BILL ANALYSIS �
SB 1192
Page 1
Date of Hearing: July 2, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 1192 (Evans) - As Amended: June 25, 2012
SUBJECT : Oil spill prevention and administrative fee
SUMMARY : Provides additional funding mechanisms through the Oil
Spill Prevention and Administration Fund (OSPAF) and Oil Spill
Response Trust Fund (Trust Fund) to secure funding for the Oiled
Wildlife Care Network (OWCN), which, among other things, rescues
animals affected by oil spills.
EXISTING LAW : Pursuant to the Lempert-Keene-Seastrand Oil Spill
Prevention and
Response Act (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)Establishes the OSPAF, which finances OSPR's and the State
Lands Commission's (SLC) oil spill prevention and planning
programs and certain activities conducted by the OWCN. 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 decrease to $0.05 per barrel
beginning on January 1, 2015. The OSPAF is also supported by
a reasonable fee on nontank vessels (collected every two
years) in an amount that is based on OSPR's costs of
implementing the Oil Spill Act related to nontank vessels.
There is currently no statutory cap on the nontank vessel fee;
however, a maximum nontank vessel fee was recently established
at $3,250 by emergency regulations.
3)Establishes the Trust Fund, which provides funding to clean up
an oil spill if the responsible party is unknown or not
financially capable. The Trust Fund is funded by a uniform
oil spill response fee on distributors, pipeline operators,
refiners, and marine terminal operators, in an amount not
exceeding $0.25 for each barrel of petroleum product received
or transported. The fee is only collected to bring the Trust
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Fund to its statutory level, which is approximately $55
million.
4)Establishes the OWCN, which is a network of rescue and
rehabilitation stations for sea birds, sea otters, and other
marine mammals. In addition to rehabilitative care, the
primary focus of the OWCN includes proactive oiled wildlife
search and collection rescue efforts.
5)Requires OSPR to submit, as a proposed appropriation in the
Governor's Budget, an amount up to $2 million of the interest
earned on the Trust Fund for the purpose of (1) equipping,
operating, and maintaining the OWCN's rescue and
rehabilitation stations, (2) OWCN's proactive oiled wildlife
search and collection rescue efforts, and (3) supporting
technology development and research related to oiled wildlife
care. Funding is also available to OWCN from the OSPAF for
certain training and field collection and search and rescue
activities.
THIS BILL:
1)Increases the OSPAF per barrel fee on oil from $0.065 to
$0.068.
2)Increases the maximum nontank vessels fee from $3,250 (as
established by regulations) to $3,500.
3)Requires OSPR to submit, as a proposed appropriation in the
Governor's Budget, an amount, not to exceed $2,000,000, from
the OSPAF for the purpose of (1) specified training and field
collection, (2) specified search and rescue activities, and
(3) equipping, operating, and maintaining the OWCN.
4)Authorizes the Trust Fund's principal to be appropriated for
certain OWCN expenses if the Trust Fund interest is not
sufficient to pay for them. The appropriation from the Trust
Fund principal may not exceed the difference between the
interest earned in the Trust Fund and $2 million. The Trust
Fund's principal may be used to the extent that such funds are
appropriated to the OWCN from the OSPAF.
FISCAL EFFECT : According to the Senate Appropriations
Committee, ongoing cost pressures of $2 million to the OSPAF
(special fund) beginning in 2013 for the activities of the OWCN.
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Ongoing revenues of $2 million to the OSPAF beginning in 2013
from raising the per-barrel fee and the minimum non-tank vessel
fee.
COMMENTS :
1)Background. 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 gives 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.
In 1995, AB 1549 (Sher) directed OSPR to establish regional
oiled wildlife rescue and rehabilitation facilities along the
California coast. In 1997, a Memorandum of Understanding was
signed between the Regents of the University of California and
OSPR assigning the administration of the OWCN to the Wildlife
Health Center at the University of California, Davis School of
Veterinary Medicine.
Between 1995 and 2001, much of the OWCN's efforts went into
increasing capacity for oiled wildlife rehabilitation along
the California coast. The OWCN constructed major facilities
in the San Diego, Los Angeles, Santa Cruz, San Francisco and
Humboldt regions. The OWCN also began working with wildlife
organizations throughout the state to upgrade existing
facilities and increase capacity to care for oiled birds and
mammals.
Since the completion of the initial construction and capital
improvement projects, the OWCN's focus has broadened to
include all aspects of oiled wildlife response. These include
extensive training and preparedness, fostering inter-agency
cooperation, refining emergency response procedures, and
supporting research activities to improve oiled wildlife
response efforts.
Since 1995, the OWCN has responded to more than 75 oil spills
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throughout California and has cared for nearly 8,000 oiled
birds and mammals.
2)The Trust Fund and OSPAF are often confused. The Trust Fund,
which is often confused with the OSPAF, is designed to retain
approximately $55 million in cash for the purpose of cleaning
up an oil spill if the responsible party is unknown or not
financially capable. The Trust Fund fee may only be collected
in limited circumstances, such as to replenish the Trust Fund
to its statutory level.
The OSPAF, in contrast, is not designed to carry a large
balance. The OSPAF mostly provides funding for the operating
expenses of OSPR's and SLC's oil spill prevention programs.
The only balance the OSPAF is permitted to carry over to the
next fiscal year is one that provides a reasonable reserve for
contingencies.
3)The Status of the Trust Fund. In 2011, SB 84 (Budget)
transferred $40 million from the Trust Fund as a loan to the
General Fund. This loan was made to help backfill for the
revenue loss caused by the cancelation of the
sale-for-leaseback of 11 large state office buildings that
were included in the 2010 Budget. According to SB 84, the
Trust Fund loan will be repaid by June 30, 2014 unless,
however, (1) repayment can be made earlier, (2) response funds
are needed for an oil spill, or (3) there is no longer a need
for the moneys in the fund or account that received the loan.
Adopted with SB 84 was SB 80 (Budget), which allows OSPR to
keep the Trust Fund below $55 million without having to
collect the fee that would otherwise be triggered (see
paragraph "3" of "EXISTING LAW").
4)The Status of the OSPAF. 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 a $0.065 fee that is imposed on each barrel of crude
or petroleum product delivered to a marine terminal in the
state and 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. This decrease is projected to create a deficit in the
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OSPAF, which will cause significant cuts to the OSPAF's
programs.
5)The OWCN. According to the Oil Spill Act, the OWCN is funded
(up to $2 million) by the interest earned on the Trust Fund
and by the OSPAF. The funding from the Trust Fund helps pay
for the costs of rescue, medical treatment, rehabilitation,
and disposition of oiled wildlife. It is also used to equip,
operate, and maintain the network of oiled wildlife rescue and
rehabilitation stations. The funding from the OSPAF is used
for certain training and field collection and search and
rescue activities.
Since fiscal year 2009-2010, the OWCN has received $2 million
in annual funding. OSPR has indicated that while there have
been sufficient funds to support the program in the past,
there will not be enough Trust Fund interest earned to fully
fund OWCN beyond fiscal year 2012-2013.
This bill provides more stable funding for the OWCN.
Specifically, the bill increases the OSPAF per barrel fee on
oil by an amount of $.003 (from $0.065 to $0.068), which is
estimated to generate $1.514 million annually. The bill also
increases the biennial fee on nontank vessels from $3,250 to
$3,500, which will generate approximately $447,000 annually.
Lastly, the bill will allow the OWCN to use the Trust Fund
principal to the extent that the interest is insufficient.
6)Suggested Amendments. The author and committee may wish to
consider the following amendments:
a) Strike out "8670.43" and replace it with "8670.48" on
line 6 of page 5 and strike out the entire "Section 3" of
the bill, which starts at line 32 on page 5 and ends on
line 2 of page 6. These amendments eliminate redundant and
confusing language in the bill.
b) Insert "training" after "efforts" on line 23 of page 10.
It is likely that this omission of "training" in the bill
was inadvertent.
c) Strike out line 1 after "Fund" and line 2 on page 11.
This provision is confusing and unnecessary.
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d) Insert a boilerplate severability clause.
REGISTERED SUPPORT / OPPOSITION :
Support
The Ocean Conservancy
San Francisco Baykeeper
Save Our Shores
Save the Bay
Opposition
None on file
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092