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SB-1147 Offshore oil and gas wells.(2017-2018)

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Date Published: 04/09/2018 02:00 PM
SB1147:v98#DOCUMENT

Amended  IN  Senate  April 09, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 1147


Introduced by Senator Hertzberg

February 14, 2018


An act to amend Section 12805.2 of the Government Code, relating to state government. add Sections 3205.6, 6217.9, and 6829.3 to the Public Resources Code, relating to oil and gas.


LEGISLATIVE COUNSEL'S DIGEST


SB 1147, as amended, Hertzberg. Natural Resources Agency: database: lands and easements. Offshore oil and gas wells.
(1) Existing law requires a person engaging in the drilling, redrilling, deepening, or in any operation permanently altering the casing, of one or more wells located in submerged lands under ocean waters within the jurisdiction of the state to file with the State Oil and Gas Supervisor a blanket indemnity bond for a specified amount to cover all of the operator’s operations in any of those wells. Existing law requires a person who operates one or more of those wells to provide an additional amount of security acceptable to the supervisor covering the full costs of plugging and abandoning all of the operator’s wells.
This bill would require the supervisor, before January 1, 2020, to evaluate and estimate the costs associated with the decommissioning of offshore oil and gas wells under its jurisdiction and, if necessary, to develop a schedule to increase the bond amounts or other financial surety provided by an operator of an offshore oil or gas well to ensure sufficient moneys are available to the state to decommission the well if no other entity is responsible for those decommissioning costs.
(2) Existing law establishes the Oil Trust Fund in the State Treasury and appropriates the money in the fund to the State Lands Commission commencing when specified requirements are met. Existing law requires the Controller to transfer certain oil-revenue-related moneys to the fund. Existing law requires the commission to expend the money in the fund to finance the costs of well abandonment, pipeline removal, facility removal, remediation, and other costs associated with removal of oil and gas facilities from specified tidelands.
This bill would establish the Offshore Infrastructure Decommissioning Fund and would require that the commission, upon appropriation by the Legislature, expend moneys in the fund only to finance the costs of well plugging and abandonment, pipeline removal, facility removal, remediation, decommissioning, or other costs associated with the removal of oil or gas facilities that are not the responsibility of another entity from California’s tidelands. The bill would require the commission to seek additional infrastructure bonding, as feasible, under its jurisdiction when lease terms are negotiated or renegotiated for offshore oil and gas leases.

Existing law requires the Natural Resources Agency to develop and maintain a database of lands and easements that have been acquired by the departments and boards within the agency.

This bill would require the Natural Resources Agency to maintain an interactive statewide map of those lands and easements that would be made available, as feasible, to the public on the agency’s Internet Web site. The bill would additionally make nonsubstantive changes.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Due to the recent bankruptcies of two independent oil companies, the state faces costs of at least $100,000,000 to prepare to remove and decommission offshore oil and gas wells and associated infrastructure.
(b) The existing bonding for Platform Holly and Rincon Island is inadequate to meet the related necessary decommissioning costs, and efforts to obtain additional moneys under lease transfer terms will be subject to negotiation and possible litigation and are unlikely to fully cover all of the state’s costs.
(c) Given their inclusion in the California Coastal Sanctuary, and the age of the associated oil and gas fields and infrastructure, additional nonwell infrastructure bonding may not be readily available.
(d) Additional actions are needed to ensure the state is not financially responsible for the decommissioning of private oil and gas infrastructure.

SEC. 2.

 Section 3205.6 is added to the Public Resources Code, to read:

3205.6.
 (a) Before January 1, 2020, the supervisor shall do both of the following:
(1) Evaluate and estimate the costs associated with the decommissioning, including plugging and abandonment pursuant to Section 3208, of the offshore oil and gas wells under its jurisdiction.
(2) If necessary, based on the estimates made pursuant to paragraph (1), develop a schedule to increase the bond amounts or other financial surety provided by an operator of an offshore oil or gas well to ensure sufficient moneys are available to the state to decommission the well if no other entity is responsible for those decommissioning costs.
(b) The supervisor shall coordinate with the State Lands Commission to ensure the actions taken pursuant to this section and Section 6829.3 are not duplicative.

SEC. 3.

 Section 6217.9 is added to the Public Resources Code, to read:

6217.9.
 (a) The Offshore Infrastructure Decommissioning Fund is hereby established in the State Treasury.
(b) Upon appropriation by the Legislature, the commission shall use the moneys in the fund only to finance the costs of well plugging and abandonment, pipeline removal, facility removal, remediation, decommissioning, or other costs associated with the removal of an oil or gas facility that is not the responsibility of another entity from California’s tidelands.

SEC. 4.

 Section 6829.3 is added to the Public Resources Code, to read:

6829.3.
 (a) The commission shall seek additional infrastructure bonding, as feasible, under its jurisdiction when a lease term is negotiated or renegotiated for an offshore oil or gas lease.
(b) The commission shall coordinate with the State Oil and Gas Supervisor to ensure the actions taken pursuant to this section and Section 3205.6 are not duplicative.

SECTION 1.Section 12805.2 of the Government Code is amended to read:
12805.2.

(a)The Natural Resources Agency, in consultation with each department, board, conservancy, and commission within the agency, shall develop and maintain a database of lands and easements that have been acquired by the departments and boards within the Natural Resources Agency. The database shall include, but need not be limited to, all of the following:

(1)The name of the owner of the land or easement.

(2)The location of the land or easement.

(3)The statutory authority for the acquisition of the land or easement.

(b)In conjunction with the database described in subdivision (a), the Natural Resources Agency shall do all of the following:

(1)On or before September 1, 2002, and each year thereafter, request that all departments, boards, commissions, and conservancies within the Natural Resources Agency provide the Secretary of the Natural Resources Agency with information on any acquisitions of land or funding that was directed to the acquisition of land, undertaken by the department, board, commission, or conservancy.

(2)To the extent that the information is available, on or before January 10, 2003, and each year thereafter, require that all departments, boards, commissions, and conservancies within the Natural Resources Agency provide the Secretary of the Natural Resources Agency with general information, including a general geographic description of land acquisition priorities and potential funding sources during the next fiscal year.

(3)To the extent feasible, review and evaluate any available information from federal agencies pertaining to its land acquisition activities to coordinate and better understand the impact on California state proposals.

(4)Provide a report to the Governor and the Legislature on or before December 31, 2003, and each year thereafter, that does both of the following:

(A)Describes the amount of land acquired by each department, board, commission, and conservancy within the Natural Resources Agency during the past year and the amount of money spent for the acquisition.

(B)Projects the approximate amount of land that will be acquired by the Natural Resources Agency during the following year.

(5)Provide the report described in paragraph (4) to the Secretary of Food and Agriculture and the Director of Conservation.

(6)Establish a uniform open process to ensure that information is readily available to the general public, local, state, and federal agencies, adjacent landowners, and other interested parties of record regarding any state hearings to approve proposed state land acquisitions.

(7)Develop strategies with local, state, and federal agencies so that a revenue stream is established to ensure management plans are adequately funded for all new acquisitions.

(c)An interactive statewide map of the lands and easements described in subdivision (a) shall be maintained by the Natural Resources Agency and made available, as feasible, to the public on the Natural Resources Agency’s Internet Web site.

(d)This section shall be implemented only during those fiscal years for which funding is provided for the purposes of this section in the annual Budget Act or in another measure.