BILL ANALYSIS �
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THIRD READING
Bill No: SB 1319
Author: Pavley (D), et al.
Amended: 5/27/14
Vote: 21
SENATE NATURAL RESOURCES AND WATER COMMITTEE : 7-1, 4/8/14
AYES: Pavley, Evans, Hueso, Jackson, Lara, Monning, Wolk
NOES: Fuller
NO VOTE RECORDED: Cannella
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 5-1, 4/30/14
AYES: Hill, Hancock, Jackson, Leno, Pavley
NOES: Fuller
NO VOTE RECORDED: Gaines
SENATE APPROPRIATIONS COMMITTEE : 6-1, 5/23/14
AYES: De Le�n, Gaines, Hill, Lara, Padilla, Steinberg
NOES: Walters
SUBJECT : Oil spills: oil spill prevention and response
SOURCE : Author
DIGEST : This bill expands the Lempert-Keene-Seastrand Oil
Spill Prevention and Response Act (Act) and expands the
responsibilities of the administrator for oil spill response
(administrator), relating to oil spills to cover all waters of
the state, as defined; directs the Governor to require the
administrator to amend the California oil spill contingency plan
to provide for the best achievable protection of all state
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waters, not solely coastal and marine waters, and to submit the
plan to the Governor and the Legislature on or before January 1,
2017; and requires the regulations to provide for the best
achievable protection of all waters and natural resources of the
state.
ANALYSIS :
Existing law:
1. Requires, under the Act, the administrator, acting at the
direction of the Governor, to implement activities relating
to oil spill response, including emergency drills and
preparedness, and oil spill containment and cleanup, and to
represent the state in any coordinated response efforts with
the federal government.
2. Directs the Governor to require the administrator to amend,
not in conflict with the National Contingency Plan, the
California oil spill contingency plan to add a marine oil
spill contingency planning section containing specified
elements, including an environmentally and ecologically
sensitive areas element.
3. Requires the administrator to adopt and implement
regulations governing the adequacy of oil spill contingency
plans to be prepared and implemented and requires the
regulations to provide for the best achievable protection of
coastal and marine waters.
4. Imposes various administrative civil penalties on a person
that violates specified provisions of the Act based on
whether it was an oil spill or an inland oil spill.
5. Requires the administrator for oil spill response, upon
request by a local government, to provide a program for
training and certification of a local emergency responder
designated as a local spill response manager by a local
government with jurisdiction over or directly adjacent to
waters of the state.
6. Requires the administrator to offer grants to a local
government with jurisdiction over or directly adjacent to
marine waters to provide oil spill response equipment to be
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deployed.
7. Requires the administrator, within five working days after
receipt of a contingency plan, prepared as specified, to send
a notice that the plan is available for review to the Oil
Spill Technical Advisory Committee (Committee).
8. Requires the administrator to establish a network of rescue
and rehabilitation stations for sea birds, sea otters, and
marine mammals affected by an oil spill in marine waters.
9. Imposes an oil spill prevention and administration fee in an
amount determined by the administrator to be sufficient to
implement oil spill prevention activities, but not to exceed
6.5 cents per barrel of crude oil or petroleum products and,
beginning January 1, 2015, to an amount not to exceed five
cents, on persons owning crude oil or petroleum products at a
marine terminal. The fee is deposited into the Oil Spill
Prevention and Administration Fund (OSPAF) in the State
Treasury. Upon appropriation by the Legislature, monies in
the OSPAF are available for specified purposes.
10.Imposes a uniform oil spill response fee on specified
persons, except specified independent crude oil producers,
owning petroleum products during any period that the Oil
Spill Response Trust Fund (Trust Fund) contains less than a
designated amount. The money in the Trust Fund is
continuously appropriated for specified purposes, including,
to pay for the costs of rescue, medical treatment,
rehabilitation, and disposition of oiled wildlife, as
specified.
11.Provides that, until June 30, 2014, if a loan or other
transfer of money from the Trust Fund to the General Fund
(GF) pursuant to the Budget Act reduces the balance of the
Trust Fund to less than or equal to 95% of the designated
amount, the administrator is not required to collect oil
spill response fees if the annual Budget Act requires the
transfer or loan to be repaid (a) to the Trust Fund with
interest calculated at a rate earned by the Pooled Money
Investment Account and (b) on or before June 30, 2014.
12.Establishes the Committee to provide public input and
independent judgment of the actions of the administrator.
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The Committee is composed of 10 members.
This bill:
1. Expands the Act and the administrator's responsibilities
relating to oil spills to cover all waters of the state, as
defined.
2. Directs the Governor to require the administrator to amend
the California oil spill contingency plan to provide for the
best achievable protection of all state waters, not solely
coastal and marine waters, and to submit the plan to the
Governor and the Legislature on or before January 1, 2017.
Requires the regulations to provide for the best achievable
protection of all waters and natural resources of the state.
3. Provides that, for purposes of administrative civil
penalties, it will no longer distinguish between an oil spill
and an inland oil spill, subjecting all persons to the oil
spill provisions.
4. Makes the program for training and certification of a local
emergency responder optional at the discretion of the
administrator.
5. Authorizes the administrator to offer the grants to a local
government with jurisdiction over or directly adjacent to
state waters.
6. Requires the administrator, within five working days after
receipt of a contingency plan, to post a notice that the plan
is available for review.
7. Requires the administrator to establish a network of rescue,
as specified, for wildlife injured by oil spills in waters of
the state, including sea otters and other marine mammals.
Authorizes the administrator to establish additional stations
or facilities in the interior of the state for the rescue and
rehabilitation of wildlife affected by inland spills.
8. Requires the administrator to annually determine the fee in
an amount sufficient to pay the reasonable regulatory costs
of specified oil spill prevention activities. Deletes the
provision that reduces the fee beginning on January 1, 2015,
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and will additionally impose this fee on a person owning
crude oil at the time the crude oil is received at a
refinery, as specified, by any mode of delivery that passed
over, across, under, or through waters of the state, whether
from within or outside the state.
9. Authorizes the Director of the Department of Finance to
augment a specified appropriation in the Budget Act of 2014
for the reasonable costs incurred by the State Board of
Equalization (BOE) related to the collection of the oil spill
prevention and administration fee, as specified.
10. Requires every person who operates an oil refinery, marine
terminal, or a pipeline to register with the BOE.
11. Deletes the fee exception for independent crude oil
producers, and deletes the provision authorizing the monies
in the Trust Fund to be used to pay for the costs of rescue,
medical treatment, rehabilitation, and disposition of oiled
wildlife and authorizes monies in the Trust Fund to be used
to respond to an imminent threat of a spill.
12. Provides, until June 30, 2017, that if a loan or other
transfer of money from the Trust Fund to the GF reduces the
balance of the Trust Fund to less than or equal to 95% of the
designated amount, the administrator is not required to
collect oil spill response fees if the annual Budget Act
requires the transfer or loan to be repaid (a) to the Trust
Fund with interest calculated at a rate earned by the Pooled
Money Investment Account and (b) on or before June 30, 2014.
Provides that these provisions will be repealed July 1, 2017.
13. Increases the number of Committee members from 10 to 14 and
requires the Speaker of the Assembly and the Senate Rules
Committee to each appoint one additional member who has
knowledge of environmental protection and the study of
ecosystems, and also requires the Governor to appoint two
additional members, with one having knowledge of the railroad
industry and another having knowledge of the oil production
industry.
14. Revises various definitions within that Act, and makes other
conforming and technical changes.
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Background
Two major crude oil spills from tankers influenced state law for
emergency response 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 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 Office of Emergency Services (OES) and
Department of Fish and Wildlife (DFW), although neither agency
has a dedicated fund for oil spill response and cleanup.
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 cents. After January 1, 2015, the
fee will return to five cents.
OSPR has recently faced challenges of rising costs to
maintaining protection from oil spills, inflation, and changes
in how oil enters California. The DFW estimates that the OSPAF
already has a $2-3 million structural deficit. This deficit
will be intensified following the fee sunset; the DFW projects a
47% decline in annual revenue by 2016.
Budget change proposal . Governor Brown Administration has
proposed significant changes to the existing oil spill
prevention and response program through the fiscal year 2014-15
Budget to address the expected increase of crude oil transport
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by rail. The proposed DFW Budget Change Proposal (BCP) expands
the current oil spill prevention and response program focused on
marine waters inland to include all waters of the state. The
Administration's proposal will require the implementation of a
statewide inland oil spill program encompassing oil-related
facilities and oil transporters.
To implement and fund the new inland program, OSPR will add 38
positions with an ongoing appropriation of $6.2 million
annually. Revenue for the program is provided by removing the
January 1, 2015, sunset date on the 6.5 cents cap on the
per-barrel fee for oil delivered at marine terminals and
extending the fee to include all crude oil delivered to
refineries in California by any transportation method. The
planned changes require legislative action and extensive
budgetary trailer bill language accompanies the BCP. This bill
is based on the budgetary trailer bill language.
The Legislative Analyst's Office has recommended support for the
proposal, although it recommends that a risk-based fee, if
feasible, be implemented that covers the cost of the entire oil
spill program and that the requested positions be funded for
one-half year only.
Senate Hearing on Emergency Response to Rail Accidents
Regulatory Framework . On March 19, 2014, the Senate
Environmental Quality and the Senate Natural Resources and Water
Committees held an oversight hearing on Emergency Preparedness
for Rail Accidents. During that hearing, representatives from
OSPR, OES, Department of Forestry and Fire Protection,
Department of Toxic Substances Control, 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
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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 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.
Transportation of oil . OSPR states that 65% of California's
crude oil supply arrives by tankers originating from Alaska or
overseas. The remaining 35% is 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 states that in the
future, around 25% of California's crude oil supply would arrive
by rail. This will be accompanied by a dramatic reduction in
the amount of oil arriving by tanker (43% predicted supply).
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, 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.
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FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Ongoing costs of $9.9 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 $11.9 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
SUPPORT : (Verified 5/27/14)
California League of Conservation Voters
Clean Water Action
Environmental Working Group
Environment California
Surfrider Foundation
ARGUMENTS IN SUPPORT : According to the author:
Significant shifts in the mode of transportation of crude oil
into and within California are expected to occur in the near
future. [?] This shift in transportation mode - with an
accompanying shift in the source of the oil being refined in
the state - means that the nature of the risks associated with
oil spills as well as the likely locations of spills is also
changing. It is time to update California's oil spill
preparation, prevention and response.
SB 1319 incorporates the Brown Administration's proposal
through the budget process to expand the
Lempert-Keene-Seastrand Oil Spill Prevention and Response Act
to all waters of the state and all modes of oil
transportation.
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RM:k 5/27/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
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