BILL ANALYSIS Ó
AB 1112
Page 1
ASSEMBLY THIRD READING
AB 1112 (Huffman)
As Amended May 27, 2011
Majority vote
NATURAL RESOURCES 6-3 WATER, PARKS & WILDLIFE 9-4
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|Ayes:|Chesbro, Brownley, |Ayes:|Huffman, Blumenfield, |
| |Dickinson, Huffman, | |Campos, Fong, Gatto, |
| |Monning, Skinner | |Roger Hernández, Hueso, |
| | | |Lara, Yamada |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Grove, Halderman |Nays:|Halderman, Bill |
| | | |Berryhill, Jones, Olsen |
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APPROPRIATIONS 11-5
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|Ayes:|Fuentes, Blumenfield, | | | |
| |Bradford, Charles | | | |
| |Calderon, Campos, Davis, | | | |
| |Gatto, Hill, Hall, | | | |
| |Mitchell, Solorio | | | |
| | | | | |
|-----+--------------------------+--------------------------+-----+--------------------------|
|Nays:|Harkey, Donnelly, | | | |
| |Nielsen, Norby, Wagner | | | |
| | | | | |
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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. 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. Specifically,
this bill:
1)Requires OSPR to monitor and inspect vessels engaged in
bunkering and lightering operations to ensure that vessels
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have the appropriate equipment in the event of an oil spill.
The monitoring and inspections shall increase by 2% annually
until a minimum of 10% of all oil transfer operations are
routinely monitored and inspected. A minimum of 50% 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 the State Auditor to conduct an audit of the OSPAF by
January 1, 2013.
5)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.
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.
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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
safety and the environment.
5)Establishes the OSPAF, which finances OSPR and the
Commission's oil spill prevention programs. OSPAF is
supported by a fee not to exceed $0.05 imposed on each barrel
of crude oil or petroleum products received at a marine
terminal and 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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Increased annual revenue to OSPAF of between approximately
$6.5 million and $16.5 million.
2)Annual costs beginning in 2011-12 and thereafter to OSPR, in
the range of approximately $2 million to $3 million, to
increase its monitoring and inspection of oil transfer
operations, which will require additional specialist, wardens,
vehicles and monitoring equipment. (OSPAF.) (DFG, in which
OSPR operates, reports that it will need to increase, from 60
to about 650, the number of transfers it monitors and
investigates annually.)
3)One-time costs to OSPR in 2011-12 of approximately $200,000,
equivalent to two staff members, to conduct a risk assessment
of bunkering and lightering and determine the highest risk
transfers. (OSPAF.)
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4)One-time costs of around $50,000 to the State Auditor to
complete an audit by January 1, 2013.
COMMENTS : 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 OSPAF.
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% above the 1990 and 2002 prices.
While the OSPAF fee has only increased $0.01 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
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programs. For fiscal year 2012-13, the estimated deficit is
over 20% of the cost to operate the programs funded by OSPAF.
As such, OSPR and the Commission will likely have to cut over
20% 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.
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 10 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% of them were inspected by OSPR.
This 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
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spill by monitoring the fuel tank capacity to avoid overfilling.
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 held 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.
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
FN: 0001109
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