Assemblyman requests $11.5 million oil loan for Hermosa Beach
State Assemblyman Al Muratsuchi (D-66th District) announces AB 2711 at the Hermosa Beach pier Friday morning. 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
Assemblyman Al Muratsuchi (D-Torrance) is asking assembly budget leaders to place an $11.5 million loan for Hermosa Beach on the state budget for the 2014-15 fiscal year so the city can maintain its ban on oil drilling.
In a letter sent to to the assembly budget chairs on Monday, Muratsuchi said that the loan would allow residents to vote against oil drilling in the city without worrying that the city would run into a financial jam.
A bill that Muratsuchi introduced last month, which proposes a similar loan, could die later this month if the appropriations committee doesn’t move the bill onto the general assembly when they revisit it during the week of May 19. Assembly Bill 2711 would loan Hermosa Beach $17.5 million from the State Tidelands Funds if the city votes to 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. Hermosa Beach city officials say that the city has put aside $6 million so far in case the ban on oiling drilling is maintained.
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.
In the letter, Muratsuchi also said the state had set a precedent for this type of loan when the city of Eureka was issued a loan from the tideland oil revenues for litigation issues in 1978.
A representative for Muratsuchi’s office said that assembly budget chairs are likely to respond to the request within a few weeks. The deadline for the state legislature to pass a final budget to Gov. Jerry Brown is June 15.