BILL ANALYSIS Ó
SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
Senator Fran Pavley, Chair
2015 - 2016 Regular
Bill No: AB 815 Hearing Date: June 9,
2015
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|Author: |Ridley-Thomas | | |
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|Version: |February 26, 2015 Introduced |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Katharine Moore |
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Subject: Oil spill prevention and response fees: collection.
BACKGROUND AND EXISTING LAW
1. In response to concern following significant oil spills,
the Legislature passed the Lempert-Keene-Seastrand Oil Spill
Prevention and Response Act (Act) (SB 2040, c. 1248, Statutes
of 1990) (Government Code (GOV) §§8670.1 et seq., and others).
The act created the Office of Spill Prevention and Response
(OSPR) in the Department of Fish and Wildlife.
2. OSPR's mission is to provide the best achievable protection
(GOV §8670.3) 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.
3. The act established the Oil Spill Prevention and
Administration Fund (OSPAF) which finances oil spill
prevention and planning programs and the Oil Spill Response
Trust Fund (OSRTF) which is used to provide the cash flow for
the response to and clean-up of California's oil spills and
certain other items.
4. Prior to the passage of the Resources budget trailer bill
last year (SB 861, c. 35, Statutes of 2014), OSPAF was
primarily funded by a per barrel fee of 6.5[ assessed on each
barrel of crude oil or petroleum products received at marine
oil terminals or from offshore production facilities. The
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owner of the crude oil or petroleum products is responsible
for the fee. SB 861 substantially revised the act to address,
in part, the potential growth of crude oil transport into and
in California by rail. The OSPAF fee is now assessed upon
receipt of crude oil and petroleum products at refineries too.
The fee is remitted to the State Board of Equalization (BOE).
5. SB 861 provides for the OSPAF fee to be collected once only
(GOV §8670.40(b)(5)) in order to address, for example, the
situation where a barrel of crude oil refined into petroleum
products exported via a marine terminal. In this instance,
the barrel would pass through two fee collection points but
should be assessed only once.
6. OSRTF is funded by an (up to) 25[ per barrel fee on crude
oil and petroleum products. This fee is assessed on the owner
of the products, pipeline operators, refiners, and marine
terminal operators until the fund balance reaches its
statutory target of about $55 million, as specified.
PROPOSED LAW
This bill would make clarifying and technical changes to OSPAF
fee collection necessary following the passage of SB 861 last
year. Specifically this bill would:
authorize a marine terminal or refinery operator receiving
petroleum products derived from crude oil refined in the state
to presume the fee has already been collected.
state legislative intent that the BOE collect the OSPAF fee
only upon first delivery to a refinery or a marine terminal.
delete the requirement that the owner of crude oil/petroleum
products remit the fee directly to the BOE, and
make additional clarifying and technical changes.
ARGUMENTS IN SUPPORT
According to the author, "While SB 861 expanded the [OSPAF] fee
to crude oil and petroleum products received at the refinery,
the bill also added provisions that prevent the fee from being
imposed or paid twice on the same crude oil or petroleum
products. However, current law is not clear that petroleum
products derived from fee-paid crude oil, once refined, are not
subject to the fee."
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"BOE staff believes that legislative intent language alone may
be ineffective to relieve industry from the requirement to
document that the [OSPAF] fee previously was paid on petroleum
products derived from fee-paid crude oil. Therefore, statutory
guidance is necessary to clarify the issue."
The BOE in its support letter indicates that the benefits of the
bill include "reduced confusion," "improved method for
preventing [the] double fee," and "ease of administration."
ARGUMENTS IN OPPOSITION
None received
COMMENTS
This is clean-up legislation that clarifies OSPAF fee
collection . For example, the refinery operator or the marine
terminal owner who collects the fee from the owner can remit
them to the board, not the owner of the crude oil/petroleum
products.
The act and its fees implicitly depend upon the existing
California market . The OSPAF fees are collected upon arrival at
marine terminals or at refineries. This presumes that all/most
of the crude oil and petroleum products pass through either a
marine terminal or refinery at least once. Crude oil produced in
California, but refined elsewhere, could potentially bypass the
OSPAF fee. This does not currently occur -- according to the
CEC, no California crude oil has been exported from the state in
2014 or 2015, the most recent data available. Should energy
policy and the California crude oil/petroleum products market
change in the future, these implicit assumptions may no longer
remain true. For example, there has been a recent push to
change federal energy policy to lift the ban on crude oil
exports (see S.1312, the Energy Supply and Distribution Act of
2015, introduced with bipartisan support last month in the U.S.
Congress).
Recent related legislation
SB 861 (Committee on Budget and Fiscal Review, chapter 35,
Statutes of 2014) This Resources trailer bill substantially
amended the act to address the growth/potential growth of crude
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oil transport by rail in California.
AB 2678 (Ridley-Thomas, 2014) This bill was an earlier attempt
at OSPAF fee Resources trailer bill clean-up language. (died on
the Unfinished Business file on the Assembly floor with the
concurrence vote pending)
SUPPORT
State Board of Equalization (sponsor)
California Chamber of Commerce
OPPOSITION
None Received
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