BILL ANALYSIS �
AB 1601
Page 1
ASSEMBLY THIRD READING
AB 1601 (Huffman)
As Amended April 19, 2012
Majority vote
NATURAL RESOURCES 7-1 APPROPRIATIONS 12-5
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|Ayes:|Chesbro, Brownley, |Ayes:|Fuentes, Blumenfield, |
| |Dickinson, Grove, | |Bradford, Charles |
| |Huffman, Monning, Skinner | |Calderon, Campos, Davis, |
| | | |Gatto, Ammiano, Hill, |
| | | |Lara, Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Halderman |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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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. Specifically, this bill:
1)Sets a $3,250 cap on the nontank vessel fee, which may be
adjusted annually based on the percentage increase in the
California Consumer Price Index; and,
2)Requires, rather than authorizes, the revenues derived from
the per vessel fee to be used for purposes specified in the
Lempert-Keene-Seastrand Oil Spill Prevention and Response Act
(Oil Spill Act), such as implementing oil spill prevention
programs through rules, regulations, leasing policies,
guidelines, and inspections.
EXISTING LAW pursuant to the 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
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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
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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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.
3)Statute restricts OSPR's ability to set the nontank vessel
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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.
4)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 : 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 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
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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.
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: 1) a $0.065 fee
that is imposed on each barrel of crude or petroleum product
delivered to a marine terminal in the state; and, 2) 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.
Last year, the author of this bill 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 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
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legislation.
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.
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
FN: 0003876