BILL ANALYSIS Ó AB 982 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 982 (Skinner) As Amended August 30, 2011 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |78-0 |(May 31, 2011) |SENATE: |34-0 |(August 31, | | | | | | |2011) | ----------------------------------------------------------------- Original Committee Reference: NAT. RES. SUMMARY : Requires the State Lands Commission (SLC) to enter into a memorandum of agreement (MOA) by April 1, 2012, with the United States Secretary of the Interior to facilitate land exchanges that consolidate state "school lands" in the California desert into contiguous holdings that are suitable for large-scale renewable energy-related projects. Requires SLC to submit a land exchange proposal within 240 days of the execution of the MOA. The Senate amendments : 1) Delete the word "commercial" wherever "large scale commercial renewable energy projects" is referenced in the bill. 2) Delete the word "all" from the requirement that SLC "prepare and submit to the United States Secretary of the Interior a proposal for land exchanges that consolidate all school land parcels in the California Desert?" 3) Authorize SLC to propose a value-for-value exchange if the federal government is not authorized to enter into an acre-for-acre exchange. 4) Delete the requirement that SLC consult with the State Energy Resources Conservation and Development Commission to identify areas that are best suited for renewable energy projects. 5) Delete the provisions regarding the Department of Fish and Game, and instead require SLC to consult with the Department of Fish and Game to identify areas in the California desert that would be consistent with the proposed or adopted provisions of the Desert Renewable Energy Conservation Plan and are either of the following: AB 982 Page 2 a) Suitable for renewable energy projects because the identified areas do not support habitat or habitat corridor values for species listed as threatened, endangered, or candidate species pursuant to the California Endangered Species Act or the federal Endangered Species Act, that, in the judgment of the Department of Fish and Game, are sufficient to warrant consideration of their designation as a mitigation or conservation area for these species; or, b) Suitable as potential mitigation areas to mitigate the impacts that renewable energy-related projects may have on the environment. 6) Require a portion of the revenue generated from renewable energy leases be made available to SLC, upon appropriation by the Legislature, to cover SLC's costs attributable to the land exchange process. 7) Clarify that the existing exemptions in the School Land Bank Act regarding the California Environmental Quality Act, Subdivision Map Act, and Property Acquisition Law do not apply to the provisions regarding land exchanges for renewable energy-related projects. 8) Make minor, technical changes. EXISTING LAW : 1)Grants administrative control of school lands to SLC. School lands are lands granted to the state from the federal government and held in trust to generate revenues that benefit public schools. 2)Authorizes SLC to take all action necessary to fully develop school lands into a permanent and productive resource base for the benefit of the California State Teachers' Retirement System (CalSTRS). 3)Declares that the consolidation of school land parcels into contiguous holdings is essential to sound and effective management of school lands. 4)Establishes the School Land Bank Fund (SLBF), which SLC may use to invest in real property with the objective of facilitating management of school lands for the purpose of generating revenue. AB 982 Page 3 SLC may also use the SLBF to pay for costs and expenses attributable to land acquisitions. AS PASSED BY THE ASSEMBLY , this bill: 1)Required SLC to make best efforts to enter into a MOA by April 1, 2012, with the United States (U.S.) Secretary of the Interior to facilitate land exchanges that consolidate school land parcels into contiguous holdings that are suitable for renewable energy-related projects. The MOA shall be tailored, to the extent feasible, to prioritize; and, exchanges that are best suited for large-scale commercial renewable energy projects. 2)Required that within 240 days of the execution of the MOA, SLC shall prepare and submit to the United States Secretary of the 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. 3)Required 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. 4)Required 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. 5)Required SLC to consult with the California Energy Commission (CEC) to identify areas that are best suited for renewable energy projects. 6)Required SLC to consult with the Department of Fish and Game (DFG) to obtain information regarding sensitive environmental habitat and potential mitigation areas in the California desert. 7)Required SLC to report to the Legislature by January 1st of each year on the status of the MOA and school land consolidation efforts in the California desert. FISCAL EFFECT : According to the Senate Appropriations Committee: 1)Land exchange negotiating costs of $450,000 in 2011-12 and $900,000 in 2012-13 from the School Land Bank Fund. AB 982 Page 4 2)Unknown lease revenues, potentially up to $10 million per year to the State Treasury to the credit of the Teachers' Retirement Fund. COMMENTS : On March 3, 1853, Congress granted the 16th and 36th section of each township in California to the state for public school purposes. These lands are referred to as "school lands." For lands that were already reserved for public use or taken by private land claims in 1853, the state was given the opportunity to select replacement lands. Overall, the state received almost 5.5 million acres of school lands as a result of this congressional action. A township is 36 square miles, containing 36 sections. Each section within a township is one square mile or 640 acres. Because Congress granted the 16th and 36th section of each township to the state, school lands are generally scattered throughout the state in a checkerboard pattern. Over time, the state sold several millions of acres of school lands. The revenue from these lands should have been reinvested to provide fiscal support for the public school system, but much of it remained unused in the SLBF. In 1984, through the School Land Bank Act (commencing with Public Resources Code Section 8700), the Legislature put an end to school land sales and declared that "it is essential that all remaining school lands and attendant interests be managed and enhanced to provide an economic base for support of the public school system." Unfortunately, most of the state's valuable school lands were already sold. The school lands that remained were mostly desert and forest lands with little value for revenue generating purposes. Today, the state retains surface and mineral ownership to approximately 468,600 acres of school lands and retains the mineral rights to an additional 790,000 acres. Approximately 370,000 acres of school lands are located in the California desert and are generally landlocked, remote, and non-revenue generating. Under the School Land Bank Act, the Legislature directed SLC to take all action necessary to fully develop school lands into a permanent and productive revenue source. Revenues generated from school lands (i.e. rent and royalties) 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 SLBF 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 AB 982 Page 5 technically scheduled to be paid back into the fund by fiscal year 2012-2013. On October 31, 1994, Senator Diane Feinstein's California Desert Protection Act (CDPA) was signed into law (Public Law 103-433). The CDPA designated 3.6 million acres in southern California as wilderness to be administered primarily by the Bureau of Land Management (BLM) within the United States Department of the Interior, and designated an additional four million acres in southern California to be included in the national park system. The purpose of the CDPA is to preserve areas in the California desert to protect its natural, cultural, scenic, and historical values and to provide for public enjoyment. Four hundred forty-two parcels (approximately 251,000 acres) of fee-owned school lands and more than 100 parcels encumbered by the state's reservation of mineral interests were initially identified to be within the boundaries of the CDPA. The CDPA authorizes BLM to enter into land exchanges with SLC. The CDPA envisioned BLM acquiring school lands located within federal protection areas in exchange for other federal lands located outside of these areas. BLM and SLC entered into several MOAs during the 1990s to facilitate these land exchanges. To date, there have been five CDPA land exchange transactions that have resulted in the transfer of more than 66,000 acres of school lands to the BLM. Two major reasons why more land exchanges have not taken place are (1) the appraisal process is time consuming, contentious, and expensive, and (2) BLM has generally not been willing to offer lands that have revenue generating potential. There are large sections of the desert that are optimal for large-scale 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 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. This bill requires SLC to enter into an MOA with the Secretary of the Interior-contingent on the cooperation of the Secretary-to facilitate land exchanges that consolidate school land parcels into contiguous holdings that are suitable for renewable energy related AB 982 Page 6 projects. 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. If an MOA is entered into for purposes related to this bill, SLC will be required to prepare and submit a proposal to consolidate school land parcels in the California desert into contiguous holdings for renewable energy related projects. To avoid the issues associated with appraisals, 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 DFG to establish a state coordinated effort to obtain desert lands that are optimal for renewable energy projects without significantly impacting the environment. This bill requires the federal government's cooperation. 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. Additionally, there appears to be an increased willingness on the part of BLM to engage in a land exchange process with SLC that will help achieve the goals of this bill. Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916) 319-2092 FN: 0002591