BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1112 (Huffman)
Hearing Date: 08/15/2011 Amended: 08/15/2011
Consultant: Brendan McCarthy Policy Vote: NR&W 6-3, EQ 5-1
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BILL SUMMARY: AB 1112 authorizes the Office of Oil Spill
Response and Prevention to raise the maximum fee on imported oil
from the current level of $0.0500 per barrel to $0.0650 in 2012
and $0.0675 in 2014. The bill requires the Office to monitor
certain ship fueling operations.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Monitoring fuel transfers $3,000
$2,000Special *
Auditing Up to $100 every four years Special
*
Potential additional fee ($3,700) ($7,400)
($7,400)Special *
revenues
* Oil Spill Prevention and Administration Fund.
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STAFF COMMENTS:
Under current law, the Office of Oil Spill Prevention and
Response (Office) is responsible for regulating the prevention,
response, removal, and cleanup of oil spills in state waters.
Under this authority, the Office requires vessel operators to
take certain precautions and to undertake specific containment
and cleanup actions in response to an oil spill.
Current law authorizes the Office to impose a fee on imported
oil up to $0.0500 per barrel, to pay for the Office's costs to
prevent and respond to oil spills in state waters.
AB 1112 (Huffman)
Page 1
AB 1112 requires the Office to develop a risk-based monitoring
program for fuel transfers to ships docked or at anchor in state
waters. The Office would be required to screen vessels for
potential risks during fueling operations and then to monitor
high-risk fueling operations.
The bill authorizes (but does not require) the Office to raise
the maximum per-barrel fee to $0.0650 in 2012 and $0.0675 in
2014. In addition, the bill authorizes the Office to increase
the maximum fee in the future by the rate of inflation. The
bill prohibits the loan of monies in the Oil Spill Prevention
and Administration Fund to any other fund.
The bill requires the Office and the State Lands Commission to
contract with the Department of Finance for audits of the
program by 2013 and at least every four years thereafter.
The bill also requires the State Lands Commission to prepare a
report on safety issues surrounding offshore oil drilling by
March 1, 2012. The bill requires the Commission to address
several topics in the report, including preventative measures,
response plans, and other issues.
The Office indicates that the costs to monitor fueling
operations will be about $3 million in the first year and about
$2 million per year thereafter, including staff costs, travel,
and purchasing additional boats for the monitoring of fuel
transfers to ships at anchor.
Staff estimates that the cost to perform programmatic audits
could be up to $100,000 every four years.
The State Lands Commission indicates that staff is already doing
research on issues similar to those required by the bill.
Therefore, any additional costs to prepare the report can be
accommodated within existing resources.
Based on current levels of imported oil, the authorized increase
in the maximum fee level would yield about $7.4 million per year
through the 2013-14 budget year and about $8.7 million per year
thereafter.
AB 1112 (Huffman)
Page 2
Staff notes that a prior version of the bill required an audit
of the Oil Spill Prevention and Administration Fund by the
Bureau of State Audits. This provision has been amended out of
the bill. However, the author has requested the Joint
Legislative Audit Committee approve an audit of the fund.
AB 234 (Huffman, 2009) authorized the Office to raise the
maximum fee by $0.01 per barrel and required the Office and
State Lands Commission to perform additional duties relating to
fueling operations. That bill was vetoed by Governor
Schwarzenegger.