BILL ANALYSIS
AB 2503
Page 1
Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2503 (John A. Perez) - As Amended: April 20, 2010
Policy Committee: Water, Parks and
Wildlife Vote: 11-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill creates the California Artificial Reef Program (CARP)
for the conversion of offshore oil facilities to use as
artificial reefs. (Summary continued below.)
FISCAL EFFECT
1)Ongoing annual costs to DFG of an unknown amount, but at least
$1 million to $2 million, for the equivalent of a nine-person
unit of varying classifications, to evaluate proposed oil
facility conversions.
2)Ongoing annual costs to DFG of at least $200,000 for
consulting costs related to evaluation of proposed
conversions.
3)Cost pressures of approximately $1 million to $2 million to
provide start-up funds to the California Endowment for Marine
Preservation (CEMP), to be repaid from revenue received from
oil facility owners/operators seeking to convert their oil
facilities.
4)Potential revenue to the CEMP of an unknown but substantial
amount, likely in the millions of dollars annually.
5)Potential revenue to the GF, eventually to be transferred to
the CEMP, of an unknown but substantial amount, likely in the
millions of dollars annually.
6)The bill specifies that all costs are to be covered by
owners/operators of oil facilities proposed for conversion.
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DFG expresses concern, however, that it would need staff in
place at the time it receives the first application for
conversion of an oil facility and that the bill makes no
provision for these start-up costs.
SUMMARY (continued)
Specifically, this bill:
1)Creates CARP, to be administered by the Department of Fish and
Game (DFG), to site, approve and mange artificial
reefs-including decommissioned oil rigs-in state and federal
waters.
2)Authorizes DFG to approve conversion of an offshore oil
facility to an artificial reef if certain conditions exist,
including that such a conversion provides a net benefit to the
environment compared to removing the facility and that the
owner/operator provides funds sufficient for DFG to evaluate,
permit and manage the reefs, both immediately and in the long
term, and indemnifies the state against all liability
3)Establishes the CEMP, governed by a nine-member
governor-appointed board, to create a permanent source of
funding for projects that will conserve, protect, restore, and
enhance the open coastal marine resources of the state through
research, environmental sustainability, habitat enhancement,
enforcement of laws concerning species and habitats, and
fishing and fisheries management.
4)Provides that cost savings from an oil facility's conversion,
as compared to the cost of removing the oil facility, shall be
split between the owner/operator, who receives 50% of the
savings, and CEMP, which is to receive 90% of the balance, and
the board of supervisors of the county immediately adjacent to
the facility, which is to receive 10% of the balance.
5)Creates the Accelerated Existing Platform Decommissioning
Program, under which an oil facility proposed for conversion
to a reef may receive expedited CEQA review, if specified
conditions are met.
6)Specifies that for facilities converted under the accelerated
program, the applicant is to pay 50% of the cost savings to
the GF, not the CEMP, and that within 15 years, the state
AB 2503
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shall deposit 80% of those funds in the CEMP and give 20% to
the board of supervisors of the adjacent county.
7)Authorizes DFG to take title to a decommissioned oil facility,
under specified conditions.
COMMENTS
1)Rationale . According to the author and sponsor, this bill is
necessary to create a legal framework for the conversion of
offshore oil rigs to artificial reefs, and to determine how
the revenue generated will be spent so that it benefits the
marine environment.
2)Background . According to the policy committee analysis, there
are 27 offshore oil and gas platforms located 1.2 to 10.5
miles off the southern California coast-four in state waters
and 23 in federal waters. Several of these rigs are expected
to be decommissioned in the next decade. The options for
dealing with a platform after decommissioning are to leave it
in place, partially remove it, or completely remove it. Oil
companies stand to gain substantial cost savings (possibly in
the tens of millions to hundreds of millions of dollars per
platform) if they leave some or all of the platforms in place.
In addition, there is evidence that abandoned oils rigs can
provide beneficial habitat for marine species that breed, live
and hide within and around them. These potential ecological
benefits are especially notable when compared with the habitat
destruction and wildlife death caused by removal of these
rigs.
3)Does the GF Have a Claim on Program Revenues ? Under the
Accelerated Existing Platform Decommissioning Program provided
by the bill, an applicant is to pay 50% of the costs savings
into the GF, rather than into the CEMP as happens under the
normal decommissioning processes created by the bill. The
bill further provides that these monies placed in the GF are
to be transferred, within 15 years, to the CEMP and the
appropriate county board of supervisors. The author describes
the rationale behind this provision as recognition of the
current shortfalls faced by the GF. The author intends the
temporary placement of this money in the GF to help the
Legislature manage these GF shortfalls, while the later
transfer of those monies to the CEMP and counties ensures that
the money eventually funds programs for marine resources.
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Some might contend, however, that the GF has a claim on at
least a portion of the money generated by this bill,
regardless of whether that money comes from the accelerated
rig decommissioning program or the normal rig decommissioning
program.
4)Support . This bill is supported by Western States Petroleum
Association and the Sportfishing Conservancy, who contend the
oil rig conversion could benefit owners/operators, marine
habitats and the state.
5)There is no registered opposition to this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081