BILL ANALYSIS �
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| SENATE COMMITTEE ON NATURAL RESOURCES AND WATER |
| Senator Fran Pavley, Chair |
| 2011-2012 Regular Session |
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BILL NO: SB 1192 HEARING DATE: April 24, 2012
AUTHOR: Evans URGENCY: No
VERSION: March 29, 2012 CONSULTANT: Katharine Moore
DUAL REFERRAL: Environmental QualityFISCAL: Yes
SUBJECT: Oil spill prevention and administrative fee.
BACKGROUND AND EXISTING LAW
In response to concern following significant oil spills, the
Legislature passed the Lempert-Keene-Seastrand Oil Spill
Prevention and Response Act (Act) (SB 2040, c. 1248, Statutes of
1990) (Government Code (GOV) �8670.1 et seq., and others). The
Act created the Office of Spill Prevention and Response (OSPR)
in the Department of Fish and Game (department) whose mission is
to provide the best achievable protection of California's
natural resources by preventing, preparing for, and responding
to spills of oil and other deleterious materials; and to restore
and enhance affected resources, including wildlife. The Act
directed the OSPR administrator (administrator) to establish
rescue and rehabilitation stations for seabirds, sea others, and
other marine mammals affected by marine oil spills. This
mandate was reaffirmed by SB 775 (Watson, c. 1202, Statutes of
1993) which led to the creation of the Oiled Wildlife Care
Network (OWCN) in 1994 as part of OSPR. In 2008, AB 2911 (Wolk,
c. 565, Statutes of 2008) expanded the services provided by OWCN
to include proactive oiled wildlife search and rescue efforts
and rehabilitative care, among other provisions.
The Act further created both the Oil Spill Prevention and
Administration Fund (OSPAF) and the Oil Spill Response Trust
Fund (trust fund) to pay for certain authorized oil spill
prevention, response and clean-up activities, as specified.
Distributers, pipeline operators, refiners, and marine terminal
operators pay a uniform oil spill response fee not exceeding
$0.25 for each barrel of petroleum product. Collection of the
fee is suspended when the fund reaches $55 million (the current
situation). Meanwhile, in order to fund OSPAF, the
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administrator collects a separate per barrel fee on crude oil
imports sufficient to implement a statewide oil spill prevention
program. Although interest on the trust fund was and is used to
fund the OWCN, AB 2911 (Wolk) specified in 2008 that OSPAF could
be used to pay for the OWCN's costs related to training, field
collection and search and rescue activities. AB 2911 also
required the administrator to submit a proposed appropriation of
up to $2 million on the interest earned on the trust fund. In
2011, AB 1112 (Huffman, c. 583, Statutes of 2011), authorized
raising the per barrel assessment fee for OSPAF from $0.05 to
$0.065.
The department signed a memorandum of understanding in 1997 with
the Wildlife Health Center at the UC Davis School of Veterinary
Medicine who now manages the OWCN. The OWCN maintains its
network in a constant state of readiness in preparation for the
next emergency as a fast response is essential to minimizing
damage to wildlife from an oil spill. During a response, the
OWCN receives assistance from its 24 participating wildlife
organizations and uses one or more of the 12 regional facilities
either built specifically for or modified to accommodate oiled
wildlife care. The OWCN has responded to 75 spills since 1995.
In 2011, Senator Evans introduced SB 584, a bill which sought to
remove the restrictions on OSPAF's ability to fund the OWCN. SB
584 passed this committee with a vote of 8 - 0 on April 12,
2011. It was held on the Senate Appropriations Suspense file.
PROPOSED LAW
This bill would remove the restrictions on OSPAF's ability to
fund the OWCN. This bill is not identical to SB 584 (Evans,
2011) and reflects changes in GOV �8670.40 due to the chaptering
last year of AB 1112.
ARGUMENTS IN SUPPORT
"Meeting OWCN's operational costs is vital to ensuring it is
ready to respond quickly in the event of an oil spill, which
often makes the difference between life and death for oiled
wildlife," according to the author. Senator Evans continues.
"?due to the economic downturn, declining interest rates, and
the borrowing of $40 million from the trust fund to the General
Fund, the total interest earned on the trust fund has declined
significantly, from over $2 million in FY 2007 - 08 to
approximately $56,000 in FY 2011 - 12. �?] There is not enough
money available from the trust fund to fully fund the OWCN this
year. �?] This bill would NOT require any money from the OSPAF
be allocated to OWCN. It simply allows the flexibility to
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utilize the fund to meet the shortfalls OWCN is facing."
COMMENTS
Ongoing concerns about OWCN funding . The Technical Advisory
Committee (TAC) to OSPR has repeatedly raised concerns about
OWCN funding. Most recently, in June 2011, the TAC's biennial
report to the legislature stated "The TAC believes that the
existing funding mechanism is not adequately sound" and
recommends that the "OWCN should receive $2,000,000 per year
funding through interest on the �trust fund], with any
deficiency being made up by a transfer of funds from the OSPAF
to the �trust fund], should the funds be available." Since
2009, there have not been sufficient funds available from the
�trust fund] to fully fund OWCN, diminishing its readiness and
ability to respond in an emergency.
The trust fund's earnings went from more than $2 million in FY
2007 - 08 to about $365,000 in FY 2009 - 10, about $265,000 in
FY 2010 - 11, an estimated $63,000 in FY 2011 - 12 and are
expected to continue to decline. The OSPAF has cost pressures
beyond the OWCN (for example, a $3 million structural deficit in
the FY 2010 - 11 budget year) although recent fee changes should
help.
OWCN funding is an appropriate use of OSPAF's funds . According
to current statute, OSPAF may be used to "?implement, install,
and maintain emergency programs, equipment, and facilities to
respond to, contain, and clean up oil spills and to ensure that
those operations will be carried out as intended (GOV
�8670.40(e)(4)).
Related legislation.
AB 1601 (Huffman). Oil spill prevention: nontank vessel:
certification of financial responsibility. This bill would
increase the fee limit to $3,250 and require the revenue to be
spent on specified purposes. Currently before the Assembly
Natural Resources Committee.
SUPPORT
Save Our Shores
California Coastkeeper Alliance
OPPOSITION
None Received
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