BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 233 (Hertzberg) - Marine resources and preservation
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|Version: April 21, 2015 |Policy Vote: N.R. & W. 6 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 28, 2015 |Consultant: Marie Liu |
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SUSPENSE FILE. AS AMENDED.
Bill
Summary: SB 233 would modify the rigs-to-reefs program by
changing the financial incentives for early decommissioning,
require that the decision to allow partial decommissioning
consider air quality or greenhouse gas emissions (GHGs), and
designate the State Lands Commission (SLC) as the lead agency
for the purposes of CEQA.
Fiscal Impact (as approved on May 28, 2015):
One-time costs in the low to mid tens of thousands of dollars,
reimbursable by the project applicant, to the Department of
Fish and Wildlife and the Air Resources Board for new
responsibilities in considering a partial decommissioning
application.
Background: In 2010, the Legislature passed AB 2503 (Perez) Chapter 687,
Statutes of 2010, which establishes a process whereby the state
may allow the partial decommissioning of offshore oil and gas
platforms on a case-by-case basis. Partial decommissioning means
removing the top part of the platform while leaving the lower
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portion behind as an artificial reef.
In order to qualify for partial decommissioning, certain
conditions must be met including, among other things, that the
partial decommissioning results in a net environmental benefit.
The criteria to determine the net environmental benefit is to be
developed by the Ocean Protection Council (OPC) and is required
to consider any impacts to biological resources or water
quality, the impacts on fish protection and productivity, and
any management requirements of a partially removed structure. In
determining the net environmental benefit criteria, OPC is
required to consult with the Department of Fish and Wildlife
(DFW), the SLC, the California Coastal Commission, and the
California Ocean Science Trust.
DFW is required to develop a management plan for the partially
removed structure and to provide an opportunity for public
comment on the partial decommissioning plan.
Any cost savings to the platform owner by avoiding full
decommissioning must be shared with the state. The platform
owner/state cost savings split would start at 45/55 for
decommissioning applications received before January 1, 2017 and
would decrease in five-year increments. Cost shares for
decommissionings whose applications were received after 2023
would be 20/80. This declining cost-savings ratio was intended
to encourage early decommissionings.
The state's portion of the savings is to be divided as follows:
85% to the California Endowment for Marine Preservation to be
used to benefit coastal marine resources,
10% to the General Fund,
2% to the Fish and Game Preservation Fund to cover any of
DFW's costs under the program,
2% to the Coastal Act Services Fund to support state agency
work involving coastal management policies regarding oil and
gas development, and
1% to the county immediately adjacent to the location of the
decommissioned facility.
AB 2503 specified that the Resources Agency should be the lead
agency for the purposes of CEQA in a rigs-to-reef project.
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Proposed Law:
This bill would make various changes to the existing
rigs-to-reef program. Specifically, this bill would:
Change the cost sharing schedule to unspecified date.
Require that air quality or GHG emissions be considered in the
net benefits evaluation. In development of the net benefit
criteria, OPC would be required to also consult with the
California Air Resources Board (ARB). The OPC would be
authorized to weigh of adverse impacts on air quality and GHG
emissions compared to the adverse impacts on biological
resources or water quality.
Replace the Resources Agency with the SLC as the lead agency
for the purposes of CEQA.
Require that DFW provide an opportunity for public comment on
CEQA environmental documents.
Specify that an applicant may withdraw its application at any
time before final approval and require the DFW return any
funds that were provided by the applicant for administrative
costs but were not expended.
Specify that the environmental review of the proposed project
can begin once the applicant provides financial assurances to
DFW.
Staff
Comments: The largest cost, or potential cost, of this bill
would be a result of extending the schedule by which cost
savings ratios are to decline. Currently the bill has replaced
the timing for the owner/state ratio with blanks. Under the
current schedule, the first cost ratio decreases in 2017. Given
that no entity has provided the upfront funding to start the
program (as required by existing law) and that no operator has
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expressed interest in applying for decommissioning in the
short-term, it is highly unlikely that an application will come
in time to qualify for the largest owner/state cost savings
ratio. Should this bill extend the timeline for the highest
owner/state cost savings ratio by replacing the blanks in the
bill with dates that are further out than existing law, the bill
would effectively be reducing the cost savings that the state
would have received without the bill. Cost savings from partial
decommissioning are likely to be in the tens of millions of
dollars, translating to potential state losses in the millions
to the General Fund and several special funds.
Under this bill, the ARB would have new responsibilities to
consult with the OPC regarding net benefit criteria. ARB would
also have costs to the air quality and GHG emissions of a
proposed project. The ARB estimates that one PY would be needed
if there were 5-6 projects in a year. However, given that there
are only 27 platforms to begin with, it seems unlikely at there
would be more than one or two applications for decommissioning
in any one year. Staff estimates that likely costs to ARB will
be approximately $35,000 per application. These costs would be
paid for by the project applicant.
Replacing the Natural Resources Agency with the SLC as the lead
agency under CEQA should not change CEQA costs only who will
incur them. The CEQA costs would be paid for by the project
applicant.
DFW is likely to incur some additional costs to hold the public
meetings required by this bill. These costs are currently
unknown, but staff estimates that they would likely be in the
thousands of dollars. These costs should also be borne by the
project applicant. DFW notes that it has significant costs
associated with AB 2503 that have yet to be funded. No
programmatic activities have begun under AB 2503 because no
platform owners have shown interest in decommissioning.
Author amendments (as adopted on May 28, 2015): Amend per author
to explicitly allow a prospective applicant to provide upfront
funding for the startup costs, as determined by DFW.
Committee amendments (as adopted on May 28, 2015): Restore
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current law in respect to the owner/state cost savings schedule.
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