BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 881
Author: Chesbro (D), et al.
Amended: 9/4/13 in Senate
Vote: 21
SENATE NATURAL RESOURCES AND WATER COMMITTEE : 7-2, 6/25/13
AYES: Pavley, Evans, Hueso, Jackson, Lara, Monning, Wolk
NOES: Cannella, Fuller
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 8-1, 7/3/13
AYES: Hill, Gaines, Calderon, Corbett, Hancock, Jackson, Leno,
Pavley
NOES: Fuller
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/30/13
AYES: De León, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 43-30, 5/30/13 - See last page for vote
SUBJECT : Oil spill prevention and administrative fee
SOURCE : San Francisco Baykeeper
DIGEST : This bill amends Lempert-Keene-Seastrand Oil Spill
Prevention and Response Act (Oil Spill Act) (SB 2040, Keene,
Chapter 1248, Statutes of 1990) to ensure that significant cuts
are not required in the state's oil spill prevention and
preparedness program when current fee levels sunset, and ensures
that the Oiled Wildlife Care Network (OWCN) is funded.
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ANALYSIS :
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 (DFW) 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
(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.
This bill:
1. Increases, as of January 1, 2015, the maximum annual
assessment to $0.07 per barrel of crude oil or petroleum
products.
2. Allows the assessment to cover the annual costs incurred by
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the OWCN on and after January 1, 2015, and until January 1,
2016. Continues, after January 1, 2016, the assessment of
$0.07 per barrel of crude oil to cover the costs authorized
under existing law.
3. Allows the administrator, until January 1, 2016, to transfer
up to $2 million in funds from OSPAF to Oil Spill Response
Trust Fund (OSRTF) annually, as described, to fund specified
OWCN activities if interest revenue from the OSRTF is
insufficient.
Background
In response to concerns following significant oil spills, the
Legislature passed the Oil Spill Act. The Oil Spill Act created
the OSPR in the DFW. The Commission has responsibility under
OSPR to minimize the possibility of oil spills at the
California's 58 marine oil terms. OSPR's mission is to provide
the best achievable protection of California's natural resources
and the public health and safety by preventing, preparing for,
and responding to spills of oil and other deleterious materials;
and to restore and enhance affected resources. The Oil Spill
Act provides for an administrator to be appointed for OSPR and
establishes the OSPAF which finances oil spill prevention and
planning programs and the OSRTF which is used to provide the
cash flow for the response to and clean-up of California's oil
spills and for certain wildlife care and spill-related damages.
OSRTF is funded by a $0.25 per barrel fee. This fee is assessed
on distributors, pipeline operators, refiners, and marine
terminal operators until the fund balance reaches its statutory
target of $55 million. Fee collection resumes only when the
fund contains less than 95% of its designated funding level.
This automatic replenishment is designed to prevent any oil
spill response from being limited by available funds.
The OWCN rescues and rehabilitates wildlife affected by coastal
oil spills and has more than 30 member organizations and
affiliated agencies. It maintains more than 12 specialized
facilities in a constant state of readiness, and has saved more
than 14,000 oiled birds and mammals affected by more than 80 oil
spills since 1995. It was formed pursuant to the Oil Spill Act
in collaboration with the DFW in order to provide the most
proactive response in the world to oiled wildlife.
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OWCN's $2 million annual budget has come from interest accruing
to the OSRTF. In 2011, $40 million was transferred from the
OSTRF and loaned to the general fund resulting in a temporary
loss of earned interest. As a result, it is projected that the
OWCN will not be fully funded as early as 2014. Further,
current interest rates, according to a recent audit report from
the Department of Finance titled "Review of State's Oil Spill
Prevention, Response, and Preparedness Program," are too low to
support the cost of the program. In his response to the report,
the Department's director notes that "?California's oil spill
contingency plan holders rely on OWCN existing in order to meet
regulatory requirements."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Ongoing estimated increased revenue of $2.5 million annually
to the OSPAF (special) from the increased maximum per-barrel
fee beginning on January 1, 2015.
Ongoing cost pressures of $2 million to the Oil Spill
Prevention and Administrative Fund (special fund) beginning
January 1, 2014, for the activities of the OWCN.
SUPPORT : (Verified 9/4/13)
San Francisco Baykeeper (source)
Aquarium of the Pacific
California Academy of Sciences
California Association of Professional Scientists
California Association of Zoos and Aquariums
California Coastal Protection Network
California Coastkeeper Alliance
Channel Islands Marine and Wildlife Institute
Environment California
Environmental Action Committee of West Marin
Heal the Bay
International Bird Rescue
The Marine Mammal Center
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Monterey Bay Aquarium
Natural Resources Defense Council
Ocean Conservancy
Orange County Coastkeeper
PRBO Conservation Science
Russian Riverkeeper
Santa Barbara Wildlife Care Network
San Francisco Bar Pilots Association
San Francisco Bay Bird Observatory
Surfrider Foundation
Sierra Club California
The Society for the Prevention of Cruelty to Animals for
Monterey County
University of California, Santa Cruz, Marine Mammal Stranding
Network
OPPOSITION : (Verified 9/4/13)
Pacific Merchant Shipping Association
Western States Petroleum Association
ARGUMENTS IN SUPPORT : According to the author's office, the
goal of this bill is to save the OWCN and ensure the solvency of
the OSPAF for the near future by increasing the per barrel fee
to 7[.
The Natural Resources Defense Council and the Ocean Conservancy
state that this bill "would provide a stable funding source for
the [OWCN]. [?] AB 881 provides funding to address the
structural budget gap in the state's important oil spill
prevention and response work."
The Pacific Merchant Shipping Association states "the existing
mechanism for funding of the OWCN through interest earned on the
[OSRTF] [?] is inadequate for their budget needs, due to the
very low interest rates earned, and coupled with the loan of 80%
($40 million) of that fund to the general fund. [?]."
ARGUMENTS IN OPPOSITION : The Western States Petroleum
Association writes in apposition:
Effective January 1, 2012, a 30% increase in funding was
put in place to
accommodate program growth funded through the Oil Spill
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Prevention and
Administration Fund (OSPAF).
By OSPR's own projections the 30% increase will result in a
$5.4 million dollar reserve at the end of fiscal year
2013-2014. Additionally, the Department of Finance audit of
the program released December 31, 2012 found:
Based on our analysis, OSPAF is receiving sufficient
revenues. Assembly Bill 1112 increased the per barrel
fee of crude oil or petroleum from $0.05 to $0.065. We
reviewed the fee increase and determined it is
reasonable and sufficient to carry out oil spill
prevention activities.
However, the industry reached a compromise with the author
to increase funding to .07 cents per barrel to raise an
additional $2.5 million annually and to delete the previous
sunset in the bill that applied to the 30% increase in
fees. Up to $2 million of the additional funds are to
ensure the continued funding of the OWCN. This means at
least an additional $500,000 annually is available to
address any other program needs above the 30% increase in
funding that took effect in 2012.
The industry specifically agreed to the increase in funding
to ensure that the OWCN is fully funded since its previous
funding has been undermined by General Fund loans and
historically low interest rates. It is inappropriate for
this funding that the industry has agreed upon for a
specific purpose to be prohibited from being used for this
purpose and to be diverted to other programs.
ASSEMBLY FLOOR : 43-30, 5/30/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Daly, Dickinson, Eggman, Fong, Garcia, Gatto, Gomez,
Gonzalez, Gordon, Gray, Hall, Levine, Lowenthal, Mitchell,
Mullin, Muratsuchi, Nazarian, Pan, Perea, Quirk, Rendon,
Skinner, Stone, Ting, Weber, Wieckowski, Williams, Yamada,
John A. Pérez
NOES: Achadjian, Allen, Bigelow, Chávez, Conway, Cooley, Dahle,
Donnelly, Fox, Beth Gaines, Gorell, Grove, Hagman, Harkey,
Jones, Jones-Sawyer, Linder, Logue, Maienschein, Mansoor,
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Melendez, Morrell, Olsen, Patterson, V. Manuel Pérez,
Quirk-Silva, Salas, Wagner, Waldron, Wilk
NO VOTE RECORDED: Bradford, Frazier, Roger Hernández, Holden,
Medina, Nestande, Vacancy
RM:d 9/5/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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