BILL ANALYSIS Ó
AB 881
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 881 (Chesbro) - As Amended: April 22, 2013
Policy Committee: Natural
ResourcesVote:6-2
Water, Parks and Wildlife 8-4
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases the maximum annual per barrel oil spill
prevention and administration fee the Oil Spill Prevention and
Response (OSPR) administrator may charge from 6.5 cents to 8
cents per barrel. Specifically, this bill:
1)Increases the maximum annual assessment for oil spill
prevention and administration from 6.5 cents to 8 cents per
barrel of crude oil or petroleum products and allows the Oil
Spill Prevention and Response administrator to adjust the fee
annually based on the percentage increase in the California
Consumer Price Index.
2)Repeals an existing January 2015 sunset on the current 6.5
cents per barrel fee amount (the per barrel fee reverts to 5
cents in 2015).
3)Caps the nontank vessel fee for oil spill prevention
activities at an amount not to exceed $3,500 per nontank
vessel. Authorizes the program administrator to reduce the
fee for nontank vessels that pose a reduced risk of pollution
and to adjust the fee annually based on the percentage
increase in the California Consumer Price Index (The nontank
vessel fee is not statutorily capped and is currently set by
regulation at $3,250 for the largest class of nontank
vessels).
4)Transfers 3[ of the per barrel fee on crude oil or petroleum
products, and $250 of the nontank vessel fee, to fund
activities of the Oiled Wildlife Care Network (OWCN).
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5)Limits the amount authorized to be transferred from the OSPAF
to fund the OWCN to the additional amount needed not provided
by interest on the Trust Fund.
FISCAL EFFECT
1)A 1.5 cents increase to the per-barrel fee would generate
approximately $7.4 million annually.
2)An increase to the nontank vessel fee to $3,500 would generate
the approximately $600,000 per year.
The nontank fee is paid biennially and some vessels pay a
lesser, pro-rated amount.
COMMENTS
1)Rationale. The Oil Spill Prevention Fund (OSPF) finances the
state's oil spill prevention and planning programs at OSPR and
the State Lands Commission (SLC) through the per barrel and
nontank vessel fees.
The OSPF is scheduled to revert to 5 cents per barrel in 2015,
resulting in a structural deficit of an estimated $7 million
per year. Additionally, current revenues are not sufficient
to fund all of the statutory OSPR and SLC requirements,
including local equipment grants, scientific studies,
volunteer coordination, and minimizing spill risks at offshore
and marine oil terminals.
Actual oil spill response and clean-up activities are funded
by a different fee on distributors, pipeline operators,
refiners and marine terminal operators in an amount not to
exceed 25 cents for each barrel of petroleum product received
or transported. The revenues generated from this fee are
deposited in the Oil Spill Response Trust Fund (Trust Fund) to
be expended when the oil spill responsible party is unknown or
financially incapable of paying for clean-up. This barrel fee
is only collected until the Trust Fund reaches $55 million.
Another program, the Oiled Wildlife Care Network (OWCN) is
funded by interest earned by the Trust Fund to provide an
annual budget of $2 million. This program includes nearly 30
stations throughout the state to rescue and treat oiled sea
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birds and marine mammals. Since 1995 the OWCN has responded
to 75 oil spills throughout California and treated over 8,000
oiled birds and mammals.
In 2011, $40 million was transferred from the Trust Fund and
loaned to the GF resulting in a temporary loss of earned
interest. As a result, it is projected that the OCWN will not
be fully funded as early as 2014.
This bill will provide funding for the OWCN and secure
on-going funding for oil spill prevention and readiness
programs.
2)Previous Legislation. AB 1112 (Huffman), Chapter 583,
Statutes of 2012, temporarily increased the per barrel fee
from 5 cents to 6.5 cents until 2015. AB 1112 also created
new responsibilities for OSPR regarding vessel to vessel fuel
transfers. The Governor in signing AB 1112 directed OSPR "to
increase the non-tank vessel fee and reduce continued program
expenditures in order to address the structural imbalance of
the [OSPAF]." Even with these reductions, OSPR still projects
a $3.8 million deficit in the OSPAF for fiscal year 2012-13.
3)Support. This bill is supported by numerous environmental
organizations who contend it is necessary to provide a stable
source of funding for the OWCN and address the structural
deficit in oil spill prevention and response work.
4)Opposition. This bill is opposed by the oil industry who
assert that the proposed 1.5 cent increase in the maximum per
barrel fee this bill could result in a 60% fee increase.
Opponents also contend that it is not necessary to pass fee
increase in this year, since the OSPAF will have a $5.4
million reserve for the 2013-2014 fiscal year. Opponents
express
support for the need to fund the OWCN, but assert that
existing funds in the OSPAF should be redirected to fund the
OWCN.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081
AB 881
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