowed appropriation for DOGGR’s fund for the remediation of hazardous wells is proposed to be increased to up to $5 million by Senator Lara’s SB 724, as introduced. However, as noted in the Assembly Appropriations Committee analysis of SB 900 last year, the cost to remediate each legacy well can be up to on the order of hundreds of thousands of dollars.

Technical amendments. There are three minor changes in language (including one typo) recommended as technical amendments to the findings. For example, one responds to the discovery of additional legacy wells at the Summerland oil field noted above. [Amendment 1]

General Fund contributions from tidelands oil revenues (pursuant to PRC §6217). From FY 2013/2014 to FY 2015/2016, tidelands oil and gas revenue contributed to the General Fund was approximately $400 million, $271 million, and $74 million, respectively.

Recent related legislation

SB 724 (Lara, 2017) would, among other things related to the regulation of oil and gas wells and related equipment, increase to up to $5 million (from $1 million) the amount of funds available every year to address orphan, hazardous and other wells. (currently pending before the Senate Natural Resources and Water Committee)

SB 900 (Jackson, 2016) would have established a coastal hazard remediation program at the commission and provided up to $500,000 in annual funding from tidelands oil and gas revenues, as specified, to the program that would have otherwise be deposited in the General Fund. (vetoed by Governor Brown)

Double-referral The Rules Committee referred this bill to both the Committee on Natural Resources and Water and to the Committee on Environmental Quality. Therefore, if this bill passes this committee, it will be referred to the Committee on Environmental Quality, which will consider the issues within their jurisdiction.

SUGGESTED AMENDMENTS

AMENDMENT 1

Revise two findings as follows:

“(c) Most legacy oil and gas wells were abandoned in the early 1900s when there was little or no oversight of the abandonment, and virtually no records exist regarding the drilling and abandonment of these wells.  Removal or plugging, if any, varied from well to well and involved rudimentary procedures that do not meet current health, safety, and environmental protection requirements.”

“(d) Based on work the State Lands Commission conducted, there are at least 198 high priority legacy oil and gas wells (identified as Category 1 wells), that could, depending on their condition, leak oil onto the surf zone impacting swimmers, surfers, and other recreational users, and causing environmental degradation and public health hazards.”

SUPPORT

Carpinteria Valley Association

Environmental Defense Center

Food and Water Watch

Get Oil Out!

League of Women Voters of California

City of Santa Barbara

City of Goleta

Supervisor Joan Hartmann, Santa Barbara County

Santa Barbara Audobon Society

Santa Barbara Channelkeeper

Santa Barbara Women’s Political Committee

Mayor Helene Schneider, City of Santa Barbara

Sierra Club California

State Lands Commission

Summerland Citizens Association

Summerland Sanitary District

Betty T. Yee, California State Controller

Over 114 individuals

OPPOSITION

None Received

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