DATE: November 8, 2016
SUBJECT:
Title
PRESENTATION ON ADVANCING THE DISTRICT’S BLUE TECH PROGRAM BY BUILDING SYNERGY WITH EXISTING PLANNING & GREEN PORT PROGRAMS AND FOCUSING ON NEW AND EMERGING BLUE TECH SOLUTIONS FOR COPPER REDUCTION IN SAN DIEGO BAY
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EXECUTIVE SUMMARY:
The District has been exploring Blue Economy opportunities to diversify its portfolio of business lines and assets, in alignment with its mission and Compass Strategic Plan. To advance the Blue Economy initiatives, staff will present an overview of the blue tech program, ongoing updates on Blue Economy opportunities and staff’s efforts to build synergy with existing Planning & Green Port programs by initially focusing on new and emerging blue tech ideas to help reduce copper in San Diego Bay.
Through the District’s blue tech program the Port is uniquely positioned to be an ambassador of sustainable ocean-based innovation.
RECOMMENDATION:
Recommendation
Presentation on advancing the District’s Blue Tech Program by building synergy with existing Planning & Green Port Programs and focusing on new and emerging blue tech solutions for copper reduction in San Diego Bay.
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FISCAL IMPACT:
This is a presentation only with no fiscal impact on the District.
Compass Strategic Goals:
Advancing the Blue Economy is an opportunity that directly aligns with the Public Trust Doctrine, Port Act, and COMPASS Strategic Plan and presents an exciting opportunity for new business for the District. This agenda item supports the following Strategic Goal(s).
• A Port with a healthy and sustainable bay and its environment.
• A Port with a comprehensive vision for Port land and water uses integrated to regional plans.
• A Port that is a safe place to visit, work and play.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
Background / Blue Economy
The Blue Economy is a growing opportunity for new business development in southern California. The term Blue Economy implies a long-term vision in which economic opportunity is balanced by responsible investment in a sustainable ocean economy. A sustainable ocean economy emerges when economic activity is in balance with the long-term capacity of ocean ecosystems to support this activity and remains resilient and healthy. The Blue Economy is comprised of a wide variety of marine-dependent businesses such as aquaculture and fisheries, eco-tourism, scientific research, security, and ocean-based technology or blue tech. The Blue Economy involves technological advances in emerging areas such as marine renewables and biofuels, marine biotechnology and robotics, and other ocean-based industries. The District has been exploring new Blue Economy opportunities, focused on aquaculture and blue tech, as a way to diversify its portfolio of business lines and assets, while strengthening alignment with its mission and Compass Strategic Plan. To advance development of both aquaculture and blue tech initiatives, staff has initiated marine spatial planning efforts in and around San Diego Bay; reviewed prospects and logistics for early pilot projects; and initiated a baywide aquaculture and blue tech infrastructure feasibility study to assess infrastructure capable of supporting aquaculture and blue tech business incubator projects.
To advance development of the aquaculture and blue tech programs, staff is developing a 5-year Blue Economy Strategic Business Plan that will serve as the basis for developing new business plans/models, establishing new partnerships1, and creating a joint action plan. On March 8, 2016, at a regular Board meeting, staff presented a Blue Economy development plan, for the Port to become a catalyst of the Blue Economy, and proposed a “concept” for establishing Port led incubators with an investment program of $5,000,000 over 5 years. The Board approved the FY16/17 budget which includes funding of $1,000,000 for both the aquaculture and blue tech programs. The long-term investment strategies would include a return of the District investments on a five year rolling basis with a goal to subsidize as many initial and/or operating costs with grants and potential investors. The District Blue Economy investment program will also help bring innovative tenants with attractive long-term leases.
For purposes of this presentation staff will be focusing in on blue tech, as further detailed below.
Blue Tech
Blue tech is the advanced technology sector of the maritime industry, which drives innovation across emerging markets of the Blue Economy. It includes a broad spectrum of industries, from clean power of marine vessels and marine clean technology, to marine-based biomedicine and ocean-based sensor technology. Blue tech entrepreneurs are driving the future of the Blue Economy by advancing technology that is allowing the maritime industry to work with the ocean in ways that were previously impossible. San Diego is home to the largest blue tech cluster (ocean & water tech) in the United States; the region hosts a diverse corporate portfolio that spans underwater robotics to ocean based software technology.
Blue tech represents a growth and diversification opportunity for the District with new business models driven by the future growth of the Blue Economy.
Blue Tech Incubator
During the past year, the District established a business incubator and investment program to assist in the creation, early development, and initial scaling of new business ventures targeted at one segment of the Blue Economy: aquaculture. Staff is now planning to expand our incubator program to include another key segment of the Blue Economy: blue tech. Together, the aquaculture and blue tech incubator programs will serve as cornerstones for District’s Blue Economy vision and create an environment in which innovation can excel, by providing ocean entrepreneurs with key assets, such as land and water entitlements, permit-ready infrastructure, marine spatial planning tools, regulatory expertise, and mentorship.
The creation of the blue tech incubator will act as a catalyst for blue tech innovation by providing support and incentives to early stage entrepreneurs and specialized ventures where technologies and business models are focused on promoting or restoring the health of ocean and marine waters. The District is uniquely positioned to attract pioneering business proposals and serve as an incubator for sustainable ocean-based innovation.
Any new or early stage ventures that align with the incubator objectives are encouraged to submit an application. The blue tech application process is comprised of four stages leading to potential Board approval with the incubator committee review centered on business plan submission requirements, as shown in Attachment A.
Throughout 2016, the District has explored the potential Blue Tech opportunities and related co-benefits. The District is seeking to take advantage of these benefits, all of which have significant relevance to the District in its role of driving the regional economic engine and leading environmental innovation and stewardship. One specific and initial area of innovation that staff is exploring is related to copper reduction in San Diego Bay waters and is summarized below.
Synergy with Copper Reduction Program
There are many blue tech companies exploring technologies to effectively remediate contaminants in marine waters and sediments. As a result, some of these efforts have a direct co-benefit to the District’s environmental programs. Staff recently began exploring ways in which blue tech could help reduce pollution in San Diego Bay.
In 2005, a Total Maximum Daily Load (TMDL) was established by the San Diego Regional Water Quality Control Board (RWQCB) to reduce copper loading in the Shelter Island Yacht Basin by 76% by 2022, with interim loading targets of 10% and 40% required by 2012 and 2017, respectively. It was further determined that 98% of the copper loading in the basin was coming from antifouling paints on recreational boat hulls.
As a result of the RWQCB’s regulations, the District made copper reduction in San Diego Bay a high priority. In 2009, the Board adopted Resolution 2009-230 that committed the District to take actions to reduce copper concentrations in San Diego Bay. The resolution provided the groundwork for development of the District’s multi-faceted copper reduction program (Program) supporting efforts to achieve load reductions and improve water quality.
The Program aims strategically to reduce copper throughout the Bay. In doing so, it focuses on the largest source contributions and identifies a strategic approach for implementing projects over the short and long-term in a manner that most effectively achieves regulatory compliance, while balancing economic and public interests. The Program is comprised of five elements, as follows:
1. Testing and Research
2. Hull Paint Transition
3. Policy Development / Legislation
4. Education and Outreach
5. Monitoring and Data Assessment
Over the last several years, the District has taken an active research and development role to identify alternative non-copper paints that reduce copper loading in the Bay. Three projects have assisted the District in this endeavor. The Safer Alternatives to Copper Antifouling Paints project, funded by an Environmental Protection Agency (EPA) grant identified effective alternatives so boaters could reduce their reliance on copper-based hull paints. The EPA grant succeeded in determining that viable alternatives to copper hull paint exist and are currently available. This grant ended in 2011. In addition, the District provided funding to three companies through the Environmental Fund to develop new or innovative products/strategies for hull paints that could be then tested in San Diego Bay. As alternative hull paint options began to be identified, as a result of these research projects, the Port promoted the use of non-copper paints. The Shelter Island Yacht Basin Hull Paint Conversion Project, funded through the State Water Resources Control Board’s (State Board) 319(h) Non-Point Source Pollution Prevention Grant Program, was an incentive-based program to encourage recreational boaters to make the switch from copper paints with non-copper hull paints. The 41 boats converted through the 319(h) grant project have contributed to the Shelter Island Yacht Basin TMDL compliance efforts, reducing the amount of copper released into Shelter Island Yacht Basin by 38.51 kg/yr. However, staff determined that to achieve further load reductions, additional measures to hull paint conversion would be necessary.
In March 2016, the District issued a Request for Proposals (RFP) #16-09AC seeking demonstration projects for new or innovative approaches that either reduce input of copper to the bay or remove existing copper from the bay water. The goal of the RFP was to provide research and development funds that promote the advancement or improvement of environmentally sustainable business practices and/or technologies that reduce copper and improve water quality. Seven proposals were received for various remediation concepts including active or passive filtration of water, bioremediation, and hull cleaning capture systems or filtration approaches.
Upon review of the RFP responses staff recognized that the pilot projects identified could be directly applicable to the new blue tech incubator. Moreover, the incubator will provide a more effective long-term mechanism to identifying regulatory-driven research and demonstration projects while concurrently establishing new business partnerships. Therefore, staff closed RFP #16-09AC without making an award, and, instead, is pursuing discussions with the RFP’s top two proposers, Red Lion Chem Tech, Inc. and Rentunder, AB, through the blue tech incubator. All of the RFP proposers are eligible to reapply through the blue tech business incubator process.
Next Steps
Staff has initiated discussion with the two aforementioned proposers so the copper reduction technology could be considered as initial pilot projects for the blue tech incubator. Staff anticipates returning to the Board in spring 2017 with incubator partnerships/proposals for review. Staff will continue exploring synergy opportunities with existing District programs to find additional opportunities to drive blue tech innovation and attract new business proposals. Staff will continue to provide the Board regular updates on advancements in blue tech initiatives.
General Counsel’s Comments:
The Office of the General Counsel has reviewed and approved this agenda as to form and legality.
Environmental Review:
This item would receive a presentation on advancing the District’s Blue Tech Program. This presentation to the Board does not constitute an “approval” or a “project” under the definitions set forth CEQA Guidelines Sections 15352 and 15378 because no direct or indirect changes to the physical environment would occur. CEQA requires that the District adequately assess the environmental impacts of its projects. Further, while the Board may request certain project components be included, alternatives studied or other direction, such direction to staff will not bind the District to a definite course of action prior to CEQA review. Full CEQA analysis will be completed prior to the approval of any entitlements, concept approval, or agreements necessary for the project. Moreover, the Board reserves its discretion to adopt any and all feasible mitigation measures, alternatives to the projects, including a no project alternative, a statement of overriding consideration, if applicable, and approve or disapprove the projects and any permits or entitlements necessary for the same. Those decisions may be exercised in the sole and absolute discretion of the Board. Based on the totality of the circumstances and the entire record, the Board’s direction does not commit the District to a definite course of action prior to CEQA review being conducted. Therefore, no further CEQA review is required.
In addition, this presentation allows for the District to implement its obligations under the Port Act and/or other laws. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, this presentation is consistent with the Public Trust Doctrine.
This presentation to the Board does not allow for “development,” as defined in Section 30106 of the California Coastal Act, or “new development,” pursuant to Section 1.a. of the District’s Coastal Development Permit (CDP) Regulations because it will not result in, without limitation, a physical change, change in use or increase the intensity of uses. Therefore, issuance of a CDP or exclusion is not required. However, the District’s projects require processing under the District’s CDP Regulations. If a project is formulated as a result of advancing the District’s Blue Tech Program, the Board will consider approval of the project after the appropriate documentation under District’s CDP Regulations has been completed and authorized by the Board, if necessary. The Board’s direction in no way limits the exercise of the District’s discretion under the District’s CDP Regulations.
Equal Opportunity Program:
Not applicable.
PREPARED BY:
Philippe LeBlanc
Program Manager, Aquaculture & Blue Tech
Planning & Green Port
Stephanie Bauer
Senior Environmental Specialist
Planning & Green Port
Eileen Maher
Acting Principal, Aquaculture & Blue Tech
Planning & Green Port
Karen Holman
Principal Environmental Protection
Planning and Green Port
Attachment(s):
Attachment A: Blue Tech Incubator Application Process
1The term “partnership” in the context of the District’s incubator is only meant to generally refer to various forms of agreements between parties, and is not intended to mean a legal partnership, for example, under the California Corporation Code.