BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 718 (Leno) - Hazardous Materials Response and Restoration  
          Subaccount.
          
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          |Version: May 11, 2015           |Policy Vote: N.R. & W. 6 - 2,   |
          |                                |          E.Q. 6 - 1            |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 18, 2015      |Consultant: Marie Liu           |
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          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.









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          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  








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            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.










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