BILL ANALYSIS �
AB 1601
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Date of Hearing: May 2, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1601 (Huffman) - As Amended: April 19, 2012
Policy Committee: Natural
ResourcesVote:7-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill caps, at $3,250, the nontank vessel fee for oil spill
prevention. The bill also authorizes the administrator of the
Office of Oil Spill Prevention and Response (OSPR) to annually
adjust the fee cap based on the percentage increase in the
California Consumer Price Index. Finally, the bill requires
nontank vessel fee revenue to be used for nontank oil spill
prevention activities.
FISCAL EFFECT
1)No direct state costs.
2)The statutory cap would prevent OSPR from increasing the
nontank vessel fee in the future to adjust to increased
administrative program needs, beyond the annual adjustment for
inflation permitted by the bill.
Statute restricts OSPR's ability to set the nontank vessel
fee, requiring the fee amount to be both reasonable and based
upon OSPR's costs to implement its oil spill prevention
activities for nontank vessels. This bill would prevent OSPR
from increasing the nontank vessel fee in response to
increased administrative costs, resulting from, for example,
increased shipping traffic or an increase in the number of
very large cargo vessels entering California ports.
Therefore, the bill may result in forgone state revenue, of an
unknown amount, that OSPR otherwise would seek to cover an
increase in OSPR's nontank vessel oil spill prevention program
costs.
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3)Restricted use of nontank vessel fee revenue to nontank vessel
spill prevention, including response to imminent threats of
oil spills. (OSPR reports the direction provided by the bill
conforms to OSPR's understanding of its legal obligations and
its current administration of nontank vessel fee revenue.
Therefore, the practical effect of the bill's provision will
be negligible.)
COMMENTS
1)Rationale. The author, acting in accordance with what he
describes as an agreement with stakeholders made during
negotiation of his Chapter 583, Statutes of 2011 (AB 1112),
intends this bill to treat equally the two oil spill
prevention fees that fund the Oil Spill Prevention and
Administration Fund (OSPAF): the fee on each barrel of oil,
which Chapter 583 capped, and the fee on each nontank vessel,
which statute does not cap.
2)Background. Statute charges OSPR, which operates in DFG, with
providing the best achievable protection of the state's
natural resources by preventing, preparing for and responding
to spills of "oil and other deleterious materials." OSPR is
funded by revenue generated by two fees: one fee on each
barrel of crude oil or petroleum delivered to a marine
terminal in the state and another fee on each nontank vessel,
collected when the vessel owner or operator submits an
application for a certificate of responsibility to OSPR every
other year. OSPAF monies are eligible for oil spill
prevention activities, as defined in statute. They are not
available for response to an oil spill.
In recent years, OSPR has warned of coming shortages in the
OSPAF and consequent program reductions. In response, the
author introduced AB 1112 to provide additional funding to the
OSPAF to avoid program reductions. To that end, AB 1112
increased the per barrel fee from $0.05 to $0.065 and requires
the fee to revert back to $0.05 on January 1, 2015. The bill
did not affect the nontank vessel fee. In signing AB 1112,
Governor Brown directed OSPR to raise the nontank fee from
$2,500 to $3,250, which OSPR did, effective January 1, 2012.
The statutory per barrel fee increase improves OSPAF revenue
by $7.4 million per year, while the administrative nontank
vessel fee increase generates $1.6 million in OSPAF revenue
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annually. Nonetheless, OSPR projects a $6.8 million
structural OSPAF deficit beginning in 2015 when the per barrel
fee reverts to its pre-AB 1112 level. Nontank vessel
operators note with concern the cap on the per barrel fee and
the lack of a cap on the nontank vessel fee. Anticipating the
coming OSPAF shortfall, nontank vessel operators worry over
pressure to fund OSPAF through nontank vessel fee increases,
despite statutory restrictions on OSPR that require it to base
the nontank vessel fee upon OSPR's costs to implement its oil
spill prevention program for nontank vessels, not its tanker
vessel activity costs.
3)Equal Treatment Sought, but Bill Treats OSPR Fees Unequally .
The author seeks equal treatment for those who pay the two
fees that fund the OSPAF. However, the bill establishes
nontank vessel fee parameters that differ from those governing
the per barrel tanker fee. This bill caps the nontank vessel
fee, which is consistent with the statutory cap on the per
barrel fee. However, the bill, based on amendments insisted
upon by the policy committee, authorizes OSPR to adjust the
nontank vessel fee annually for inflation. But statute
provides OSPR with no such inflation adjustment authority
regarding the per barrel fee.
In addition, as mentioned previously, statute reverts, as of
2015, the per barrel fee to $0.05, the amount it was prior to
passage of AB 1112. This bill caps the nontank vessel fee,
but does not revert the fee to its pre-AB 1112 at some future
date.
4)Support . This bill is supported by the Pacific Merchant
Shipping Association, whose members pay the nontank vessel oil
spill prevention fee.
5)Opposition . This bill is opposed by the Department of Fish
and Game, who objects to the diminished ability of OSPR to set
the nontank vessel fee at a level necessary to cover the
reasonable costs of administering OSPR's nontank vessel oil
spill prevention activities.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081
AB 1601
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