BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 260|
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THIRD READING
Bill No: SB 260
Author: Wiggins (D)
Amended: As introduced
Vote: 21
SENATE BUS. PROF. & ECON. DEVEL. COMMITTEE : 6-3, 4/13/09
AYES: Negrete McLeod, Corbett, Florez, Oropeza, Romero,
Yee
NOES: Wyland, Aanestad, Walters
NO VOTE RECOREDED: Correa
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Petroleum products: motor oil
SOURCE : California Agricultural Commissioners and
Sealers Association
DIGEST : This bill increases the maximum fee paid to the
Department of Food and Agricultures Division of Measurement
of Standards from $0.02 to $0.05 for each gallon of motor
oil sold or purchased on or after January 1, 2010, and
provides that a fee of $0.03 for each gallon of motor oil
sold or purchased may be applied by the Secretary of Food
and Agriculture prior to the adoption of regulations.
ANALYSIS :
Existing law:
CONTINUED
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1.Jointly regulates and enforces the sale of and
measurement standard of petroleum products, by the
Department of Food and Agriculture (DFA) acting through
its Division of Measurement Standards (DMS) and by each
County Office of Weights and Measures, acting through the
county sealer.
2.Authorizes DMS and each sealer to inspect the petroleum
products and to enter any place where petroleum products
are kept, and take any samples necessary for inspection.
3.Prohibits any person from selling or delivering any
petroleum product, as specified, which fails to meet the
required specifications.
4.Establishes a motor oil fee to be used for the
administration and enforcement of the petroleum and
automotive products provisions, and requires persons
involved in the sale of motor oil to pay a maximum fee of
$0.02 for each gallon of motor oil sold or purchased on
or after July 1, 1980.
5.Provides that the fee shall be paid only once on any
particular motor oil and that it shall not apply to motor
oil exported for sale outside of California.
6.Provides the fee may be established at a lower rate by
the Secretary of the Department of Food and Agriculture
(Secretary) and that the Secretary may, by regulation,
prescribe the frequency of payments, the procedures for
such payment, the procedures for refunds, and penalties
for late payment.
This bill:
1.Increases the maximum fee from $0.02 to $0.05 for each
gallon of motor oil sold or purchased on or after January
1, 2010.
2.Provides that a fee of $0.03 for each gallon of motor oil
sold or purchased may be applied by the Secretary prior
to the adoption of regulations.
Background
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The California Oil Substitution Act of 1931, established
statewide minimum quality standards for petroleum and other
automotive products as well as prohibited false or
misleading advertising and labeling of those products. The
California Department of Food and Agriculture's Division of
Measurement Standards and California County Sealers of
Weights and Measures are charged with enforcing the
provisions of this Act.
The DMS is mandated by both state and federal law to
enforce the standards. This oversight promotes uniformity
of products and transactions throughout the state.
According to DMS, the enforcement program is staffed with
special investigators who train and coordinate county
inspectors, coordinate special investigations involving
cases of fraud, contamination and misbranded products, and
has two laboratories with highly trained chemists. The
program is dedicated to ensuring only quality fuels and
automotive products are sold and distributed to the
motoring public.
In 1979, legislation was enacted that replaced the funding
for the Department's Petroleum Products Program (Program)
from a pump registration fee to a fee assessed on each
gallon of motor oil manufactured or imported into
California. In 1979, the maximum fee was set at two cents
($0.02) per gallon with the provision that the Department
could, by regulation, establish a lower rate when the funds
collected were more than necessary for administration and
enforcement of the code. This fee has not been increased
in 29 years. The County Sealers are reimbursed for their
enforcement through contracts with each county. The
funding available for these contracts has been set at
between $500,000 and $527,000 since the early 1980's.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/21/09)
California Agricultural Commissioners and Sealers
Association (source)
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OPPOSITION : (Verified 4/21/09)
California Taxpayers Association
ARGUMENTS IN SUPPORT : This California Agricultural
Commissioners and Sealers Association (CACASA) is the
Sponsor of this bill and indicates that the source of the
bill is the California Department of Food and Agriculture,
Division of Weights and Measures. According to CACASA, the
bill ensures that valuable consumer protection programs
that reinforce both the quality of petroleum products on
the market and the accuracy of the volume distributed to
the buyer will continue to safeguard the public and provide
adequate oversight. The Sponsor states that the current
fee is capped at two cents ($0.02) per gallon and is not
sufficient to cover the current program requirements.
Revenues are used to perform octane testing, viscosity
tests, and other quality analysis on fuels, oils and engine
additives. A portion of the funding is also used to ensure
compliance with labeling standards. The Sponsor states
that these programs ensure that petroleum products adhere
to strict quality standards, ensuring fair competition
among producers as well as protecting the public from
substandard or contaminated fuels and automotive products.
According to the Sponsor, the current cost of the
inspection and enforcement program is $4.4 million and
annually exceeds the revenue generated by fees. The fee
generates $2.9 million and fuel levels have been relatively
stable for the last several years. Estimates show that
without an increase, the funding for this program will run
out by March, 2010. For several years the Division has
been spending down a reserve that built up in the petroleum
account. That reserve is now exhausted and the program
will no longer be able to carry out its mission under the
existing fee structure.
The author's argues that this bill is necessary to
establish and ensure statewide minimum quality standards
for fuels and other automotive products are being met, as
well as preventing false or misleading advertising and
labeling of those products. According to the author's
office, a rigorous program of sampling, testing, and
vigilant oversight of the marketplace is critical for
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California. Experience shows that substandard products
will be sold, with potential costly damage to vehicles
leading to a lack of confidence in the marketplace and
unsafe conditions for motorists on busy streets and
highways. As the price of fuel continues to rise, so does
the consumer's demand to ensure they are receiving the
quality and quantity of what they are paying for and DMS
has noted a significant increase in the number of
complaints registered for low octane and inaccurate
dispensers.
ARGUMENTS IN OPPOSITION : California Taxpayers
Association opposes the bill arguing that the recently
approved state budget include more than $12 billion in new
taxes, and with Californians paying more at seemingly every
turn, now is not the time to propose additional costs on
California businesses.
JJA:do 4/21/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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