BILL ANALYSIS Ó
SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
Senator Fran Pavley, Chair
2015 - 2016 Regular
Bill No: SB 788 Hearing Date: April 28,
2015
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|Author: |McGuire | | |
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|Version: |February 27, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Katharine Moore |
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Subject: California Coastal Protection Act of 2015
BACKGROUND AND EXISTING LAW
1.California is a major oil and gas producing state from both
onshore fields and offshore fields under its jurisdiction.
California recently ranked third for oil (2013) and thirteenth
for natural gas (2012) among the 50 states. In 2013, offshore
oil production from state waters was about 14 million barrels
(about 7% of the 200 million barrel state total), and an
additional 18.5 million barrels were produced from federal
waters.
2.The Legislature, beginning in 1921 and repeatedly since, has
passed laws that exclude offshore areas of the state from oil
and gas leasing. The State Lands Commission (commission) has
had exclusive jurisdiction over the leasing of offshore state
lands for oil and gas production since 1938.
3.According to the commission, it issued over fifty offshore oil
and gas leases between 1938 and 1968. In general, lease terms
provide for the leases to remain in effect so long as oil and
gas production continues in paying or commercial quantities.
When production ceases, a lease should be quitclaimed back to
the commission.
4.In January 1969 a blowout occurred on a well drilled from one
of the platforms in federal waters off of Santa Barbara which
resulted in a spill of approximately 80,000 - 100,000 barrels
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of crude oil. This spill oiled two hundred square miles of
ocean and thirty-five miles of state coastline, and killed
thousands of animals. The commission has not issued any new
oil and gas leases since.
5.The California Coastal Sanctuary Act of 1994 (act)(Public
Resources Code (PRC) §§6240 et seq.) extended the California
coastal sanctuary which removed the authority of the
commission to issue new oil and gas leases for unleased tide
and submerged lands underlying the Pacific Ocean with limited
exceptions. Legislative findings stated that "offshore oil
and gas production in certain areas of state waters poses an
unacceptably high risk of damage and disruption to the marine
environment of the state." (PRC §6241)
6.Pursuant to PRC §6244, the act allows the commission to
consider issuing a new oil and gas lease if the commission
determines that (1) state oil and gas resources are being
drained by production on adjacent federal lands, and (2) the
lease is in the state's interest.
7.To the west of Vandenberg Air Force Base (VAFB) and Points
Pedernales and Arguello in Santa Barbara County, there is an
oil and gas field that is under both state and federal waters
- Tranquillon Ridge. Studies have shown that production from
federal platform Irene is draining the hydrocarbon resources
in the state's portion of this oil and gas field. Reservoir
pressure on the state side is also being reduced, which may
ultimately decrease the recoverable hydrocarbon reserves from
the field. The amount of economically recoverable oil in the
state's portion of the Tranquillon Ridge field is uncertain,
and a recent estimate places it in the range of 40 to 150
million barrels.
8.Development of the state portion of Tranquillon Ridge was
first proposed in 1999. In 2008, the Santa Barbara Board of
Supervisors approved a highly controversial subsequent
proposal which utilized drilling into state waters from a
federal platform. However, the commission voted in January
2009 against issuing a new oil and gas lease pursuant to the
exception to the act provided by PRC §6244.
9.There has also been at least one proposal made to access the
state portion of the Tranquillon Ridge field by slant or
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extended reach drilling from onshore - specifically from VAFB.
10.Under the federal Outer Continental Shelf Lands Act (43
U.S.C. §1337(g)(2)), California is entitled to 27% of the
federal royalty for production from oil and gas wells within
three nautical miles of the state/federal boundary. The state
may also receive additional royalties. For example, under
separate agreement, the state's royalty share in the federal
well known to drain Tranquillon Ridge is 50% as it is within
500 feet of the state/federal boundary.
11.There are 43 existing active leases under the federal Outer
Continental Shelf Lands Act in federal waters offshore
California. There is no current federal law, ongoing federal
appropriations moratoria or executive order banning new oil
and gas leasing. There are no locations offshore California
in the current five-year federal leasing schedule/plan, and
none are proposed for the 2017 - 2022 federal leasing
schedule/plan. Last year, the Governors of Oregon, California
and Washington wrote a joint letter to the federal government
opposing new oil and gas leasing in federal waters off the
entire West Coast for the 2017 - 2022 period. In addition, the
commission has repeatedly passed resolutions in recent years
opposed to the resumption or expansion of federal offshore oil
development and production. According to the commission, the
risks associated with oil development and potential spills
were too high and both could negatively affect fishing,
tourism, and environmental, recreational, economic, scenic and
other values.
12.In and around the Santa Barbara Channel there are a variety
of protected federal and state marine areas, including the
Channel Islands National Marine Sanctuary and several
protected locations near the Tranquillon Ridge field.
State-level marine protected areas under the Marine Life
Protection Act (Fish and Game Code §§2850 et seq.) are
designed to protect or conserve marine life and habitat. The
Vandenberg State Marine Reserve is located to the west of
VAFB. A state marine reserve is a marine protected area
designation that prohibits damage or take of all marine
resources (living, geologic, or cultural) including
recreational and commercial take.
PROPOSED LAW
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This bill would remove the exception from the act described
above in Point 6. Specifically the bill would no longer allow
the commission to issue a new oil and gas lease for state-owned
tide and submerged lands within the coastal sanctuary if it is
shown that producing well or wells drilled from federal leases
is or are draining a state-owned oil and gas pool, and the
commission determines that the new lease is in the best
interests of the state. The bill would also make numerous
uncodified legislative findings to support the removal of the
act's exception.
ARGUMENTS IN SUPPORT
According to the author, "California's coast is extraordinarily
diverse. Its natural splendor attracts over 150 million
visitors annually from all around the world seeking to witness
its unparalleled beauty. [?] Coastal communities contributed $40
billion annually to the state's economy and provide nearly half
a million important jobs." The author further notes the
multi-billion dollar annual revenue from commercial fisheries,
ocean-dependent tourism and recreational fishing.
"In 1969, Santa Barbara experienced one of the nation's worst
oil spills. [?] As a result, California has taken a position to
intentionally forgo any revenue from new offshore oil
development due to the unacceptably high risk, and has instead
focused on developing clean renewable energy." The author
characterizes PRC §6244 as a "loophole" in the act and continues
"? the [act] and the Marine Life Protection Act have conflicting
mandates, which allow for offshore drilling in areas that were
subsequently designated to protect and conserve marine life."
"Protecting our coastal resources, which act as a major economic
engine, benefits all Californians and will help the state
achieve its greenhouse gas reduction targets and the Governor's
vision of reducing petroleum use by up to 50 percent. SB 788
repeals PRC 6244 to ensure that the [act] and the Marine Life
Protection Act are able to provide their intended protections."
The Pacific Coast Federation of Fishermen's Associations adds,
"[s]ustainable seafood production and the family fishing way of
life are threatened by the presence of offshore oil facilities
in California's coastal waters. Unfortunately, that destruction
lasts long after removal of surface oil [in the event of an oil
spill]. The National Oceanic and Atmospheric Administration
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recently stated that the effects of the [Deepwater Horizon]
spill are likely to last 'generations.' PCFFA stands vigorously
opposed to any infrastructure projects that could literally suck
the ocean's wealth into a few corporate coffers at the expense
of marine life, productive fisheries, and our cultural
heritage."
ARGUMENTS IN OPPOSITION
Writing in opposition, the Western States Petroleum Association
characterizes PRC §6244 as a "narrow exemption" to the act and
further states that "if the [commission] makes a finding [?]
that drainage of state resources is occurring from oil and gas
operations in federal waters and that the loss of valuable state
resources is occurring and will continue to occur, the
[commission] may enter into a lease for the development of those
resources in state waters if it determines that it is in the
state's best interest. Additionally, and state tideland oil and
gas lease granted by the [commission] under these federal
drainage conditions must be formally approved by multiple
government agencies, including 1) land use permitting by local
government, and 2) coastal plan amendment by the California
Coastal Commission. At each step, detailed environmental review
must be conducted by the relevant agencies, which include
extensive public review and comment. SB 788 would not impact
the ongoing drainage of state resources from oil and gas
operations in federal lands. Instead SB 788 would only prohibit
the state from capturing oil and gas resources that otherwise
will continue to be drained by adjacent wells outside of the
state's purview."
COMMENTS
Technical changes to the findings . The Committee may choose to
make a few technical and clarifying changes to the findings in
order, primarily, to distinguish between offshore drilling and
leasing [Amendment 1].
Deliberate government actions have foregone offshore oil and gas
revenue . As noted above, the policy of various levels of state
government over many years has been to purposefully limit or
seek to limit oil and gas revenue to the state from offshore
sources in both state and federal waters.
How unique is Tranquillon Ridge? This bill would bar the future
development of the Tranquillon Ridge project, as most recently
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proposed, or the development of the same field from onshore. It
remains unknown, but possible, that other oil and gas pools in
state waters within the coastal sanctuary extend into federal
waters and could potentially have met the PRC §6244 criteria to
be considered for a new state oil and gas lease. The commission
identified two possible fields a few years ago (Rocky Point and
Jalama/Sudden) that do or may cross the federal-state boundary
and could be reached by existing federal infrastructure.
Definitive information is not available, however.
The act contains additional exceptions to the coastal sanctuary .
In the event of certain presidential and gubernatorial findings
and actions related to an energy shortage, and legislative
action, new oil and gas leasing in state waters could occur.
An oil and gas lease for state waters from the commission is not
sufficient to start drilling . Approval from several other
regulators and public authorities are or likely to be required.
These would include, in general, the local land use authority,
local air district, the Department of Fish and Wildlife, the
California Coastal Commission, and the Division of Oil, Gas and
Geothermal Resources, among others. Additionally, mineral
rights would have to be obtained.
Possible oil development at VAFB . US law authorizes the
military to lease non-excess lands for nonfederal development if
the use does not conflict with mission's requirements and the
use is beneficial to the military service leasing the property.
In late 2013, a contractor for VAFB released an "Opportunity
Assessment" study which evaluated the feasibility of extended
reach drilling from VAFB to exploit the Tranquillon Ridge field.
Although the public copy was heavily-redacted, the assessment
determined that there was a potential onshore surface location
at VAFB of about 25 - 30 acres where up to 30 extended reach
wells could be drilled from. Certain benefits and
environmental, mission and safety risks - including to the state
marine reserve - were identified in the assessment.
Onshore vs. offshore development of Tranquillon Ridge . The
approved 2008 Environmental Impact Report (EIR) for the offshore
development of the Tranquillon Ridge field considered onshore
development from the VAFB as an alternative. (While the "no
project alternative" had the fewest environmental impacts, CEQA
Guidelines require evaluating an alternative the meets the goals
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of the project (in this case oil and gas development of the
Tranquillon Ridge field).) While the VAFB onshore alternative
was only conceptual in nature, numerous "Class I" impacts - a
significant impact that cannot be mitigated to insignificance -
were identified in the EIR for both onshore and offshore
development. The VAFB onshore alternative was found to be
environmentally disadvantageous compared to offshore development
for onshore biology, onshore water resources and cultural
resources. Overall, over a dozen Class I impacts for an onshore
facility were identified.
Existing offshore leases can have new drilling . Both state and
federal regulators continue to approve new oil and gas well
drilling permits in existing active state and federal offshore
oil and gas leases.
Recent related legislation
SB 1096 (Jackson, 2014) would have removed the provision in the
act allowing new state oil and gas leasing in the event federal
activity was draining a state field (failed on the Assembly
floor).
SUGGESTED AMENDMENTS
AMENDMENT 1
On page 2, line 28 after "new" insert "leases for"
On page 2, line 28: after "drilling" insert "in state
waters"
On page 2, line 30, after "for" insert "new state leases
for"
On page 2, line 36, delete "permits" and insert "leases"
On page 2, line 37, after "from" insert "any"
On page 2, line 37, after "new" insert "lease and the
associated"
On page 3, line 2, before "offshore" insert "new"
On page 3, line 2, delete "drilling" and insert
"development leases"
On page 3, line 10, after "a" insert "July 2014"
SUPPORT
California Coastal Protection Network
California Coastkeeper Alliance
California League of Conservation Voters
California Sea Urchin Commission
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California Sportfishing League
California Trout
Center for Biological Diversity
Clean Water Action
Coast Seafoods Company
Community Environmental Council
Defenders of Wildlife
Environmental Action Committee of West Marin
Environmental Defense Center
Environmental Defense Fund
Environment California
Fishing Vessel Corregidor
Golden Gate Salmon Association
Habematolel Pomo of Upper Lake
Heal the Bay
Hog Island Oyster Company, Inc.
Humboldt Baykeeper
Kayak Zak's
Land Trust of Santa Cruz County
The League of Women Voters of California
Mad River Alliance
Natural Resources Defense Council
Northcoast Environmental Center
Ocean Outfall Group
Pacific Coast Federation of Fishermen's Associations
Sherwood Valley Band of Pomo Indians
Sierra Club California
Smith River Rancheria
Surfrider Foundation
Union of Concerned Scientists
The Wildlands Conservancy
2 individuals
OPPOSITION
California Independent Petroleum Association
Western States Petroleum Association
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