BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 788|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 788
Author: McGuire (D), et al.
Amended: 6/2/15
Vote: 21
SENATE NATURAL RES. & WATER COMMITTEE: 7-1, 4/28/15
AYES: Pavley, Allen, Hertzberg, Hueso, Jackson, Monning, Wolk
NOES: Stone
NO VOTE RECORDED: Vidak
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: California Coastal Protection Act of 2015
SOURCE: Author
DIGEST: This bill deletes the exception to the California
Coastal Sanctuary Act that allows for a new oil and gas lease if
such a lease is in the state's interest and the state's oil and
gas deposits are being drained from adjacent federal lands.
ANALYSIS:
Existing federal law under the federal Outer Continental Shelf
Lands Act (43 U.S.C. §1337(g)(2)), provides that California is
entitled to 27% of the federal royalty for production from oil
and gas wells within three nautical miles of the state/federal
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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 the state's Tranquillon Ridge
field (described below) is 50% as it is within 500 feet of the
state/federal boundary. There is no current federal law,
ongoing federal appropriations moratoria or executive order
banning new oil and gas leasing off of California. There are 43
existing active leases under the federal Outer Continental Shelf
Lands Act in federal waters offshore California.
Existing state law:
1)Provides and has provided the State Lands Commission
(commission) exclusive jurisdiction over the leasing of
offshore state lands for oil and gas production since 1938.
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.
2)Extends, through the California Coastal Sanctuary Act of 1994
(act) (Public Resources Code (PRC) §§6240 et seq.) 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. The Legislature had, beginning in 1921
and repeatedly since, passed laws that excluded offshore areas
of the state from oil and gas leasing. 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).
3)Allows, pursuant to PRC §6244, 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.
4)Specifies state-level marine protected areas under the Marine
Life Protection Act (Fish and Game Code §§2850 et seq.) are
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designed to protect or conserve marine life and habitat. 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.
This bill:
1)Deletes the exception to the act that allows for a new oil and
gas lease if such a lease is in the state's best interest and
the state's oil and gas deposits are being drained from
adjacent federal lands.
2)Makes numerous uncodified legislative findings to support the
removal of this exception.
Comments
Deliberate government actions have foregone offshore oil and gas
revenue. As noted herein, 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.
The Tranquillon Ridge oil field. There is one known offshore
oil field that meets the existing criteria established by PRC
§6244 - the Tranquillon Ridge field located to the west of
Points Pedernales and Arguello in Santa Barbara County. 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.
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. Additionally there has been at least
one proposal made to access the state portion of Tranquillon
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Ridge field by slant or extended reach drilling from Vandenberg
Air Force Base. If certain criteria are met, the military may
allow non-military activities on its property. Recently a
potential on-base site was identified. (See the Senate Natural
Resources and Water Committee analysis for further information.)
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 meet the PRC §6244 criteria to be
considered for a new state oil and gas lease. No definitive
information is available, however.
The commission's leasing history and related activities. The
commission has not issued any new oil and gas leases since the
January 1969 oil spill in Santa Barbara where a well blowout
from one of the federal platforms resulted in a spill of
approximately 80,000 - 100,000 barrels of crude oil. This spill
oiled two hundred square miles of ocean and thirty-five miles of
state coastline, and killed thousands of animals. 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.
Federal offshore leasing plans. 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.
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.
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.
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Online petition support. The author's office reports over
15,000 individuals signed an on-line petition in support of this
bill.
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. This bill failed on the
Assembly floor.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, this bill has
unknown costs, estimated between $48 million and $173 million
per year based on a per barrel oil price of $50, to the General
Fund for forgone offshore oil lease revenue that could have been
received if the State Lands Commission entered into a lease off
the Vandenberg Air Force Base into the Tranquillon Ridge. The
variability in the estimated cost depends on the royalty rate,
life of the project, and the price of oil.
SUPPORT: (Verified5/29/15)
Audobon California
Azul
Black Surfers Collective
Brightline Defense Project
California Coastal Protection Network
California Coastkeeper Alliance
California League of Conservation Voters
California Sea Urchin Commission
California Sportfishing League
California Trout
Center for Biological Diversity
Center for Climate Protection
Clean Water Action
Coast Seafoods Company
Coastal Environmental Rights Foundation
Community Environmental Council
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Defenders of Wildlife
Environmental Action Committee of West Marin
Environmental Defense Center
Environmental Defense Fund
Environment California
Doreen Farr, Supervisor, Santa Barbara County Board of
Supervisors
Fishing Vessel Corregidor
Get Oil Out!
Golden Gate Salmon Association
Greater Santa Barbara Lodging and Restaurant Association
Habematolel Pomo of Upper Lake
Heal the Bay
Hog Island Oyster Company, Inc.
Humboldt Bay, Harbor, Recreation, and Conservation District
Humboldt Baykeeper
The Karuk Tribe
Kayak Zak's
Land Trust of Santa Cruz County
The League of Women Voters of California
Mad River Alliance
National Parks Conservation Association
Natural Resources Defense Council
Northcoast Environmental Center
Ocean Conservancy
Ocean Outfall Group
Pacific Coast Federation of Fishermen's Associations
Planning and Conservation League
City of Santa Monica
Santa Ynez Valley Alliance
Sherwood Valley Band of Pomo Indians
Sierra Club California
Smith River Rancheria
Southern California Trawlers Association
Surfrider Foundation
The Trust for Public Land
Union of Concerned Scientists
Wildcoast
The Wildlands Conservancy
2 individuals
OPPOSITION: (Verified5/29/15)
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California Chamber of Commerce
California Independent Petroleum Association
California Manufacturers & Technology Association
Western States Petroleum Association
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
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
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heritage."
ARGUMENTS IN OPPOSITION: Writing in opposition, the Western
States Petroleum Association characterizes PRC §6244 as a
"narrow exemption in the best interest of the state" 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, any 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."
Prepared by:Katharine Moore / N.R. & W. / (916) 651-4116
6/2/15 18:36:03
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