BILL ANALYSIS
AB 368
Page 1
ASSEMBLY THIRD READING
AB 368 (Skinner)
As Introduced February 23, 2009
Majority vote
NATURAL RESOURCES 6-3 APPROPRIATIONS 11-5
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|Ayes:|Skinner, Brownley, |Ayes:|De Leon, Ammiano, |
| |Chesbro, | |Charles Calderon, Davis, |
| |De Leon, Hill, Huffman | |Fuentes, Hall, John A. |
| | | |Perez, Price, Skinner, |
| | | |Solorio, Torlakson |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Gilmore, Knight, Logue |Nays:|Nielsen, Duvall, Harkey, |
| | | |Miller, Audra Strickland |
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SUMMARY : Delays the effective date of a quitclaim deed filed to
terminate all or a portion of any lease (including oil, gas,
geothermal or mineral lease) with the State Lands Commission
(Commission) until such time that the lessee reclaims or
restores the lease premises as approved by the Commission.
Releases, upon Commission approval, the lessee from all
obligations with respect to the lands quitclaimed. Generalizes
this authority so that it applies to any land lease regardless
of size or resource extracted.
EXISTING LAW :
1)Requires a lease for the extraction of oil, gas, and mineral
resources on state lands from the Commission.
2)Authorizes a lessee at any time to file with the Commission a
quitclaim deed or relinquishment of all rights under an oil,
gas or geothermal lease or any portion of a lease comprising a
10-acre parcel. The quitclaim deed is effective when it is
filed provided that all accrued rent and royalties are paid
and all wells are suspended or abandoned consistent with the
terms of the lease.
3)Pursuant to the Surface Mining and Reclamation Act of 1975
(SMARA), requires mine operators to obtain a mining permit
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from a lead agency, submit a reclamation plan, and provide
financial assurances to the lead agency in the event that they
are unable to reclaim or restore the mined land.
4)Pursuant to the School Land Bank Act (Act), Chapter 879,
Statutes of 1984, lands granted to the state by Congress, to
be managed and enhanced to provide for an economic base in
support of the public school system, were placed into a
statutory trust and the Commission was designated trustee of
the School Land Bank Fund.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, modest revenues, perhaps in the hundreds of thousands
of dollars annually, principally to the California State
Teachers' Retirement Fund.
COMMENTS : According to the author's office, this bill
authorizes the state to collect rent from lessees of mining
operations until the land underlying those operations is
reclaimed or restored consistent with existing law. Currently,
any lessee can quitclaim or relinquish all rights or legal
claims to a lease at any time. This quitclaim is effective upon
filing with the Commission. Practically speaking, a lessee is
then under no obligation to pay rent during the time in which it
restores or reclaims the leases premises. This issue is most
relevant during the reclamation of sand and gravel pits on
"school lands," which can take many years. The Commission,
sponsor of this bill, states that at least two lessees currently
fall into this category.
Prior to conducting surface mining operations, SMARA,
administered by the Department of Conservation and local
governments, requires mining operators to obtain a mining permit
from a lead agency and develop a reclamation plan. This plan
must include measures to restore water quality, stream banks,
wildlife habitat, slope stability, and vegetation, among other
things. This plan may be in place for about 15 years or more
during which time the state may be unable to collect rent or
manage its lands for other uses, forgoing any potential revenues
from those uses.
The Commission manages approximately 496,000 acres of "school
lands" held in fee ownership by the state. Most of these lands
are isolated, landlocked parcels in the desert regions of the
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state; about a quarter of these lands, however, are leased for
revenue generating purposes. These school lands are what remain
of the nearly 5.5 million acres originally granted to the state
by Congress in 1853 to benefit public education. The Act
requires the Commission to manage and enhance school lands to
provide an economic benefit to the public school system. All
revenues generated from the use of school lands must be
deposited into the Teachers' Retirement Fund (TRF), which
benefits the California State Teachers' Retirement System. This
bill is entirely consistent with this mandate.
The Commission states that this bill would result in a modest
increase in rental revenue to the TRF. Quantifying this
increase is difficult since this bill would only apply to new
leases, the acreage of which cannot be predicted. It is
similarly challenging to predict when new leases may terminate
since they are dependent on economical returns dedicated by
market forces. During fiscal year 2007-08, the Commission
collected $738,471 in rent; $143,745 of this was deposited into
the TRF from roughly 140 leases. Since 1997, $3.5 million in
revenue has been generated from surface leasing activities on
school lands.
Analysis Prepared by : Dan Chia / NAT. RES. / (916) 319-2092
FN: 0000396