BILL ANALYSIS Ó
AB 1112
Page 1
Date of Hearing: April 4, 2011
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1112 (Huffman) - As Introduced: February 18, 2011
SUBJECT : Oil spill prevention and administration fee: State
Lands Commission
SUMMARY : Requires the Office of Spill Prevention and Response
(OSPR) to increase its monitoring and inspections of operations
involving the transfer of oil between vessels; increases the Oil
Spill Prevention and Administration Fund (OSPAF) fee to support
the state's oil spill prevention programs; and requires the
State Lands Commission (Commission) to provide statutory
recommendations to the Legislature to ensure maximum safety and
prevention of harm during offshore oil drilling.
EXISTING LAW :
1)Requires OSPR to direct prevention, removal, abatement,
response, containment, and cleanup efforts with regard to all
aspects of an oil spill in the marine waters of the state.
2)Requires OSPR to adopt and implement regulations that govern
the adequacy of oil spill contingency plans and provide for
the best achievable protection of coastal and marine
resources. These regulations are required to include, among
other things, rules regarding the transfer of oil between
vessels (i.e. bunkering and lightering). OSPR is allowed to
conduct vessel inspections for the purposes of determining
compliance with oil spill prevention and response laws.
3)Requires the Commission to adopt rules, regulations,
guidelines, and leasing policies related to all existing and
proposed marine terminals in the state to minimize the
possibilities of a discharge of oil. These rules,
regulations, guidelines, and leasing policies must provide the
best achievable protection of public health and safety and the
environment.
4)Requires the Commission to inspect, on a regular basis, all
marine facilities along with associated equipment. The
Commission is also required to monitor marine facility
operations and the effect they have on public health and
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safety and the environment.
5)Establishes the OSPAF, which finances OSPR and the
Commission's oil spill prevention programs. OSPAF is
supported by (1) a fee not to exceed $0.05 imposed on each
barrel of crude oil or petroleum products received at a marine
terminal, and (2) a $2,500 fee imposed on nontank vessels
every two years.
6)Requires offshore oil drilling facilities under the
Commission's jurisdiction to conform to various pollution
prevention regulations.
THIS BILL :
1)Requires OSPR to monitor and inspect vessels engaged in
bunkering and lightering operations to ensure that vessels
have the appropriate equipment in the event of an oil spill.
The monitoring and inspections shall increase by 2 percent
annually until a minimum of 10 percent of all oil transfer
operations are routinely monitored and inspected. A minimum
of 50 percent of oil transfers subject to monitoring and
inspections must be conducted at fuel transfer operations
occurring at anchorage.
2)Increases the OSPAF fee limit on each barrel of crude oil or
petroleum products from $0.05 to $0.08. OSPR may adjust the
fee limit for inflation as measured by the California Consumer
Price Index. The bill also increases the OSPAF nontank vessel
fee from $2,500 to $3,000.
3)Requires OSPR and the Commission to contract with the
Department of Finance for a report on the financial basis and
programmatic effectiveness of the state's oil spill
prevention, response, and preparedness programs. The report
is due on or before January 1, 2013 and no less than once
every four years thereafter.
4)Requires, on or before March 1, 2012, the Commission to submit
a report on regulatory action, pending or already taken, and
statutory recommendations for the Legislature to ensure
maximum safety and prevention of harm during offshore oil
drilling.
FISCAL EFFECT : Unknown
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COMMENTS :
1)OSPAF. Recent accounting figures from OSPR show a projected
deficit in OSPAF for fiscal years 2011-12 (-$2,327,252),
2012-13 (-$10,837,194), and 2013-14 (-$18,072,343). These
projected deficits will most likely lead to substantial cuts
in both OSPR and the Commission's programs.
The primary fee that supports OSPAF is a $0.05 fee that is
imposed on each barrel of crude or petroleum product delivered
to a marine terminal in the state. In the 20 year history of
OSPAF, this fee has only increased once-in 2002, the
Legislature raised the fee from $0.04 to $0.05 when OSPR was
faced with staffing reduction as a result of a declining
reserve in the fund. To put the OSPAF fee into perspective,
when the governor signed the bill creating the fund in 1990,
the price of oil was approximately $24 per barrel. In 2002,
when the governor signed the bill essentially increasing the
OSPAF fee from $0.04 to $0.05 per barrel, the price of oil was
approximately $26 per barrel. On March 21, 2011, the price of
oil was almost $110 per barrel-over 400 percent above the 1990
and 2002 prices.
While the OSPAF fee has only increased one cent since
established in 1991, the oil spill prevention programs it
funds have expanded substantially. This is based in part on
the "best achievable protection" standard mandated by the
programs' governing statutes. This standard requires OSPR and
the Commission to implement "the highest level of protection
that can be achieved through both the use of the best
achievable technology and those manpower levels, training
procedures, and operational methods that provide the greatest
degree of protection achievable." As a result of this
stringent standard, OSPR and the Commission must constantly
evolve their programs to provide the best protection against
oil spills. The Commission has performed its duties under
this standard by, for example, creating its Marine Oil
Terminal Engineering and Maintenance Standards program to
ensure that marine oil terminals are structurally sound.
Without an increase in the OSPAF fees or a new funding source,
the projected deficits in OSPAF will force both the Commission
and OSPR to cut positions essential to their respective
programs. For fiscal year 2012-13, the estimated deficit is
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over 20 percent of the cost to operate the programs funded by
OSPAF. As such, OSPR and the Commission will likely have to
cut over 20 percent of their payroll, which could mean the
loss of oil spill prevention specialists, environmental
scientists, enforcement agents, engineers, field inspectors,
and support staff. These cuts will seriously jeopardize the
protection the Commission and OSPR's programs provide to the
public and the environment from oil spills.
2)Bunkering and Lightering. On October 30, 2009, due to a
bunkering incident, the oil tanker Dubai Star spilled 400 to
800 gallons of intermediate fuel oil into San Francisco Bay at
Anchorage 9 just south of the Bay Bridge. The spill affected
more than ten miles of shoreline, from just north of the east
approach of the Bay Bridge to San Leandro Bay along the
Alameda coast line. The spill resulted in shoreline oiling,
bird mortalities, as well as beach and fisheries closures in
the vicinity of Alameda Island. According to news reports,
state investigators explained that the spill occurred when one
of the ship's massive fuel tanks overfilled during an early
morning refueling stop and crew members failed to notice until
oil had already seeped into the bay.
In 2010, there were 6,317 bunkering operations in California
marine waters and only 1.8 percent of them were inspected by
OSPR. The bill would require OSPR to increase its inspections
of bunkering and lightering operations. Inspections are
needed to ensure that all oil spill prevention and response
requirements are met during the transfer of oil between
vessels. Presumably, increased inspections, especially if
conducted randomly, would cause all parties in bunkering and
lightering operations to become more vigilant in complying
with laws and regulations.
At recent workshops regarding bunkering and lightering
regulations, OSPR discussed the idea of requiring the presence
of a "Pollution Safety Advisor" at oil transfers between
vessels. Pollution Safety Advisors are currently utilized at
a few marine oil terminals in the Bay Area. For bunkering and
lightering operations, this person would ensure that no spills
occur during the oil transfer. If a spill were to occur, the
Pollution Safety Advisors would facilitate the immediate
response to mitigate environmental harm. In the case of the
Dubai Star, a Pollution Safety Advisor could have prevented
the spill by monitoring the fuel tank capacity to avoid
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overfilling.
The author and committee may wish to consider further
investigating the benefit and feasibility of requiring
Pollution Safety Advisors at bunkering and lightering
operations and amend the bill if it becomes clear that
Pollution Safety Advisors would provide the best achievable
protection of coastal and marine resources.
3)State Lands Commission Report. The Commission has
jurisdiction over offshore oil production facilities within
three nautical miles of the coast and over the state's marine
oil terminals. In August 2010, Commission staff released a
report entitled Production and Marine Terminal Operations in
State Waters and the California State Lands Commission's Oil
Spill Prevention Programs Protecting State Waters. The report
was prepared in light of the Deepwater Horizon oil spill in
the Gulf of Mexico and describes the Commission's oil spill
prevention practices and challenges. In October 2010, in
consideration of the report, the Commission adopted several
action items, including directing Commission staff to obtain
agreements from state lessees to submit third-party
certification of all drilling programs, and operation of
blowout prevention equipment on lessee platforms.
Since the Commission's August 2010 report, several reports
have been published from various parties regarding the
Deepwater Horizon catastrophe. The federal government has
also continued to investigate the oil spill--the Bureau of
Ocean Energy Management, Regulation and Enforcement/U.S. Coast
Guard Joint Investigation Team will hold a seventh session of
public hearings the week of April 4, 2011 focusing
specifically on the forensic examination of the Deepwater
Horizon blowout preventer.
It would be appropriate, considering the expertise of the
Commission in matters involving offshore oil drilling and oil
spill prevention, that it report to the Legislature in 2012,
after considering all available information regarding the
Deepwater Horizon spill, and recommend ways to ensure maximum
safety and prevention of harm during offshore oil drilling.
Suggested Amendments. While the bill requires the Commission
to report on ways to ensure maximum safety and prevention of
harm during offshore oil drilling, it does not specifically
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require the Commission to consider information from Deepwater
Horizon related reports and investigations. To ensure that
the Commission reviews all relevant, available information
pertaining to the Deepwater Horizon oil spill before preparing
the report to the Legislature, the author may wish to consider
amending the bill to require consideration of these reports
and investigations.
REGISTERED SUPPORT / OPPOSITION :
Support
Blue Frontier Campaign
California Association of Professional Scientists
California Coastal Commission
California State Lands Commission
Center for Biological Diversity
Center for Oceanic Awareness, Research and Education
Clean Water Action
Crab Boat Owners Association
Defenders of Wildlife
East Bay Bird Advocates
Environment California
Environmental Action Committee
Environmental Defense Center
Friends of the Earth
Natural Resources Defense Council
Ocean Conservancy
Ocean Conservation Research
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Ocean Defenders Alliance
Ocean Revolution
Oceana
Pacific Coast Federation of Fisherman's Associations
Pacific Environment
Save Our Shores
Save the Bay
Sierra Club California
Waterways Restoration Institute
Opposition
Pacific Merchant Shipping Association
Western States Petroleum Association
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092