BILL ANALYSIS �
AB 2678
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: AB 2678
AUTHOR: Ridley-Thomas
AMENDED: As proposed to be amended
FISCAL: Yes HEARING DATE: August 29,
2014
URGENCY: No CONSULTANT: Karen Morrison
SUBJECT : OIL SPILLS: OIL SPILL PREVENTION AND RESPONSE
SUMMARY :
Existing law :
1) Under the Lempert-Keene-Seastrand Oil Spill Prevention and
Response Act of 1990 (Government Code (GOV) �8670.1 et
seq., and others), created the Office of Spill Prevention
and Response (OSPR) in the Department of Fish and Wildlife
(DFW) and required the OSPR administrator to direct
prevention, removal, abatement, response, containment, and
cleanup efforts with regard to all aspects of any oil spill
in marine waters of the state.
2) Under the Natural Resources Trailer Bill (SB 861, Chapter
35, Statutes of 2014), extended OSPR's current program to
direct prevention, removal, abatement, response,
containment, and cleanup efforts of any oil spill in all
waters of the state by imposing a fee on all imported crude
oil and petroleum products. SB 861 went into effect on
July 1, 2014.
In particular, SB 861 eliminated the sunset for the 6.5 cent
per barrel fee and permits the State Board of Equalization
to collect a fee on crude oil and petroleum products that
pass over, across, under, or through all waters of the
state. (GOV �8670.40)
As proposed to be amended this bill :
1) Describes the intent of the Legislature to only collect the
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fee on crude oil or petroleum products upon first delivery
to a refinery or marine terminal. (GOV �8670.40)
2) States that nothing in this section shall prohibit the
State Board of Equalization from determining the
appropriate collection point. (GOV �8670.40)
3) Contains an urgency clause and would therefore take effect
immediately.
COMMENTS :
1) Referral to the Committee pursuant to Senate Rule 29.10 .
AB 2678 was originally introduced by Assembly Member
Ridley-Thomas on February 21, 2014, as a measure addressing
the Oil Spill Technical Advisory Committee. The bill, in
this form, passed out of the Assembly on May 23, 2014 on a
vote of 72-0. AB 2678 was then heard in the Senate
Committee on Natural Resources and Water, where it passed
out 8-0.
On August 22, 2014, Senate floor amendments changed the
subject of the bill to oil spill prevention and response.
Consistent with Senate Rule 29.10(b) the Senate Rules
Committee referred the amended bill to the Senate
Environmental Quality Committee for a hearing of the Senate
amendments on August 28, 2014. However, the bill was
removed from the hearing agenda at the request of the
author and re-referred to the Senate Rules Committee.
2) Referral to the Committee pursuant to Senate Rule 29.3 .
Pursuant to Joint Rules 61 and 62 and Senate Rule 29.3(b),
AB 2678 was referred to the Senate Environmental Quality
Committee to be amended and heard.
3) Purpose of the bill . According to the author, "The concern
arising from the passage of SB 861 was that the language
left an opening for a double charge of crude or petroleum
products by the Board of Equalization."
4) Background on OSPR . Two major crude oil spills from
tankers influenced state law for emergency response
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following marine oil spills: the Exxon Valdez spill in
Alaska on March 24, 1989, and the American Trader spill
near Huntington Beach on February 7, 1990. As a result,
the Legislature passed the Lempert-Keene-Seastrand Oil
Spill Prevention and Response Act in 1990. This Act covers
all aspects of marine oil spill prevention and response in
California. In 1991 the Office of Spill Prevention and
Response (OSPR) opened, headed by the Administrator.
When a spill occurs, OSPR deploys a field response team of
wardens, environmental specialists, and oil spill
prevention specialists to evaluate the incident and direct
response efforts. When there is not an ongoing incident,
OSPR collaborates with other organizations to develop oil
spill contingency plans. OSPR also conducts drills and
exercises to promote readiness in the event of a spill.
Although OSPR has authority to respond to marine oil spills
and inland oil spills near state water, it can only use
money from the OSPAF to respond to marine spills. If an
inland spill occurs in an area distant from state waters,
the primary responsible agencies are OES and DFW, although
neither agency has a dedicated fund for oil spill response
and cleanup.
5) Funding for OSPR . OSPR is funded by a per-barrel fee on
any oil delivered at marine terminals within the state and
a fee on non-tank vessels. The per-barrel fee has varied
over the years, but currently the cap is 6.5[. After
January 1, 2015, the fee will return to 5[.
OSPR has recently faced challenges of rising costs to
maintaining protection from oil spills, inflation, and
changes in how oil enters California (see comment 8). DFW
estimates that the OSPAF already has a $2-3 million
structural deficit. This deficit will be intensified
following the fee sunset; DFW projects a 47% decline in
annual revenue by 2016.
6) Budget change proposal . The Brown Administration proposed
significant changes to the existing oil spill prevention
and response program through the FY 2014-15 Budget to
address the expected increase of crude oil transport by
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rail. This was approved in (SB 861, Chapter 35, Statutes
of 2014).
7) Senate Hearing on Emergency Response to Rail Accidents
Regulatory Framework . On March 19, 2014, the Senate
Committees on Environmental Quality and Natural Resources
and Water held an oversight hearing on Emergency
Preparedness for Rail Accidents. During that hearing,
representatives from OSPR, OES, Department of Forestry and
Fire Protection (Cal FIRE), Department of Toxic Substances
Control (DTSC), and the Sacramento County Certified Unified
Program Agencies (CUPA) testified on their responsibilities
and preparedness in the event of a rail accident.
At the hearing, the agencies stated that while there is
significant cooperation at the state level, the
coordination with local agencies can be lacking. The CUPAs
are typically the first responders after an accident.
Although immediate response by a CUPA is likely in the
event of an urban spill, local CUPA staff in rural parts of
the state may not be able to respond for hours or until the
next day.
Testimony from OSPR highlighted the complete approach it
currently has for prevention, preparedness, and response
for a marine oil spill. However, OSPR testified that there
are significant gaps in all three of these areas for an
inland oil spill. Although prevention of a spill from a
train (see comments 8 and 9) is largely regulated by the
Federal Rail Administration and the Public Utilities
Commission, there are substantial regulatory gaps in
preparedness. In addition, OSPR highlighted the lack of
dedicated state resources for response.
8) Transportation of oil . OSPR states that in 2012, 65% of
California's crude oil supply arrived by tankers
originating from Alaska or overseas. The remaining 35% was
supplied by pipeline within California.
With the expansion of oil drilling in the Baaken region of
North Dakota and the Tar Sands in Canada, and the
subsequent transportation of crude oil by train, a shift is
occurring in the source of California oil imports. OSPR
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states that in the future, around 25% of California's crude
oil supply would arrive by rail. This would be accompanied
by a dramatic reduction in the amount of oil arriving by
tanker (43% predicted supply).
9) Crude oil transportation by rail . The rapid expansion of
crude oil transportation by rail, coupled with a series of
derailments and explosions over the past year, has raised
concerns about the safety of rail transport of hazardous
materials.
Train accidents involving large crude oil spills resulting in
large fires and explosions have made headlines in the past
year. According to data from the Pipeline and Hazardous
Materials Safety Administration (PHMSA), the amount of
crude oil spilled from rail cars in 2013 exceeded that
spilled in the preceding four decades. In 2013, 1.15
million gallons of crude oil were spilled, compared with
about 800,000 gallons spilled from rail cars between 1975
and 2012.
One of the most serious of these recent accidents was the
Lac-M�gantic derailment that occurred in the town of
Lac-M�gantic in Canada on July 6, 2013. In this accident,
a 74-car freight train carrying crude oil from the Bakken
formation derailed in the downtown area, killing 47 people
and destroying more than 30 buildings when multiple tank
cars exploded and burned. In addition, the Chaudi�re River
was contaminated by 26,000 gallons of crude oil.
10)OSPR Trailer Bill Cleanup . In response to the growing
concern about oil entering California by rail, SB 861
(Chapter 35, Statutes of 2014) extended the OSPR program to
response in all waters of the state by expanding the fee to
all crude oil and petroleum products entering California.
As OSPR began to develop emergency regulations to implement
the provisions of the bill, concerns were raised concerning
the double-collection of fees.
Double collection of fees: SB 861 expanded the fee collection
site from marine terminals to refineries in order to
capture crude oil and petroleum products entering the state
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(such as by rail) or extracted within California. In cases
where crude oil first arrived at a marine terminal and was
then delivered to a refinery, the language could be
interpreted to describe a process for double-billing on the
same oil. This bill seeks to clarify that crude oil or
petroleum products will only be billed once after they
enter California.
SOURCE : Natural Resources Agency
SUPPORT : Unknown
OPPOSITION : Unknown