BILL ANALYSIS Ó
SB 233
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 233
(Hertzberg) - As Amended July 16, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill modifies the California Marine Resources Legacy Act
regarding applications to allow the partial removal of an
offshore oil structure. Specifically, this bill:
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1)Designates the State Lands Commission (SLC), instead of the
Natural Resources Agency, as the lead agency under the
California Environmental Quality Act (CEQA). Requires SLC to
begin CEQA review after the applicant provides specified
financial assurances.
2)Allows a prospective applicant, before the first application
for partial removal of an offshore oil structure is filed, to
pay a portion of the startup costs rather than all startup
cost as currently required. The portion of the startup costs
must be in an amount the Department of Fish and Wildlife (DFW)
determines 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 DFW to return any
unexpended funds to the applicant upon notification of
withdrawal.
4)Requires the criteria developed by the Ocean Protection
Council (OPC) for evaluating the net environmental benefit of
full removal versus partial removal to be based on credible
science.
5)Requires OPC to consult with the Air Resources Board (ARB) to
determine the criteria for evaluating net environmental
benefit, including air quality impacts. When making the
determination if partial removal produces a net benefit,
requires OPC to determine how to weigh adverse impacts to air
quality or GHG emissions as compared to adverse impacts to
biological resources or water quality.
6)Clarifies the purpose of the opportunity for public comment
and public hearings that the DFW is required to provide and
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hold are to receive public comment on the application and
environmental document pursuant to CEQA.
7)Modifies the timelines that trigger the percentage of the cost
savings that an applicant is required to share with the state
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 is required to apportion and directly transmit a
portion of the total amount of cost savings resulting from the
first application to DFW as follows:
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, 2017.
b) Applicant must transmit 65% if application is submitted
after January 1, 2017 but before
January 1, 2023.
c) Applicant must transmit 80% if application is submitted
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.
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8)Provides that the total percentage of the cost savings
required to be shared must be transmitted by the applicant to
DFW.
9)Requires DFW, upon final, non-appealable 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
County adjacent to the facility, as specified.
FISCAL EFFECT:
1)Potential unknown costs for OPC to develop criteria to
evaluate the net environmental benefits and compare potential
adverse impacts to air quality and GHG with adverse impacts to
water quality and biological resources, likely in the hundreds
of thousands of dollars.
2)Potential increased costs for the ARB to provide assistance to
the OPC to determine the net environmental benefit of each
proposed project, likely in the $100,000 to $150,000 range.
3)Increased, reimbursable costs for SLC to prepare an
Environmental Impact Report and calculate cost savings.
4)All costs may be offset by any proceeds the state receives
from completed partial removal applications.
COMMENTS:
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1)Purpose. According to the author, no operators of offshore
oil platforms have applied for a permit for partial removal of
rigs under the California Marine Resources Legacy Act because
it is so cumbersome and opaque. This bill seeks to improve
the permitting process to convert an oil rig into an
artificial reef.
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: 55% of cost
savings for applications submitted before 2017, 65% for
applications submitted between 2017 and 2023, and 80% for
those submitted after 2023.
It is anticipated that one or more offshore oil structures may
be scheduled for decommissioning in the next few years.
3)State Agency Capacity. From a state agency perspective, it
is unclear if this bill addresses the lack of state capacity,
at the DFW and other entities, to ramp-up by hiring the expert
staff necessary to implement this bill. It is also unclear
how state agencies can reimburse start-up costs for withdrawn
applications once staffing is in place.
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Additionally, this bill places the OPC in the position of
evaluating air quality and GHG impacts which is not their
typical jurisdiction.
The author may wish to work with the Administration on
modifications necessary to ensure state agencies will be able
to meet the requirements of this bill should an application be
submitted.
4)Prior Legislation. AB 207 (Rendon) of 2013 proposed
amendments to the Act 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
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.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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