Panel OKs $500-Million Oil Spill Fund

A bill to set up a $500-million superfund paid for by oil company fees to clean up offshore oil spills was approved Monday by the Assembly Committee on Natural Resources.

An 8-1 vote sent the measure, which received new impetus from the recent Huntington Beach oil spill, to the Ways and Means Committee.

“You can’t trust the oil industry to cover the damages of a spill,” said Controller Gray Davis, a member of the sponsoring State Lands Commission. “You can’t trust their assurances that oil spills won’t happen and they will clean it up if one occurs.”

The legislation calls for a 50-cents-per-barrel fee to be imposed on crude oil shipped into California by tankers. There would be lesser fees for oil brought ashore by pipelines from drilling platforms.

In addition to the cleanup superfund, the bill would establish a new state office to coordinate all oil spill response efforts, require tanker safety and emergency plans at every oil transfer terminal in California and require unannounced tanker inspections and emergency drills.

“Our coastline, once known for its beauty, is now known for dead birds and other remnants of oil spills,” said Assemblyman Ted Lempert (D-San Mateo), who introduced the measure.

In defense of the proposed $500-million superfund, the chairman of the Assembly Select Committee on Oil Spill Prevention and Response Preparedness said, “The first 48 hours are absolutely critical and the money must be readily available for oil spill cleanup purposes.”

But a major oil company representative, Michael B. Kahl, speaking for the Western States Petroleum Assn., questioned the need for such a large superfund. “We cannot justify this large amount of money just sitting in a fund,” he said.

As an alternative, Kahl suggested keeping $10 million on hand in the superfund and adding a borrowing authority to obtain more money if needed when a spill occurs. Kahl said any loans would be repaid by imposing additional fees on the industry. He also said his clients would rather have national oil spill prevention standards set by the federal government instead of trying to abide by conflicting state requirements.