BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 1319 (Pavley) - Oil spills: oil spill prevention and
response.
Amended: May 6, 2014 Policy Vote: NR&W 7-1, EQ 5-1
Urgency: No Mandate: Yes (see staff comment)
Hearing Date: May 19, 2014 Consultant: Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1319 would expand the state's marine oil spill
program to include inland spills and would impose a new fee on
oil received at the state's refineries to pay for the program.
Fiscal Impact:
Ongoing costs of $12.2 million (special*) to expand the oil
spill response program to include all waters of the state.
Ongoing savings of $2 million (special**) resulting from
changing the funding source for the Oiled Wildlife Care
Network.
Ongoing revenues of at least $14.2 million (special*) from
expansion of the per barrel oil fee base to include crude
oil received at refineries.
* Oil Spill Prevention and Administration Fund
** Oil Spill Response Trust Fund
Background: Under the Lempert-Keene-Seastrand Oil Spill
Prevention and Response Act (act), the Office of Oil Spill
Prevention and Response (OSPR), headed by the administrator, is
responsible for regulating the prevention, response, removal,
and cleanup of oil spills in state waters. OSPR's oil spill
prevention and response readiness responsibilities costs are
funded by a fee imposed on imported oil up to $0.065 per barrel
until 2015 and $0.05 per barrel after 2015. Fee revenues are
deposited in the Oil Spill Prevention and Administration Fund
(OSPAF).
Expenditures from the OSPAF have exceeded revenues by an average
of $2.56 million annually over the past six years. This
structural deficit has been masked by the spending down of a
large reserve ($18.78 million in FY 2006-07). The reserve is
anticipated to be fully exhausted in FY 2014-15. Program and
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personnel cuts will be necessary in FY 2015-16 as there will be
a $2 million shortfall in the OSPAF.
Existing 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 is largely funded by interest accrued on the
Oil Spill Response Trust Fund (Trust Fund). Interest rates are
no longer supporting the OWCN's $2 million dollar budget.
Section 5655 of the Fish and Game Code establishes the
administrator as the primary authority to serve as a state
incident commander with regards to all oil spills in the waters
of the state, inland and marine. Section 8574.8 of the
Government Code requires the administrator to develop an oil
spill contingency plan that consists of a planning section for
both marine and inland oil spills. The plan must be updated
every three years. Response to inland spills has historically
been funded exclusively out of the Fish and Wildlife Pollution
Account. This account has never had a dedicated funding source
and instead is only supported by cost recovery and the
collection of fines and penalties from responsible parties. The
account had a negative fund balance as of September 2012.
Proposed Law: This bill generally expands the state's marine oil
spill program to include all state waters, which would be
defined to include all surface waters within the boundaries of
the state and specifically excludes groundwater. Specifically,
this bill would:
1. Expand the requirement for preparation of an oil spill
contingency plan to apply to the owner or operator of an oil
pipeline; a railroad that transports oil as cargo; and a
structure used in various aspects of oil exploration,
production, refining, storage, and transport.
2. Require oil spills of any size to be reported, opposed to
spills greater than one barrel (42 gallons) as required by
existing law.
3. Allow the Trust Fund to be used to pay for an oil spill in
any waters of the state.
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4. Require the administrator to develop a risk-based
monitoring program for inspecting nonvessel handling and
transport of oil. The administrator would be required to
routinely monitor and inspect those operations that pose the
highest risk of a pollution incident.
5. Amend the administrator's ability to offer a local
government a grant to complete an oil spill contingency plan
element to instead offer a grant to a unified program agency
to revise its oil spill element of the area plan. Require
the administrator to periodically review the preparedness of
unified program agencies to continue an agency's grant.
6. Require CalEPA and the Office of Emergency Services (OES)
to also review contingency plans for areas that are outside
of the coastal zone and to provide comments to the
administrator.
7. Expand the scope of the OWCN to cover all wildlife injured
by oil spills in all waters of the state and explicitly
authorize the establishment of additional stations in the
interior of the state.
8. Delete the cap on the per barrel fee that funds the OSPAF
as of December 1, 2015 and establishes a new fee on oil
produced in the waters of the state and transported in the
state through a pipeline and crude oil received at a
refinery within the state. Fees would be remitted to the
State Board of Equalization (BOE).
9. Expand the use of the OSPAF to also finance public health
studies related to the effects of oil spills
10. Allow for full funding of the OWCN from the
OSPAF.
11. Extends General Fund loan repayments to the
Trust Fund from 2014 to 2017.
12. Expands the membership of the Oil Spill
Technical Advisory Committee (TAC) to include members that
have knowledge of the railroad industry, oil production
industry, and truck transportation industry.
13. Require the TAC to also monitor and evaluate the
modes of transportation of oil into the state to identify
any necessary changes in oil spill response and preparedness
programs.
14. Amend various penalty provisions to apply
regardless of whether the spill was on marine or inland
waters and would deposit any collected penalties into the
OSPAF.
15. Require at least annual reporting by railroads
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regarding the type and quantity of oil transported, contact
information, operating schedules, and other specified
information.
Related Legislation: AB 2911 (Wolk) Chapter 565, Statutes 2008
extended the administrator's authority as the state incident
commander for oil spills to include spills on inland waters.
This measure also extended many of the liability standards and
penalties regarding marine spills to inland spills.
Staff Comments: The Governor's proposed 2014-15 budget includes
a budget change proposal and a related proposed trailer bill
that is substantially similar to this bill, though this bill
would add additional costs but allow for additional revenues.
Costs: The Governor's proposal would increase program costs by:
(1) $6.2 million to include inland waters; (2) $2.5 million to
expand the OWCN and to allow the OWCN to be fully paid for by
the OSPAF; and (3) increased BOE collection costs. BOE
collection costs are unknown, but staff estimates that it will
likely be approximately $1 million. This bill has several
program expansions that are not included in the trailer bill
that would further increase costs, specifically items #4, 5, 9,
and 13 under the "proposed law" section. These expansions would
add an additional $2.3 million to the Governor's proposal.
Additionally this bill would require CalEPA and OES to review
contingency plans (#6). These costs are unknown, but staff
estimates that CalEPA and OES are likely to incur less than
$200,000 annually.
Collectively, this bill is anticipated to add these costs would
expand the existing oil spill program costs by $12.2 million
annually to the OSPAF.
Savings : By changing the funding source of the OWCN from the
Trust Fund to the OSPAF, appropriations from the Trust Fund
would decrease $2 million.
Revenues : The Governor's proposal would delete the sunset date
on the existing 6.5 cent cap on the per barrel oil fee and would
extend the assessment to include crude oil received at
refineries (excluding any crude oil that has already paid the
fee at a marine terminal). These changes would allow the
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administrator to receive up to $11.3 million in additional
revenues.
This bill also would extend the fund base to include crude oil
received at refineries, but would remove the per barrel fee cap
entirely. Because of the increased costs under this bill, and
the existing $2 million estimate structural deficit of the
OSPAF, this bill could result in the collection of at least
$14.2 million.
This bill creates a state-mandated local program by expanding
the scope of crimes as violations of the act are crimes.
However, this is mandate is not reimbursable under the
California Constitution.