Existing law establishes rules for how revenue from oil and gas operations on the Long Beach tidelands is divided between the City of Long Beach and the State of California. Existing law establishes the Oil Trust Fund in the State Treasury and appropriates the moneys in the fund to the State Lands Commission commencing when specified requirements are met. Existing law requires the commission to expend the moneys in the fund to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the Long Beach tidelands that are not the responsibility of other parties. Existing law requires the Controller to transfer certain oil-revenue-related moneys to the fund, including, on the last day of each month beginning January 31, 2023, a transfer to the fund for the amount of $2,000,000 or 50% of remaining oil revenue from the City of Long Beach, as provided, whichever is less.

This bill would instead require the Controller, on the last day of each month beginning January 31, 2025, to transfer to the fund the amount of $5,000,000 or 50% of remaining oil revenue from the City of Long Beach, whichever is greater, as provided. By increasing the amount of money that may be deposited into a continuously appropriated fund, this bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes rules for how revenue from oil and gas operations on the Long Beach tidelands is divided between the City of Long Beach and the State of California. Existing law establishes the Oil Trust Fund in the State Treasury and appropriates the moneys in the fund to the State Lands Commission commencing when specified requirements are met. Existing law requires the commission to expend the moneys in the fund to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the Long Beach tidelands that are not the responsibility of other parties. Existing law requires the Controller to transfer certain oil-revenue-related moneys to the fund, including, on the last day of each month beginning January 31, 2023, a transfer to the fund for the amount of $2,000,000 or 50% of remaining oil revenue from the City of Long Beach, as provided, whichever is less.

This bill would instead require the Controller, on the last day of each month beginning January 31, 2025, to transfer to the fund the amount of $5,000,000 or 50% of remaining oil revenue from the City of Long Beach, whichever is greater, as provided. By increasing the amount of money that may be deposited into a continuously appropriated fund, this bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes rules for how revenue from oil and gas operations on the Long Beach tidelands is divided between the City of Long Beach and the State of California. Existing law establishes the Oil Trust Fund in the State Treasury and appropriates the moneys in the fund to the State Lands Commission commencing when specified requirements are met. Existing law requires the commission to expend the moneys in the fund to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the Long Beach tidelands that are not the responsibility of other parties. Existing law requires the Controller to transfer certain oil-revenue-related moneys to the fund, including, on the last day of each month beginning January 31, 2023, a transfer to the fund for the amount of $2,000,000 or 50% of remaining oil revenue from the City of Long Beach, as provided, whichever is less.

This bill would instead require the Controller, on the last day of each month beginning January 31, 2025, to transfer to the fund all the amount of $5,000,000 or 50% of remaining oil revenue from the City of Long Beach, up to $13,000,000, whichever is greater, as provided. By increasing the amount of money that may be deposited into a continuously appropriated fund, this bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law establishes the Agricultural Protection Planning Grant Program within the Department of Conservation, to provide planning grants to conserve Californias most productive farmlands and ecologically important rangelands, to advance Californias climate change goals through carbon sequestration and greenhouse gas emissions reductions resulting from the implementation of local plans, and to maintain local food supplies and agricultural economies through the protection of agricultural lands.

This bill would make a nonsubstantive revision to the stated purposes of the program.

SENATE THIRD READING

STR Bill Id:SB 1425

Author:(Gonzalez)

As Amended Ver:May 16, 2024

2/3 vote. Urgency

SUMMARY

Require the State Controller, on the last day of each month beginning January 31, 2025, to transfer to the Oil Trust Fund (Fund) the amount of $5 million or 50% of remaining oil revenue from the City of Long Beach, whichever is greater.

Major Provisions

COMMENTS

In 1911 the state granted in trust to the City of Long Beach (City) control over its tidelands – including mineral interests – subject to the terms of the grant and the Public Trust Doctrine. In 1937, the Wilmington Oil Field was discovered, and the City began oil development and extraction operations in its tidelands shortly thereafter. The City is the unit operator and California Resources Corporation (CRC) is the contractor responsible for day-to-day production and maintenance.

The City derives oil revenue from the Long Beach tidelands, a substantial portion of which has been freed from the public trust as it is no longer necessary for trust purposes. The freed revenues must be paid to the state and are deposited into the General Fund. The City is permitted to retain, out of the oil revenue each month, an amount equal to all subsidence costs and money expended by the City in administering oil and gas operations. The City must pay to the state the remaining oil revenue, except for an annual lump sum amount to be used for specified trust purposes.

Eventually, the City was faced with the certainty of large future costs, estimated to be at least $200 million for oil well plugging and abandonment and facility removal. SB 71 (Senate Committee on Budget and Fiscal Review), Chapter 81, Statutes of 2005, created the Oil Trust Fund to fund abandonment costs after unit operations have ceased from oil revenue generated. The reserve was funded through a continuing monthly per barrel charge based on tidelands oil production. The City retained these funds monthly from oil revenue, along with amounts equal to the other moneys it expended in administering oil and gas operations, before paying over the remaining oil revenue to the state.

The Controller was required to do monthly deposits ($2 million or 50% of monthly revenue, whichever is less) from the state's share of tidelands oil revenues until the Fund reached $300 million. However, the cap was reached in June 2014. AB 353 (O'Donnell), Chapter 516, Statutes of 2002, deleted the $300 cap on the total amount deposited in the Fund.

Once operations end and revenue is no longer generated, the Fund will be the primary source to fund the substantial abandonment and decommissioning work that will be required to plug and abandon wells and remove oil and gas facilities related to the oil operations.

SB 1425 will would increase the amount that the Controller transfers to the Fund at the end of each month to be all of certain oil revenue from the City.

According to the Author

For close to a century, the state of California and the City of Long Beach have engaged in a unique profit sharing and ownership relationship related to the extraction of oil resources from the Long Beach Coastline and tidelands. As a result, the State has earned billions of dollars in profit, including $5.75 billion in the last 20 years alone. However, as part of this arrangement, the State is also obligated to fund a proportional share of the liability for closing down oil wells, based on the profit it has received. The Oil Trust Fund is the primary funding source to cover this liability.

Currently, the State's share of oil abandonment liability is estimated at approximately $1 billion. With only approximately $330 million in the Oil Trust Fund, the State has an unfunded liability of $670 million. At the current rate of depositing only $2 million of monthly profits in the Oil Trust Fund, the State's liability will not be funded until 2050. This would be years after the Governor's directive to the Air Resources Board to phase out oil production by 2045 and decades after the estimated date of oil operations ceasing in 2029. These nominal monthly payments constrain the State's ability to promote responsible environmental stewardship as oil operations phase out and further leave taxpayers fronted with the bill to pay off the liability. As production from these wells naturally declines, it is vital that the State maximize the profits set aside now to minimize the share of the liability that will need to be paid later from the General Fund. By requiring $5 million or 50% of profits, whichever is more, be deposited in the Oil Trust Fund on a monthly basis, SB 1425 would help provide the necessary funding to enable the State to reach its environmental goals, allow for a responsible and timely decommissioning of toxic wells, and help protect future California taxpayers from massive liability costs.

Arguments in Support

The California State Lands Commission supports SB 1425, which is intended to address this shortfall and ensure that the state’s abandonment fund for the Long Beach oil operations will cover the state's liability when the operations end. If the state does not have enough money set aside when the oil operations end, it will have to find other ways to come up with hundreds of millions of dollars.

Arguments in Opposition

None on file

FISCAL COMMENTS

According to the Assembly Appropriations Committee, the state's share of the liability is currently $1.046 billion. The Fund balance is about $330 million, leaving a shortfall of about $700 million. Increasing the monthly contribution to the Fund to $5 million or 50% of the remaining revenue, whichever is greater, will impact the General Fund. The "remaining revenue" each month is between $700,000 and $16.5 million, with an average of $7.8 million. Thus, this bill will result in a minimum loss of $5 million a month in General Fund revenue, but likely more depending on how much remaining revenue the SLC receives, compared to the current $2 million per month.

VOTES

SENATE FLOOR: 38-0-2

YES: Alvarado-Gil, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Allen, Archuleta

ASM NATURAL RESOURCES: 10-0-1

YES: Bryan, Flora, Bauer-Kahan, Friedman, Hoover, Kalra, Lackey, Muratsuchi, Pellerin, Wicks

ABS, ABST OR NV: Wood

ASM APPROPRIATIONS: 14-0-1

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Grayson, Haney, Hart, Pellerin, Ta, Villapudua

ABS, ABST OR NV: Jim Patterson

UPDATED

VERSION: May 16, 2024

CONSULTANT: Paige Brokaw / NAT. RES. / (916) 319-2092 FN: 0003816

Date of Hearing: July 2, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 1425

Author:(Gonzalez) – As Amended Ver:May 16, 2024

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

SUMMARY:

This bill requires the Controller, on the last day of each month beginning in 2025, to transfer to the Oil Trust Fund (Fund) administered by the State Lands Commission (SLC) the amount of $5 million or 50% of remaining oil revenue from the City of Long Beach, whichever is greater.

Specifically, this bill:

1. Increases the amount of money the Controller shall transfer to the Fund from $2 million to $5 million, or 50% of the remaining oil revenue, whichever is greater, on the last day of each month beginning January 31, 2025.
2. Establishes this bill as an urgency measure in order to ensure the state is able to fund its share of the liability for the Long Beach Unit and tidelands operations in a timely manner.

FISCAL EFFECT:

According to the SLC, which supports this bill, the state’s share of the liability is currently $1.046 billion. The Fund balance is about $330 million, leaving a shortfall of about $700 million. Increasing the monthly contribution to the Fund to $5 million or 50% of the remaining revenue, whichever is greater, will impact the General Fund. The “remaining revenue” each month is between $700,000 and $16.5 million, with an average of $7.8 million. Thus, this bill will result in a minimum loss of $5 million a month in General Fund revenue, but likely more depending on how much remaining revenue the SLC receives, compared to the current $2 million per month.

According to the Legislative Analyst’s Office, the General Fund faces a structural deficit in the tens of billions of dollars over the next several fiscal years. 

COMMENTS:

1. Purpose. According to the author:

For close to a century, the state of California and the City of Long Beach have engaged in a unique profit sharing and ownership relationship related to the extraction of oil resources from the Long Beach Coastline and tidelands. As a result, the State has earned billions of dollars in profit, including $5.75 billion in the last 20 years alone. However, as part of this arrangement, the State is also obligated to fund a proportional share of the liability for closing down oil wells, based on the profit it has received. The Oil Trust Fund is the primary funding source to cover this liability…

At the current rate of depositing only $2 million of monthly profits in the Oil Trust Fund, the State’s liability will not be funded until 2050. This would be years after the Governor’s directive to the Air Resources Board to phase out oil production by 2045 and decades after the estimated date of oil operations ceasing in 2029. These nominal monthly payments constrain the State’s ability to promote responsible environmental stewardship as oil operations phase out and further leave taxpayers fronted with the bill to pay off the liability. As production from these wells naturally declines, it is vital that the State maximize the profits set aside now to minimize the share of the liability that will need to be paid later from the General Fund. By requiring $5 million or 50% of profits, whichever is more, be deposited in the Oil Trust Fund on a monthly basis, SB 1425 would…help protect future California taxpayers from massive liability costs.

1. Background. The state’s share of revenue from City of Long Beach oil operations generally is deposited in the General Fund, with the $2 million per month deposited in the Fund. Current law requires the SLC to expend the money from the Fund solely to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the Long Beach tidelands that are not the responsibility of other parties. This bill, by increasing the monthly deposit into the Fund, necessarily reduces the amount left in the General Fund. However, state and local officials supporting this bill describe this increase as essential to avoid future unfunded liabilities. According to the Mayor of the City of Long Beach:

Both the City and state have received significant revenues from oil extraction in the Wilmington Oil Field, and the cost of abandoning these wells is apportioned based on net profit interest between stakeholders. When oil operations cease, oil wells and facilities must be appropriately decommissioned, remediated, and abandoned to maintain environmental standards required by law. The state’s liability is estimated at nearly $1 billion, while the City’s liability is estimated at around $150 million. The City began accelerating the amount it reserves annually to fully fund its abandonment liability by 2035, ten years before the 2045 deadline to phase out oil and gas extraction in California originally directed by Governor Newsom, but the state still needs to substantially increase its savings to meet its remaining liability.

1. Prior Legislation. SB 71 (Senate Committee on Budget and Fiscal Review), Chapter 81, Statutes of 2005, created the Oil Trust Fund to fund abandonment costs after unit operations have ceased from oil revenue generated.

Analysis Prepared by: Jacqueline Kinney / APPR. / (916) 319-2081

Date of Hearing: June 17, 2024

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Isaac G. Bryan, Chair

SBPCA Bill Id:SB 1425

Author:(Gonzalez) – As Amended Ver:May 16, 2024

SENATE VOTE: 38-0

SUBJECT: Oil revenue: Oil Trust Fund.

SUMMARY: Require the Controller, on the last day of each month beginning January 31, 2025, to transfer to the Oil Trust Fund (Fund) the amount of $5 million or 50% of remaining oil revenue from the City of Long Beach, whichever is greater.

EXISTING LAW:

1. Protects, pursuant to the common law doctrine of the public trust (Public Trust Doctrine), the public's right to use California's waterways for commerce, navigation, fishing, boating, natural habitat protection, and other water oriented activities. The Public Trust Doctrine provides that filled and unfilled tide and submerged lands and the beds of lakes, streams, and other navigable waterways (public trust lands) are to be held in trust by the state for the benefit of the people of California. (National Audubon Society v. Superior Court (1983) 33 Cal.3d 419)
2. Establishes the State Lands Commission (SLC) as the steward and manager of the state's public trust lands. SLC has direct administrative control over the state's public trust lands and oversight authority over public trust lands granted by the Legislature to local public agencies (granted lands). (Public Resources Code (PRC) 6009)
3. Authorizes SLC to enter into an exchange, with any person or any private or public entity, of filled or reclaimed tide and submerged lands or beds of navigable waterways, or interests in these lands, that are subject to the public trust for commerce, navigation, and fisheries, for other lands or interests in lands, if specified conditions are met. (PRC 6307)
4. Establsihes the Fund in the State Treasury. Requires, on the last day of each month beginning January 31, 2023, the Controller to transfer to the fund the amount of two million dollars ($2,000,000) or 50% of remaining oil revenue, as described in subdivision (d) of Section 4 of Chapter 138 of the Statutes of 1964, First Extraordinary Session, whichever is less.  (PRC Code 6217.8)
5. Governs the revenues from the sale or disposition of oil and gas derived from the Long Beach tidelands. (Subdivision (d) of Section 4 of Chapter 138 of the Statutes of 1964)
6. Requires the City of Long Beach to pay to SLC all money, including both principal and interest, in the abandonment reserve fund that the city created in 1999 and that was the subject of the litigation in State of California ex rel. California State Lands Commission v. City of Long Beach (2005) 125 Cal. App. 4th 767.
7. Requires SLC to expend the money from the Fund solely to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the Long Beach tidelands that are not the responsibility of other parties. (PRC Code 6217.8)

THIS BILL:

1. Increases the amount of money the Controller shall transfer to the Fund to $5 million or 50% of the remaining oil revenue, whichever is greater, on the last day of each month beginning January 31, 2025.
2. Establishes this bill as an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are in order to ensure the State of California is able to fund its share of the liability for the Long Beach Unit and tidelands operations in a timely manner, it is necessary for this measure to take effect immediately.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill will result in potential ongoing revenue loss of up to $11 million per month (General Fund), depending on the amount generated by the state’s share of the Long Beach oil operations.

COMMENTS:

1. Author’s statement:

For close to a century, the state of California and the City of Long Beach have engaged in a unique profit sharing and ownership relationship related to the extraction of oil resources from the Long Beach Coastline and tidelands. As a result, the State has earned billions of dollars in profit, including $5.75 billion in the last 20 years alone. However, as part of this arrangement, the State is also obligated to fund a proportional share of the liability for closing down oil wells, based on the profit it has received. The Oil Trust Fund is the primary funding source to cover this liability.

Currently, the State’s share of oil abandonment liability is estimated at approximately $1 billion. With only approximately $330 million in the Oil Trust Fund, the State has an unfunded liability of $670 million. At the current rate of depositing only $2 million of monthly profits in the Oil Trust Fund, the State’s liability will not be funded until 2050. This would be years after the Governor’s directive to the Air Resources Board to phase out oil production by 2045 and decades after the estimated date of oil operations ceasing in 2029. These nominal monthly payments constrain the State’s ability to promote responsible environmental stewardship as oil operations phase out and further leave taxpayers fronted with the bill to pay off the liability. As production from these wells naturally declines, it is vital that the State maximize the profits set aside now to minimize the share of the liability that will need to be paid later from the General Fund. By requiring $5 million or 50% of profits, whichever is more, be deposited in the Oil Trust Fund on a monthly basis, SB 1425 would help provide the necessary funding to enable the State to reach its environmental goals, allow for a responsible and timely decommissioning of toxic wells, and help protect future California taxpayers from massive liability costs.

1. Long Beach settlement. In 1911 the state granted in trust to the City of Long Beach control over its tidelands – including mineral interests – subject to the terms of the grant and the Public Trust Doctrine. In 1937, the Wilmington Oil Field was discovered, and the City began oil development and extraction operations in its tidelands shortly thereafter. The City is the unit operator and California Resources Corporation (CRC) is the contractor responsible for day-to-day production and maintenance.

The City derives oil revenue from the Long Beach tidelands, a substantial portion of which has been freed from the public trust as it is no longer necessary for trust purposes. The freed revenues must be paid to the state and are deposited into the General Fund. The City is permitted to retain, out of the oil revenue each month, an amount equal to all subsidence costs and money expended by the City in administering oil and gas operations. The City must pay to the state the remaining oil revenue, except for an annual lump sum amount to be used for specified trust purposes.

Eventually, the City was faced with the certainty of large future costs, estimated to be at least $200 million for oil well plugging and abandonment and facility removal. SB 71 (Senate Committee on Budget and Fiscal Review), Chapter 81, Statutes of 2005, created the Oil Trust Fund to fund abandonment costs after unit operations have ceased from oil revenue generated. The reserve was funded through a continuing monthly per barrel charge based on tidelands oil production. The City retained these funds monthly from oil revenue, along with amounts equal to the other moneys it expended in administering oil and gas operations, before paying over the remaining oil revenue to the state.

The Controller was required to do monthly deposits ($2 million or 50% of monthly revenue, whichever is less) from the state's share of tidelands oil revenues until the Fund reached $300 million. However, the cap was reached in June 2014. AB 353 (O’Donnell), Chapter 516, Statutes of 2002, deleted the $300 cap on the total amount deposited in the Fund.

Existing law and various litigated agreements provide for the decommissioning liability of these Long Beach oil operations. The state’s share of liability associated with the plugging and abandonment of oil and gas wells, the decommissioning and removal of related equipment and facilities, and any necessary remediation is apportioned based on its net profit interest. According to the SLC, the state retains a large majority of the total abandonment liability. While the state earns millions of dollars in revenue from oil operations from the City, the state also holds a proportional share of the liability for the eventual abandonment of those wells. The unfunded portion of the state’s liability is now on the order of $970 million, according to the City’s letter of support for this bill. An April 2022 SLC staff report states that the City’s current estimate of the end of oil operations in the Long Beach unit and the tidelands are 2052 and 2036, respectively.

1. This bill. Once operations end and revenue is no longer generated, the Fund will be the primary source to fund the substantial abandonment and decommissioning work that will be required to plug and abandon wells and remove oil and gas facilities related to the oil operations.

SB 1425 is intended to address this shortfall and ensure that the state’s abandonment fund for the Long Beach oil operations will cover the state’s liability when the operations end. If the state does not have enough money set aside when the oil operations end, it will have to find other ways to come up with hundreds of millions of dollars.

SB 1425 will would increase the amount that the Controller transfers to the Fund at the end of each month to be all of certain oil revenue from the City.

REGISTERED SUPPORT / OPPOSITION:

Support

California State Lands Commission
Center for Biological Diversity
Center for Biological Diversity, INC.
City of Long Beach
Office of Lieutenant Governor Eleni Kounalakis

Opposition

None on file

Analysis Prepared by: Paige Brokaw / NAT. RES. /

 THIRD READING  

Bill No: SB 1425

Author: Gonzalez (D)

Amended: 5/16/24

Vote: 27 - Urgency

SENATE NATURAL RES. & WATER COMMITTEE: 10-0, 4/15/24

AYES: Min, Seyarto, Allen, Dahle, Eggman, Hurtado, Laird, Limón, Padilla, Stern

NO VOTE RECORDED: Grove

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/16/24

AYES: Caballero, Jones, Ashby, Becker, Bradford, Seyarto, Wahab

SUBJECT: Oil revenue: Oil Trust Fund

SOURCE: City of Long Beach

DIGEST:

This bill increases the amount that the Controller transfers to the Oil Trust Fund at the end of each month to $5 million or 50% of certain remaining oil revenue from the City of Long Beach, as provided.

ANALYSIS:

Existing law:

1. Establishes the California State Lands Commission (commission) to manage, among other things, the state’s public trust lands – including tide and submerged lands – and to provide oversight to local trustees who manage public trust lands granted by the Legislature.
2. Establishes the Oil Trust Fund (fund) in the State Treasury and appropriates the money in the fund to the commission commencing when specified requirements are met. (Public Resources Code (PRC) §6217.8) The fund was established through the Resources budget trailer bill in 2005 (SB 71, Committee on Budget and Fiscal Review, Chapter 81, Statutes of 2005).
3. Requires the State Controller to transfer certain oil-revenue-related moneys to the fund to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the City of Long Beach (city) tidelands that are not the responsibility of other parties.

In addition to certain moneys required to be deposited in 2005 and 2006, as specified, starting on July 31, 2006, the lesser of the amount of $2 million or 50 percent of the remaining oil revenue, as defined, is to be transferred monthly to the fund.

This bill increases the amount that the Controller transfers to the fund at the end of each month to $5 million or 50% of certain remaining oil revenue from the city, as provided.

Background

Public trust lands must be managed in accordance with the public trust doctrine. There are over 80 local trustees (grantees) of public trust lands.

In 1911 the state granted in trust to the city control over its tidelands – including mineral interests – subject to the terms of the grant and the public trust doctrine.

In 1937, the Wilmington oil field was discovered, and the city began oil development and extraction operations in its tidelands shortly thereafter. A large portion of the Wilmington oil field – one of the largest in the country – underlies the Long Beach tidelands. The city and the state fought over mineral rights development and revenues.

The state receives a share of the net profits from the city’s oil and gas operations that would otherwise go to the city as grantee of the lands. The net profits are generally, with specified exception, deposited in the state’s General Fund.

The state’s share of liability associated with the plugging and abandonment of oil and gas wells, the decommissioning and removal of related equipment and facilities, and any necessary remediation is apportioned based on its net profit interest, among other factors.

According to the commission, the state retains a large majority of the total abandonment liability at the end of oil and gas operations in the Long Beach tidelands. There are approximately 2,500 active or idle oil and gas wells between the Long Beach Unit (the eastern offshore portion of the Wilmington field) and the Tidelands (West Wilmington field), four man-made oil and gas production islands, and associated equipment and facilities in the Long Beach tidelands.

The city is the only municipal government in the state that manages extensive oil and gas operations. The California Resources Corporation is the contractor for the city for these oil operations. In addition to the Wilmington oil field, the city has interests in various smaller oil fields throughout the city.

According to the commission, once oil operations cease and revenue is no longer generated, the fund will be the primary source to fund the substantial abandonment and decommissioning work. As originally implemented, the fund had a cap of $300 million. The $300 million cap was reached in June 2014, according to the city, and it took four subsequent legislative efforts to finally remove the cap (AB 353 (O’Donnell, Chapter 516, Statutes of 2022)).

The most recent estimate of the state’s liability for the Tidelands and Long Beach Unit is approximately $1.046 billion. On January 24, 2024, the fund balance was $329,989,954.90. The existing liability is on the order of $715 million.

From January 2022 – October 2023, the monthly total net profit revenue from the Long Beach Unit and the Tidelands averaged approximately $10,540,000 monthly ($4,238,951 - $18,093,246 range).

The city’s goal, according to a 2021 memo, is to fully fund oil field abandonment by 2035, and expects the revenue from the oil fields to end around then. The expected life of an oil field depends upon many factors, including the price of oil. An April 2022 commission staff report states that the city’s current estimate of the end of oil operations in the Long Beach Unit and the Tidelands are 2052 and 2036, respectively.

Comments

Time to cover the estimated shortfall. The $715 million estimated shortfall will be met in about 12 years at a monthly $5 million transfer rate. As noted above, however, the monthly average net profit revenue has lately been about $10.5 million, but as low as $4.2 million in any one month. This suggests that as much as $5 million may not be transferred every month. In addition, monies in the fund itself may change based upon investment gains and losses, and the total outstanding liability may fluctuate as well.

It is worth noting, given the state’s current fiscal situation, that the additional monies proposed to be directed into the fund are monies that are then not deposited in the General Fund.

Recent Inflation Reduction Act funds awarded to the commission to clean-up and monitor oil wells. In late December, the commission received a $22 million grant from the Biden Administration to monitor and reduce methane emissions from oil and gas operations and for environmental restoration of well sites. The funding will enable the commission to work with operators to plug and abandon marginal wells, measure and monitor methane emissions, and restore well sites. The commission will identify wells that represent the most liability to the state, and prioritize wells by location and proximity to disadvantaged communities in compliance with the federal Justice40 initiative.

FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• Ongoing revenue loss of at least $5 million, but potentially more, per month (General Fund), depending on the amount generated by the state’s share of the Long Beach oil operations. Currently, the Oil Trust Fund monthly contribution is $2 million. The remaining oil revenue each month varies, anywhere from $700k to $16.5 million, but the average is $7,899,765. Half the average would be about $4 million monthly.

SUPPORT: (Verified 5/15/24)

City of Long Beach (source)

Center for Biological Diversity

OPPOSITION: (Verified 5/15/24)

None received

ARGUMENTS IN SUPPORT: According to the author, “For close to a century, the state of California and the City of Long Beach have engaged in a unique profit sharing and ownership relationship related to the extraction of oil resources from the Long Beach Coastline and tidelands. As a result, the State has earned billions of dollars in profit, including $5.75 billion in the last 20 years alone. However, as part of this arrangement, the State is also obligated to fund a proportional share of the liability for closing down oil wells, based on the profit it has received. The Oil Trust Fund is the primary funding source to cover this liability.”

“Currently, the State’s share of oil abandonment liability is estimated at approximately $1 billion. With only approximately $330 million in the Oil Trust Fund, the State has an unfunded liability of $670 million. At the current rate of depositing only $2 million of monthly profits in the Oil Trust Fund, the State’s liability will not be funded until 2050. This would be years after the Governor’s directive to the Air Resources Board to phase out oil production by 2045 and decades after the estimated date of oil operations ceasing in 2029. These nominal monthly payments constrain the State’s ability to promote responsible environmental stewardship as oil operations phase out and further leave taxpayers fronted with the bill to pay off the liability. As productions from these wells naturally declines, it is vital that the State maximize the profits set aside now to minimize the share of the liability that will need to be paid later from the General Fund. By requiring all total profits to be deposition in the Oil Trust Fund on a monthly basis, SB 1425 would help provide the necessary funding to enable the State to reach its environmental goals, allow for a responsible and timely decommissioning of toxic wells, and help protect future California taxpayers from massive liability costs.”

Prepared by: Katharine Moore / N.R. & W. / (916) 651-4116

5/18/24 12:35:13

**** END ****

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1425 (Gonzalez) - Oil revenue: Oil Trust Fund

Bill Summary:

This bill would increase the amount that the Controller transfers to the Oil Trust Fund at the end of each month to be all of certain oil revenue from the City of Long Beach, up to $13 million, as provided.

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

The following information is revised to reflect amendments

adopted by the committee on May 16, 2024

Fiscal Impact:

• Ongoing revenue loss of at least $5 million, but potentially more, per month (General Fund), depending on the amount generated by the state’s share of the Long Beach oil operations. Currently, the Oil Trust Fund monthly contribution is $2 million. The remaining oil revenue each month varies, anywhere from $700k to $16.5 million, but the average is $7,899,765. Half the average would be about $4 million monthly.

Committee Amendments:

These amendments would require the Controller to transfer $5 million or 50% of remaining oil revenue from the City of Long Beach, whichever is greater, to the Oil Trust Fund each month.

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SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1425 (Gonzalez) - Oil revenue: Oil Trust Fund

Bill Summary:

This bill would increase the amount that the Controller transfers to the Oil Trust Fund at the end of each month to be all of certain oil revenue from the City of Long Beach, up to $13 million, as provided.

Fiscal Impact:

• Potential ongoing revenue loss of up to $11 million per month (General Fund), depending on the amount generated by the state’s share of the Long Beach oil operations. See staff comments for details.

Background:

In 1911 the state granted in trust to the City of Long Beach (city) control over its tidelands – including mineral interests – subject to the terms of the grant and the public trust doctrine. In 1937, the Wilmington oil field was discovered, and the city began oil development and extraction operations in its tidelands shortly thereafter. A large portion of the Wilmington oil field – one of the largest in the country – underlies the Long Beach tidelands. The city and the state fought over mineral rights development and revenues.

The state receives a share of the net profits from the city’s oil and gas operations that would otherwise go to the city as grantee. The net profits are generally, with specified exception, deposited in the state’s General Fund.

The state’s share of liability associated with the plugging and abandonment of oil and gas wells, the decommissioning and removal of related equipment and facilities, and any necessary remediation is apportioned based on its net profit interest, among other factors. According to the commission, the state retains a large majority of the total abandonment liability at the end of oil and gas operations in the Long Beach tidelands. There are approximately 2,400 active or idle oil and gas wells between the Long Beach Unit (the eastern offshore portion of the Wilmington field) and the Tidelands (West Wilmington field), four man-made oil and gas production islands, and associated equipment and facilities in the Long Beach tidelands.

The city is the only municipal government in the state that manages extensive oil and gas operations. The California Resources Corporation (CRC) is the contractor for the city for these oil operations. In addition to the Wilmington oil field, the city has interests in various smaller oil fields throughout the city.

Existing law establishes the Oil Trust Fund (fund) in the State Treasury and appropriates the money in the fund to the commission commencing when specified requirements are met. (Public Resources Code (PRC) §6217.8) The fund was established through the Resources budget trailer bill in 2005 (SB 71 (Committee on Budget and Fiscal Review, Chapter 81, Statutes of 2005)).

Existing law requires the Controller to transfer certain oil-revenue-related moneys to the fund to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the Long Beach tidelands that are not the responsibility of other parties.

In addition to certain moneys required to be deposited in 2005 and 2006, as specified, starting on July 31, 2006, the lesser of the amount of $2 million or 50 percent of the remaining oil revenue, as defined, is to be transferred monthly to the fund.

Existing law prohibits the total amount deposited in the fund from exceeding $300 million, and requires all interest earned on money in the fund after the balance in the fund totals $300 million to be transferred to the General Fund.

According to the commission, once oil operations cease and revenue is no longer generated, the fund will be the primary source to fund the substantial abandonment and decommissioning work.

The $300 million cap for the fund was reached in June 2014, according to the city.

Total estimated costs to decommission the Long Beach oil operations have increased substantially due to several factors, including the cost of materials and necessary services. The unfunded portion of the state’s liability is now on the order of $970 million according to the city’s letter of support for this bill. An April 2022 commission staff report states that the city’s current estimate of the end of oil operations in the Long Beach Unit and the Tidelands are 2052 and 2036, respectively.

Proposed Law:

This bill would increase the amount that the Controller transfers to the fund at the end of each month to be all of certain oil revenue from the city, up to $13 million, as provided.

Specifically, this bill would:

1. Require the Controller at the end of each month, starting January 31, 2025, to transfer to the fund all of the remaining oil revenue from the city, up to $13 million, as provided.
2. Make an appropriation, and declare and justify an urgency statute.

Related Legislation:

SB 1433 (Limón, 2024) would authorize the re-purposing of oil and gas wells for use as gravity based energy storage wells through a pilot program, among other things.

SB 1304 (Limon, 2024) would require the State Water Resources Control Board to lead the effort to seek aquifer exemptions for the Class II Underground Injection Control program oil and gas wells, among other provisions.

SB 1087 (Grove, 2024) would require the State Air Resources Board to annually produce an assessment of greenhouse gas emissions associated with the transportation of oil into California, as provided, among other things.

SB 979 (Grove, 2024) would require CalGEM to provide a written response for a denial of a notice of intention to drill or re-drill an oil and gas well.

SJR 12 (Min, 2024) would ask the federal government to modify federal bankruptcy laws to not allow the discharge of oil and gas well clean-up and decommissioning obligations.

AB 3233 (Addis, 2024) would authorize a local jurisdiction to limit or prohibit oil and gas operations or development in its jurisdiction, as provided, among other things.

AB 3155 (Friedman, 2024) would make the operator or owner of any oil or gas production facility presumptively, jointly and severally liable for certain ailments in select populations that live within 3,200 feet of an oil or gas wellhead, as provided.

AB 3019 (Bains, 2024) would require CalGEM to make available funding from the Hazardous and Idle-Deserted Well Abatement Fund to a county that meets certain requirements for oil and gas well plugging-and-abandonment and related activities, among other things.

AB 2716 (Bryan, 2024) would identify low production oil and gas wells within 3,200 feet of a sensitive receptor and prohibit their operation as a low-production well for more than 24 months, among other things.

AB 1866 (Hart, 2024) would accelerate the required plugging-and-abandonment of idle and long-term idle oil and gas wells, among other things.

SB 704 (Min, Chapter 292, Statutes of 2023) authorizes the California Coastal Commission to seek scientific advice on offshore wind, and revise the coastal-dependent industrial use policies in the Coastal Act of 1976 to bar new or expanded oil and gas development and new or expanded refineries or petrochemical facilities from being considered a coastal-dependent industrial use and authorizes their permitting if all applicable Coastal Act provisions are complied with, among other things.

SB 559 (Min, 2023) would have required the State Lands Commission to pursue the voluntary relinquishment of the state’s tidelands oil and gas leases, and, failing that, required the State Lands Commission to terminate the leases, as provided. (This bill was held on suspense in this committee.)

SB 556 (Gonzalez, 2023) would have made the operator or owner of any oil or gas production facility presumptively, jointly and severally liable for certain ailments in select populations that live within 3,200 feet of an oil or gas wellhead, as provided. (This bill was held on suspense in this committee.)

AB 1167 (W. Carrillo, Chapter 359, Statutes of 2023) requires a person who acquires the right to operate a well or production facility by purchase, transfer, assignment, conveyance, exchange, or other disposition to file with the State Oil and Gas Supervisor an individual indemnity bond for the well or production facility or a blanket indemnity bond for multiple wells or facilities in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment, decommissioning, and site restoration, with certain exceptions, as provided, among other provisions.

AB 631 (Hart, Chapter 337, Statutes of 2023) enhanced CalGEM’s authority to take certain actions or impose various penalties on oil and gas operators and property owners for violations of the state’s oil and gas conservation laws and regulations, as specified.

SB 1137 (Gonzalez, Chapter 365, Statutes of 2022) provided for health protection zones around oil and gas wellheads, among other provisions. (Implementation of this bill is pending a November 2024 referendum.)

SB 953 (Min, 2022) would have terminated the commission leases permitting oil and gas development in state waters, among other things. (This bill was held on the suspense file in this committee.)

AB 1279 (Muratsuchi, Chapter 337, Statutes of 2022) established the California Climate Crisis Act that, among other provisions, sets state policy to reach net negative greenhouse gas emissions by 2045.

AB 353 (O’Donnell, Chapter 516, Statutes of 2022) removed the cap on the Oil Trust Fund.

AB 2687 (O’Donnell, 2020) would have removed the cap on the Oil Trust Fund. (This bill was held in the Assembly Natural Resources Committee without hearing.)

AB 1057 (Limón, Chapter 771, Statutes of 2019) authorized CalGEM to seek additional financial surety up to $30 million per operator if in CalGEM’s determination the operator was at risk of deserting their wells, among other things.

AB 926 (O’Donnell, 2019) would have removed the cap on the Oil Trust Fund. (This bill was held on the suspense file in this committee.)

AB 2404 (O’Donnell, 2018) would have removed the cap on the Oil Trust Fund. (This bill was held on the suspense file in this committee.)

SB 1147 (Hertzberg, Chapter 607, Statutes of 2018) provided direction to CalGEM and the commission to assess whether offshore bonding amounts were sufficient, among other things.

Staff Comments:

The state’s share of the liability is currently $1.046 billion dollars. The Oil Trust Fund balance is roughly $330 million, leaving a roughly $700 million shortfall. The Oil Trust Fund, until 2022, was capped at $300 million. In 2023, legislation took effect to remove the cap and resume monthly $2 million contributions into the fund to address the state’s unfunded liability. SB 1425 would increase the monthly contribution to all the remaining oil revenue the Commission receives from the City and that is deposited into the General Fund (minus the monthly $2 million or 50 percent of revenue—whichever is less). The “remaining revenue” each month varies, anywhere from $700k to $16.5m. The average is $7,899,765.

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SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Dave Min, Chair

2023 - 2024 Regular

Bill No: SB Hearing Date: April 15, 2024

Subject: Oil revenue: Oil Trust Fund

SUMMARY

This bill would increase the amount that the Controller transfers to the Oil Trust Fund at the end of each month to be all of certain oil revenue from the City of Long Beach, up to $13 million, as provided.

BACKGROUND AND EXISTING LAW

1. Existing law establishes the California State Lands Commission (commission) to manage, among other things, the state’s public trust lands – including tide and submerged lands – and to provide oversight to local trustees who manage public trust lands granted by the Legislature.
   1. Public trust lands must be managed in accordance with the public trust doctrine. There are over 80 local trustees (grantees) of public trust lands.
2. In 1911 the state granted in trust to the City of Long Beach (city) control over its tidelands – including mineral interests – subject to the terms of the grant and the public trust doctrine. In 1937, the Wilmington oil field was discovered, and the city began oil development and extraction operations in its tidelands shortly thereafter. A large portion of the Wilmington oil field – one of the largest in the country – underlies the Long Beach tidelands. The city and the state fought over mineral rights development and revenues.
3. The state receives a share of the net profits from the city’s oil and gas operations that would otherwise go to the city as grantee. The net profits are generally, with specified exception, deposited in the state’s General Fund.
4. The state’s share of liability associated with the plugging and abandonment of oil and gas wells, the decommissioning and removal of related equipment and facilities, and any necessary remediation is apportioned based on its net profit interest, among other factors. According to the commission, the state retains a large majority of the total abandonment liability at the end of oil and gas operations in the Long Beach tidelands. There are approximately 2,500 active or idle oil and gas wells between the Long Beach Unit (the eastern offshore portion of the Wilmington field) and the Tidelands (West Wilmington field), four man-made oil and gas production islands, and associated equipment and facilities in the Long Beach tidelands^[1].
5. The city is the only municipal government in the state that manages extensive oil and gas operations. The California Resources Corporation (CRC) is the contractor for the city for these oil operations. In addition to the Wilmington oil field, the city has interests in various smaller oil fields throughout the city.
6. Existing law establishes the Oil Trust Fund (fund) in the State Treasury and appropriates the money in the fund to the commission commencing when specified requirements are met. (Public Resources Code (PRC) §6217.8) The fund was established through the Resources budget trailer bill in 2005 (SB 71 (Committee on Budget and Fiscal Review, Chapter 81, Statutes of 2005)).
7. Existing law requires the Controller to transfer certain oil-revenue-related moneys to the fund to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from the Long Beach tidelands that are not the responsibility of other parties.
   1. In addition to certain moneys required to be deposited in 2005 and 2006, as specified, starting on July 31, 2006, the lesser of the amount of $2 million or 50 percent of the remaining oil revenue, as defined, is to be transferred monthly to the fund. Remaining revenues are deposited in the General Fund.
8. As originally implemented, the fund had a cap of $300 million. The $300 million cap was reached in June 2014, according to the city, and it took four subsequent legislative efforts to finally remove the cap (AB 353 (O’Donnell, Chapter 516, Statutes of 2022)).
9. The most recent estimate of the state’s liability for the Tidelands and Long Beach Unit is approximately $1.046 billion. On January 24, 2024, the fund balance was $329,989,954.90. The existing liability is on the order of $715 million.
10. From January 2022 – October 2023, the monthly total net profit revenue from the Long Beach Unit and the Tidelands averaged approximately $10,540,000 monthly ($4,238,951 - $18,093,246 range).
11. The city’s goal, according to a 2021 memo, is to fully fund oil field abandonment by 2035, and expects the revenue from the oil fields to end around then. The expected life of an oil field depends upon many factors, including the price of oil. An April 2022 commission staff report states that the city’s current estimate of the end of oil operations in the Long Beach Unit and the Tidelands are 2052 and 2036, respectively.

PROPOSED LAW

This bill would increase the amount that the Controller transfers to the fund at the end of each month to be all of certain oil revenue from the city, up to $13 million, as provided.

Specifically, this bill would:

1. Require the Controller at the end of each month, starting January 31, 2025, to transfer to the fund all of the remaining oil revenue from the city, up to $13 million, as provided.
2. Make an appropriation, and declare and justify an urgency statute.

ARGUMENTS IN SUPPORT

According to the author, “For close to a century, the state of California and the City of Long Beach have engaged in a unique profit sharing and ownership relationship related to the extraction of oil resources from the Long Beach Coastline and tidelands. As a result, the State has earned billions of dollars in profit, including $5.75 billion in the last 20 years alone. However, as part of this arrangement, the State is also obligated to fund a proportional share of the liability for closing down oil wells, based on the profit it has received. The Oil Trust Fund is the primary funding source to cover this liability.”

“Currently, the State’s share of oil abandonment liability is estimated at approximately $1 billion. With only approximately $330 million in the Oil Trust Fund, the State has an unfunded liability of $670 million. At the current rate of depositing only $2 million of monthly profits in the Oil Trust Fund, the State’s liability will not be funded until 2050. This would be years after the Governor’s directive to the Air Resources Board to phase out oil production by 2045 and decades after the estimated date of oil operations ceasing in 2029. These nominal monthly payments constrain the State’s ability to promote responsible environmental stewardship as oil operations phase out and further leave taxpayers fronted with the bill to pay off the liability. As productions from these wells naturally declines, it is vital that the State maximize the profits set aside now to minimize the share of the liability that will need to be paid later from the General Fund. By requiring all total profits to be deposition in the Oil Trust Fund on a monthly basis, SB 1425 would help provide the necessary funding to enable the State to reach its environmental goals, allow for a responsible and timely decommissioning of toxic wells, and help protect future California taxpayers from massive liability costs.”

ARGUMENTS IN OPPOSITION

None received

COMMENTS

Time to cover the estimated shortfall. The $715 million estimated shortfall will be met in under 5 years at a monthly $13 million transfer rate. As noted above, however, the monthly average net profit revenue has lately been about $10.5 million, but as low as $4.2 million in any one month. As the bill is written, reduced revenues one month have the potential to be offset, at least in part, by relatively higher revenues in a subsequent month. In addition, monies in the fund itself may change based upon investment gains and losses, and the total outstanding liability may fluctuate as well.

It is worth noting, given the state’s current fiscal situation, that the additional monies proposed to be directed into the fund are monies that are then not deposited in the General Fund.

Recent Inflation Reduction Act funds awarded to the commission to clean-up and monitor oil wells. In late December, the commission received a $22 million grant from the Biden Administration to monitor and reduce methane emissions from oil and gas operations and for environmental restoration of well sites. The funding will enable the commission to work with operators to plug and abandon marginal wells, measure and monitor methane emissions, and restore well sites. The commission will identify wells that represent the most liability to the state, and prioritize wells by location and proximity to disadvantaged communities in compliance with the federal Justice40 initiative.

Recent related legislation

SB 1433 (Limón, 2024) would authorize the re-purposing of oil and gas wells for use as gravity based energy storage wells through a pilot program, among other things. (This bill is pending before the Senate Environmental Quality Committee.)

SB 1304 (Limon, 2024) would require the State Water Resources Control Board to lead the effort to seek aquifer exemptions for the Class II Underground Injection Control program oil and gas wells, among other provisions. (This bill is pending before the Senate Environmental Quality Committee.)

SB 1087 (Grove, 2024) would require the State Air Resources Board to annually produce an assessment of greenhouse gas emissions associated with the transportation of oil into California, as provided, among other things. (This bill is pending before the Senate Energy, Utilities, and Communication Committee.)

SB 979 (Grove, 2024) would require CalGEM to provide a written response for a denial of a notice of intention to drill or re-drill an oil and gas well. (This bill is pending before this committee.)

SJR 12 (Min, 2024) would ask the federal government to modify federal bankruptcy laws to not allow the discharge of oil and gas well clean-up and decommissioning obligations. (This resolution is pending before this committee.)

AB 3233 (Addis, 2024) would authorize a local jurisdiction to limit or prohibit oil and gas operations or development in its jurisdiction, as provided, among other things. (This bill is pending before the Assembly Natural Resources Committee.)

AB 3155 (Friedman, 2024) would make the operator or owner of any oil or gas production facility presumptively, jointly and severally liable for certain ailments in select populations that live within 3,200 feet of an oil or gas wellhead, as provided. (This bill is pending before the Assembly Judiciary Committee.)

AB 3019 (Bains, 2024) would require CalGEM to make available funding from the Hazardous and Idle-Deserted Well Abatement Fund to a county that meets certain requirements for oil and gas well plugging-and-abandonment and related activities, among other things. (This bill is pending before the Assembly Natural Resources Committee.)

AB 2716 (Bryan, 2024) would identify low production oil and gas wells within 3,200 feet of a sensitive receptor and prohibit their operation as a low-production well for more than 24 months, among other things. (This bill is pending before the Assembly Natural Resources Committee.)

AB 1866 (Hart, 2024) would accelerate the required plugging-and-abandonment of idle and long-term idle oil and gas wells, among other things. (This bill is pending before the Assembly Appropriations Committee.)

SB 704 (Min, Chapter 292, Statutes of 2023) authorizes the California Coastal Commission to seek scientific advice on offshore wind, and revise the coastal-dependent industrial use policies in the Coastal Act of 1976 to bar new or expanded oil and gas development and new or expanded refineries or petrochemical facilities from being considered a coastal-dependent industrial use and authorizes their permitting if all applicable Coastal Act provisions are complied with, among other things.

SB 559 (Min, 2023) would have required the State Lands Commission to pursue the voluntary relinquishment of the state’s tidelands oil and gas leases, and, failing that, required the State Lands Commission to terminate the leases, as provided. (This bill was held on suspense in the Senate Appropriations Committee.)

SB 556 (Gonzalez, 2023) would have made the operator or owner of any oil or gas production facility presumptively, jointly and severally liable for certain ailments in select populations that live within 3,200 feet of an oil or gas wellhead, as provided. (This bill was held on suspense in the Senate Appropriations Committee.)

AB 1167 (W. Carrillo, Chapter 359, Statutes of 2023) requires a person who acquires the right to operate a well or production facility by purchase, transfer, assignment, conveyance, exchange, or other disposition to file with the State Oil and Gas Supervisor an individual indemnity bond for the well or production facility or a blanket indemnity bond for multiple wells or facilities in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment, decommissioning, and site restoration, with certain exceptions, as provided, among other provisions.

AB 631 (Hart, Chapter 337, Statutes of 2023) enhanced CalGEM’s authority to take certain actions or impose various penalties on oil and gas operators and property owners for violations of the state’s oil and gas conservation laws and regulations, as specified.

SB 1137 (Gonzalez, Chapter 365, Statutes of 2022) provided for health protection zones around oil and gas wellheads, among other provisions. (Implementation of this bill is pending a November 2024 referendum.)

SB 953 (Min, 2022) would have terminated the commission leases permitting oil and gas development in state waters, among other things. (This bill was held on the suspense file in the Senate Appropriations Committee.)

AB 1279 (Muratsuchi, Chapter 337, Statutes of 2022) established the California Climate Crisis Act that, among other provisions, sets state policy to reach net negative greenhouse gas emissions by 2045.

AB 353 (O’Donnell, Chapter 516, Statutes of 2022) removed the cap on the Oil Trust Fund.

AB 2687 (O’Donnell, 2020) would have removed the cap on the Oil Trust Fund. (This bill was held in the Assembly Natural Resources Committee without hearing.)

AB 1057 (Limón, Chapter 771, Statutes of 2019) authorized CalGEM to seek additional financial surety up to $30 million per operator if in CalGEM’s determination the operator was at risk of deserting their wells, among other things.

AB 926 (O’Donnell, 2019) would have removed the cap on the Oil Trust Fund. (This bill was held on the suspense file of the Senate Appropriations Committee.)

AB 2404 (O’Donnell, 2018) would have removed the cap on the Oil Trust Fund. (This bill was held on the suspense file of the Senate Appropriations Committee.)

SB 1147 (Hertzberg, Chapter 607, Statutes of 2018) provided direction to CalGEM and the commission to assess whether offshore bonding amounts were sufficient, among other things.

SUGGESTED AMENDMENTS: none

SUPPORT

City of Long Beach (sponsor)

OPPOSITION

None received

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1. 2,522 active and idle wells listed for THUMS Long Beach Co., and Tidelands Oil Production Co. according to the CalGEM WellSTAR data dashboard, accessed April 6, 2024. There are additional wells in the Wilmington field owned by others. ↑