BILL ANALYSIS Ó
AB 1112
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1112 (Huffman)
As Amended September 2, 2011
Majority vote
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|ASSEMBLY: |42-26|(June 3, 2011) |SENATE: |25-13|(September 8, |
| | | | | |2011) |
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Original Committee Reference: NAT. RES.
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 (i.e., bunkering
and lightering); temporarily increases the Oil Spill Prevention
and Administration Fund (OSPAF) fee to support the state's oil
spill prevention programs for the next; requires the State Lands
Commission (Commission), in consultation with the Department of
Conservation, to provide statutory recommendations to the
Legislature to ensure maximum safety and prevention of harm
during offshore oil drilling.
The Senate amendments :
1)Delete the Assembly provisions regarding bunkering and
lightering, and instead:
a) Require OSPR to develop and implement a screening
mechanism and a comprehensive risk-based monitoring program
for inspecting the bunkering and lightering operations of
vessels at anchor alongside a dock;
b) Require the monitoring and inspection program to
identify those bunkering and lightering operations that
pose the highest risk of a pollution incident and to ensure
that they are routinely monitored and inspected;
c) Requires OSPR to coordinate the program with the United
States Coast Guard; and,
d) Require OSPR to establish regulations to provide for the
best achievable protection during bunkering and lightering
operations in the marine environment.
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2)Delete the Assembly provision requiring the State Auditor to
conduct an audit of the OSPAF by January 1, 2013.
3)Delete the Assembly provision increasing the OSPAF fee limit
on each barrel of crude oil or petroleum products from $0.05
to $0.08, and instead increase the fee limit to $0.065 per.
4)Sunset the OSPAF fee increase beginning January 1, 2015.
5)Delete the Assembly provision regarding the nontank vessel
fee.
6)Prohibit using the moneys deposited in the OSPAF to provide
loans to any other funds.
7)Require the Commission to consult with the Department of
Conservation when preparing its report and recommendations to
the Legislature regarding 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 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
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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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required 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% 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)Increased 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)Required 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)Required the State Auditor to conduct an audit of the OSPAF by
January 1, 2013.
5)Required, 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
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drilling.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)The bunkering and lightering provisions in this bill will
create an expense of $3 million in 2012-13 and $2 million in
2013-14 to the OSPAF.
2)The auditing provisions in this bill will create an expense of
up to $100,000 every four years from the OSPAF.
3)The additional fees will potentially bring revenues of $3.7
million in 2011-12, $7.4 million in 2012-2013, and $7.4
million in 2013-14 to the OSPAF.
COMMENTS :
1)OSPAF Fee Increase.
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'
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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
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.
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 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
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bunkering and lightering operations.
3)Offshore Oil Spill Prevention 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 report, more information has become
available regarding the Deepwater Horizon spill. It would be
appropriate, considering the expertise of the Commission in
matters involving offshore oil drilling and oil spill
prevention, that it, in consultation with the Department of
Conservation, 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: 0002827