BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          SB 1192 (Evans) - Oil spill prevention and administrative fee.
          
          Amended: March 29, 2012         Policy Vote: NR&W 6-2
          Urgency: No                     Mandate: No
          Hearing Date: May 24, 2012      Consultant: Marie Liu
          
          SUSPENSE FILE.  AS PROPOSED TO BE AMENDED.

          
          Bill Summary: SB 1192 would remove the restrictions on the types 
          of activities by the Oiled Wildlife Care Network that can be 
          paid for by the Oil Spill Prevention and Administrative Fund.

          Fiscal Impact: 
               Ongoing cost pressures of $2 million to the Oil Spill 
              Prevention and Administrative Fund (special fund) beginning 
              in 2013 for the activities of the Oiled Wildlife Care 
              Network. 
               Ongoing revenues of $2 million to the Oil Spill Prevention 
              and Administrative Fund beginning in 2013 from raising the 
              per-barrel fee and the minimum non-tank vessel fee. 

          Background: Under current law, the Office of Oil Spill 
          Prevention and Response (OSPR) is responsible for regulating the 
          prevention, response, removal, and cleanup of oil spills in 
          state waters. Under this authority, OSPR requires vessel 
          operators to take certain precautions and to undertake specific 
          containment and cleanup actions in response to an oil spill. 
          Current law requires OSPR to establish an Oiled Wildlife Care 
          Network (OWCN), to be available to respond to wildlife that have 
          been impacted by oil spills. OWCN facilities are maintained in a 
          constant state of readiness and are stocked with emergency 
          medical equipment and supplies and staffed by local volunteers 
          specifically trained in the care of oiled birds and marine 
          mammals. The OWCN also funds scientific research through a 
          competitive grants program to increase knowledge and 
          understanding of the consequences of oil exposure and to improve 
          the quality of response technology for oil spills.

          Current law authorizes OSPR to impose a fee on imported oil up 
          to $0.065 per barrel until 2015 and $0.05 per barrel after 2015, 
          to pay for OSPR's costs to prevent and respond to oil spills in 








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          state waters. Fee revenues are deposited in the Oil Spill 
          Prevention and Administration Fund (Administration Fund). Those 
          funds support OSPR's oil spill prevention and response readiness 
          responsibilities, including for the "training and field 
          collection and such and rescue activities" of the OWCN at a cost 
          of about $40,000 per year.

          Current law also authorizes OSPR to impose a $0.25 per barrel 
          fee, deposited into the Oil Spill Response Trust Fund (Trust 
          Fund), until the balance reaches $55 million. Generally, monies 
          in the Trust Fund are held to pay for the costs of responding to 
          an oil spill when the responsible party cannot be identified, in 
          the interim while the responsible party is identified, or if the 
          responsible party is unable to pay for the response costs. Up to 
          $2 million in interest accrued on the Trust Fund may be used to 
          support activities of the OWCN. 

          Proposed Law: This bill would allow the Administrative Fund to 
          be used to fund all activities of the OWCN.

          Related Legislation: The current version of this bill is 
          essentially identical to the substantive language in SB 584 
          (Evans) 2011, which was held on suspense.

          Staff Comments: In the past, the OWCN has received the maximum 
          $2 million in funding from Trust Fund interest. However, Trust 
          Fund interest earnings have recently dropped dramatically due to 
          the economic downturn and a loan to the General Fund so that 
          only $365,000 and $265,000 in interest was generated in FY 
          2009-10 and FY 2010-11 respectively. Only $63,000 is expected in 
          interest this year with further declines expected by OSPR. 

          The decrease in Trust Fund interest has left the OWCN 
          underfunded. By allowing the OWCN to also receive funds from the 
          Administrative Fund, this bill aims to fully fund the OWCN. 
          There seems to be widespread agreement, including by OSPR, that 
          the OWCN needs approximately $2 million in funding in order to 
          maintain proper readiness in the event of an oil spill. However, 
          staff notes that the Administrative Fund has a structural 
          deficit of $3 million despite a modest and temporary increase in 
          the per barrel fee until 2015. This bill will increase cost 
          pressures on the Administrative Fund. 

          Proposed Author Amendments: Permanently increase the 








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          Administrative Fund per barrel fee by three-tenths of a cent and 
          the nontank vessel fee to a minimum of $3,500 to increase 
          revenues to the Administrative Fund in an amount equal to full 
          funding for the OWCN.