BILL ANALYSIS                                                                                                                                                                                                    






                                                       Bill No:  AB 
          982
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2011-2012 Regular Session
                                 Bill Analysis


          AB 982  Author:  Skinner
          As Amended:  June 23, 2011
          Hearing Date:  June 28, 2011
          Consultant:  Paul Donahue


           SUBJECT  :  State land exchange for renewable energy projects
          
           SUMMARY  :  Directs the State Lands Commission to arrange 
          land exchanges with the federal government in order to 
          consolidate non-contiguous parcels owned by the state for 
          development of large-scale renewable energy projects.

           Existing law  :

          1) Designates administrative control of specified state 
          lands to the State Lands Commission (SLC), including 
          property the federal government granted to the state to be 
          held in trust for the benefit of California public schools.

          2) Vests the SLC, as a trustee, with the exclusive 
          jurisdiction and authority to administer the School Land 
          Bank Fund and the interest in land acquired pursuant to 
          that act. 

          3) The School Land Bank Act authorizes the SLC acting as a 
          trustee, to acquire interest in real property for the 
          purposes of facilitating the management of school lands to 
          generate income, for the benefit of the California State 
          Teachers' Retirement System.

           This bill  :

          1) Requires SLC to enter into a memorandum of agreement 
          (MOA) by April 1, 2012, with the U. S. Secretary of the 
          Interior to facilitate land exchanges that consolidate 
          school land parcels into contiguous holdings that are 





          AB 982 (Skinner) continued                               
          PageB


          suitable for renewable energy-related projects, contingent 
          upon the cooperation of Interior.  

          2) States that, to the extent feasible, the MOA shall be 
          tailored to prioritize land exchanges that are best suited 
          for large-scale commercial renewable energy project 
          development, including for mitigation of its effects. 

          3) Requires that within 240 days of the execution of the 
          MOA, SLC shall prepare and submit to the Dept. of Interior 
          a proposal for land exchanges that consolidate all school 
          land parcels in the California desert into contiguous 
          holdings that are suitable for renewable energy-related 
          projects. 

          4) Requires SLC, in developing the land exchange proposal, 
          to give priority to land exchanges that will facilitate the 
          development of large-scale commercial renewable energy 
          projects.

          5) Requires the land exchange proposal to be based on an 
          acre-for-acre exchange with the U.S. unless SLC reasonably 
          believes, based on existing and reliable information, that 
          an 
          acre-for-acre exchange would not provide the state with 
          compensation that is equal to or greater than fair market 
          value.

          6) Requires SLC to consult with the California Energy 
          Commission (CEC) to identify areas that are best suited for 
          renewable energy projects.

          7) Requires SLC to consult with the Department of Fish and 
          Game (DFG) to identify areas that are best suited for 
          renewable energy projects because they do not support 
          direct habitat or habitat corridor values or that serve as 
          potential mitigation area to offset environmental impacts 
          of renewable energy projects.

          8) Requires SLC to report to the Legislature by January 1 
          of each year on the status of the MOA and school land 
          consolidation efforts in the California desert.

           COMMENTS  :
          
          1)  Rationale  :  The author states that large-scale renewable 





          AB 982 (Skinner) continued                               
          PageC


          projects are a primary source of renewable energy that can 
          be used to meet California's renewable portfolio standard, 
          which requires retail sellers of electricity to procure at 
          least 33% of electricity delivered to retail customers from 
          renewable energy resources by the year 2020.  The author 
          notes that, according to the U.S. Department of Energy, 
          California has some of the best locations on which to 
          produce renewable energy, but much of this public land is 
          not contiguous.  This bill is intended to help consolidate 
          some of this land so that large-scale renewable projects 
          can be built on the lands.

          2)  Background  :  After California achieved statehood, the 
          federal government granted approximately 5.5 million acres 
          of land to California to be used for the support of 
          schools. This land consisted of the sixteenth and 
          thirty-sixth section of each township.<1> Approximately 90 
          percent of the school lands were sold prior to the creation 
          of the State Lands Commission (SLC) in 1938. Proceeds were 
          used primarily to pay for school construction. 

          In 1984, the California Legislature directed that school 
          lands be retained and managed by the SLC to generate 
          revenue to provide COLAs for retired teachers. The school 
          lands are difficult to manage because they are broken up 
          into noncontiguous, square-mile parcels. The Legislature 
          found the "consolidation of school land parcels into 
          contiguous holdings is essential to sound and effective 
          management."<2>  The law authorizes SLC to sell the 
          isolated, non-economic school lands and use the funds from 
          the sales to purchase real property that will generate 
          additional revenues to benefit California's retired 
          teachers. Proceeds from sales are required to be held in 
          trust by the Commission for the teachers and are deposited 
          in the School Land Bank Fund (SLBF).

          Over time, the state sold several millions of acres of 
          school lands, but the state owns surface and mineral rights 
          on approximately 468,600 acres of school lands, and retains 
          the mineral rights to an additional 790,000 acres. 
          Approximately 370,000 acres of these state lands are 
          -------------------------
          <1> A township is 36 square miles, containing 36 sections.  
          Each section within a township is one square mile, or 640 
          acres.

          <2> Pub. Res. Code  8702 





          AB 982 (Skinner) continued                               
          PageD


          located in the California desert and are landlocked, 
          remote, and non-revenue generating.

          Under the School Land Bank Act, the SLC may take all action 
          necessary to fully develop school lands into a permanent 
          and productive revenue source.  Revenues generated are 
          deposited in the State Treasury to the credit of the 
          Teachers' Retirement Fund.  The money collected from the 
          Pre-1984 sale of school lands was deposited into the SLBF.  
          SLC is required to use this money to make investments that 
          produce revenue for CalSTRS.  In 2008, the state borrowed 
          $59 million from the SLBF to deal with the state's budget 
          issues.  The loan is technically scheduled to be paid back 
          into the fund by fiscal year 2012-2013.
           
          3)  Desert Protection Act  :  The federal California Desert 
          Protection Act (CDPA) became law in 1994.  The CDPA 
          designates 3.6 million acres in southern California as 
          wilderness lands, administered primarily by the Bureau of 
          Land Management (BLM), and designated an additional four 
          million acres in southern California as national park 
          lands.  

          There are large sections of the desert that are optimal for 
          large-scale commercial renewable energy related projects.  
          Renewable energy developers are interested in leasing 
          desert school lands for their projects, but school lands 
          are generally scattered across the desert in 640 acre 
          sections- large-scale commercial renewable energy projects 
          generally require thousands of acres.  Several school land 
          parcels are surrounded by BLM lands that are not protected 
          by the CDPA.  Land exchanges with BLM could consolidate 
          school land parcels into large contiguous holdings that 
          would be useful for substantial renewable energy 
          development.
           
          4)  Purpose of  the bill  : This bill requires SLC to enter 
          into a MOA with the Secretary of the Interior to facilitate 
          land exchanges that consolidate school land parcels into 
          contiguous holdings that are suitable for renewable energy 
          related projects and the associated mitigation.

          The Secretary of the Interior is currently authorized to 
          enter into an MOA with SLC pursuant to the CDPA; however, 
          there is no current MOA between the parties that focuses on 
          renewable energy related projects.  





          AB 982 (Skinner) continued                               
          PageE



          This bill requires SLC to make every effort to consolidate 
          school land parcels in the California desert into 
          contiguous holdings for use in developing renewable energy 
          related projects.  The bill authorizes an acre-for-acre 
          exchange unless SLC reasonably believes, based on existing 
          and reliable information, that an acre-for-acre exchange 
          would not provide the state with compensation that is equal 
          to or greater than the fair market value of a parcel.  
          Additionally, SLC will be required to work with CEC and DFG 
          to establish a state coordinated effort to obtain desert 
          lands that are optimal for renewable energy projects 
          without significantly impacting the environment.

          Senator Diane Feinstein has introduced the California 
          Desert Protection Act of 2011 that includes provisions to 
          facilitate land exchanges between SLC and BLM for renewable 
          energy related projects.  

          5)  Support  :  Supporters believe that large-scale renewable 
          projects are an essential component to satisfying the 
          state's renewable energy procurement mandate.  They believe 
          that AB 982 will help to establish renewable energy parks 
          on government land on parcels that are large enough for 
          developers to build, and provide meaningful mitigation 
          lands in the process.

          6)  Related legislation  :

          SB 1272 (Harman) Chapter 701, Statutes of 2005 authorizes 
          the sale of school lands trust mineral rights beneath a 
          proposed landfill in Riverside County at full market value.

           SUPPORT:   

          BrightSource Energy
          California Retired Teachers Association

           OPPOSE:   

          None on file

           DUAL REFERRAL:   Senate Energy, Utilities and Communications 
          Committee
           
          FISCAL COMMITTEE:   Senate Appropriations Committee





          AB 982 (Skinner) continued                               
          PageF




                                   *********