BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1300 (Hancock) - Refineries: Turnarounds
Amended: April 21, 2014 Policy Vote: L&IR 3-0
Urgency: No Mandate: Yes
Hearing Date: May 5, 2014 Consultant: Robert Ingenito
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1300 would require petroleum refineries to
report annually their schedule for turnarounds, as defined, to
the Department of Industrial Relations (DIR), and to provide DIR
with information regarding safety and infrastructure. In
addition, the bill would require DIR to recoup the full costs of
extraordinary expenditures from an emergency situation at a
petroleum refinery.
Fiscal Impact: DIR estimates that it would incur annual costs of
roughly $250,000 (special funds) to implement the provisions of
this bill, to fund three positions required to evaluate the
technical information provided by refineries.
Background: The California Energy Commission reports that the
State has a total of 20 refineries which are located in the San
Francisco Bay Area, the Los Angeles Area and the Central Valley.
About two million barrels (a barrel is equal to 42 U.S. gallons)
of petroleum are processed daily into a variety of products,
with gasoline representing about half of the total product
volume.
The American Petroleum Institute (API) indicates that refinery
turnarounds are planned shutdowns of the refinery process, and
can be total or partial in nature. During the shutdown period,
refinery staff performs maintenance, overhaul and repair
operations and inspect, test and replace process materials and
equipment. API indicates that turnarounds are generally
scheduled at least one year in advance and allow for necessary
maintenance and upkeep of operating units to ensure safe and
efficient operations. Depending on factors such as the amount of
required maintenance, the length of a turnaround can vary from
one week to over a month.
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API also notes an inverse correlation between refinery safety
and the frequency with refineries start and stop their
operations, as refinery incidents are more likely to occur
during turnarounds.
Proposed Law: With respect to turnarounds, this bill would,
among other things, do the following:
Define "turnaround" as a planned, periodic shutdown,
total or partial, of a refinery process unit or plant to
perform maintenance, overhaul, and repair operations and to
inspect, test, and replace process materials and equipment.
Specify that "turnaround" does not include unplanned
shutdowns that occur due to emergencies or other unexpected
maintenance matters in a process unit or plant, or routine
maintenance, as specified.
Require a refinery to submit to DIR a full schedule of
planned "turnarounds" for the various units on September 15
of each year.
Upon request by DIR, require a refinery to provide
on-site access and specified documentation relating to a
planned turnaround at least 60 days in advance.
Require the refinery to submit notification of any
changes and supporting documents at least 30 days prior to
a planned turnaround.
Require DIR to develop an electronic information
management system to facilitate monitoring of petroleum
refineries.
With respect to fee authority, the bill would, among other
things, do the following:
Authorize DIR (instead of one of its divisions) to fix
and collect reasonable fees to cover all necessary
expenses, including administrative and indirect costs, for
the existing consultation, inspection, adoption of
standards and other duties required under current law.
Authorize the fees to be used to fund participation in
interagency efforts to improve safety in refineries and
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chemical plants.
Require DIR to adopt rules and regulations governing the
criteria and procedures to fix and collect the fees,
including emergency regulations as necessary.
Require DIR to recoup from the owner of a refinery (by
adding the amount expended to next year's assessment), the
full costs of extraordinary expenditures resulting from the
division's response to a hazardous material release or
similar occurrence.
Related Legislation: SB 438 (Hancock) of 2013 is very similar to
the provisions found in this bill. The bill was held in the
Assembly Appropriations Committee.
Staff Comments: Currently there is no requirement for oil
refineries to report their schedule of turnarounds, and other
related information, to DIR. The receipt of this information
could assist the department to identify possible hazards and
schedule targeted inspections.
Although flagged as a mandate by the Legislative Counsel because
it alters the definition of a crime or infraction, under Section
6(b) of Article XIII B of the California Constitution, any costs
to a unit of local government which result from legislation
defining a new crime or changing the definition of a crime are
not reimbursable by the State.