BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 23 X4
                                                                  Page  1

           (Without Reference to File)
          AB 23 X4 (DeVore)
          As Amended  July 24, 2009
          Majority vote
          |ASSEMBLY:  |     |(July 9, 2009)  |SENATE: |     |(July 24,      |
          |           |     |                |        |     |2009)          |
                    (vote not relevant)           (vote not available)
           Original Committee Reference:     RLS.

          Summary  :  Makes statutory changes necessary for the state to  
          proceed with the reconsideration of a lease to drill for oil in  
          the Tranquillon Ridge Field from an existing platform in federal  
          waters of the California Coast near Santa Barbara.   
          Specifically,  this bill  :  

           The Senate amendments  delete the Assembly version of this bill,  
          and instead:

          1)Makes findings and declarations stating that due to the  
            budgetary crisis, it is in the public's best interest to  
            reconsider the issuance of a lease to drill for oil in the  
            state tidelands in Santa Barbara County.

          2)Creates an Interim Resources Management Board (IRMB) for the  
            sole purpose of reconsidering the Tranquillon Ridge Field  
            proposed lease and development project that was rejected by  
            the State Lands Commission (SLC) on January 29, 2009.  The  
            IRMB will be chaired by the Secretary for the Natural  
            Resources Agency (Resources) with the Secretary of the  
            California Environmental Protection Agency, and the State  
            Controller serving as additional voting members.

          3)Requires that the IRMB hold at least one public hearing to  
            reconsider the proposed lease within 30 days of enactment of  
            the act.

          4)Authorizes the chair of the IRMB to execute the lease on  
            behalf of the state of California once approved by the board  
            by a majority vote.  Once executed, the lease will be  


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            administered by the SLC.

          5)Requires that the proposed lease contain the following  
            conditions that are enforceable by the Attorney General prior  
            to approval:

             a)   The lease will be terminated in no more than 14 years;

             b)   The lessee will make a single pre-paid royalty payment  
               to the State Treasury of $100 million and will provide, at  
               a minimum, the same royalty payments to the state that were  
               proposed when this was before the SLC in January, 2009;

             c)   The lessee will avoid, reduce, or offset all potential  
               greenhouse gas emissions resulting from project operations;

             d)   Upon termination of the lease, all offshore oil and gas  
               production operations will be terminated and all related  
               onshore processing facilities that are owned, controlled,  
               or operated by the lessee will be removed.

             e)   Upon termination of the lease, the lessee will clean up,  
               restore and donate a minimum of 3,900 acres of land,  
               including land formerly used to house processing  
               facilities, for public use and conservation.  
             f)   The lessee will use all feasible efforts to remove four  
               of its platforms on the outer continental shelf in federal  
               water that are currently in production. Additionally, the  
               lessee will provide funds in an escrow account, in an  
               amount to be determined by the IRMB, to decommission four  
               platforms or for the mitigation of adverse environmental  
               effects of offshore oil drilling; and

             g)   All other terms and agreements entered into between the  
               lessee and non governmental third party will be included as  
               a condition in a proposed lease.  Such agreements will be  
               provided to the IRMB, made public and posted on the  
               Resources Agency's website at least 30 days prior to the  
               consideration of the lease by the IRMB.

          6)Requires that any legal challenges to the act must be filed  
            and served within 60 days of the effective date.

          7)Requires that any lease executed pursuant to the bill must be  
            filed and served within 60 days following execution and  


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            notification of its execution.

          8)Sunsets the act on January 1, 2011. 
          AS PASSED BY THE ASSEMBLY  , this was a vehicle for the budget  
          trailer bill.
          FISCAL EFFECT  :  Approval of a lease will provide $100 million in  
          revenue in 2009-10. Depending on price of oil, over its life the  
          lease would generate from $1 billion to $4 billion in royalties  
          for the state.  The royalty revenue estimates for this bill were  
          from a prior lease proposal that was presented before the SCL.   
          This bill uses these royalty rates estimates as a minimum and do  
          not preclude the IRMB from negotiating a higher rate of return  
          for the state. 

           Analysis Prepared by:   Keali'i Bright / BUDGET / (916) 319-2099

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