Earthquake Tax OKd in Hectic Final Session : Legislature: Oil spill cleanup fund also moves toward approval as lawmakers scramble to adjourn.

Lawmakers racing to wind up a two-year session of the California Legislature passed a bill Friday that would place a new tax on homeowners to create a statewide earthquake insurance fund.

Wrestling with scores of unresolved issues, legislators also reached agreement on a plan to tax oil companies $100 million to pay for the cleanup of potential oil spills along the coast of California.

The two disaster proposals were among hundreds of bills on a vast array of subjects facing legislators before they close out their 1989-90 session, expected in the pre-dawn hours Saturday.

Still hanging in the balance were bills to move California’s presidential primary to March, change the rules for malathion spraying in urban areas and put multimillion-dollar bond measures on the Nov. 6 ballot.

At times, tempers flared and shouting erupted as lawmakers--already weary from a week of lengthy floor sessions--pushed their legislation or fought to save their bills from last-minute defeat.

Illustrating the tense atmosphere in the Capitol, rumors swept through both houses that undercover FBI agents were mingling with lobbyists outside the chambers as part of an ongoing investigation of political corruption. A spokesman for the FBI, however, said no agents were deployed Friday in the Legislature.

The earthquake insurance tax plan by Sen. Frank Hill (R-Whittier) is designed to provide homeowners with basic quake coverage to supplement private insurance they might buy.

Homeowners would be required to pay an average of $36 a year into a quake fund that ultimately would provide coverage of up to $27,000 for any home in California damaged in an earthquake.

Most private earthquake insurance policies now available include a deductible equal to 10% of the value of the house. This bill is designed to fill that gap for most homes.

“We have a voluntary system now that doesn’t work,” Hill said, referring to the private insurance market. “I think this is proof that the legislative process can work and we can solve problems that need state government help.”

The measure passed the Assembly by a 43-21 vote and, within hours, cleared the Senate 28 to 3. Gov. George Deukmejian, who initially sponsored the bill, is expected to sign it.

Supporters of the legislation said that if the system had been in effect at the time of the Bay Area quake last October, 24,000 of the 25,000 homes damaged would have been fully covered by the program. The remaining 1,000 would have received the maximum amount but still would have needed private insurance to pay for rebuilding.

The program had been opposed by some Republican legislators who objected to imposing a mandatory charge for the insurance on homeowners who live outside areas prone to earthquakes.

“It bothers me a little bit to take away the freedom of choice of the people of California whether they want to take a risk or not,” argued Sen. Don Rogers (R-Bakersfield).

And Sacramento-area Assemblyman Tim Leslie (R-Carmichael) asked, “Why do we have to do this for other areas of the state?”

Earlier, the Assembly approved and sent to the governor a bill by Assemblyman Dominic L. Cortese (D-San Jose) that would require 80% of California homeowners--those in the state’s earthquake zones--to bolt their homes to their foundations by 1996. Homeowners who have not completed the work by July, 1991, would be required to notify potential buyers that the bolts had not been installed.

In an attempt to raise money to pay for another kind of disaster--oil spills--legislators and the Republican governor agreed on a plan to collect $100 million from oil companies by placing an additional tax of 25 cents on each barrel of oil.

In addition, oil tankers and terminals would be required to adopt comprehensive oil spill safety and prevention plans. Tankers would be subject to state inspection and would require tugboat escorts in hazardous waters.

On top of the $100-million response fund, the state would be given unlimited authority to borrow additional money for cleanup operations that would be repaid by oil companies.

“This is the most significant coastal protection bill the Legislature has considered in decades,” said environmental lobbyist Corey Brown of the Planning and Conservation League.

The agreement between deeply divided lobbyists for environmentalists, oil companies and attorneys appeared to clear the way for rapid approval by both houses of the Legislature before the midnight deadline.

The governor is expected to ratify the measure. “It looks good, but we’ve got to read the fine print,” Deukmejian Press Secretary Robert Gore said.

Lobbyist Michael B. Kahl, representing the influential Western States Petroleum Assn., gingerly endorsed the compromise, telling reporters that “generally the oil industry is pleased” with the agreement.

In the negotiations, the oil industry succeeded in including a provision that would grant at least 60 days of immunity to cleanup crews hired by oil companies for accidental property damage they might cause.

Supporters said the legislation by Sen. Barry Keene (D-Benicia) and freshman Assemblyman Ted Lempert (D-San Mateo) would establish the first comprehensive plan of any coastal state designed to deal with an offshore oil tanker spill.

To cope with the possibility of a massive spill off the coast of California, the legislation would vastly expand emergency crews available to swiftly control damage to birds, wildlife and the coast itself.

If the extra 25-cent tax was passed on to motorists by oil companies, the increase at the pump would be “negligible” and would be in force only “for a short period of time,” Lempert said.

But not all efforts to resolve major issues before the midnight deadline met with success.

Assemblyman Burt Margolin (D-Los Angeles), sponsor of what was to be the first step toward a universal health insurance program, abandoned his efforts when Deukmejian sent word he would veto the bill. Margolin had crafted the measure as a fall-back plan after it became clear the Legislature would not pass a more ambitious bill requiring all California employers to pay a health care tax or provide coverage for their workers.

“The indication we have received from the governor’s office is that he will not sign the bill,” Margolin said.

Margolin’s bill had been approved by a two-house conference committee that included leaders of the Senate and Assembly. But as the end of the legislative session approached, he finally acknowledged that months of talks on the issue would not lead to legislative action this year.

He said the measure would serve as the starting point for more negotiations in January. “We’re going to work on a very fast track next year to work with the new governor to finish this process,” Margolin said.

In a bid to rescue Butte County from bankruptcy, the Assembly passed and sent to the governor a bill waiving requirements that counties match state funds for certain programs.

The bill by Assemblyman Sam Farr (D-Carmel), one of several designed to help Butte County, was approved on a vote of 69 to 1. Technically, the measure would apply to any county, but it would be up to the governor to waive the matching fund requirement.

For Butte, the bill would save as much as $7.9 million. But Farr said the legislation would not make it easy on any county. “It will require counties to come to the state on their hands and knees,” he said.

Much of Friday’s action was on issues that could hardly be considered monumental.

For example, by a vote of 77 to 0, the Assembly passed and sent to the governor a bill by Assemblywoman Jackie Speier (D-South San Francisco) that would require all state agencies to remain open during the lunch hour.

As the crush of bills moved through the Legislature, one modest measure produced an unusual alliance.

To the surprise of his colleagues, conservative Sen. John Doolittle (R-Rocklin) served as the floor manager in the Senate for a bill by onetime radical Assemblyman Tom Hayden (D-Santa Monica).

An embarrassed Doolittle explained, “When he has a good idea, I support him, which isn’t that often.” The bill, which would allow for easier disposal of medical wastes, passed the Senate on a 33-0 vote.

Earlier in the day, Assemblymen Gil Ferguson (R-Newport Beach) and Steve Peace (D-Chula Vista) nearly came to blows in a Capitol hallway. The two shouted insults at each other before they were separated by another assemblyman and a staff member.

Their argument stemmed from letters Ferguson had written attacking Peace and other opponents of a bill aimed at removing pornography from news racks.

“He was very, very angry,” Ferguson said later. “He kept screaming and he got so mad at one point that he threw his glasses on the floor.”

Times staff writers Daniel M. Weintraub, William Trombley, Douglas P. Shuit, Paul Jacobs, Carl Ingram, Jerry Gillam, Virginia Ellis and George Skelton contributed to this story.