BILL ANALYSIS Ó SB 900 Page 1 Date of Hearing: August 3, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 900 (Jackson) - As Amended May 31, 2016 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill transfers $2 million from the General Fund (GF) to the Land Bank Fund (LBF) for FY 2017-18, to be available, upon appropriation, for the State Lands Commission (SLC) to implement a coastal hazard removal and remediation program. Beginning in FY 2018-19, this bill annually transfers up to $2 million from the GF to the LBF to ensure a total of $2 million is available. Specifically, this bill: 1)Provides LBF funds are available to the SLC upon appropriation by the Legislature in the Budget Act. SB 900 Page 2 2)Requires SLC, within two years of an appropriation of funds, to administer the coastal hazard removal and remediation program to: a) Complete an in-depth inventory of legacy (i.e., abandoned) oil and gas wells and other coastal hazards along the coastline and determine high-priority hazards and wells to remediate. b) Survey, study, and monitor oil seepage in state waters and tidelands to determine oil seepage locations, rates, and environmental impacts. c) Begin the process of remediating improperly abandonedwells with a high risk of leaking, and with any remaining funds, remove other identified coastal hazards. 1)Authorizes SLC to seek and accept gifts, bequests, devises, or donations to fund the program without the approval of the Department of Finance. 2)Authorizes SLC, in cooperation with the Division of Oil, Gas, and Geothermal Resources (DOGGR), authorizes SLC to abandon (properly close) wells that present a hazard to public health and safety and the environment. 3)Requires SLC to annually report to the Legislature the activities and accomplishments of the program. FISCAL EFFECT: SB 900 Page 3 1)The redirection of $2 million from the GF to the LBF in FY 2017-18 and up to $2 million per year thereafter to ensure the unencumbered funds in the LBF are available to the SLC for program implementation. 2)One-time SLC cost of approximately $100,000 to complete the in-depth inventory of legacy wells (LBF). 3)Annual SLC costs of approximately $50,000 to survey and monitor oil seepage and annual SLC costs of approximately $200,000 to remove coastal hazards (LBF). 4)Unknown costs to plug and abandon legacy wells, potentially in the $1 million per well range if the well is in the tidal zone (LBF). This includes CEQA compliance (which can be hundreds of thousands of dollars). 5)DOGGR costs are absorbable. COMMENTS: 1)Purpose. According to the author, we already know there are over 200 improperly capped wells in state waters. In order to completely address the issue of legacy coastal oil wells, this bill directs the SLC to conduct an in-depth inventory of legacy oil wells along California's coastline. The author further contends, given the effectiveness of SLC and its staff at protecting California's coastline, it is the appropriate body to remediate California's legacy oil wells and other coastal hazards. SB 900 Page 4 2)Background. Coastal hazards can include remnants of coastal structures, piers, oil wells, pilings, deteriorated electric cables, and old pipes. Many coastal hazards are located on public trust lands set aside for commerce, navigation, fishing, and recreation, and can impede coastal use and threaten public health and safety. The Summerland Oil Field in Santa Barbara County was the world's first offshore oil drilling operation and predates any regulatory framework. While the visual infrastructure has been removed, the wells were not properly capped and continue to leak oil into the ocean and Santa Barbara's beaches. SLC has developed a limited coastal hazard removal program that has operated when funding has been available. The program was initiated when an inventory performed in the mid-1980s found over 400 coastal hazards in Los Angeles, Santa Barbara, and Ventura Counties. While some hazards were traced to responsible parties, most were not and consequently became the responsibility of the state. SLC has completed eight hazard removal projects since 2001. In August, 2015, SLC directed staff to conduct an initial assessment of the Becker Onshore Well (in the Summerland Oil Field). Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081 SB 900 Page 5