BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2503|
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THIRD READING
Bill No: AB 2503
Author: John A. Perez (D)
Amended: 8/20/10 in Senate
Vote: 21
SENATE NATURAL RES. & WATER COMMITTEE : 9-0, 6/29/10
AYES: Pavley, Cogdill, Hollingsworth, Huff, Kehoe,
Lowenthal, Padilla, Simitian, Wolk
SENATE APPROPRIATIONS COMMITTEE : 10-1, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Walters, Wolk, Wyland
NOES: Yee
ASSEMBLY FLOOR : 73-0, 6/2/10 - See last page for vote
SUBJECT : Ocean resources: marine resources and
preservation
SOURCE : Author
DIGEST : This bill establishes a program to allow for the
partial removal of existing off-shore oil platforms. Any
cost savings realized from partial removal would be split
between the state and the platform owner. This bill
specifies that any state proceeds would largely be provided
to a new endowment corporation and would be used for
various ocean-related purposes.
Senate Floor Amendments of 8/20/10 (1) designate the
CONTINUED
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Resources Agency as the lead agency for the purposes of the
California Environmental Quality Act instead of the State
Lands Commission, (2) modify the way startup costs shall be
paid for the decommissioning program, and (3) clarify how
the state will be indemnified for liability assumed when
taking ownership of a decommissioned offshore oil
structure.
ANALYSIS : Under current state and federal law, as well
as leases authorized by the state and federal government,
owners of offshore oil platforms are required to fully
remove platforms at the end of their lease term. There are
27 oil platforms off the California coast (four are in
state waters and 23 are in federal waters). Federal law
allows for partial removal of oil platforms, provided that
certain conditions are met, including the enactment of a
law allowing for partial removal in the adjacent state.
This bill establishes a program under which an offshore oil
platform owner is allowed to partially remove a platform,
leaving behind some of the underwater structure for marine
habitat.
A platform owner could (voluntarily) apply to the
Department of Fish and Game (DFG) for permission to
partially decommission an oil platform. The applicant
would be responsible for reimbursing the state for costs
incurred reviewing the application and taking other actions
under the bill. The Ocean Protection Council would
determine whether partial removal of a platform would
provide a net environmental benefit. The State Lands
Commission would be responsible for determining the cost
savings associated with partial removal of an oil platform,
as opposed to full removal.
DFG would be authorized to approve partial removal of an
oil platform if (1) partial removal conforms to all
existing state and federal laws, (2) partial removal would
result in a net environmental benefit, (3) the cost savings
from partial removal have been determined, (4) the platform
owner has agreed to provide sufficient funds to cover state
regulatory costs, (5) the platform owner has agreed to
provide funding sufficient to manage the remaining
structure, (6) the platform owner has indemnified the state
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from any liability associated with the structure, and (7)
the platform owner has received all required permits.
In order for DFG to provide final approval for partial
removal, the applicant must provide a portion of the cost
savings to the state. Before 2017, the applicant must
provide the state 55 percent of the cost savings, from 2017
to 2023, the state share is 65 percent, and after 2023, the
state share is 80 percent.
The state share of the cost savings is to be apportioned as
follows: 85 percent shall be transferred to an endowment
corporation created under the bill; 10 percent is to be
deposited in the General Fund; two percent shall be
deposited in a special fund and used for coastal protection
activities; two percent shall be deposited into the Fish
and Game Preservation Fund for expenditure; and one percent
shall be deposited with the board of supervisors of the
county immediately adjacent to the location of the
facility.
This bill creates the California Endowment for Marine
Preservation as a public benefit corporation. The
Endowment is governed by a board made up of the Secretary
for Natural Resources, the Secretary for Environmental
Protection, one member appointed by each of the Governor,
the Senate Rules Committee, and the Speaker of the
Assembly. The Endowment would directly receive 85 percent
of the state's share of any cost savings from a partial
removal of an offshore oil platform. The Endowment is
directed to hold those funds in trust as an endowment and
generally to only use interest earnings from the endowment
to fund a variety of activities related to the protection
of the marine environment.
This bill requires the Endowment to report annually to the
Governor and the Legislature on its activities and makes
the Endowment subject to audit by the Bureau of State
Audits.
This bill requires the State Coastal Conservancy, upon
DFG's final approval of the first application to create and
update, as specified, an advisory spending plan for cost
savings deposited in the Endowment. The Conservancy will
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be required to submit a copy of the spending plan and all
updates to the Legislature, and the Board of Directors of
the California Endowment for Marine Preservation.
This bill allows a partial decommissioning of an offshore
oil rig under specific conditions. This bill allows the
first applicant to be reimbursed for paying the startup
costs of the artificial rig program, should their partial
decommissioning application be accepted. This bill
clarifies that the applicant must provide an insurance
policy, cash settlement, or other similar mechanism in the
indemnification agreement to assure that the state's
liability would be covered in perpetuity.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Fish and Game review $750 $1,700
$1,700Special*
State Lands Commission $450 $450
$1,900General**
review
Revenues from cost Unknown revenues, potentially
in Various
savings the tens or hundreds of millions in
future years
* Fish and Game Preservation Fund. Ultimately offset with
fees.
**Ultimately offset with fees
SUPPORT : (Verified 8/23/10)
Audubon California
California League of Conservation Voters
Monterey Bay Aquarium
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Ocean Conservancy
Oceana
The Nature Conservancy
United Anglers of Southern California
OPPOSITION : (Verified 8/23/10)
Environmental Defense Center
Sierra Club California
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Bass, Beall,
Bill Berryhill, Blakeslee, Block, Blumenfield, Bradford,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nestande,
Niello, Nielsen, Norby, V. Manuel Perez, Portantino,
Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio,
Swanson, Torlakson, Torres, Torrico, Tran, Villines, John
A. Perez
NO VOTE RECORDED: Tom Berryhill, Fong, Lieu, Nava, Audra
Strickland, Yamada, Vacancy
CTW:mw 8/23/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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