Oil Spill Insurance Proposed : Environment: Deukmejian’s legislative plan aims to put the burden of cleanup costs on the industry instead of taxpayers.

Gov. George Deukmejian on Saturday proposed a multimillion-dollar plan designed to ensure that the oil industry--not the taxpayers--pays the cost of cleanup of offshore oil spills like the recent one off Huntington Beach.

The governor’s proposal will compete with two rival Democratic-sponsored offshore oil spill response bills already slowly moving through the legislative process.

The bills have been given impetus by the Feb. 7 spill of 9,500 barrels of crude oil that blackened the waters off Orange County.

In his weekly radio address, Deukmejian said that California is “heavily dependent” on oil shipped to the state in tankers and that it is “essential to our economy and way of life.”

But he added: “We must also do everything possible to protect our coastal environment. This new plan will help ensure that California remains both an economic powerhouse and a place of natural beauty and wonder.”

A key point in the governor’s plan calls for requiring oil companies transporting their product through state waters to be able to demonstrate that they have $500 million worth of oil spill liability insurance protection.

As a prerequisite of doing business, those companies also would have to prove they are members of an oil spill cooperative or have the individual capacity to clean up a serious spill.

The oil companies also would have to submit updated contingency plans that include greater use of skimming vessels and booming equipment to contain spilled oil before it reaches shore.

“This would reassure the public if there is another spill, it will be taken care of rapidly without any of their tax money being spent,” said Bob Gore, Deukmejian’s press secretary.

An Office of Oil Spill Response would be created within the state Department of Fish and Game to coordinate the ongoing stepped-up activities.

Financing for the plan would come from a $30-million fund to be raised by a 5-cents-per-barrel fee on companies shipping crude oil into California.

“In this way, we will ensure that the industry bears the burden of the cost of oil spill prevention and cleanup,” the governor said.

Deukmejian added he also has written U.S. Transportation Secretary Samuel K. Skinner, asking him to direct the Coast Guard to immediately review the safety of heavily traveled oil tanker shipping lanes, extend its vessel traffic control system, and expand inspection and licensing programs.

The governor’s plan will be amended into a pending measure by Assemblyman Eric Seastrand (R-Salinas) scheduled to be heard by the Natural Resources Committee on May 7.

Asked for response to Deukmejian’s plan, a major oil company representative, Michael B. Kahl, speaking for the Western States Petroleum Assn., said, “I think you are going to see a program emerge from the Legislature that is probably going to be very similar to what the governor has proposed.”

Kahl said he wanted to see the specifics of the plan as amended into Seastrand’s bill before making further comment.

One competing Democratic-sponsored bill now awaiting an Assembly floor vote calls for an 18-cents-per-barrel fee on oil companies to raise $64 million, plus authorization for the state to borrow up to $1 billion to clean up offshore oil spills that would be repaid by the companies.

The other Democratic rival measure calls for a $150-million superfund and giving the state another $350 million in borrowing authority. The first $150 million would come from a 50-cents-per-barrel fee on transported oil. That bill is bogged down in the Senate Judiciary Committee.