BILL ANALYSIS �
AB 1054
Page 1
ASSEMBLY THIRD READING
AB 1054 (Skinner)
As Amended January 4, 2012
Majority vote
NATURAL RESOURCES 6-3 APPROPRIATIONS 12-5
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|Ayes:|Chesbro, Brownley, |Ayes:|Fuentes, Blumenfield, |
| |Dickinson, Huffman, | |Bradford, Charles |
| |Monning, Skinner | |Calderon, Campos, |
| | | |Chesbro, Gatto, Hall, |
| | | |Hill, Ammiano, Mitchell, |
| | | |Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Grove, Halderman |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Prevents a lessee on State Lands Commission (Commission)
land from relinquishing his or her duty to pay rent and hold
insurance until the lease premises has been reclaimed or restored.
Specifically, this bill :
1)Delays the effective date of a quitclaim filed to terminate all or
a portion of an 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)Releases, upon Commission approval, the lessee from all
obligations with respect to the lands quitclaimed.
3)Generalizes this authority so that it clearly applies to any land
lease regardless of size or resource extracted.
EXISTING LAW :
1)Requires a person, association, or corporation to obtain a lease
from the Commission to extract oil, gas, geothermal, or mineral
resources on lands under the Commission's jurisdiction.
2)Authorizes, pursuant to the Cunningham-Shell Act of 1955, an oil,
gas, geothermal, or mineral mining lessee on Commission land to,
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at any time, file with the Commission a quitclaim or
relinquishment of all rights under the lease or any portion of the
lease. The quitclaim or relinquishment is effective on the date
of filing. The lessee and its surety are subject to the continued
obligation to: a) make payment of all rentals and royalties
accrued before the filing; and, b) to suspend or abandon all wells
in accordance with the applicable lease terms and regulations. The
quitclaim or relinquishment does not release the lessee or its
surety from any liability for breach of any obligation of the
lease existing at the time of the filing.
3)Requires, pursuant to the Surface Mining and Reclamation Act of
1975 (SMARA), 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 are unable to
reclaim or restore the mined land.
4)Grants administrative control of "school lands" to the Commission.
School lands are lands granted to the state from the federal
government and held in trust to generate revenues that benefit
public schools. Pursuant to the School Land Bank Act, the
Commission is required to take all action necessary to fully
develop school lands into a permanent and productive resource base
for the benefit of the California State Teachers' Retirement
System (CalSTRS).
FISCAL EFFECT : According to the Assembly Appropriations Committee,
minor and absorbable costs to the Commission to monitor and review
reclamation and restoration activities of lessees who have filed
quitclaims and modest revenues, perhaps in the hundreds of thousands
of dollars annually, principally to the California State Teachers'
Retirement Fund.
COMMENTS : 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.
This bill also ensures that lessees are bound to the insurance and
bonding requirements of the lease during reclamation, which will
protect the state from liability. 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 or maintain liability insurance during the time in which it
restores or reclaims the lease premises. This issue is most
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relevant during the reclamation of sand and gravel pits on "school
lands," which can take many years.
This bill is virtually identical to AB 368 (Skinner) of 2009, which
was vetoed by Governor Schwarzenegger with a veto message that
included the following:
"It is unclear why this bill is needed, since I have not seen, or have
been provided, any evidence that would indicate widespread abuse of
mineral extraction leases held under existing law by the oil
industry, the gas industry, or the hard rock mining industry. Absent
such evidence, this bill appears to be a "solution" in search of a
'problem'."
The Commission staff in 2009, however, offered examples of leases
that were recently quitclaimed before reclamation to illustrate the
problem. Additionally, staff has indicated that there are new
leases on the horizon that will require significant reclamation.
Without this bill, the Commission will likely receive no revenue
from these new leases once they go into reclamation even though the
lessees remain on the property. What is probably more significant
is that when a quitclaim occurs, the lease's provisions that protect
the Commission and the state from liability arising from, for
example, personal injury or property damage are no longer
enforceable.
The Commission manages approximately 468,600 acres of school lands
held in fee ownership by the state, and the reserved mineral
interests on approximately 790,000 acres of school lands where the
surface estate has been sold. 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 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 School Land Bank 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 CalSTRS. This bill is
entirely consistent with this mandate.
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
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FN: 0003051