Bills

SB 953: Oil and gas leases: state waters: State Lands Commission.

Session Year: 2021-2022
House: Senate
Latest Version Date: 2022-04-18

Version:

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 laws. Existing law prohibits 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.

This bill would require the commission to terminate all remaining oil and gas leases under its jurisdiction in tidelands and submerged lands within state waters by December 31, 2023. The bill would authorize the commission to negotiate voluntary relinquishment of a lease, before the termination, upon those terms and conditions as the commission deems necessary and advisable for the protection of the ecological, economic, and other interests of the state.

This bill would require the commission to conduct an amortization study of the oil and gas leases in state waters for which it is the lessor in order to determine the market value of these leases and provide recommendations to phase out the production of oil and gas production, as provided. The bill would require the study to be completed on or before December 31, 2023, and posted on the commissions internet website. The bill would also require, before or upon the publication of the amortization study, the commission to seek to initiate negotiations with the lessees for the active oil and gas leases in state waters, with the goal of reaching an agreement for the voluntary relinquishment of the leases and termination of all oil and gas production associated with these leases. If the commission is unable to reach an agreement with the lessees that results in voluntary relinquishments of the leases on or before December 31, 2024, the bill would require the commission to terminate the leases and provide fair compensation, as determined using the amortization study, to the lessees.

Version:

The people of the State of California do enact as follows:SECTION 1.

The Legislature finds and declares all of the following:

(a)California has a longstanding policy 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.

(b)Offshore oil and gas production creates the risk of oil spills and other pollution that threaten Californias coastal environment, community, and economy.

(c)Offshore oil and gas production is inconsistent with state climate policy, including, but not limited to, Section 38566 of the Health and Safety Code, that seeks to reduce dangers to the environment and public health, and threats to environmental justice, from climate change.

(d)Of the 11 remaining active leases in California state waters, there are only three active offshore oil and gas platforms, and all other oil and gas leases were legislatively granted to local municipalities.

(d)There are 11 remaining active oil and gas leases in California state waters managed on behalf of the state by the State Lands Commission. There are only three active offshore oil and gas platforms in state waters.

(e)The economic lives of these offshore oil and gas platforms have been largely exhausted, and continuing operations increase the risks of failure of aging infrastructure and that the government will have to pay for decommissioning costs.

(f)Oil and gas production impairs bathing, fishing, navigation, and recreation opportunities, is no longer in the interest of the state, and presents a public nuisance. an ongoing public nuisance that jeopardizes our beautiful California coastline and the forty-four billion dollars ($44,000,000,000) it generates each year in economic activity.

(g)It is in the best interests of the State of California to end offshore oil and gas production, and to terminate these leases either through voluntary negotiations or through its eminent domain powers, and to obtain the following outcomes through that termination:

(1)The end of all offshore oil and gas production.

(2)The plugging and abandonment of all oil and gas wells on the platform to the satisfaction of the Geologic Energy Management Division.

(3)The complete removal of all infrastructure, including the platform, pipelines, and production facilities, if any, attendant to the wells.

(4)The restoration of the sites of this infrastructure to the extent feasible.

SEC. 2.Section 6246 is added to the Public Resources Code, to read:6246.(a)The commission shall terminate all remaining oil and gas leases under its jurisdiction in tidelands and submerged lands within state waters by December 31, 2023.(b)Before the termination of a lease described in subdivision (a), the commission has full authority to negotiate voluntary relinquishment of a lease upon those terms and conditions as the commission deems necessary and advisable for the protection of the ecological, economic, and other interests of the state.(c)Absent a relinquishment agreement providing otherwise, this section does not release lessees from their obligations to properly plug, abandon, and decommission wells, pipelines, and attendant production facilities, or to restore the tidelands and submerged lands as required by their existing leases and current law.SEC. 2.Section 6246 is added to the Public Resources Code, to read:6246.

(a)(1)The commission shall conduct an amortization study of the oil and gas leases in state waters for which it is the lessor in order to determine the market value of these leases, and provide recommendations to phase out the production of oil and gas production. The scope of the study shall include, but is not limited to, the total expected revenues over the life of the lease, discounted to present value, as well as expected costs under the terms of the lease, including any costs associated with the plugging and abandonment of all wells to the Geologic Energy Management Divisions satisfaction, the complete removal of all infrastructure, and any other measures necessary to protect the environmental quality, health, and environmental equity of the surrounding areas.

(2)In conducting this study, the commission shall collect and analyze all data necessary to phase out oil and gas production, including any necessary legal analyses and changes to state law, if any, that may be required, to prioritize and facilitate the timely relinquishment of the existing leases described in paragraph (1).

(3)In determining the costs associated with the lease, the commission shall consider all platforms and pipelines and any attendant production facilities, and the restoration of the site to the extent feasible.

(4)The amortization study shall be peer-reviewed by independent experts.

(5)The amortization study shall be completed on or by December 31, 2023, and shall be posted for the public on the commissions internet website.

(b)Before or upon the publication of the amortization study, the commission shall seek to initiate negotiations with the lessees for the active oil and gas leases in state waters, with the goal of reaching an agreement for the voluntary relinquishment of the leases and termination of all oil and gas production associated with these leases.

(c)If the commission is unable to reach an agreement, as described in subdivision (b), with the lessees that results in voluntary relinquishments of the leases on or before December 31, 2024, the commission shall terminate the leases and provide fair compensation, as determined through the amortization study, to the lessees.

(d)Lessees shall properly plug and abandon all oil and gas wells, decommission pipelines, offshore platforms, and attendant production facilities, and restore the tidelands and submerged lands.

(e)The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

The people of the State of California do enact as follows:SECTION 1.

The Legislature finds and declares all of the following:

(b)Offshore oil and gas production creates the risk of oil spills and other pollution that threaten Californias coastal environment, community, and economy.

(f)Oil and gas production impairs bathing, fishing, navigation, and recreation opportunities, is no longer in the interest of the state, and presents a public nuisance.

SEC. 2.Section 6246 is added to the Public Resources Code, to read:6246.

(a)The commission shall terminate all remaining oil and gas leases under its jurisdiction in tidelands and submerged lands within state waters by December 31, 2023.

(b)Before the termination of a lease described in subdivision (a), the commission has full authority to negotiate voluntary relinquishment of a lease upon those terms and conditions as the commission deems necessary and advisable for the protection of the ecological, economic, and other interests of the state.

(c)Absent a relinquishment agreement providing otherwise, this section does not release lessees from their obligations to properly plug, abandon, and decommission wells, pipelines, and attendant production facilities, or to restore the tidelands and submerged lands as required by their existing leases and current law.

Date	Status
May 19, 2022	May 19 hearing: Held in committee and under submission.
May 13, 2022	Set for hearing May 19.
May 9, 2022	May 9 hearing: Placed on APPR suspense file.
Apr 29, 2022	Set for hearing May 9.
Apr 26, 2022	From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 2. Page 3517.) (April 26). Re-referred to Com. on APPR.
Apr 18, 2022	From committee with author's amendments. Read second time and amended. Re-referred to Com. on N.R. & W.
Apr 8, 2022	Set for hearing April 26.
Apr 7, 2022	April 19 set for second hearing canceled at the request of author.
Mar 31, 2022	Set for hearing April 19.
Mar 10, 2022	March 22 set for first hearing canceled at the request of author.
Mar 4, 2022	Set for hearing March 22.
Feb 16, 2022	Referred to Com. on N.R. & W.
Feb 10, 2022	From printer.
Feb 9, 2022	Article IV Section 8(a) of the Constitution and Joint Rule 55 dispensed with February 7, 2022, suspending the 30 calendar day requirement.

Authors shown for version:
Amended Senate (4/18/2022)