BILL ANALYSIS �
AB 1601
Page 1
Date of Hearing: April 16, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1601 (Huffman) - As Introduced: February 6, 2012
SUBJECT : Oil spill prevention: nontank vessel: certification
of financial responsibility
SUMMARY : Sets a $3,250 cap on the nontank vessel fee that is
collected to fund the state's oil spill prevention and planning
activities related to nontank vessels.
EXISTING LAW: Pursuant to the Lempert-Keene-Seastrand Oil Spill
Prevention and
Response Act (Oil Spill Act):
1)Establishes the Office of Spill Prevention and Response (OSPR)
within the Department of Fish and Game and requires it to
direct prevention, removal, abatement, response, containment,
and cleanup efforts with regard to all aspects of an oil spill
in the marine waters of the state.
2)Requires OSPR to adopt and implement regulations that govern
the adequacy of oil spill contingency plans and provide for
the best achievable protection of coastal and marine
resources.
3)Requires the State Lands Commission (Commission) to adopt
rules, regulations, guidelines, and leasing policies related
to all existing and proposed marine terminals (i.e. marine
facility used for transferring oil to or from tankers or
barges) in the state to minimize the possibilities of a
discharge of oil. These rules, regulations, guidelines, and
leasing policies must provide the best achievable protection
of public health and safety and the environment.
4)Requires the Commission to inspect, on a regular basis, all
marine facilities along with associated equipment. The
Commission is also required to monitor marine facility
operations and the effect they have on public health and
safety and the environment.
5)Establishes the Oil Spill Prevention and Administration Fund
(OSPAF), which finances OSPR and the Commission's oil spill
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prevention and planning programs. OSPAF is supported by a fee
not to exceed $0.065 that is imposed on each barrel of crude
oil or petroleum products received at a marine terminal. This
fee will be decreased to $0.05 per barrel beginning on January
1, 2015. The OSPAF is also supported by a reasonable fee on
nontank vessels in the amount that is based on OSPR's costs in
implementing the Oil Spill Act relating to nontank vessels.
Before January 1, 2005, the nontank vessel fee was capped at
$2,500. The fee is collected with each vessel's application
to obtain a certificate of financial responsibility, which is
submitted every two years. There is currently no cap on the
nontank vessel fee.
THIS BILL :
1)Sets a $3,250 cap on the nontank vessel fee.
2)Requires, rather than authorizes, the revenues derived from
the per vessel fee to be used for purposes specified in the
Oil Spill Act, such as implementing oil spill prevention
programs through rules, regulations, leasing policies,
guidelines, and inspections..
FISCAL EFFECT : Unknown
COMMENTS :
1)Background. In light of the March 24,1989 Exxon Valdez oil
spill in Alaska (which spilled approximately 11 million
gallons of crude oil) and the February 7, 1990 American Trader
oil spill near Huntington Beach (which spilled approximately
300,000 gallons of crude oil), the Legislature passed the Oil
Spill Act. This act established OSPR and gave the
administrator of OSPR primary authority to direct prevention,
removal, abatement, response, containment, and cleanup efforts
with regard to all aspects of any oil spill in the marine
waters of the state, in accordance with any applicable marine
facility or vessel contingency plan and the California oil
spill contingency plan.
Additionally, the Oil Spill Act requires the Commission to
adopt rules, regulations, guidelines, and leasing policies for
reviewing the location, type, character, performance
standards, size, and operation of all existing and proposed
marine terminals (i.e. marine facility used for transferring
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oil to or from tankers or barges) within the state and all
other marine facilities on lands under lease from the
Commission to minimize the possibilities of a discharge of
oil.
The Oil Spill Act requires both OSPR and the Commission to
provide the "best achievable protection" of public health and
safety and the environment. Best achievable protection is
defined as the highest level of protection that can be
achieved through both the use of the best achievable
technology and those manpower levels, training procedures, and
operational methods that provide the greatest degree of
protection achievable. The act prohibits the use of a
cost-benefit or cost-effectiveness analysis in determining
which measures provide the best achievable protection. This
standard has led to the creation of programs such as the
Commission's Marine Oil Terminal Engineering and Maintenance
Standards, which defines standards for terminals with regard
to structural analysis and design-many terminals are beyond
the period for which they were built and require engineering
and maintenance to prevent structural failures and oil spills.
As OSPR and the Commission have developed their programs to
provide the best achievable protection, the costs to implement
the act have increased.
2)The OSPAF Fee. The OSPAF was created by the Oil Spill Act to,
among other things, fund oil spill prevention and planning
programs through rules, regulations, leasing policies,
guidelines, and inspections. The fees that support OSPAF are
a $0.065 fee that is imposed on each barrel of crude or
petroleum product delivered to a marine terminal in the state
and a $650 to $3,250 nontank vessel fee that is collected from
each nontank vessel when the owner or operator submits an
application for certificate of financial responsibility, which
occurs every two years. The $0.065 per barrel fee will
decrease to $0.05 per barrel on January 1, 2015. The maximum
nontank vessel fee was recently established at $3,250 by
emergency regulations. Prior to January 1, 2012, regulations
established the maximum fee at $2,500 per nontank vessel. As
of, January 1, 2005, there has been no statutory cap on the
fee.
3)AB 1112 (2011). Last year, the author introduced AB 1112,
which, among other things, sought to increase the maximum per
barrel fee from $0.05 to $0.08 with the ability to adjust the
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fee annually for inflation, as measured by the California
Consumer Price Index. The reason for this fee increase was
because OSPR was projecting a multi-million dollar deficit in
the OSPAF for the upcoming years. The fee had only increased
$0.01 from 1990 to 2011 while gas prices increased by close to
400%. AB 1112 sought to fix the projected deficit by
increasing the per barrel fee and allowing inflation
adjustments to keep the fund solvent without having to
routinely increase the fee through legislation.
The Assembly Natural Resources Committee passed AB 1112 with
the $0.08 fee and the inflation adjustment language. Through
the legislative process, however, the bill was amended to
include only a maximum per barrel fee of $0.065, which will
revert back to $0.05 on January 1, 2015. As such, AB 1112,
along with some one-time accounting maneuvers, created a
temporary fix to the OSPAF funding issues and thus delayed the
projected deficits by only a few years. Since the OSPAF
cannot operate with a deficit, significant cuts to OSPR's and
the Commission's oil spill prevention programs will likely
occur in the future to balance the account. With such cuts,
it is doubtful that the state will be able to achieve the best
achievable protection from oil spills.
AB 1112 did not affect OSPR's authority to increase the
nontank vessel fee, which, as stated above, does not have a
statutory cap. Until this year, the nontank vessel fee never
exceeded $2,500 per vessel. Currently, nontank vessels are
required to pay up to $3,250 every two years. This fee
increase was directed by the Governor in his AB 1112 signing
statement, which explained that a nontank vessel fee increase
was necessary to address the structural imbalance of the
OSPAF.
4)Suggested Amendments . This bill will cap the nontank vessel
fee at $3,250 per nontank vessel, which is collected every two
years. While this may seem reasonable since there is a cap on
the per barrel fee, the bill will further limit the resources
that are available for the soon-to-be-insolvent OSPAF, which
plays a very important role in protecting the state's
environment and economy. If the committee would like to place
a cap on the nontank vessel fee, it may wish to consider an
amendment that will increase the per barrel fee to ensure the
solvency of the OSPAF and prevent foreseeable cuts to the
state's oil spill prevention and planning programs. Such an
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amendment can take the form of the per barrel fee that was
passed by the committee last year with AB 1112. If the
committee wishes to adopt a cap, it may wish to amend the bill
to allow OSPR to periodically adjust the $3,250 cap based on
the consumer price index. This amendment will at least ensure
that the fee keeps up with inflation.
REGISTERED SUPPORT / OPPOSITION :
Support
Pacific Merchant Shipping Association
Opposition
Department of Fish and Game
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092