CHAPTER 25A EVIDENCE OF FINANCIAL RESPONSIBILITY TO CLEAN UP OIL SPILLS
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1 CHAPTER 25A EVIDENCE OF FINANCIAL RESPONSIBILITY TO CLEAN UP OIL SPILLS Sec. 25A-1. Findings of fact. Sec. 25A-2. Purpose of chapter. Sec. 25A-3. Applicability. Sec. 25A-4. Definitions. Sec. 25A-5. Financial responsibility Requirement. Sec. 25A-6. Same Establishment. Sec. 25A-7. Certificate renewal. Sec. 25A-8. Fees. Sec. 25A-9. Enforcement. Sec. 25A-10. Severability. Sec. 25A-1. Findings of fact. (a) On June 27, 1989, the board of supervisors adopted and approved the Marine Emergency Management Study (MEMS) dated May, The MEMS concluded that the marine tankering of oil presents a severe safety risk to the environment and natural resources of the County of Santa Barbara, and that currently available oil spill containment and cleanup resources are unlikely to prevent a major spill from impacting coastal and onshore resources. (b) Other federal, state and local agencies have evaluated the risks posed by marine transportation of oil and have concluded that there now exists a significant risk of a major oil spill offshore California as a result of the use of the marine tankers for the transport of crude oil. (c) Users and operators of marine terminals are charged with responsibility under applicable law to respond to oil spills and restore affected natural resources and areas in the event of an oil spill associated with or arising from the operation of marine terminals. (d) Operators and users of marine terminals will not be able to fulfill their cleanup and restoration responsibilities unless they have the financial ability to do so. (e) Unless marine terminal users and operators are financially capable of paying the cost of restoring affected natural resources and areas to prespill conditions in the event of an oil spill associated with or arising from the operation of a marine terminal, the county will suffer significant adverse environmental impacts and substantial harm to the public health, welfare and safety, including the economy, tourism, fisheries, mariculture and recreation. Sec. 25A-2. Purpose of chapter. It is the purpose of this chapter to assure the maintenance and restoration of the natural resources and environment of Santa Barbara County by requiring operators and users of marine terminals to demonstrate evidence of sufficient financial responsibility to clean up all coastal and onshore resources within the County of Santa Barbara affected by an oil spill associated with or arising from the operation of Santa Barbara County, California, Code of Ordinances Page 1
2 a marine terminal offshore Santa Barbara County and for the successful restoration of all affected areas to their prespill conditions as required by applicable law and conditions of operation or use. Sec. 25A-3. Applicability. This chapter applies to all operators and users of marine terminals located in the County of Santa Barbara. Sec. 25A-4. Definitions. As used in this chapter: (a) "Financial responsibility" means proof of financial ability to pay for cleanup of all affected coastal and onshore resources, and for the successful restoration of all affected areas to their prespill condition, in the event of an oil spill onshore or offshore Santa Barbara County associated with or arising from operation or use of marine terminals located in Santa Barbara County. (b) "Oil" or "petroleum products" means oil of any kind or in any form, including, but not limited to, petroleum, crude oil or any fraction or residue therefrom, fuel oil, sludge and oil refuse. (c) "Operator" means any person, including, but not limited to, an owner of or other contractor who conducts or is responsible for the operation of a marine terminal located in the County of Santa Barbara. (d) "Person" includes, but is not limited to, an individual, proprietorship, firm, corporation, partnership, joint venture, business trust, or other business entity, or an association or other organization. (e) "Prespill conditions" means the condition and quality of the subtidal, intertidal, coastal strand, and estuarine and wetland areas of Santa Barbara County, considering the presence and distribution of any and all plant and animal species, the density of those species, and the general health and reproductive ability of those species, as determined by resource management department upon consultation with the State Department of Fish and Game, the US Fish and Wildlife Service, the National Parks, the National Marine Sanctuary, the California Coastal Commission, the State Lands Commission, the University of California, and any technical information, written or otherwise, including baseline studies and environmental impact reports. Sec. 25A-5. Financial responsibility Requirement. No person may operate or use a marine terminal without first demonstrating financial responsibility to the county. Those persons who have commenced operation and use of permitted marine terminal project facilities prior to the adoption by the board of supervisors of the guidelines required by this chapter shall have one hundred twenty days from the adoption of the guidelines to comply with the requirements set forth therein. Upon demonstration of financial responsibility under this section, an operator or user of a marine terminal shall be issued a certificate of financial responsibility. The issuance of a certificate of financial responsibility by the county establishes the minimum amount of financial responsibility required to be demonstrated prior to operation or use of a marine terminal and in no way restricts or sets financial limitations on any duty, obligation or condition requiring an operator or user of a marine terminal to be responsible for cleanup of affected coastal and onshore resources, and for the successful restoration of all affected areas to prespill conditions, in the event of an oil spill onshore or offshore Santa Barbara County. Santa Barbara County, California, Code of Ordinances Page 2
3 Sec. 25A-6. Same Establishment. (a) Methods. An operator or user shall establish evidence of financial responsibility by any one of, or combination of, the following methods: certificate of insurance, surety bond, self-insurance, guaranty, or other methods acceptable to the director of the resource management department (RMD), which may include any fund established by federal or state legislation to cover liability for claims and cleanup costs stemming from oil spills in United States waters. Instruments establishing financial responsibility shall be approved as to form by county counsel. (b) Guidelines. RMD, in consultation with the office of emergency management, shall promulgate guidelines, to be adopted by the board of supervisors, establishing (1) the evidence, methods and instruments by which a particular operator or user can demonstrate financial responsibility and (2) factors to be considered in establishing the amount of financial responsibility to be required of a particular operator or user. In developing guidelines for determining the amount of financial responsibility required of a particular operator or user, the department of resource management shall take into consideration factors including but not limited to: environmental impact documents certified for marine terminal and other energy-related projects located within Santa Barbara County; the likely costs of cleanup and removal of oil, restoration of affected coastal and onshore resources to prespill conditions; cleanup and restoration costs incurred as a result of major oil spills, to the extent available, including the Exxon Valdez oil spill; and, the costs of monitoring cleanup, removal and restoration. The guidelines shall provide that an owner or shipper of oil may establish financial responsibility by demonstrating that its oil is being transported by a marine terminal and tanker or vessel that have been issued certificates of financial responsibility by RMD. (c) Application Procedures. Any operator or user otherwise permitted to operate or use a marine terminal located within Santa Barbara County shall file with RMD an application, fees and evidence of financial responsibility in a form required by RMD. RMD shall process the application and determine, within forty-five days of receiving a complete application, whether the evidence of financial responsibility submitted by the applicant is sufficient and consistent with the guidelines required by this section. If the applicant's evidence of financial responsibility is sufficient, the director of RMD shall issue a certificate of financial responsibility. A decision of RMD to grant or deny an application for a certificate of financial responsibility may be appealed directly to the board of supervisors by filing a written appeal with the clerk of the board within ten days of that decision. (d) Self-Insurance. Self-insurance shall be permitted only in combination, where feasible, with other methods of establishing financial responsibility which provide direct funding resources for oil spill cleanup and restoration, such as certificates of insurance, surety bonds or other direct guarantees. (1) Maintenance of Working Capital/Net Worth. An applicant may establish financial responsibility as a self-insurer by maintaining, in the United States, working capital and net worth, each in an amount to be determined by RMD sufficient to demonstrate financial responsibility as required by this chapter. As used in this subparagraph, "working capital" means the amount of current assets located in the United States, less all current liabilities; and "net worth" means the amount of all assets located in the United States less all liabilities. Maintenance of the required working capital and net worth shall be demonstrated by submitting with the initial application the items specified in subdivision (2) of this subsection for the applicant's last fiscal year preceding the date of application as well as any additional information requested pursuant to subsection (4) of this subsection. Thereafter, for each of the applicant's fiscal years the applicant shall submit the items specified in subdivisions (2) and (3) of this subsection and shall be subject to the provisions of subdivisions (3), (4), (5) and (6) of this subsection. (2) Initial and Annual Submissions. An applicant shall submit an annual, current nonconsolidated balance sheet and an annual, current nonconsolidated statement of income and surplus, certified by an independent certified public accountant. Those financial statements shall be accompanied by an additional statement from the applicant's treasurer (or equivalent official), certifying to both the amount of current assets and the amount of total assets included in the Santa Barbara County, California, Code of Ordinances Page 3
4 accompanying balance sheet, which are located in the United States and acceptable for purposes of this chapter, i.e., unencumbered assets or encumbered assets with net equity. If the balance sheet and statement of income and surplus cannot be submitted in consolidated form, consolidated statements may be submitted if accompanied by an additional statement prepared by the involved independent certified public accountant, certifying to the amount by which the applicant's: (A) Assets, located in the United States and acceptable under this part, exceed total (i.e., worldwide) liabilities; and (B) Current assets, located in the United States and acceptable under this part, exceed its current liabilities. Each additional statement must specifically name the applicant, indicate that the amounts so certified relate only to the applicant apart from any other entity, and identity the consolidated financial statement to which it applies. (3) Semiannual Submission. When the net worth of an applicant choosing self-insurance is not at least two times the amount of self-insurance required to demonstrate financial responsibility, an affidavit shall be filed by the applicant's corporate treasurer, or equivalent official for a noncorporate entity, covering the first six months of the applicant's fiscal year. Such affidavits shall state that neither the working capital nor the net worth have, during the first six months, fallen below the required amounts. (4) Additional Submissions. Additional financial information shall be submitted upon request of RMD. All applicants who choose self-insurance shall notify RMD within five days of the date such persons know, or have reason to believe, that the amounts of working capital or net worth have fallen below the amounts required. (5) Failure to Submit. Failure to file timely any statement, data or affidavit required by this chapter shall constitute grounds for the revocation of the certificate. (6) Guaranty. An applicant may file with RMD a guaranty executed by a guarantor acceptable to RMD and county counsel. A guarantor shall comply with all of the self-insurance provisions of subdivisions (1) through (5) of this subsection. In addition, the amounts of working capital and net worth required to be demonstrated by an acceptable guarantor shall be no less than the aggregate amounts underwritten as a self-insurer under this section. Sec. 25A-7. Certificate renewal. Certificates of financial responsibility shall be renewed annually. Operators and users issued certificates of financial responsibility shall file written applications for renewal certificates at least forty-five days before the expiration date of existing certificates. Each renewal application shall be accompanied by appropriate recertification fees and identify any changes since the original application was filed. Operators and users establishing financial responsibility by self-insurance shall submit an annual financial statement and additional statements as required by subsection (d)(2), (3) and (4) of section 25A-6. Sec. 25A-8. Fees. Operators and users of marine terminals shall be assessed a reasonable application fee in an amount necessary to recover costs incurred by the department of resource management for processing applications to establish financial responsibility as required by this part. No certificate of financial responsibility can be issued unless all fees required by this section have been paid. Santa Barbara County, California, Code of Ordinances Page 4
5 Sec. 25A-9. Enforcement. (a) Civil Penalties. Any operator or user who fails to comply with this part is subject to a civil penalty of twenty-five thousand dollars per day of operation. (b) Criminal Penalties. Any person, whether as principal, agent, employee or otherwise, violating any provisions of this chapter or the guidelines or certificates issued thereunder, shall be guilty of an infraction, and upon conviction thereof, shall be punishable by a fine not exceeding five hundred dollars for each violation. An offense which would otherwise be an infraction may, at the discretion of the district attorney, be filed as a misdemeanor. Upon conviction of a misdemeanor, punishment shall be a fine of not less than five hundred dollars nor more than twenty-five thousand dollars or imprisonment in the county jail for a period not to exceed six months or by both such fine and imprisonment. Each and every day during any portion of which any violation of this chapter or the guidelines or certificates issued thereunder is committed, continued or permitted by such person shall be deemed a separate and distinct offense. (c) Injunction. Whenever, in the judgment of the Director of RMD, any person has engaged in, is engaged in, or is about to engage in any act(s) or practice(s) which constitute or will constitute a violation of the provisions of this chapter of the Santa Barbara County Code, or any rule, regulation, certificate, requirement, or other order issued, promulgated, or executed thereunder, the district attorney or county counsel may make application to the Superior Court for an order enjoining such acts or practices, or for an order directing compliance, and upon a showing that such person has engaged in or is about to engage in any such acts or practices, a permanent or temporary injunction, restraining order, or other order may be granted. In any civil action brought pursuant to this chapter in which a temporary restraining order, preliminary injunction, or permanent injunction is sought, it shall not be necessary to allege or prove at any stage of the proceeding that irreparable damage will occur should the temporary restraining order, preliminary injunction, or permanent injunction not be issued; or that the legal remedies are inadequate. (d) Cumulative Remedies and Penalties. The remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state. Sec. 25A-10. Severability. If any provision of this chapter is determined to be invalid by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect. Santa Barbara County, California, Code of Ordinances Page 5
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