1. OVERVIEW OF THE OFFICE OF SPILL PREVENTION & RESPONSE CA DEPARTMENT OF FISH & WILDLIFE FOR THE CA ENERGY COMMISSION IEPR COMMISSIONER WORKSHOP TRENDS IN CRUDE OIL MARKET & TRANSPORT Ryan C. Todd Senior Staff Counsel July 2015 1

2. Main Topics Today  Trustee Responsibility  Emerging challenges as a result of market shifts in crude oil supply  Office of Spill Prevention & Response Overview  Implementation of Statewide Oil Spill Preparedness Mandates 2

3. Public Trust Doctrine  Roman Emperor Justinian, circa 530 AD, created the "Institutes of Justinian," the body of Roman civil law. The Institutes covered much of Roman life and commerce, including: “1. By the law of nature then the following things are common to all men; the air, running water, the sea, and consequently the shores of the sea." Book II, Title 1. On the Division of Things, par. 1; tr. by Adby & Walker 1876, Cambridge 3

4. Wildlife Trustee Responsibilities  1870: Board of Fish Commissioners. First wildlife conservation agency in the country.  1909: Board became the Fish & Game Commission  1926: Commission created a Pollution Bureau.  1927: Division of Fish & Game established to take over certain duties from the Commission.  1951: Division became the Department of Fish & Game.  1991: Office of Spill Prevention & Response  2013: Renamed the Department of Fish & Wildlife 4

5. DFW Trustee Responsibilities “The fish and wildlife resources are held in trust for the people of the state by and through the Department.” Fish & Game Code §711.7, 1600, 1802, 2701 California Department of Fish & Wildlife 5

6. Water Pollution Threat to Wildlife  Pollution is one of the single biggest threats to wildlife and habitat – acute or chronic. Compare:  Disease?  Cosco Busan – approximately 7,000 dead birds  Deepwater Horizon – estimated 6,000+ birds, 600+ turtles, 150+ dolphins, other species.  Refugio …… ? 6

7. Statewide Oil Spill Program Enacted in September 1990 (S.B. 2040) Revised June 2014 (S.B. 861) Government Code §8670.1 et. seq. Lempert-Keene-Seastrand Oil Spill Prevention & Response Act Establishes statewide preparedness and response mandates for vessels and facilities, to protect surface waters of the state from oil spills. 7

8. Lempert-Keene-Seastrand Oil Spill Prevention & Response Act  Created an Administrator, appointed by the Governor; is a Chief Deputy Director of DFW. Gov. C. §8670.4  Office of Spill Prevention and Response (OSPR) opened 1991  Administrator has “…the primary authority to direct prevention, removal, abatement, response, containment, and cleanup efforts with regard to all aspects of any oil spill in the waters of the state…” and is the “incident commander” for oil spills in state surface waters. Gov. C. §8670.7; Fish & Game C. §5655(d) 8

9. Shift in Crude Oil Transport 9

10. Crude-by-Rail Westerly Flow 10

11. C-B-R Facilities 11

12. Increasing Risk Crude Rail Incidents 5 in 7 Years: 2006-2013 12 in 2 Years: 2013-2015 12

13. Going Statewide 13  Original Mandates Limited to the Coast

14. Main OSPR Programs  Prevention Coordinate with Oversight Agencies Regarding Adequate Spill Measures and Monitoring. (Not Regulatory)  Readiness Contingency Planning Oil Spill Response Organization Oversight Drills and Exercises Demonstration of Financial Responsibility (e.g. Insurance) Local Government Coordination  Response Spill Dispatch Center Incident Command Oiled Wildlife Care  Legal/Enforcement Investigations (Criminal & Civil Actions) NRDA – Natural Resource Damage Assessment & Restoration 14

15. Funding 15

16. Funding Solution 16  $0.065 per bbl of crude or petroleum received at refinery or marine terminal that passed over/through Waters of the State.

17. New SB 861-affected Operators  Threat to Waters of the State  Within ¼ mile  Estimate about 250-300  12-14 Pipeline operators  10-12 Railroad (Class I & Short Lines)  200+ Production Facilities  Other fixed facilities (eg. refinery) 17

18. Contingency Plans  Standards for Facility & Vessel Plans  Best Achievable Protection  Reasonable Worst Case Spill Volume  Equipment Types, Location, & Time To Deliver  Contractual Arrangements for Equipment & Services  Strategies to Protect Environmentally Sensitive Areas  Use of Rated OSRO Ref. Gov. C. §8670.28-31 18

19. Reasonable Worst Case Spill Volumes  Production Facilities: 10% of the daily average of the largest producing well.  Distribution Pipelines: Same formula as used for marine pipelines (PHMSA)  Railroads: 20% of the maximum volume of oil cargo that a railroad may transport by a single train within the state based on 714 barrels per tank car.  Others: (i.e., gathering lines, portable storage tanks, etc.): Same formula as marine facilities. 19

20. Geographic Response Plans  Federal plans to protect inland waterways from oils/haz mat  Feather River Canyon GRP underway:  Feather River is ‘high risk’ for hazmat spills  Collaboration: OSPR, US EPA, BNSF, Union Pacific (ARCADIS)  Focus on rail and other transportation risks  Public/LEPC process 20

21. Oil Spill Response Organizations  OSRO [cleanup contractor]  An entity that provides equipment, personnel, supplies, or other services directly related to oil spill containment, cleanup, or removal activities. GC 8670.3  Rated by OSPR = Drills + Inspections  On-water, booming, recovery, and storage  Shoreline protection  Terrestrial (shore) cleanup (new) 21

22. OSROs – “Inland”  Equipment for Dry Washes?  New Terrestrial Rating  Response Times  Response Planning Areas  Ratings by RPA or counties within an RPA 22

23. Drills for Operators & OSROs  Announced and Unannounced Drills  Test response and cleanup operations, equipment, contingency plans, and procedures of the plan.  All elements of the plan must be exercised at least once every 3 years 23

24. Drills Objectives  Establishing Tiers based on Operator Size.  Small (tier III), Medium (tier II) and Large (tier I)  Objectives for each tier are reflective of expectations based on the size and scope of the plan holder.  Tiers initially used for the new entities under SB 861, and will be phased in for existing marine plan holders in 2016/2017. 24

25. OSPR Response Planning Areas 25

26. Financial Responsibility  Demonstrate financial resources to pay for spill response & damages.  Based on Reasonable Worst Case Spill Volume.  Methods:  Insurance  Surety Bond  Letter of Credit  Guaranty  Self-insure Ref. Gov. C. §8670.37.51 26

27. Financial Responsibility  Owner or operator, or oil owner, must make the demonstration.  Primarily responsible for facility, vessel, or the oil for determining liability.  Facilities  Formula - generally: RWCS/bbls x $12,500 or $10,000  Up to $300,000,000  Vessels  Tank Vessel - $1B  Nontank Vessel – up to $300,000,000 27

28. Oiled Wildlife Care Network  Rescue and rehabilitation stations, and proactive search and collection, for wildlife injured by oil spills.  Maintained in a state of preparedness to provide best achievable treatment.  Managed by the U.C. Davis Wildlife Health Center.  30 Participating Organizations  Aquaria  Universities  Scientific organizations  Rehabilitation groups. 28

29. Oiled Wildlife Care Network  Authorized to expand inland  Looking at:  Inland wildlife rehabilitation facilities  Wildlife rescue & care organizations 29

30. Spill Response  Basic Aspects of a Spill for OSPR:  Incident Management  Response & Cleanup  Injury Assessment (NRDA)  Investigation  Cost Recovery 30

31. OSPR Field Response Team Areas  New for 2015/2016  6 New locations for staff 31

32. New SB 861 OSPR Regulations  Expected Early to Mid-August, as emergency regulations; valid for 12 months.  Formal Rulemaking to be completed 12 months later; late summer early fall 2016.  Workshops likely Spring 2016 32

33. Lawsuit over SB 861 & Rail  Plaintiffs: UPRR, BNSF, & Assoc. of American Railroads  Defendants: OSPR, Tom Cullen as OSPR Administrator, and A.G. Kamala Harris  October 2014: RR Complaint and Motion for Preliminary Injunction  Dismissed June 2015 as not ripe. 33

34. PHMSA Rulemaking Pipeline & Hazardous Materials Safety Administration  Tank Car Standards  Notice Aug 2014;  CPUC and OES submitted comments  Final rule May 2015  Oil Spill Contingency Plan revisions  Notice Aug 2014  OSPR Submitted Comments  No PHMSA action yet 34

35. Federal Legislation 2015  S. 859 (Cantwell ) and H.R. 1804 (McDermott)  “Crude-by-Rail Safety Act”  Not acted upon since introduction.  Would directly put the FRA in charge of oil spill response planning for railroads.  Drastic departure from current law, the President is nationally responsible; delegated by Executive Order to USCG, EPA, DOT, MMS, etc.  Very open-ended for DOT to establish requirements – no specificity or guidance. 35

36. Questions? Thank You Ryan C. Todd Senior Staff Counsel OSPR/DFW ryan.todd@wildlife.ca.gov 916.324.3406 36