State Assemblyman Al Muratsuchi (D-66th District) announces AB 2711 at the Hermosa Beach pier in April. He was joined by (left to right) South Bay 350’s Joe Galliani, Heal the Bay’s Sarah Sikich, Surfrider’s Craig Cadwallader, Hermosa Beach councilwoman Nanette Barragan, State Senator Ted Lieu, Stop Hermosa Beach Oil’s Stacey Amato, Earthworks’ Jhon Arbelaez, and Los Angeles Waterkeeper’s Brian Meux. Photo by Kevin Cody
A bill that would allow Hermosa Beach to borrow $11.5 million from the State Tidelands Funds in order to help the city keep its ban on oil drilling was passed by the appropriations committee on Friday and will move on to the Assembly.
Assembly Bill 2711, which Assemblyman Al Muratsuchi (D-Torrance) introduced in April, would provide the money if city voters maintain the ban on oil drilling. Under the terms of the proposed bill, Hermosa Beach would pay the loan back at a rate of $500,000 per year to the General Fund.
Muratsuchi said that the bill moving on to the assembly is a major victory for Hermosa Beach as many bills with a fiscal impact die in the appropriations committee. “I am fighting hard, but it’s going to be a tough fight,” Muratsuchi said. “My challenge will be to convince legislators that this isn’t just about oil drilling in Hermosa Beach, but the entire Santa Monica Bay.”
The city and E&B Natural Resources signed an agreement last year that would allow E&B to call for an election as soon as November to lift Hermosa’s ban on oil drilling. If successful, the ballot measure would allow E&B to install 30 oil wells at the city’s 1.3-acre maintenance yard. The agreement calls for the city to repay E&B $17.5 million if the ballot measure fails. E&B loaned the money to the city to help settle a lawsuit with Macpherson Oil. At the time, the city was facing up to $500 million in damages for having broken a 1984 agreement with Macpherson to allow oil drilling from the city maintenance yard. Although E&B has promised upwards of $1.2 million for schools, the drilling proposal has sharply divided the city. Many residents fear oil spills could ruin the city’s pristine beaches and negatively impact their health.
Earlier this month, the Hermosa Beach City Council voted to support the bill. Mayor Michael DiVirgilio said that having the option to borrow the $11.5 million from the State Tidelands Funds would be helpful. An earlier version of the bill proposed loaning $17.5 million to Hermosa Beach, but city officials say the city has already set aside $6 million so far in case the ban on oil drilling is maintained.
When AB 2711 was originally introduced, E&B described the proposed bill as unnecessary. During the past two years, city officials and community activists have consistently and forcefully stated that the City has the financial capacity necessary to repay the $17.5 million loan E&B provided. This loan allowed the City to avoid bankruptcy and to end 14 years of litigation with Macpherson Oil,” the statement said.
Last week, Muratsuchi also asked assembly budget leaders to place an $11.5 million loan for Hermosa Beach on the state budget for the 2014-15 fiscal year. He said he expects to hear back from assembly budget chairs sometime next week. The deadline for the state legislature to pass a final budget to Gov. Jerry Brown is June 15 and then Brown has until June 30 to sign off on the budget.
A representative from Muratsuchi’s office said that the Assembly will likely vote on the bill before August 30, where it will need a two-thirds vote in order to move on to the Senate.