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    CA Senate Passes Bill That Could Take Millions From LB Now, More Later, In Tidelands Oil Revenue City Hall Expected To Cover Future Clean-Up Costs For Tidelands Oil Field; Sens. Lowenthal, Bowen & McClintock Oppose Bill To No Avail, Now Advances To Ass'y

    (June 1, 2005, updated June 2) -- In a development with potentially major consequences for LB, the CA state Senate has passed a bill that may require LB City Hall to give Sacramento an estimated $116 million dollars now being put aside, and millions more in the coming years, that City Hall expected would cover future costs of cleaning-up and closing LB's tidelands oil field.

    On a 22-13 vote, the state Senate passed SB 1086 by Sen. Carol Migden (D., SF) despite vociferous opposition by Senators Alan Lowenthal (D., LB-SP-PV), Debra Bowen (D., Redondo Beach) and Tom McClintock (R., Thousand Oaks).

    As recently amended by Sen. Migden, the bill would take funds set aside by LB (City Hall says about $86 million in oil abandonment fund at present, estimated by Sacramento to grow to about $116 million by early 2005) and prevent City Hall from reserving further tidelands oil revenue to pay for clean-up and closure of LB's tidelands oil field when it inevitably runs dry (expected some years hence).

    CA ultimately bears the lion's share of the costs for cleanup and closure of the field...and money being set aside by LB was to pay for both LB's share and CA's.

    The legislation would let Sacramento take the oil revenue money retained by LB for future use and use it instead for current CA General Fund spending, including some items already budgeted.

    "It is my understanding this bill continues the rip-off of tideland funds from the communities that are actually impacted by that development to the state General Fund so that we can spend it for whatever it is we please, rather than have the local communities spend it to mitigate the impact of oil production in their regions," Sen. McClintock declared. He added:

    Sen. McClintock: ...This bill would prohibit the city [Long Beach] from setting aside these funds and would require them to return the funds they're holding to the state General Fund so all of us can spend the money right now on things completely unrelated to oil production. This is exactly the kind of centralized, irresponsible thinking that has helped get California into this mess. I think we ought to call a stop to it.

    He was followed by Sen. Alan Lowenthal:

    Sen. Lowenthal:...The state has received approximately five billion dollars -- five billion dollars -- from the LB tidelands oil production for the past 70 years. The field is running out...

    The city of Long Beach as a [state tidelands] trustee is required to protect the environment...The estimated cost for abandonment which will be coming soon is somewhere between $300-$500 million. It would be a disaster to take money out of this abandonment fund now...We are going to be liable for this money. This is a reasonable way of not hitting the General Fund with a huge impact within the next few years by putting money, in a reasonable way, a small percentage of that money [aside] every year...

    State Sen. Debra Bowen concurred:

    Sen. Bowen:...The amount of money that will come into the [CA] General Fund in the long run from being able to do the abandonment and clean up work immediately far exceeds the $116 million that the state might take this year, so I think we need to find another way to approach this problem.

    State Sen. Sheila Kuehl (D., WLA) supported the bill...and said the state Senate Budget subcommittee (on which Sen. Lowenthal sits) indicated "we wanted to make sure that the City of Long Beach would not suffer and we wanted to have meetings about that. The trailer bill language concerning tidelands oil does say 'notwithstanding any other provision of law' and would essentially, arguably, override this bill, so there are still a lot of questions remaining..."

    Sen, Kuehl added, "Although we need to deal with the question of liability, I do not think that simply holding it [the oil revenue] back for Long Beach is the right way to go and would support continuing to use this bill as a vehicle to work this through."

    Sen. Migden, the powerful chair of CA Senate Appropriations Committee, urged Senators to approve her bill:

    Sen. Migden:: ...This bill in effect says that Long Beach has long-standing had a practice...where it took in excess of the 10% that the state entitled them to, which amounted ladies and gentlemen, to $80 million. So what we unearthed here is an unfairness because the City of Long Beach has been allowed to operate for years without objection to skim, no offense to anybody, but to take in excess of 100% as opposed to the 10% that was the state's intention for environmental clean-up.

    ...What this bill seeks to do is restore to the state the funding from tideland revenue so that it can be apportioned appropriately through the budget process so that no entity is allowed, ispo facto, to take more than their share, 100% of their share...

    I was seeking to just reauthorize a sunset for the purposes of creating this revenue for tideland. During the course of that, we discovered this great irregularity with the City of Long Beach, and when it was was simply flatly wrong to take 100% when in fact it was entitled to 10 and the state will do clean-up.

    So I have great respect for the members whose districts abut or that are a part of the City of Long Beach, and I well understand its desire to keep this pool of money.

    But it is not entitled to. This bill says that they get the 10%, and the 90% will be restored to resources and allocated under our budget process for purposes that we all believe are the efficacious use of these revenues.

    When the bill initially failed to reach the 21 votes necessary to pass the 40-member Senate, Sen. Migden put the bill on call, then returned a few minutes later to resume calling the votes. Several Senators who initially voted "no" changed their votes to "yes"...and the bill passed 22-13. "It's a frickin' stampede," quipped Senate President Pro Tem Don Perata (D., Oakland).

    The bill now heads to the Assembly.

    A Senate legislative analysis of SB 1086 indicates the oil revenues to be sent to Sacramento "are all General Fund fungible and have been used for other purposes notwithstanding the provisions of law in this bill. Available funding for these programs varies...depending on the price of oil. The upcoming year's budget predicted $185 million in revenues from these funds and allocated funding, notwithstanding...existing law [which doesn't yet let Sacramento take the money], as follows:

    1. $500,000 to the Marine Life Protection Act.

    2. $165 million to the General Fund.

    3. $10 million to ocean projects and $2.7 million to parks projects in the Los Angeles [sic].

    4. $6.5 million for salmon and steelhead restoration.

    5. $1.5 million for environmental review of stream flow requirements on mid-California coastal streams."

    The legislation would effectively reverse the major victory (previously reported by won by LB City Attorney Bob Shannon in the CA Court of Appeal (which the CA Supreme Court let stand) letting LB City Hall retain a portion of tidelands oil revenue for future oil field clean-up.


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