BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 718 (Leno) - Hazardous Materials Response and Restoration Subaccount. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 11, 2015 |Policy Vote: N.R. & W. 6 - 2, | | | E.Q. 6 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 718 would authorize a loan from the Oil Spill Response Trust Fund (trust fund) of up to $500,000 annually for the purpose of reimbursing organizations providing wildlife injured by non-petroleum spills. Fiscal Impact: Up to $500,000 annually from the General Fund to reimburse nongovernmental organizations for wildlife rescue and rehabilitation operations. Minor and absorbable costs to the Oil Spill Prevention and Response Fund (special) to the Department of Fish and Wildlife (DFW) to develop the guidelines for the uses of the Hazardous Materials Response and Restoration Subaccount. SB 718 (Leno) Page 1 of ? Background: The Office of Oil Spill Prevention and Response (OSPR), led by the administrator, is responsible for regulating the prevention, response, removal, and cleanup of oil spills in state waters. Under this authority, OSPR requires vessel operators to take certain precautions and to undertake specific containment and cleanup actions in response to an oil spill. Existing law authorizes OSPR to impose a $0.25 per barrel fee on distributors, pipeline operators, refiners, and marine terminal operators that bring oil into the state. This fee is deposited into the Oil Spill Response Trust Fund (Trust Fund), until the balance reaches $55 million. Generally, monies in the Trust Fund are held in order to pay for the costs of responding to an oil spill when the responsible party cannot be identified, in the interim while the responsible party is identified, or if the responsible party is unable to pay for the response costs. Proposed Law: This bill would allow an annual loan of up to $500,000 from the trust fund to the Hazardous Materials Response and Restoration Subaccount (subaccount), which would be created by this bill, in order to reimburse organizations for expenses incurred by rescue and rehabilitation operations for wildlife injured by spills of non-petroleum events. The loan would be made at the discretion of the administrator and would be subject to the following requirements: Any loan made to the subaccount would be required to be repaid, with interest, either by the responsible party, monies recovered by the responsible party, or the General Fund within five years. The total of unpaid loans would limited to $2,500,000, excluding interest owned on those loans. The administrator would be required to develop and adopt guidelines identifying expenses eligible for reimbursement from the subaccount. The administrator would be required to notify the Joint Legislative Budget Committee of any loans made at the time the SB 718 (Leno) Page 2 of ? loan is made. Staff Comments: Fundamentally, the loan created by this bill guarantees payments to nongovernmental organizations for wildlife rescue and rehabilitation either from the responsible party or from the General Fund. The trust fund is just an intermediary. From this perspective, when the administrator is determining what activities get reimbursed, the administrator is essentially deciding the distribution of General Fund, should no responsible party be identified. Therefore, while the immediate costs to the loan would be to the trust fund, the ultimate costs of this bill should be attributed to the General Fund. Staff emphasizes that the loan permitted by this bill would only be for organizations providing wildlife rescue and rehabilitation. Presumably these organizations are nongovernmental organizations. State costs would still either need to come from other non-OSPR sources, most likely the Fish and Wildlife Pollution Account, which is oversubscribed and has no dedicated funding source. The Legislature and Governor could decide to appropriate General Fund monies to pay for state response costs, though the likelihood of this would be far from certain. In contrast, the Legislature would be bound to use the General Fund to repay the loan authorized in this bill should no responsible party be identified. This bill is in response to a spill of a sticky "mystery goo" in the San Francisco Bay in January of this year. OSPR responded to the spill. However, once it was determined that the substance was not petroleum-base, funding for the respond had to be shifted away from OSPR's funds, including the trust fund, which would have otherwise been available to reimburse non-governmental organizations for their response activities. The trust fund is continuously appropriated to the Department of Fish and Wildlife. As this bill allows spending of the Trust Fund, it creates an appropriation. SB 718 (Leno) Page 3 of ? -- END --