BILL ANALYSIS Ó
AB 881
Page 1
ASSEMBLY THIRD READING
AB 881 (Chesbro)
As Amended May 24, 2013
Majority vote
NATURAL RESOURCES 6-2 WATER, PARKS & WILDLIFE 8-4
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|Ayes:|Chesbro, Garcia, |Ayes:|Rendon, Blumenfield, |
| |Muratsuchi, Skinner, | |Bocanegra, Fong, Gatto, |
| |Stone, Williams | |Gomez, Yamada, Williams |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Grove, Bigelow |Nays:|Allen, Dahle, Beth |
| | | |Gaines, Patterson |
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APPROPRIATIONS 12-5
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|Ayes:|Gatto, Bocanegra, | | |
| |Bradford, | | |
| |Ian Calderon, Campos, | | |
| |Eggman, Gomez, Hall, | | |
| |Ammiano, Pan, Quirk, | | |
| |Weber | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Harkey, Bigelow, | | |
| |Donnelly, Linder, Wagner | | |
| | | | |
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SUMMARY : Amends the Lempert-Keene-Seastrand Oil Spill
Prevention and Response Act (Oil Spill Act) to ensure that the
state's oil spill prevention and preparedness program and the
state program that saves oiled wildlife do not experience
significant cuts in fiscal year 2014-15. Specifically, this
bill :
1)Repeals a sunset date that will reduce the primary source of
funding for the state's oil spill prevention and preparedness
program, which is a fee on each barrel of oil received at
marine oil terminals or from offshore production facilities
(per barrel fee). (The current per barrel fee is capped at
$0.065; the sunset will reduce this cap to $0.05 per barrel
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during fiscal year 2014-15).
2)Increases the per barrel fee cap by $0.015, which may be
adjusted based on the California Consumer Price Index.
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)Authorizes the transfer of revenues from the per barrel fee
and nontank vessel fee to support the Oiled Wildlife Care
Network (OWCN).
EXISTING LAW : Pursuant to the Oil Spill Act:
1)Establishes the Office of Spill Prevention and Response (OSPR)
within the Department of Fish and Wildlife and requires it to
administer the state's oil spill prevention and preparedness
program, which includes, among other things, announced and
unannounced oil spill drills, review and approval of oil spill
contingency plans, and local government grants.
2)Requires the State Lands Commission (Commission) to adopt
rules, regulations, guidelines, and leasing policies for
reviewing marine terminals (i.e., facilities used for
transferring oil to or from tankers or barges) and other
marine facilities (i.e., facilities used to explore for, drill
for, produce, store, handle, transfer, process, refine, or
transport oil) to minimize the possibilities of a discharge of
oil.
3)Establishes the OWCN, which is a network of rescue and
rehabilitation stations for sea birds, sea otters, and other
marine mammals. In addition to rehabilitative care, the
primary focus of the OWCN includes proactive oiled wildlife
search and collection rescue efforts.
4)Establishes the Oil Spill Prevention and Administration Fund
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(OSPAF), which finances OSPR's and the Commission's oil spill
prevention and planning programs. OSPAF is supported by a fee
not to exceed $0.065 that is imposed on each barrel (42
gallons) of crude oil or petroleum products piped in from a
marine production facility or imported to a marine facility.
This fee will sunset on January 1, 2015, and revert back to
$0.05, which was the amount set by the Legislature in 2002.
The OSPAF is also supported by a reasonable fee on nontank
vessels in the amount that is based on OSPR's costs in
implementing the Oil Spill Act relating to nontank vessels.
The nontank vessel fee is collected with each vessel's
application to obtain a certificate of financial
responsibility, which is submitted every two years. There is
currently no statutory cap on the nontank vessel fee; however,
recent regulations set the fee to as much as $3,250 for the
largest class of nontank vessels.
FISCAL EFFECT : According to the Assembly Appropriations
Committee a $0.015 increase to the per-barrel fee would generate
approximately $7.4 million annually. An increase to the nontank
vessel fee to $3,500 would generate approximately $600,000 per
year. The nontank fee is paid biennially and some vessels pay a
lesser, pro-rated amount.
COMMENTS :
Background of the Oil Spill Act . In the wake of the March 24,
1989, Exxon Valdez oil spill in Alaska (which spilled
approximately 11 million gallons of crude oil) and the February
7, 1990, American Trader oil spill near Huntington Beach (which
spilled approximately 300,000 gallons of crude oil), the
Legislature passed the Oil Spill Act. This act established OSPR
and gave the administrator of OSPR primary authority to direct
prevention, removal, abatement, response, containment, and
cleanup efforts with regard to all aspects of any oil spill in
the marine waters of the state.
Additionally, the Oil Spill Act gives the Commission
responsibility to minimize the possibilities of a discharge of
oil at marine oil terminals-where, in 2012, 27.3 billion gallons
of oil were transferred-and offshore oil production facilities.
The Oil Spill Act requires both OSPR and the Commission to
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provide the "best achievable protection" of public health and
safety and the environment. Best achievable protection is
defined as 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. The
act prohibits the use of a cost-benefit or cost-effectiveness
analysis in determining which measures provide the best
achievable protection. This standard has led to the creation of
programs such as the Commission's Marine Oil Terminal
Engineering and Maintenance Standards, which establishes
standards to ensure that an oil terminal's infrastructure can
withstand earthquakes and other threatening events.
The Oil Spill Fiscal Cliff . By 2011, the OSPAF per barrel fee
had only increased $0.01 since 1990 (while gas prices nearly
quadrupled), which was not enough to address inflation as well
as OSPR's and the Commission's responsibilities to provide the
best achievable protection from oil spills. As such, a
multi-million dollar deficit was projected for the OSPAF.
Previously, the Legislature had responded to the OSPAF funding
issues when it passed AB 2032 (Hancock) of 2008, which would
have increased the per barrel fee from $0.05 to $0.08. Governor
Schwarzenegger, however, vetoed this bill. Strangely, that same
year, Governor Schwarzenegger signed AB 2031 (Hancock), Chapter
563, Statutes of 2008, into law, which put further stress on the
OSPAF by requiring OSPR to expand its local government grant
program with OSPAF moneys.
In 2011, facing a major structural deficit in the OSPAF that
would have led to a 20% cut to the state's oil spill prevention
and preparedness program, AB 1112 (Huffman), Chapter 583,
Statutes of 2011, was introduced to increase the OSPAF per
barrel fee from $0.05 to $0.08. In response to the 2009 Dubai
Star oil tanker spill that spilled 400 to 800 gallons of
intermediate fuel oil into San Francisco Bay, AB 1112 also
created significant responsibilities for OSPR regarding vessel
to vessel fuel transfers. According to the Senate
Appropriations Committee, these additional responsibilities will
cost the OSPAF $2 to $3 million a year.
The Assembly Floor passed AB 1112 with the $0.08 fee and an
inflation adjustment provision. Through the legislative
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process, however, the opponents were successful in negotiating
the fee down to $0.065. They also negotiated a sunset provision
that will reduce the fee back to $0.05 on January 1, 2015.
With only a $0.015 per barrel fee increase and the additional
responsibilities with vessel to vessel transfers, a significant
structural deficit was still projected. Recognizing this
problem, Governor Brown issued a signing statement for AB 1112
directing OSPR "to increase the non-tank vessel fee and reduce
continued program expenditures in order to address the
structural imbalance of the Oil Spill and Administration Fund."
Even with the Governor's measures, OSPR still projects a $3.8
million deficit in the OSPAF for fiscal year 2012-13.
Major cuts have not yet been made to the state's oil spill
prevention and preparedness program because it has a reserve
that has been absorbing the OSPAF's annual deficit. The
reserve, however, will be depleted when the AB 1112 sunset
provision takes place in fiscal year 2014-15. Without
legislative action this year, OSPR and the Commission will be
forced to begin the process of laying off over 90 positions and
planning cuts to critical oil spill prevention and preparedness
functions as part of next year's budget process.
For a program that currently costs $42 million a year, OSPR and
the Commission will have to cut over $10 million in costs ($7.4
million a year from the AB 1112 sunset and $3.8 million from the
structural deficit). With approximately 25% of the state's oil
spill prevention and preparedness program cut, the state would
be making its environment, economy, and public health
substantially more vulnerable to oil spills.
The OSPAF is constantly audited . The OSPAF and the programs it
funds have been audited by the Department of Finance (January
2005, December 2012) and by the State Auditor (August 2008,
August 2012). Current law requires the Department of Finance to
audit the OSPAF programs no less than once every four years.
The audit report is specifically required to focus on "the
financial basis and programmatic effectiveness of the state's
oil spill prevention, response, and preparedness program."
These audits have helped improve the state's oil spill
prevention and preparedness program achieve the best achievable
protection from oil spills while ensuring that the OSPAF moneys
are being used appropriately and efficiently.
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Equality for nontank vessels . While the Oil Spill Act contains
a cap on the per barrel fee, it does not provide a cap on the
nontank vessel fee. The lack of a cap is what allowed Governor
Brown to direct OSPR to increase the nontank vessel fee through
the AB 1112 signing statement. This bill provides a $3,500 cap
on the nontank vessel with an inflation adjuster. This cap is
$250 more than what the largest vessel currently pays pursuant
to fee regulations. It should be noted that the Pacific
Merchant Shipping Association supports this bill.
Cost to the Consumer . According to California Energy Commission
figures, a typical driver who drives 15,000 miles per year, and
whose car gets 20 miles per gallon, would see his or her fuel
costs increase by approximately $0.27 in a year as a result of
this bill. (This assumes consumers incur 100% of the fee
increase. In reality, some of this would be borne by the
supplier.)
This cost pales in comparison to the effect a catastrophic oil
spill would have on the economy, the environment, and people's
lives.
Oiled Wildlife Care Network . The OWCN is the state program that
rescues and rehabilitates oiled wildlife in the state. It is an
integrated system of more than 30 organizations and facilities
strategically sited throughout California that is largely
considered the most proactive response organization in the world
dedicated to wildlife affected by catastrophic oil spills.
Since 1995, the OWCN has responded to more than 75 oil spills
throughout California and has cared for nearly 8,000 oiled birds
and mammals.
The Department of Finance released a report in December 2012
expressing the need to "explore feasible options to obtain a
dedicated funding source for OWCN." The Director of the
Department of Fish and Wildlife has stated that he is treating
this issue as a "top priority."
This bill establishes a reliable funding source for the OWCN by
authorizing the use of OSPAF moneys to support the program.
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Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
FN: 0000938