BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 982
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        CONCURRENCE IN SENATE AMENDMENTS
        AB 982 (Skinner)
        As Amended  August 30, 2011
        Majority vote
         
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        |ASSEMBLY:  |78-0 |(May 31, 2011)  |SENATE: |34-0 |(August 31,    |
        |           |     |                |        |     |2011)          |
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         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:









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           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.  








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          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.  








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        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 








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        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 








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        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 



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