BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de Le�n, Chair


          SB 438 (Author: Hancock) - Refineries: Turnarounds
          
          Amended: April 4, 2013          Policy Vote: L&IR 3-1
          Urgency: No                     Mandate: Yes
          Hearing Date: May 23, 2013      Consultant: Robert Ingenito
          
          SUSPENSE FILE. 


          Bill Summary: SB 438 would require oil refineries to report  
          annually their schedule for turnarounds, as defined, to the  
          Department of Industrial Relations (DIR), and to provide DIR  
          with information regarding safety and infrastructure upon  
          request. 

          Fiscal Impact: DIR estimates that it would incur costs of  
          $875,000 (special funds) to implement the provisions of this  
          bill, to fund new positions required to evaluate the information  
          provided by refineries. The document evaluation requires  
          sufficient process safety and construction knowledge to  
          understand the work and work hazards involved, and to identify  
          what information is incomplete or missing.   Specifically, DIR  
          estimates the need for the following increased staff: four  
          Associate Safety Engineers, and partial positions for a district  
          manager, office technician, Senior Safety Engineer, and data  
          specialist.

          Background: The California Energy Commission Reports that the  
          State has a total of 20 refineries which are located in the San  
          Francisco Bay area, the Los Angeles area and the Central Valley.  
          About two million barrels (a barrel is equal to 42 U.S. gallons)  
          of petroleum are processed daily into a variety of products,  
          with gasoline representing about half of the total product  
          volume.

          Proposed Law: This bill would, among other things, do the  
          following:

                 Define "turnaround" as any instance of an industrial  
               plant or unit being partially or totally taken offstream or  
               offline for the purposes of maintenance, overhaul, repair,  
               inspection, testing, or replacement of materials or  








          SB 438 (Hancock)
          Page 1


               equipment. 

                 Require a refinery employer to annually submit to DIR a  
               full schedule of planned turnarounds for the subsequent  
               calendar year by September 15th. 

                 Require a refinery employer to submit various  
               documentation at DIR's request at least 60 days prior to  
               the planned turnaround. Requested documentation could  
               include such items as corrosion reports, risk-based  
               inspection reports, boiler permit schedules, and  
               unfulfilled work orders since the refinery's last  
               turnaround. 


          Staff Comments: The American Petroleum Institute (API) indicates  
          that refinery turnarounds are planned shutdowns of the refinery  
          process, and can be total or partial in nature. During the  
          shutdown period, refinery staff performs maintenance, overhaul  
          and repair operations and inspect, test and replace process  
          materials and equipment. API indicates that turnarounds are  
          generally scheduled at least one year in advance and allow for  
          necessary maintenance and upkeep of operating units to ensure  
          safe and efficient operations. Depending on factors such as the  
          amount of required maintenance, the length of a turnaround can  
          vary from one week to over a month. 

          API also notes an inverse correlation between refinery safety  
          and the frequency with refineries start and stop their  
          operations, as refinery incidents are more likely to occur  
          during turnarounds.

          DIR indicates that current law (Labor Code section 7870)  
          authorizes it to assess fees for consultation, inspection,  
          adoption of standards, and other duties; however, no fees have  
          ever been assessed under this authority.