SB 233
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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 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requires the DFW, upon notification that the applicant has withdrawn the application, to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 for the first applicant to partially remove an offshore oil
structure only. Provides that the applicant who files the first application to partially remove
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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
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.
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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% 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 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
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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 rigsto-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, 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
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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.
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 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
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to what constitutes a completed application. To ensure that the applicant is committed to the
process, it is recommended that the language in new 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)
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