BILL ANALYSIS
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| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2009-2010 Regular Session |
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BILL NO: AB 2739 HEARING DATE: June 29, 2010
AUTHOR: Blakeslee URGENCY: No
VERSION: June 15, 2010 CONSULTANT: Katharine Moore
DUAL REFERRAL: No FISCAL: Yes
SUBJECT: Oil spill prevention and response.
BACKGROUND AND EXISTING LAW
In response to the 1989 Exxon Valdez disaster and the smaller
1990 American Trader crude oil spill off of Huntington Beach,
the Legislature passed the Lempert-Keene-Seastrand Oil Spill
Prevention and Response Act (SB 2040, c. 1248, Statutes of
1990)(Act). The Act creates the Office of Spill Prevention and
Response (OSPR) in the Department of Fish and Game whose mission
is to provide the best achievable protection of California's
natural resources by preventing, preparing for, and responding
to spills of oil and other deleterious materials; and to restore
and enhance affected resources, including wildlife. OSPR's
administrator also represents the state in any coordinated
response efforts with the federal government - typically
coordinating with the US Coast Guard (USCG) for marine spills.
The Act further created both the Oil Spill Prevention and
Administration Fund (OSPAF) and the Oil Spill Response Trust
Fund (trust fund) to pay for certain authorized oil spill
prevention, response and clean-up activities. There is an annual
appropriation of $100,000 from the OSPAF to allow the
administrator to respond to an "imminent threat of a spill."
OSPR is required to seek reimbursement of all costs incurred in
responding to spill incidents: Most monies spent from the trust
fund are replenished through reimbursements by the responsible
parties. Where no responsible party exists, OSPR can submit a
claim to the federal Oil Spill Liability Trust Fund.
Past oil spills due to sunken vessels
Between 1997 and 2002, there was a series of serious "mystery
oil" incidents where oil came ashore south of San Francisco that
led to several wildlife disasters in the National Oceanic and
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Atmospheric Administration's (NOAA's) Gulf of the Farallones
National Marine Sanctuary. The mystery oil killed an estimated
51,000 sea birds and eight sea otters, and fouled 40,000 square
miles of tidal flats. Eventually, the source of the oil was
determined to be a World War II-era cargo ship, the SS Jacob
Luckenbach, which sank in 175 feet of water in 1944. Rocking
from strong sub-surface swells due to heavy storms in
combination with deteriorating vessel integrity was suspected to
have led to the oil's escape. Approximately 100,000 gallons of
bunker oil were subsequently removed from the vessel and the $20
million clean-up cost was paid from the federal Oil Spill
Liability Trust Fund in the absence of a responsible party. The
USCG and OSPR worked together on the clean-up. Additionally,
the remaining oil in a tank on the SS Palo Alto - a partially
submerged ship serving as part of a pier in Aptos, California -
had to be removed in 2006 to prevent oiling and death of birds.
NOAA started the Resources and UnderSea Threats (RUST) project
in 2003 to compile information on sunken vessels whose
deterioration may pose significant pollution threats from oil or
other hazardous materials in all US coastal waters and
significant inland waterways. NOAA estimates that the largest
1,122 of the over 7,000 ships listed by RUST may contain up to
1.3 billion gallons of oil.
The SS Montebello
The SS Montebello is an oil tanker sunk by a Japanese torpedo in
1941 that sits approximately 850 feet below the surface near the
southern edge of the Monterey Bay National Marine Sanctuary in
federal waters about six miles off the coast of Cambria,
California. Prior to its sinking, the Montebello loaded
approximately 3,100,000 gallons of crude oil and 105,000 gallons
of bunker fuel. Inspection by divers as recently as 2003 found
the wreck's hull to be upright and intact except where the
torpedo hit. The entire cargo may remain in the Montebello's
tanks.
In early 2009, the author initiated a partnership with OSPR who
agreed to initiate a risk assessment to investigate the
likelihood of oil leakage from the Montebello and its threat to
the environment, and to coordinate with other agencies and
stakeholders. In March 2009, the Montebello Assessment Task
Force was formed and stakeholders include OSPR, NOAA, the
National Park Service, CalTrans, the Monterey Bay Aquarium
Research Institute, USCG, Monterey Bay National Marine
Sanctuary, and the California State University Council on Ocean
Affairs, Science and Technology. The Chevron Corporation is
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also cooperating with the task force. The task force has
recommended three different methods be used to evaluate the
threat posed by the Montebello. These include the use of:
1. an autonomous underwater vehicle tethered to a surface
ship,
2. a mini submarine, and
3. a "hot tap" for determining how much oil (if any)
remains on board the wreck.
There are many sensitive areas along the coast of California
that have the potential to be impacted by a spill from the
Montebello including the Central Coast Marine Life Protection
Area, the Central California Coast Priority Area, the Monterey
Bay National Marine Sanctuary, and the Channel Islands National
Marine Sanctuary.
PROPOSED LAW
This bill would:
(i Require the OSPR administrator to conduct an assessment of
the SS Montebello wreck in coordination with NOAA and the
USCG. If the assessment indicates an imminent threat of
oil release, the administrator is directed to request
federal reimbursement for the assessment. If there is no
imminent threat, the administrator will recommend preferred
and alternate monitoring methods, including the likely cost
of each.
(ii Allocate as much as $400,000 for the assessment of the SS
Montebello from the trust fund while directing OSPR to
partner with NOAA and the USCG to defray costs.
ARGUMENTS IN SUPPORT
According to the author, "AB 2739 seeks to address the unique
risk the S.S. Montebello poses to the central California
coastline with a one-time appropriation from the Oil Spill
Response Trust Fund. This measure will help the Office of Oil
Spill Prevention and Response by providing flexibility for them
to assist with vessels that are not in California waters but
that pose a threat to California resources."
"OSPR currently has the statutory authority to fund the first
two assessment methods. However, the hot tap is estimated to
cost between $300,000 and $400,000, which exceeds statutory
limitations."
"While the wreck is located in federal waters, it is the
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California coastline, fisheries, tourism, and sensitive habitats
that may pay the price for failing to mitigate the risk
proactively. Under existing regulations, the federal agencies
will not take action to address sunken vessels until an
'imminent' threat of an oil spill is established. The purpose
of this bill is to establish whether or not an 'imminent threat'
exists and to make recommendations for future courses of action
in order protect our coast."
ARGUMENTS IN OPPOSITION
None received
COMMENTS
The SS Montebello is an appropriate target for investigation .
According to the author, the Montebello has been identified as a
priority candidate for assessment. The potential risks posed by
each offshore sunken vessel to the health of the environment and
ecosystems of coastal California are not well-known. However,
representatives of NOAA and the USCG have confirmed to committee
staff that the risk of oil leakage from the SS Montebello's
tanks is of very high concern.
Is the Oil Spill Response Trust Fund an appropriate funding
source ? As mentioned above, both the Oil Spill Prevention and
Administration Fund and the Oil Spill Response Trust Fund were
established by the Lempert-Keene-Seastrand Oil Spill Prevention
and Response Act in 1990. The missions of each fund remain
entirely distinct and mutually exclusive with very limited
exception. The OSPAF provides funding for certain projects
related to oil spill prevention and response capabilities,
including, among others, technology development and studies
leading to improved oil spill prevention and response. There is
an annual appropriation of $100,000 from the OSPAF to allow the
administrator to respond to an "imminent threat of a spill."
Monies deposited in the OSPAF are not to be used for responding
to oil spills. The OSPAF is primarily funded through a 5 cents
per barrel fee on crude oil and petroleum products received or
transported through California: Revenues averaged approximately
$28 million annually from FY 2004-2005 through FY 2009-2010.
By contrast, the trust fund is used to provide the cash flow for
the response to and clean-up of California's oil spills and for
certain wildlife care and spill-related damages. The trust
fund is funded by a 25 cents per barrel fee. This fee is
assessed until the trust fund reaches $50 million (its statutory
target). Fee collection is then only triggered when the fund
contains less than 95% of its designated funding level. This
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automatic replenishment is designed to prevent any oil spill
response from being limited by available funds.
The committee may note that past efforts to use the trust fund
for non-spill response activities have been vetoed, notably AB
2547 (Leno, 2008) which would have added a California Oil Spill
Prevention and Cleanup Technology Grant program to the trust
fund. The Governor emphasized in his veto message:
"?Trust Fund monies are set aside to fund oil spill
response activities. Using this money for an ongoing
program depletes the fund and sets a bad precedent
that undermines its purpose: to ensure that there are
always funds available for expedient response to an
oil spill in the marine waters of the state."
In view of the contrasting goals of the OSPAF and the trust
fund and the recognized role for OSPAF funding in
addressing the imminent threat of a spill, the committee
may wish to consider moving the proposed appropriation to
the OSPAF (amendment 1).
SUGGESTED AMENDMENTS
AMENDMENT 1
Delete page 3, lines 7 - 25 and replace with:
Add Section 8670.40 (e)(6)(i) (Government Code)
"To conduct the assessment required by Section 8670.15 in
an amount not to exceed four hundred thousand dollars
($400,000). To the extent possible, the administrator shall
seek to partner with the National Oceanic and Atmospheric
Administration and the United States Coast Guard on funding
the assessment required by Section 8670.15
SUPPORT
None received
OPPOSITION
None received
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