October 20, 2008Energy, Environmental, Pipeline Safety Group Alerts
California Oil Spill Legislative and Regulatory Update
In a June Alert, we discussed certain pending oil spill legislation that had been introduced in the California legislature shortly after the November 2007 release of approximately 58,000 gallons of bunker fuel oil into the San Francisco Bay from the container ship M/V Cosco Busan.
On September 29, 2008, Governor Schwarzenegger issued a press release announcing the signing of seven of the ten oil spill bills that were adopted by the Legislature, many of which will have particular impact on response planning for future oil spills into state waters, as well as potential liability for costs, damages, and civil penalties. This Alert will summarize key requirements in these bills which will become effective on January 1, 2009. We have also included a brief update on the status of efforts by the Office of Spill Prevention and Response ("OSPR") to amend its oil spill response standards to require more rapid implementation of on-water recovery and spill containment measures for certain marine oil spills.
AB 2911 (Wolk, D-Davis). AB 2911 expands the Lempert-Keene-Seastrand Oil Spill Prevention and Response Act to provide the OSPR with the authority to serve as the State Incident Commander for inland spills (defined as unauthorized releases of at least 42 gallons of oil into waters of the state other than marine waters and groundwater). The OSPR currently serves in this capacity with respect to oil spills into marine waters. Towards this end, the OSPR will be required to submit an updated version of California's oil spill contingency plan to the Governor and the California legislature containing contingency planning requirements for spills to both categories of water bodies no later than January 1, 2010.
Parties responsible for inland oil spills will now be liable for the same categories of damages (including wildlife rehabilitation costs), and subject to the same limited liability exceptions, as currently apply to marine oil spills. AB 2911 also increases the potential civil penalties for certain negligent or intentional acts associated with a marine oil spill to between $50,000 and $1 million per violation. The potential maximum administrative civil penalties for such violations will now increase to $200,000. With respect to inland spills, civil penalties and administrative civil penalties for such actions will be capped at $50,000 per violation. AB 2911 also modifies the existing "per gallon" administrative penalty provisions for marine oil spills and extends their applicability to inland spills. Parties responsible for inland spills will be strictly liable for administrative penalties of up to $10 per gallon of oil released, with the penalty amount increasing to $30 per gallon for spills resulting from gross negligence or reckless conduct. The penalty amounts for marine oil spills will double from their current levels – up to $20 per gallon for strict liability spills and $60 per gallon for discharges resulting from gross negligence or reckless conduct. In all instances, reductions in the penalty amount will continue to be based on the volume of oil recovered and disposed of in accordance with applicable requirements.
Another goal of AB 2911 is to improve the state's capacity to locate and rescue wildlife impacted or threatened by oil spills. In this regard, the OSPR is charged with responsibility for (1) adopting additional measures to ensure the availability of a sufficient number of wildlife specialists and volunteers through the Oiled Wildlife Care Network to assist with the response to future spills, and (2) developing a plan to ensure that appropriate equipment to facilitate wildlife rescue is available and ready for deployment at key locations throughout the state.
AB 2031 (Hancock, D-Berkeley). AB 2031 requires the OSPR, when requested by a local government, to train and certify a local emergency responder for designation as a local spill response manager. This entity, in turn, will be required to participate in oil spill response drills when requested by the OSPR, and will be authorized to train and certify local oil spill response volunteers. AB 2031 also modifies the statutory reporting requirements applicable to oil spills, by providing that parties currently required to notify the Office of Emergency Services ("OES") upon the discharge or threatened discharge of oil into marine waters also update OES immediately upon determining that the initial report was "inaccurate or incomplete, or if the quantity of oil discharged has changed." Consistent with the increased local government involvement in spill response, OES will now be required to include governmental agencies in the area surrounding the discharge on the list of authorities to be notified of reported marine oil spills.
SB 1739 (Simitian, D-Palo Alto). SB 1739 provides that if the OSPR, U.S. Coast Guard, or other appropriate agency is unable to attend an oil spill contingency plan drill being conducted outside of California, the owner or operator of a covered facility can be required to retain an independent monitor to evaluate the drill for consistency with applicable requirements. It also requires that all oil spill contingency plans provide for training and drills on various plan elements at least annually, with all elements subject to a drill at least once every three years. With regard to requirements applicable to oil spill response organizations ("OSROs"), SB 1739 mandates that an OSRO: (1) demonstrate to the satisfaction of the OSPR that it is able to deploy all response resources necessary to meet the provisions in each oil spill contingency plan in which it is listed; and (2) satisfactorily complete one unannounced drill prior to being granted a renewal (with an actual, satisfactory spill response conducted during the preceding three-year period authorized to serve as a drill substitute).
AB 2935 (Huffman, D-San Rafael). AB 2935 requires the Department of Fish and Game, within 24 hours of notification of a spill of at least 42 gallons of oil at locations where fishing may occur, or where aquaculture operations are occurring, to prohibit the taking of fish and shellfish from waters in the vicinity of the discharge unless the Office of Environmental Health Hazard Assessment ("OEHHA") concludes that the release is unlikely to present a public health risk. It further requires that within 48 hours of such a spill, the Department, in consultation with the OEHHA, shall determine the extent of any public health risk posed by the consumption of fish taken from the impacted area, whether the closure area should be expanded, and the estimated duration of the closure period needed to protect public health. The responsible party will be obligated to reimburse the Department for its reasonable costs in implementing these new requirements, including testing costs. In addition to the foregoing, SB 2935 also requires the OSPR to revise the California oil spill contingency plan to establish a better framework for the response to marine oil spills into identified environmentally and ecologically sensitive areas and to consider the use of private vessels for spill containment, cleanup and removal.
AB 1960 (Nava, D-Santa Barbara). AB 1960 adds a new requirement that any person convicted of knowingly making a "false or misleading marine oil spill report" to the OES be subject to a fine of between $2,500 and $250,000 and/or imprisonment in county jail for up to one year for a first violation and to a fine of between $5,000 and $500,000 and/or imprisonment in state prison or county jail for up to one year for second and subsequent violations. It also provides that a person who knowingly makes a false or misleading report to the OES concerning a spill to non-marine waters of the state, or who fails to provide a report as required by law, shall be subject upon conviction to a fine of up to $50,000. AB 1960 also requires the Department of Conservation's Division of Oil and Gas to promulgate regulations establishing minimum facility maintenance standards (including leak detection, corrosion prevention and testing, and tank inspection requirements) for "production facilities" associated with oil and gas operations. Operators of production facilities would be required to file oil spill contingency plans within three months of acquisition. AB 1960 also increases to $50,000 the maximum civil penalty for statutory violations, and provides the Division with the authority to issue cease and desist orders to production facilities found to be in violation of applicable standards.
OSPR Regulatory Revisions. Two of the oil spill bills vetoed by the Governor included SB 1056 (Migden, D-San Francisco), which in part would have reduced to two hours the acceptable response time for oil spills to the San Francisco Bay and required the OSPR to reassess the protectiveness of oil spill response standards, and AB 2547 (Leno, D-San Francisco), portions of which would have revised requirements applicable to OSROs and mandated that the OSPR update response standards applicable to certain categories of spills or threatened discharges. Certain of the issues addressed by these bills are related to ongoing revisions to the OSPR's oil spill response standards that are currently under development. The OSPR held two public workshops in September 2008 to solicit comments on its proposed regulatory revisions. An updated version of the proposed changes reflecting comments received during the public workshops should be issued in the near future. The current proposal includes revisions to the on-water response requirements applicable to marine facilities, tank vessels, and non-tank vessels operating along or in waterways subject to "high velocity currents". It also proposes upgrades to the on-water recovery or spill containment capabilities for vessels transiting in certain heavily-traveled areas, such as "high volume ports" and along the coastline.
If you have questions regarding California oil spill prevention and response matters, please contact any of the following members of Cooper's Energy, Environmental or Pipeline Safety groups: Mark Warnke, Barry Ogilby, Keith Howard, Kristen Thall Peters, Bill Norman, or Jill Rowe.
