BILL ANALYSIS Ó
SB 788
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Date of Hearing: June 29, 2015
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
SB
788 (McGuire) - As Amended June 2, 2015
SENATE VOTE: 23-14
SUBJECT: California Coastal Protection Act of 2015
SUMMARY: Eliminates the exception in the California Coastal
Sanctuary Act of 1994 (AB 2444, O'Connell) (CCSA) that allows
the State Lands Commission (Commission) to issue an offshore oil
lease if state oil or gas deposits are being drained by wells on
federal lands and the lease is in the best interests of the
state.
EXISTING LAW:
1)Pursuant to the CCSA,
a) Makes findings and declarations 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. (State waters generally
extend out three nautical miles from the shore.)
b) Establishes the California Coastal Sanctuary
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(Sanctuary), which includes all state waters subject to
tidal influence west of the Carquinez Bridge, except oil or
gas leases in effect on January 1, 1995, unless the lease
is deeded or otherwise reverts to the state after that
date.
c) Generally prohibits a state agency or state officer from
entering into any new lease for the extraction of oil or
gas from the Sanctuary.
d) Authorizes the Commission to enter into any lease for
the extraction of oil or gas from state-owned tide and
submerged lands in the Sanctuary if the Commission
determines that those oil or gas deposits are being drained
by means of producing wells upon adjacent federal lands and
the lease is in the best interest of the state.
e) Authorizes the Commission to adjust the boundaries of an
existing offshore oil and gas lease to encompass all of an
oil and gas field partially contained in the lease.
2)Pursuant to the federal Outer Continental Shelf Lands Act (OCS
Lands Act),
a) Defines the ''Outer Continental Shelf'' (OCS) as all
submerged lands lying between the seaward extent of the
states' jurisdiction and the seaward extent of federal
jurisdiction.
b) Declares, among other things, that it is the U.S. Policy
that the OCS is a vital national resource reserve held by
the federal government for the public, which should be made
available for expeditious and orderly development, subject
to environmental safeguards, in a manner that is consistent
with the maintenance of competition and other national
needs.
c) Requires the Department of the Interior (Interior) to
prepare, periodically revise, and maintain an oil and gas
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leasing program that consists of a schedule of proposed
lease sales indicating, as precisely as possible, the size,
timing, and location of leasing activity that the Interior
determines will best meet national energy needs for the
five-year period following its approval or reapproval.
Gives priority leasing consideration to areas where the
combination of previous experience; local, state, and
national laws and policies; and expressions of industry
interest indicate that potential leasing and development
activities could be expected to proceed in an orderly
manner.
FISCAL EFFECT: According 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 foregone offshore oil lease revenue that
could have been received if the State Lands Commission (SLC)
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.
COMMENTS:
1)Author's statement.
California's coast acts as a meeting point for the
warm waters from the South and the cold waters of the
North. As a result, California's coast is recognized
as one of only five locations in the world that
produces such diverse sea life, marine ecology and
vegetation.
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Allowing for new offshore oil drilling, at the same
time stating it poses too great of a risk, is a
contradiction within the Coastal Sanctuary Act. This
glaring inconsistency is compounded as a result of the
subsequent passage of the MLPA, which provided
stringent new marine protection guidelines in the same
coastal regions that remain open to new offshore oil
drilling that is authorized under the Coastal
Sanctuary Act.
As a result, the Coastal Sanctuary Act and Marine Life
Protection Act have conflicting mandates, which allow
for offshore drilling in areas that were subsequently
designated to protect and conserve marine life.
2)Strengthening the CCSA. This bill would repeal the exception
to the CCSA that allows for the Commission to issue a new
offshore drilling lease based on the CCSA's drainage
provision. By doing this, the state would be bringing in a
large portion of the Pacific Ocean off the coast of Santa
Barbara County, where the exemption has been proposed to be
used, into the full protection of the CCSA.
3)The Legislature and Offshore Oil. The Legislature has a long
history of excluding areas from leasing for offshore oil and
gas development. Beginning in 1921, and many times since, the
Legislature has enacted laws that set aside offshore areas
where oil and gas leasing is generally prohibited. The 1921
Leasing Act prohibited the issuance of any prospecting permits
or leases within one mile of any municipality. The 1921 Act
was amended in 1929 to prohibit the issuance of any new lease
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in offshore state waters. Between 1938 and 1955, leases could
only be issued by the Commission if drainage of the state's
oil and gas could be shown. In 1955, the Legislature
authorized new oil and gas leases in state offshore waters but
has steadily increased the area that is closed to these
leases. Finally, in 1994, the CCSA removed all state lands
underlying the Pacific Ocean from the Commission's oil and gas
general leasing authority. The CCSA contains two limited
exceptions that allow the Commission to approve new offshore
oil and gas production in state waters. One exception is if
the Commission determines that state oil or gas deposits are
being drained by means of producing wells upon adjacent
federal lands and a new oil and gas lease is in the best
interests of the state. The other exception allows the
Commission to adjust the boundaries of an existing offshore
oil and gas lease to encompass all of an oil and gas field
partially contained in the lease.
4)The Commission and Offshore Oil. Since 1938, the Commission
has had jurisdiction over the leasing of oil and gas from
offshore state lands. Between 1938 and 1968, over 50 offshore
oil and gas leases were issued by the Commission. In a manner
common to most oil and gas leases, the leases that the
Commission issued were either devoid of a fixed end date or
were subsequently amended to remove an end date. The lease
terms typically provide that the leases last as long as oil
and gas is being produced in paying or commercial quantities.
Once production ceases, the leases are to be quitclaimed back
to the Commission.
Two August 1968 leases, one to Continental Oil Company and the
other to Standard Oil Company, were the last new offshore oil
and gas leases that the Commission entered into prior to the
January 1969 Santa Barbara oil spill. The spill was the
result of a well drilling blow-out at an offshore platform
located in the federal OCS off the coast of Santa Barbara
County. The cause was inadequate protective wellpipe casing.
The event lasted 11 days and spilled between 80,000 and
100,000 barrels of crude oil. Two hundred square miles of
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ocean and 35 miles of California coastline were oiled and
thousands of animals were killed.
At its February 1969 meeting, the Commission deferred the
acceptance of outstanding bids for new leases and subsequently
deferred deadlines for additional drilling from existing
leases. Since then, the Commission has not entered into any
new offshore oil and gas leases. Since 2001, the Commission
adopted several resolutions opposing the resumption or
expansion of federal offshore oil and gas lease sales in the
OCS. The foundation for each resolution was the same: that
the danger of an oil spill like the 1969 Santa Barbara oil
spill was too high and that oil development and potential
spills would adversely affect fishing, tourism, and
environmental, recreational, economic, scenic, and other
values. The resolutions are also based on and expressive of
the state's policy and practice of not issuing new offshore
leases. Further, the Commission's staff has been proactive in
obtaining quitclaims of existing offshore oil and gas leases
from oil companies back to the state.
5)2009 Offshore Lease Proposal. On January 29, 2009, the
Commission considered a proposal to approve an offshore oil
and gas lease that would have involved the Tranquillon Ridge
oil and gas field located within the state's jurisdiction off
the Santa Barbara County coast. The project proposal called
for up to 17 wells from Platform Irene (approximately four and
a half miles off the coast in federal waters) into two new
state leases, with all the drilling and production to cease on
or before December 31, 2022. According to the Commission's
staff report, total production from this project would have
been in the range of 40 to 90 million barrels of oil. The
produced oil and gas would have been piped onshore through an
existing pipeline to be processed and shipped to a refinery.
(It is worth noting that this pipeline experienced a rupture
on September 28, 1997, spilling crude oil into the ocean about
two and a half miles from the shore. The oil spread
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approximately four miles, oiling wildlife and killing hundreds
of seabirds. Studies concluded that the leak was caused by a
faulty weld.)
The Commission was authorized to consider this proposal under
the CCSA because an independent study showed that an existing
well (Well A-28) drilled from Platform Irene into the OCS
drains a relatively low amount of natural gas from the state
side of the Tranquillon Ridge field. (The state is
compensated for production from Well A-28 even though it
occurs on federal property. Pursuant to a 1997 agreement
between the state and federal government, the state receives a
royalty share of 50% of all hydrocarbons produced from Well
A-28 originating within 500 feet of the state/federal
boundary. In addition, pursuant to the OCS Land Act, because
Well A-28 is located within three nautical miles of the
state/federal boundary, the state receives payment of 27% from
the federal royalty production of the well.)
The Commission ultimately rejected the lease proposal
concluding that it was not in the best interest of the state.
The Commission's decision was based, in part, on a
determination that "environmental, tourism, recreational,
economic, fishing, scenic, and other values are threatened by
offshore oil development and that these values were more
important [than the benefits of the lease]." Additionally,
the Commission was concerned about the message the lease would
send to Washington, D.C. As indicated above, the Commission
and the Legislature have opposed new offshore oil drilling for
decades. The state relied on this history when calling on the
President and Congress to continue its moratorium on new
offshore federal leases off the California coast. In 2008,
President George W. Bush lifted the presidential moratorium on
federal offshore leases and Congress refused to re-enact its
own moratorium. On January 16, 2009, the Interior announced
plans to conduct lease sales in different parts of the
country, including three off of the California coast. The
Commission was concerned about "the impact a new lease would
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have on the potential for new federal leasing off of
California?."
After the Commission rejected the Platform Irene-Tranquillon
Ridge lease proposal, there were several failed legislative
attempts to bypass the Commission's offshore oil and gas
leasing authority: AB 1536 (Blakeslee, 2009), ABX4 23
(DeVore, 2009), AB 2719 (DeVore, 2010), and Governor
Schwarzenegger's 2010-11 Proposed Budget. Governor
Schwarzenegger's proposal came as a surprise to many since, in
2006, he entered into the "West Coast Governors' Agreement on
Ocean Health," in which he agreed to "[s]end a joint message
to the President and Congress reinforcing [California, Oregon,
and Washington's] opposition to oil and gas leasing,
exploration, and development off our coasts."
6)Proposal to Drill Tranquillon Ridge from the Coast. Around
the same time the Commission was processing the Platform
Irene-Tranquillon Ridge lease application, Sunset Exploration
submitted an offshore lease application that proposed to drill
into Tranquillon Ridge from the Vandenberg Air Force Base.
The Commission did not consider this proposal viable due to
the lack of the surface owner's (U.S. Air Force) approval for
a surface location for the project. However, according to
news reports last year, the U.S. Air Force is more seriously
considering allowing the base to be used for the drilling
project. U.S. law authorizes military services to lease
non-excess land for nonfederal development if the use does not
conflict with mission requirements and is beneficial to the
military service leasing the property. As such, the
Commission again could be faced with deciding whether to
approve its first offshore oil lease since 1968.
7)Refugio Oil Spill. On May 19, 2015, a pipeline owned by
Houston-based Plains All American Pipeline ruptured, spilling
up to 101,000 gallons of heavy crude oil along the Gaviota
coast in Santa Barbara County. It is estimated that as much as
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21,000 gallons of the oil went down a storm culvert onto
cliffs and into the Pacific Ocean. The immediate oil spill
area stretched over nine miles of California coastline, and
tar balls have washed up as far as one hundred miles from the
spill site. The pipeline that ruptured, known as Line 901, is
a common carrier pipeline that transports oil that was
produced on platforms offshore in both state and federal
waters to be refined in Santa Maria or Kern County. Many
offshore platforms, including operations at Heritage, Harmony,
Hondo, and Holly have halted production because of the spill
from Line 901 and denial of an emergency permit to truck the
oil produced. In a July 30, 2014 letter sent by the Governors
of Washington, Oregon, and California to the Secretary of the
Interior opposing new federal leases off the pacific coast
stated, "while new technology reduces the risk of a
catastrophic event such as the 1969 Santa Barbara oil spill, a
sizable spill anywhere along our shared coast would have a
devastating impact on our population, recreation, natural
resources, and our ocean and coastal dependent economies." The
Refugio oil spill shows, despite new technology, the risk
remains with existing oil production and any potential new
production.
8)Prior Legislation. SB 1096 (Jackson, 2014) was almost
identical to this bill. SB 1096 failed passage on the Assembly
Floor.
REGISTERED SUPPORT / OPPOSITION:
Support
Absolute Board Company
Action Expo
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Agency Glow
Agenda
Ambsn
Angel/Anarchy Eyewear (Quantum Optics)
ARC Sustainability
Arnette
Asian Pacific Environmental Network
Audubon California
Azul
Beach Riot
Billabong USA
Black Surfers Collective
Blue Business Council
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Boardworks
Body Glove International
Braven
Brewer Surfboards
Brightline Defense
California Coastal Alliance
California Coastal Protection Network
California Coastkeeper Alliance
California Environmental Justice Alliance
California League of Conservation Voters
California Sea Urchin Commission
California Sport Fishing League
California Trout
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Captain Fin
Carpenteria Valley Association
Catch Surf
Center for Biological Diversity
Center for Climate Protection
Channel Island Surfboards
Channel Islands Outfitters
CIT Commercial Services
Citizens Planning Association
Citizens Planning Association of Santa Barbara County
City of Arcata
City of Santa Monica
Clean Water Action
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Coast Seafoods Company
Coastal Playground
Community Environmental Council
Coastal Environmental Rights Foundation
Creatures of Leisure
D'BLANC
Dakine
DC Shoes
Defenders of Wildlife
DEPACTUS
Dewey Weber Surfboards
Dragon
Duvin Design Company
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Eastern Surf Magazine
Electric
Environment California
Environment in the Public Interest
Environmental Action Committee of West Marin
Environmental Defense Center
Environmental Defense Fund
Erin Feinblatt Photography
E-Tech Boards
Ethika
Ezekiel
FCS/Surf Hardware Int'l
Fillirate
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Fins Unlimited
FireWire Surfboards
Fishing Vessel Corregidor
Foam Magazine
Former Superintendent of Public Instruction, Jack O'Connell
Fox
Freestyle Watch Col
Friedmann & Friedmann
Friends of the Earth
FUEL TV
Futures
Get Oil Out!
Global Surf Industries
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Globe Shoes (OSATA)
Golden Gate Salmon Association
GoPro
Graffy, Inc.
Guy Takayama Surfboards/Carve Sports, Inc.
Habematelel Pomo of Upper Lake
Hayden Surfboards, Inc.
Heal the Bay
Hippy Tree
Hog Island Oyster Company
Holt Building Group, Inc.
Hooklit
Howler Brothers
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Humboldt Bay Harbor, Recreation, and Conservation District
Humboldt Bay Tourism Center & Oyster Tours
Humboldt Baykeeper
Humboldt County Board of Supervisors
Huntington Glassworks
Hydroflex Technology
Imperial Capital
Insight
Iron & Resin
Jelly Handboards & Skateboards
Jetty Life
Judicci, Inc.
Kameleonz
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Karuk Tribe
Kayak Zak's
Kid Creature
Klean Kanteen
L*Space
Land Trust of Santa Cruz County
League of Women Voters of California
Lib Tech
Liquid Tribe
Lira Clothing
Los Angeles Waterkeeper
Lost International
Luv Surf
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Mad River Alliance
Manhattan Beachwear
MapCargo
MasterCraft Boat Company
Matix
Mizu, Inc.
Monterey Bay Aquarium
Moss Adams
Naples Coalition
Natural Resources Defense Council
New Era Cap Company
Nixon, Inc.
Noll Surfboards
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NRI Distribution/NRI USA
O'Neill Clothing and Wetsuits
Oakley
Ocean Conservancy
Ocean Outfall Group
Olukai, Inc.
Orange County Coastkeeper
Orange County SEO
Otis
OurCaste
Pacific Coast Federation of Fishermen's Association
Patagonia
Patagonia Surf
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Planning and Conservation League
Prana
Pro-Llite
QuickSilver
Raen Optics
Reef
Richer Poorer
Rip Curl
Roark
Roxy
Rusty North America
Rusty Surfboards
RVCA
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Salt Life
San Diego Coastkeeper
San Francisco Baykeeper
San Luis Obispo Coastkeeper
Santa Barbara Adventure Co.
Santa Barbara Board of Supervisors
Santa Barbara Channelkeeper
Santa Barbara County Action Network
Santa Barbara Lodging & Restaurant Association
Santa Cruz Surfboards
Santa Ynez Vacation
Santa Ynez Valley Alliance
Sanuk
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Save The Bay
Savenaples.org
Scott Guinto Surfboards
Sector 9
Seea
Shaper Studios
Sherwood Valley Band of Pomo Indians
Shout Public Relations
Sierra Club California
Skullcandy
Slyde Handboards
SME
Smiley's Schooner Saloon
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Smith River Rancheria
Smith Sport Optics
So. Cal Industries, Inc.
Sojourner Café
Solforce Energy
Southern California Trawlers Association
Spy Optics
Stance Steele Distribution
Sun Bum
SuperBrand
Suplove
SURFFit
Surf Diva
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Surf DNA Graphite Master
Surf Expo
Surf Industry Manufacturers Association
Surf Right Project
Surfer / Surfing
Surfline
Surfrider Foundation
Surfrider Foundation, Santa Barbara Chapter
Surfrider Foundation, South Bay Chapter
Surfrider Foundation, West LA/Malibu Chapter
Surftech
Steel Distribution
Swappow LLC
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T&C Surfboards
Tavik
The ActivEmpire
The Fund For Santa Barbara
The Northcoast Environmental Center
The People's Movement
The Surfer's Journal
The Trust for Public Land
The Wheat Group
The Wildlands Conservancy
Under Armour
Union of Concerned Scientists
Vans
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Ventura Coastkeeper
Verde Brand Communications
Vertra
Vestal Watch, Inc.
Vissla
Volcom
VonZipper
Wave Zone, Inc.
Wells Fargo Capital Finance
West Marin Environmental Action Committee
Wholly H2O
Wildcoast
Wishtoyou Foundation
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Xcel Wetsuits
Yulex
Opposition
California Chamber of Commerce
California Independent Petroleum Association
California Manufacturers & Technology Association
Sunset Exploration
Western States Petroleum Association
Analysis Prepared by:Michael Jarred / NAT. RES. / (916)
319-2092
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