BILL ANALYSIS Ó
SB 233
Page 1
Date of Hearing: July 14, 2015
ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE
Marc Levine, Chair
SB
233 (Hertzberg) - As Amended July 7, 2015
SENATE VOTE: 37-2
SUBJECT: Marine resources and preservation.
SUMMARY: Amends the California Marine Resources Legacy Act
regarding requirements of applications for partial removal of an
offshore oil structure. Specifically, this bill:
1)Requires the State Lands Commission (Commission) instead of
the Natural Resources Agency to serve as the lead agency for
purposes of the environmental review required under the
California Environmental Quality Act (CEQA) for a proposed
project to partially remove an offshore oil structure.
Requires the Commission, as lead agency, to begin the
environmental review as soon as feasible after the applicant
provides required financial assurances.
2)Allows a prospective applicant, before the first application
for partial removal of an offshore oil structure is filed, to
elect to pay a portion of the startup costs rather than all
SB 233
Page 2
startup costs, in an amount the Department of Fish and
Wildlife (DFW) determines to be necessary for staff and other
costs in anticipation of receipt of the first application.
3)Authorizes an applicant to withdraw an application at any time
before final approval, and requires the DFW, upon notification
that the applicant has withdrawn the application, to return to
the applicant any unexpended funds.
4)Requires the criteria developed by the Ocean Protection
Council (OPC) for evaluating the net environmental benefit of
full removal versus partial removal of offshore oil structures
to be based on best available science. Requires the OPC to
consult with the State Air Resources Board, in addition to
other specified entities, in determining the criteria. Adds
to the factors the OPC is required to take into account in
making the determination of net environmental benefit, any
adverse impacts to air quality or greenhouse gas emissions.
Requires the OPC to determine the appropriate weight to be
assigned adverse impacts to air quality or greenhouse gas
emissions as compared to adverse impacts to biological
resources or water quality. Requires the OPC to take all
feasible steps to complete its determination in a timely
manner that accommodates the DFW's schedule for consideration
of the application.
5)Clarifies that the purpose of the opportunity for public
comment and public hearings that the DFW is required to
provide and hold are to receive public comment on the
application and environmental document pursuant to CEQA.
6)Modifies the timelines that trigger the percentage of the cost
savings that an applicant is required to share with the state
SB 233
Page 3
for the first applicant to partially remove an offshore oil
structure only. Provides that the applicant who files the
first application to partially remove an offshore oil
structure shall apportion and directly transmit a portion of
the total amount of cost savings resulting from the first
application to DFW as follows:
a) 55% if the application was submitted before January
1, 2017;
b) 65% if the application was submitted on or after
January 1, 2017, and before January 1, 2023; and
c) 80% if the application was submitted on or after
January 1, 2023.
Requires DFW to return the cost savings paid by the first
applicant to the applicant if any approvals required for
partial removal are permanently enjoined, vacated,
invalidated, rejected, or rescinded as a result of litigation,
and the applicant is required to carry out full removal.
7)Provides that the total percentage of the cost savings
required to be shared shall be transmitted by the applicant to
DFW. Requires DFW, upon final, nonappealable judicial
decisions upholding DFW's final approval and all permits and
approvals required for partial removal, or the running of the
statute of limitations, whichever is later, to transmit the
specified percentages of the total to the California Endowment
for Marine Preservation, the General Fund, and Fish and Game
Preservation Fund, the Coastal Act Services Fund, and the
SB 233
Page 4
County adjacent to the facility, as specified.
EXISTING LAW:
1) Under the California Marine Resources Legacy Act,
establishes a program to allow partial removal of
decommissioned offshore oil structures as an alternative to
full removal if specified conditions are met. Authorizes the
DFW to approve partial removal if specified conditions are
met, including that: the removal would be consistent with all
applicable state, federal and international laws; the partial
removal provides a net benefit to the marine environment as
compared with full removal; the cost savings that would result
have been determined; the applicant has provided required
financial assurances; DFW and the applicant have entered into
a contractual agreement that will provide sufficient funds for
overall management of the remaining structure; and federal
approvals have been received.
2) Requires the OPC to establish criteria for determining net
environmental benefit and to consult with the DFW, the
Commission, the California Coastal Commission and the
California Ocean Science Trust. Requires the OPC in
determining whether partial removal would provide a net
benefit to the marine environment, to take into account, among
other things, any adverse impacts to biological resources or
water quality, or any other marine environmental impacts.
3) Provides that a proposed project to partially remove an
offshore oil structure is a project for purposes of CEQA, and
the Natural Resources Agency shall serve as the lead agency
for the environmental review.
SB 233
Page 5
4) Requires the first person to file an application for
partial removal of an offshore oil structure to pay the
startup costs incurred by the DFW or Commission to implement
the Act, including the costs of developing and adopting
regulations. Requires the DFW to reimburse the payment of
startup costs from cost savings subsequently deposited into
the Fish and Game Preservation Fund from future applicants.
5) Requires the DFW, prior to granting conditional approval of
an application for partial removal to prepare a management
plan, as specified, and to provide an opportunity for public
comment and hold a public hearing in the county nearest to the
location of the structure.
6) Requires the applicant, upon receipt of conditional
approval for partial removal of the structure, to apportion
and directly transmit a portion of the total amount of the
cost savings to specified entities as follows:
a) 55% if the application was transmitted before January 1,
2017;
b) 65% if transmitted on or after January 1, 2017, and before
January 1, 2023;
c) 80% if transmitted on or after January 1, 2023.
7) Requires, of the amount of the cost savings required to be
submitted in 6) above, that the applicant shall directly
transmit the following percentages to the identifed funds: 85%
SB 233
Page 6
to be deposited into the California Endowment for Marine
Preservation; 10% to be deposited into the General Fund; 2% to
be deposited into the Fish and Game Preservation Fund; 2% to
be deposited into the Coastal Act Service Fund; and 1% to be
deposited with the board of supervisors of the county
immediately adjacent to the location of the facility prior to
its decommissioning.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill has one-time costs in the low to mid tens
of thousands of dollars, reimbursable by the project applicant,
to DFW and the Air Resources Board for new responsibilities in
considering a partial decommissioning application.
COMMENTS: This bill makes several changes to an existing law,
enacted in 2010, that allows for owners or operators of
decommissioned offshore oil structures, to apply to the state
for permission to partially remove the oil structure instead of
fully removing the structure, if certain criteria are met. To
date, no applications have been filed under the law, but it is
anticipated that one or more offshore oil structures may be
scheduled for decommissioning in the next few years.
1)Author's Statement: The author states that "California's
coast is home to more than two dozen oil platforms that have
been extracting fossil fuels for, in many cases, more than
fifty years. Built in the 1960s, the half century oil
construction technology poses a threat to California's coast
as these platforms age and continue to be battered by ocean
forces. At the same time, these oil rigs are home to decades
of accumulated and valuable marine life that have made a home
of the massive structures. Across the globe and in places in
the United States, like the Gulf of Mexico, artificial reefs
have been created from ships, subway cars and decommissioned
SB 233
Page 7
oil rigs. However, in California the permitting process for
partial removal of rigs under the California Marine Resources
Legacy Act is so cumbersome and opaque that no operator has
applied for a permit under [the Act]. As long as oil and gas
are being extracted from the waters off California, this state
will continue to face a grave environmental threat in that of
oil spills or leaks. SB 233 seeks to improve the permitting
process to convert an oil rig into an artificial reef and end
off-shore oil production."
The Senate analysis of this bill cites the author as further
stating that "In 2010, the Legislature passed AB 2503 by
former Speaker John Perez, which enacted California's
rigs-to-reefs program. We are now nearing the point where the
first of California's offshore oil rigs will be ready for
decommissioning in the next few years. It has become apparent
through discussions with the Administration, that the
permitting process is unworkable, both for practical reasons
involving a lack of expertise and fiscal reasons as well. SB
233 is intended to make the current rigs-to-reefs permitting
process more pragmatic without sacrificing any of the
environmental review." The author indicates an intent to work
on amendments that are "both workable and protective of the
environment." The author adds that this "bill adds impact of
greenhouse gas emissions that should be considered in weighing
the removal options for offshore oil rigs" in the calculation
of the net environmental benefit, and that "overall, SB 233
seeks to take a critical look at the rigs-to-reefs program and
to work to make the process better. Ultimately, if oil rigs
are approved for conversion, a productive marine ecosystem
will be saved from destruction and potentially hundreds of
millions of dollars will be made available in perpetuity for
funding ocean oriented environmental programs."
2)Background: AB 2503 (John Perez), Chapter 687, Statutes of
2010, enacted the California Marine Resources Legacy Act,
SB 233
Page 8
which, under specified conditions, allows for the partial
removal of a decommissioned offshore oil platform, as an
alternative to full removal. The law is commonly known as the
"Rigs-to-Reefs" program, since the structure of the remaining
platform can serve as an artificial reef providing some
habitat for fish and other marine organisms. The criteria for
approval of partial removal is that there must be a scientific
finding that there would be a net benefit to the marine
environment from partial removal versus full removal. The
additional public policy rationale behind the program is that
since there would be significant cost savings to the applicant
from partial removal, the law requires that the cost savings
be shared with the state. The current program, as enacted by
AB 2503, provides that a portion of the cost savings would go
to an endowment for marine conservation created by the bill, a
portion would go to the state General Fund, a portion would go
to the DFW to cover state review and management costs, and a
portion would go to the county located nearest to the offshore
oil platform. The earlier that the offshore oil facility is
decommissioned, the larger the percentage of the cost savings
that the applicant is allowed to retain. Thus far, no
entities have submitted applications under the Act for partial
removal of a decommissioned offshore oil facility. Other
issues include how the start-up costs should be funded for the
DFW to develop the resources and expertise to review and
evaluate the applications, and whether air quality and climate
change impacts should be considered in the determination of
"net environmental benefit," and if so, what weight these
impacts should be given versus other impacts to the marine
environment.
3)Prior and related Legislation: AB 207 (Rendon) of 2013
proposed amendments to the Act that were substantially similar
to this bill. AB 207 was held in the Assembly Appropriations
Committee. AB 2267 (Hall) of the 2012 Session also proposed
similar amendments to the Act and was held in the Senate
SB 233
Page 9
Appropriations Committee. Some versions of these prior bills,
and earlier versions of this bill, also proposed to alter the
time frames and percentages of the cost savings that the
applicant is required to share with the state, and provisions
relating to liability and indemnity.
4)Supporting Arguments: Supporters indicate this bill will
remedy an unworkable permitting process for the partial
decommissioning of off-shore oil rigs, with the goal of
facilitating the end to off-shore oil drilling off the
California coast. Supporters note this bill would streamline
the review process and require that air quality impacts be
considered in determining net environmental benefit. Other
supporters emphasize the value of decommissioned oil
structures in providing forage and habitat for marine species.
5)Opposing Arguments: Opponents assert this bill is unnecessary
and would undermine the existing law which requires a
balanced, thorough analysis of partial versus full removal,
and was passed after extensive debate. They also assert this
bill is premature since no platforms are ready for
decommissioning at this point. Some opponents also note that
while they were opposed to the original law as proposed in AB
2503 (John Perez), and continue to feel that the oil industry
should be required to comply with its original commitment to
remove oil platforms in their entirety at the end of their
productive life and restore the marine environment to its
natural condition, they feel the existing law is adequate to
address issues raised by proposals for partial removal.
Opponents also identify several issues they assert need to be
addressed if oil platforms are not entirely removed, including
legacy pollution resulting from residual toxins and
contaminated debris, introduction of invasive species,
attraction of fish away from more productive natural reefs,
safety and navigation issues, and potential increased
SB 233
Page 10
liability to the state.
Some groups opposed this bill unless amended to retain the SLC's
responsibility for determining the cost savings (an amendment
which was adopted), while others opposed unless amended to
delete proposed extensions to the timelines for cost sharing
obligations. This bill was amended in the Senate to delete
the earlier proposed timeline extensions, and was amended in
the Assembly to modify the timeline just for the first
applicant, who bears the responsibility for payment of state
startup costs, and to reflect current trends in oil platform
economic lifetimes.
Opposition letters received were to prior versions of this bill.
It is unclear whether the subsequent amendments have removed
all of the opposition.
6)Suggested Committee Amendments: The July 7th amendments to
this bill replaced the term "credible science" with the term
"best available science." Since the Fish and Game Code
defines credible science to include best available scientific
information, and includes standards for determining best
available science, it is suggested that this bill be amended
to reinsert the term "credible science."
The July 7th amendments also modified, for the first applicant
only, the timelines that trigger the percentage of the cost
savings that the applicant is required to share with the
state. The new timelines for the first applicant are based on
the date that the application is submitted. However, until
the first application actually goes through the process,
questions may exist as to what constitutes a completed
application. To ensure that the applicant is committed to the
process, it is recommended that the language in new
SB 233
Page 11
subdivision (c) (1) of Section 6618 be modified to read: "?if
the application was submitted and the applicant elected to pay
startup costs pursuant to Section 6612 (c) before January 1,
2017." Similar language could also be added to subdivision
(c)(2) and (c)(3) of that section.
REGISTERED SUPPORT / OPPOSITION:
Support
The Sportfishing Conservancy
Amigos Del Aire Libre
Get Wet Scuba
22nd Street Landing Sportfishing
Big Fish Bait and Tackle
Harbor Breeze Corporation
Opposition (to prior version of bill)
Environmental Action Committee of West Marin (unless amended)
SB 233
Page 12
Environment California
Environmental Defense Center
Ocean Conservancy (unless amended)
Sierra Club California
Western Alliance for Nature
Wholly H2O
Analysis Prepared by:Diane Colborn / W., P., & W. / (916)
319-2096