BILL ANALYSIS
AB 368
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Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 368 (Skinner) - As Introduced: February 23, 2009
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill delays the effective date of a quitclaim deed for a
lease with the State Lands Commission (commission) until the
lessee reclaims or restores the land. Specifically, this bill:
1) Delays the effective date of a quitclaim deed for any
lease, including an oil, gas, geothermal or mineral lease,
with the commission until the leased land has been
reclaimed or restored, as approved by the commission.
2) Makes the quitclaim provisions applicable to any land
lease with the commission, regardless of the size of the
land in question or the type of resources extracted from
that land.
3) These provisions would only apply to new commission
leases.
FISCAL EFFECT
Modest revenues, perhaps in the hundreds of thousands of dollars
annually, principally to the California State Teachers'
Retirement Fund.
COMMENTS
1) Rationale. According to the commission-the sponsor of
this bill-the changes proposed by this bill are necessary
to give the commission greater administrative control of
lands leased from the commission during the time that those
lands undergo reclamation and restoration. Existing law
AB 368
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authorizes the commission to lease state sovereign and
"school lands"-land ceded to the state by the federal
government for the benefit of public education-for mining
and other purposes. During the mine's operation, the lessee
pays rent and royalties on the leased land per the terms of
the lease. In addition, the lessee is required to maintain
insurance and bonding for the land.
Current law allows the lessee to file a quitclaim at any
time, at which point the lessee is no longer obligated to
pay rent on the land. However, the lessee may reclaim and
restore the mined land for many years after it has filed
its quitclaim, during which time the state is unable to
collect rent on the land or authorize the land for other
use. In addition, the lessee is not required to maintain
insurance and bonding once the quitclaim is filed, exposing
the state to financial risk from personal injury and
property damage during the reclamation period.
The commission claims that extending the effective date of
the quitclaim until after completion of reclamation and
restoration of the leased land, per commission approval,
would allow the state to continue to generate revenue from
the leased land. The extension would also extend a lessee's
obligation to maintain insurance and bonding for the leased
land throughout reclamation and restoration, thereby
lessening the state's financial risk.
2) Revenue from leased lands mainly benefits teachers. In
1853, congress passed the School Land Bank Act, which ceded
certain lands to the states for the benefit of public
education. The act requires the commission to manage these
school lands-in California today, mainly isolated tracts of
desert land-to the economic benefit of the public school
system. All revenue generated by school lands is deposited
in the California State Teachers' Retirement System.
Revenue generated on sovereign state lands-mainly state
coastal lands-goes to the General Fund. However, the
commission claims that lessees on sovereign lands generally
have not quitclaimed until after reclamation is complete,
and so expects little change in the amount of General Fund
revenue as a result of this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081