BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        AB 815|
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                                      CONSENT 


          Bill No:  AB 815
          Author:   Ridley-Thomas (D)
          Introduced:2/26/15  
          Vote:     21  

           SENATE NATURAL RES. & WATER COMMITTEE:  9-0, 6/9/15
           AYES:  Pavley, Stone, Allen, Hertzberg, Hueso, Jackson,  
            Monning, Vidak, Wolk

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  77-0, 4/30/15 (Consent) - See last page for  
            vote

           SUBJECT:   Oil spill prevention and response fees: collection


          SOURCE:    State Board of Equalization 



          DIGEST:  This bill makes clarifying and technical corrections to  
          statutes concerning the Oil Spill Prevention and Administration  
          Fund necessary due to the chaptering of last year's Resources  
          budget trailer bill.


          ANALYSIS:   


          Existing law:


          1)Establishes the Lempert-Keene-Seastrand Oil Spill Prevention  
            and Response Act (Act) (SB 2040, Chapter 1248, Statutes of  








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            1990) (Government Code (GOV) §§8670.1 et seq., and others).   
            The Act created the Office of Spill Prevention and Response  
            (OSPR) in the Department of Fish and Wildlife.


          2)Establishes the Oil Spill Prevention and Administration Fund  
            (OSPAF) which finances oil spill prevention and planning  
            programs and certain other items.


          3)Provides for the OSPAF per barrel fee (set at 6.5[) to be  
            assessed upon receipt of crude oil and petroleum products at  
            refineries, marine terminals or from offshore oil production  
            facilities.  The owner of the crude oil or petroleum products  
            is response for the fee which is paid to the State Board of  
            Equalization (BOE).


          4)Provides for the OSPAF fee to be collected once only (GOV  
            §8670.40(b)(5)) in order to address, for example, the  
            situation where a barrel of crude oil refined into petroleum  
            products is exported via a marine terminal.  In this instance,  
            the barrel would pass through two fee collection points but  
            should be assessed only once.


          This bill makes clarifying and technical changes to OSPAF fee  
          collection necessary following the passage of the Fiscal Year  
          2014/2015 resources budget trailer bill (SB 861, Committee on  
          Budget and Fiscal Review, Chapter 35, Statutes of 2014) last  
          year.  Specifically, this bill:

          1)Authorizes a marine terminal or refinery operator receiving  
            petroleum products derived from crude oil refined in the state  
            to presume the fee has already been collected.


          2)States legislative intent that the BOE collect the OSPAF fee  
            only upon first delivery to a refinery or a marine terminal.


          3)Deletes the requirement that the owner of crude oil/petroleum  








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            products remit the fee directly to the BOE.


          4)Makes additional clarifying and technical changes.


          Background
           
           OSPR's mission.  OSPR's mission is to provide the best  
          achievable protection of California's natural resources and the  
          public health and safety by preventing, preparing for, and  
          responding to spills of oil and other deleterious materials; and  
          to restore and enhance affected resources.  

           This is clean-up legislation that clarifies OSPAF fee  
          collection.  Prior to the passage of the resources budget  
          trailer bill last year, OSPAF was primarily funded by a per  
          barrel fee of 6.5[ assessed on each barrel of crude oil or  
          petroleum products received at marine oil terminals or from  
          offshore production facilities.  The resources budget trailer  
          bill substantially revised the Act to address, in part, the  
          potential growth of crude oil transport into and in California  
          by rail.  The OSPAF fee is now assessed upon receipt of crude  
          oil and petroleum products at refineries too.  Clarifying  
          changes to, for example, make clear that the refinery operator  
          or the marine terminal owner who collects the fee from the owner  
          can remit them to the BOE, not the owner of the crude  
          oil/petroleum products, are necessary.

          The Act and its fees implicitly depend upon the existing  
          California market.  The OSPAF fees are collected upon arrival at  
          marine terminals or at refineries.  This presumes that all/most  
          of the crude oil and petroleum products pass through either a  
          marine terminal or refinery at least once.  Crude oil produced  
          in California, but refined elsewhere, could potentially bypass  
          the OSPAF fee.  This does not currently occur -- according to  
          the California Energy Commission, no California crude oil has  
          been exported from the state in 2014 or 2015, the most recent  
          data available.  Should energy policy and the California crude  
          oil/petroleum products market change in the future, these  
          implicit assumptions may no longer remain true.  For example,  
          there has been a recent push to change federal energy policy to  








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          lift the ban on crude oil exports (see S.1312, the Energy Supply  
          and Distribution Act of 2015, introduced with bipartisan support  
          last month in the U.S. Congress).

          Related Legislation
          
          SB 861 (Committee on Budget and Fiscal Review, Chapter 35,  
          Statutes of 2014), the resources budget trailer bill,  
          substantially amended the Act to address the growth/potential  
          growth of crude oil transport by rail in California.

          AB 2678 (Ridley-Thomas, 2014) was an earlier attempt at OSPAF  
          fee resources budget trailer bill clean-up language.  (The bill  
          died on the Assembly Unfinished Business File with the  
          concurrence vote pending.)

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified6/30/15)


          State Board of Equalization (source)
          California Chamber of Commerce


          OPPOSITION:   (Verified 6/30/15)


          None received

          ARGUMENTS IN SUPPORT:  According to the author, "While SB 861  
          expanded the [OSPAF] fee to crude oil and petroleum products  
          received at the refinery, the bill also added provisions that  
          prevent the fee from being imposed or paid twice on the same  
          crude oil or petroleum products.  However, current law is not  
          clear that petroleum products derived from fee-paid crude oil,  
          once refined, are not subject to the fee."

          "BOE staff believes that legislative intent language alone may  
          be ineffective to relieve industry from the requirement to  








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          document that the [OSPAF] fee previously was paid on petroleum  
          products derived from fee-paid crude oil.  Therefore, statutory  
          guidance is necessary to clarify the issue."

          The BOE in its support letter indicates that the benefits of the  
          bill include "reduced confusion," "improved method for  
          preventing [the] double fee," and "ease of administration."

          ASSEMBLY FLOOR:  77-0, 4/30/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,  
            Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,  
            Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gonzalez, Gordon, Gray, Grove,  
            Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Campos, Chávez, Gomez


          Prepared by:Katharine Moore / N.R. & W. / (916) 651-4116
          7/1/15 11:15:42


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