BILL ANALYSIS �
SB 1192
Page 1
Date of Hearing: August 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 1192 (Evans) - As Amended: August 7, 2012
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill would increase certain fees on petroleum products and
nontank vessels to better secure funding for the Oiled Wildlife
Care Network (OWCN). Specifically, this bill:
1)Increases the maximum per-barrel fee on crude oil from $0.065
to $0.068 until January 1, 2015, and from $0.05 to $0.053
thereafter.
2)Increases the minimum nontank vessel fee from $2,500 to
$3,500.
3)Requires the transfer, upon appropriation, of 0.003% from the
Oil Spill Prevention and Administration Fund (OSPAF) to the
Oil Spill Response Trust Fund to fund activities of the OWCN.
4)Authorizes the Oil Spill Response (OSP) 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.
FISCAL EFFECT
1)Increased annual per barrel revenue of approximately $1.6
million and annual nontank vessel revenue of approximately
$500,000 (OSPAF).
2)Annual cost pressure, in the range of $2 million, on the OSPAF
to transfer fee revenue to the OSP Trust Fund to fund the
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activities of the OWCN.
3)Annual cost pressure on the principal balance of the OSP Trust
Fund, of up to $2 million, to the extent the interest earned
on the principal balance is insufficient to fund the OWCN at
$2 million.
COMMENTS
1)Rationale. The author intends this bill to ensure funding for
the activities of the OWCN.
2)Background. Statute charges the Office of Spill Prevention
and Recovery (OSPR), which operates in DFG, with providing the
best achievable protection of the state's natural resources by
preventing, preparing for and responding to spills of oil and
other deleterious materials. OSPR is funded by revenue in the
OSPAF, which is supported by a fee, not to exceed $0.065, on
each barrel of crude oil or petroleum products received at a
marine terminal. The per-barrel fee will decrease to $0.05 as
of 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, regulation establishes a maximum
nontank fee of $3,250.
OSPR projects a $2.3 million OSPAF deficit in 2011-12, growing
to $18 million in 2013-14. Absent additional funding, OSPR
anticipates significant cuts that will severely hamper oil
spill prevention and response. The OSPAF per-barrel fee has
been increased only once in 20 years, and that increase, in
2002, raised the fee to $0.05 per barrel from $0.04 per
barrel.
Oil spill cleanup is not funded from OSPAF. Rather, when the
party responsible for a spill is unknown or unable to clean up
a spill, the state uses monies in the OSP Trust Fund. The
trust fund is funded by an 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 fund to its statutory
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level, which is approximately $55 million.
Statute also creates the OWCN, which provides for the rescue
and rehabilitation of sea birds and marine mammals harmed by
oil spills. OWCN is funded by an appropriation, of up to $2
million, from the interest earned on the money in the OSP
Trust Fund.
Recent circumstances and actions have severely diminished
returns on the OSP Trust Fund balance. Low rates have reduced
interest earnings on the trust fund principal. In addition,
as part of the 2010 Budget Act, the administration loaned $40
million from the trust fund to the General Fund. As a result,
OWCN funding is in jeopardy.
3)Related Legislation.
a) Chapter 583, Statutes of 2011 (AB 1112, Huffman)
authorizes OSPR to raise the maximum per barrel assessment
fee from $0.05 to $0.065, beginning January 1, 2012, then
reduces the fee back to $0.05, effective January 1, 2015.
b) AB 1601 (Huffman) caps, at $3,250, the nontank vessel
fee for oil spill prevention. The bill also authorizes the
administrator of OSPR to annually adjust the fee cap based
on the percentage increase in the California Consumer Price
Index. The bill passed the Assembly 54-20 and is pending
before Senate Appropriations.
4)Support. This bill is supported by The Ocean Conservancy and
other marine conservation organizations.
5)There is no opposition formally registered to this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081