BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 1601 (Huffman) - Oil spill prevention: nontank vessel.
          
          Amended: June 28, 2012          Policy Vote: NR&W 7-0, EQ 6-0
          Urgency: No                     Mandate: No
          Hearing Date: August 16, 2012                          
          Consultant: Brendan McCarthy    
          
          SUSPENSE FILE.
          
          
          Bill Summary: AB 1601 would cap the biennial fee paid by nontank 
          vessel owners at $3,500 with an annual adjustment allowed for 
          inflation.

          Fiscal Impact: By capping the fee at $3,500 every two years 
          (plus an adjustment for inflation), the bill prevents the Office 
          of Spill Prevention and Response from raising the fee in future 
          years to meet budgeted program needs.

          Background: Nontank vessels are large vessels such as cruise 
          ships and container ships that do not transport oil as cargo, 
          but have substantial fuel onboard.

          Under current law, the Office of Spill Prevention and Response 
          (within the Department of Fish and Game) is responsible for 
          preventing and responding to oil spills in state waters. The 
          Office is funded by a fee of $0.065 per barrel of imported oil 
          (set in statute) and a biennial fee of $3,250 on nontank vessels 
          (set by regulation).  These fees are paid into the Oil Spill 
          Administrative Fund.

          Proposed Law: AB 1601 would cap the biennial fee paid by nontank 
          vessel owners at $3,500 with an annual adjustment allowed for 
          inflation.

          The cap imposed by the bill would sunset on January 1, 2018. 
          (After that, the Office would once again be able to set the fee 
          through regulation.)

          Related Legislation: SB 1192 (Evans) would set a $3,500 minimum 
          non tank vessel fee, among other provisions. That bill is in the 
          Assembly Appropriations Committee.








          AB 1601 (Huffman)
          Page 1



          Staff Comments: In recent years, the Department of Fish and Game 
          has indicated that the Administrative Fund has significant 
          projected deficits, including a projected deficit up to $18 
          million by 2013-14. The increased per barrel fee to $0.065 
          required under SB 1112 (Huffman, Chapter 583, Statutes of 2011) 
          and by regulatory action by the Office to raise the nontank 
          vessel fee to $3,250 have reduced the projected deficit. 
          Nevertheless, there may be a projected deficit in the fund up 
          $7.5 million by 2013-14. Assuming that the Office further raises 
          the nontank fee to $3,500 as allowed under the bill, the 
          Administrative Fund would still have a projected deficit of just 
          under $7 million.

          Prior to 2010, fees could be imposed by a majority vote of the 
          Legislature, provided there was a logical nexus between the fee 
          payer and the uses of the fee revenues. For example, an industry 
          that emits air pollution can be charged a fee to pay for 
          programs that regulate air pollution and mitigate the impacts of 
          air pollution. This standard is referred to as the "Sinclair 
          Paint" test, after a decision of the California Supreme Court. 
          Proposition 26 of 2010 limited the use of regulatory fees 
          enacted by a majority vote of the Legislature. Under Proposition 
          26, regulatory fees are generally limited to the costs of 
          issuing permits or other activities directly relating to the 
          specific fee payer. Proposition 26 does not impact fees adopted 
          before 2010.

          The bill reverts to current law in 2018. However, by changing 
          the fee level in statute, it may impose Proposition 26 
          requirements on the existing nontank vessel fee. In that case, 
          it is possible that revenues from the nontank vessel fee may be 
          restricted from being used to support some of the oil spill 
          prevention activities undertaken by the Office.