BILL ANALYSIS �
AB 207
Page 1
Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 207 (Rendon) - As Introduced: January 30, 2013
Policy Committee: Water Parks and
Wildlife Vote: 15-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill revises provisions of an existing program that allows
the partial removal of offshore oil structures. Specifically
this bill:
1)Modifies the definition of cost savings to include
consideration of all costs to the applicant of participating
in either the full or partial removal program.
2)Provides that for applications for partial removal submitted
on or before January 1, 2022, the calculation of cost savings
shall include the following:
a) The cost to the applicant for providing surety bonds or
other financial assurances to cover the state's program
costs.
b) The cost to the first applicant to cover the state's
start-up costs.
c) The cost of providing indemnity agreements.
3)Requires the Ocean Protection Council (OPC) to consult with
the Air Resources Board (ARB) to determine the criteria for
evaluating net environmental benefit, including air quality
impacts.
4)Extends the time period before which an application for
partial removal must be submitted in order to qualify for
certain cost sharing apportionments as follows:
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a) Applicant must transmit 55% of the total cost savings to
the state and other specified
entities if the application is submitted before January
1, 2022.
b) Applicant must transmit 65% if application is submitted
after January 1, 2022 but before
January 1, 2028.
c) Applicant must transmit 80% if application is submitted
after January 1, 2028.
FISCAL EFFECT
1)Under the offshore oil structure removal program, an applicant
who realizes cost savings, as defined in statute, shares those
cost savings with the state. Because this bill increases the
items to be considered in determining the cost to an applicant
to participate in the program, the bill has the potential to
reduce the amount of cost savings realized from partial
removal of an offshore oil structure and, therefore, the
amount of money to be shared with the state.
The amount by which this bill will reduce cost savings that
must be shared with the state is unknown, but may total in the
millions of dollars. Such a reduction will occur for
applications on or before January 1, 2022 that would be
subject to the new cost and benefit calculations provided by
this bill.
Whatever the amount of reduced cost savings shared with the
state, the reduction will occur proportionally, as follows,
consistent with existing law: 85% to the California Endowment
for Marine Preservation; 10% to the General Fund; 2% each to
the Fish and Game Preservation Fund and the Coastal Act
Services Fund; and 1% to the board of supervisors of the
county in which a project occurs.
2)Minor, absorbable costs for consultation between the ARB and
OPC (special fund).
COMMENTS
1)Purpose . According to the author, this bill will create
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incentives for oil companies to decommission offshore oil
platforms. As a result of high oil prices, the program has
yet to be used. The author contends it is appropriate to
consider all actual costs incurred by an applicant when
determining the cost savings that must be shared with the
state. It is also appropriate to include air quality
benefits in the calculation of net environmental benefits.
The state has not yet received any revenue for this program.
2)Background. AB 2503 (J. Perez, Chapter 687, Statutes of 2010)
enacted the California Marine Life Legacy Act. The act
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.
The owner may voluntarily apply to DFG to partially remove
such a structure if certain conditions including the
determination by OPC of net environmental benefit are met.
Offshore oil structure owners might realize savings in the
tens-to-hundreds of millions of dollars by partially removing
decommissioned oil structures, as opposed to fully removing
them. The act requires any cost savings, as defined by the
act, be shared with the state in a percentage dependent on the
timing of the application for partial removal: 57% of cost
savings for applications submitted before 2017, 65% for
applications submitted between 2017 and 2023, and 80% for
those submitted after 2023.
3) Prior Legislation. This bill is similar to AB 2267 (Hill) of
2012, however, AB 2267 did not contain provisions extending
the filing deadlines.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081