BILL ANALYSIS
AB 368
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 368 (Skinner)
As Amended July 23, 2009
Majority vote
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|ASSEMBLY: |48-30|(May 11, 2009) |SENATE: |23-13|(August 31, |
| | | | | |2009) |
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Original Committee Reference: NAT. RES.
SUMMARY : Delays the effective date of a quitclaim deed filed to
terminate all or a portion of a mineral lease with the State
Lands Commission (Commission) until the lessee reclaims or
restores the lease premises as approved by the Commission.
The Senate amendments :
1)Clarify that a quitclaim request is effective upon compliance,
as approved by the Commission, with any existing abandonment
or reclamation requirements.
2)Require the Commission to consider a quitclaim request upon
completion of any required abandonment or reclamation at its
next regularly scheduled meeting for which the request can be
properly noticed.
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
from a lead agency, submit a reclamation plan, and provide
financial assurances to the lead agency in the event that they
AB 368
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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.
AS PASSED BY THE ASSEMBLY :
1)Delays the effective date of a quitclaim deed filed to
terminate all or a portion of a land lease (including oil,
gas, geothermal or mineral lease) with the Commission until
such time that the lessee reclaims or restores the lease
premises as approved by the Commission.
2)Upon Commission approval, releases the lessee from all
obligations with respect to the lands quitclaimed.
3)Generalizes this authority so that it applies to any relevant
land lease regardless of size or resource extracted.
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 15 or more 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
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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
lease its lands for other uses, forgoing any revenue 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
state; about a quarter of these lands, however, are leased for
revenue generating purposes. These lands are what remain of the
nearly 5.5 million acres originally granted to the state by
Congress in 1853 for the benefit of 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 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 dictated by
market forces. During fiscal year 2007-08, the Commission
collected $738,471 in lease rent; of this amount, $143,745 from
roughly 140 leases was deposited into the TRF. 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: 0002213