review of oil spill risk and comparison to funding mechanism proposed final report joint legislative...
TRANSCRIPT
Review of Oil Spill Risk and Comparison to Funding
MechanismProposed Final Report
Joint Legislative Audit & Review Committee
January 7, 2009
Elisabeth Donner and John Woolley JLARC Staff
January 7, 2009 2
Statutory Directive Guides Oil Spill Program Activities
“The legislature finds that prevention is the best method to protect the unique and special marine environments in this state…”
And
“…that the primary objective of the state is to achieve a zero spills strategy to prevent any oil or hazardous substances from entering waters of the state.”
RCW 90.56.005(2)Review of Oil Spill Risk and Comparison to Funding Mechanism
BACKGROUND
Report Page 6
January 7, 2009Review of Oil Spill Risk and Comparison to Funding Mechanism 3
Report Looks at Three Key Oil Spill Questions
1.What are the sources of oil spill risk into Washington’s waters?• Spills occur across the state from many
different sources.
2.Do the sources of revenue (funding for oil spill activities) align with the sources of risk?• No.
3.Are there alternative funding methods?• Other states have broader/different tax bases.• Aligning funding with risk faces practical
hurdles.Report Page 10
BACKGROUND
January 7, 2009Review of Oil Spill Risk and Comparison to Funding Mechanism 4
Consultants Identified 23 Risk Sources: Modes of Transportation & Activities
AirportFacility-MillingFacility-OtherGas StationOil TerminalPower UtilityRefineryResidentialAircraftRailroadTanker TruckVehicle-Other
FerryFishing VesselNon-Tank VesselPassenger VesselPleasure CraftTank BargeTank ShipTow/Tug Boat
PipelineMilitaryUnknown
Fac
ilitie
sM
obile
Ves
sels
Oth
er
SOURCES
OF
OIL
SPILL
RISK
Report Pages 35-37
January 7, 2009 5
Relative Oil Spill Risk = Probability Impact:Calculating Relative Risk
Review of Oil Spill Risk and Comparison to Funding Mechanism
Multiply per-gallon impact scores by probability
Final risk score: provides indicator for relative measure of oil spill risk for each source category and geographic location
SOURCES
OF
OIL
SPILL
RISK
Report Pages 9-11, Appendix 7
January 7, 2009 6
Analysis Uses Four Approaches for Estimating Relative Risk
Review of Oil Spill Risk and Comparison to Funding Mechanism
• Approach #1: based on actual spill history into Washington waters from 1995 through 2007.
• Approach #2: incorporates into historic data range of potential spill volumes.
• Approach #3: incorporates into historic data known and projected changes in regulations, industry operation, and traffic for the year 2015.
• Approach #4: incorporates into potential spill volumes known and projected changes in regulations, industry operations, and traffic for year 2015.
SOURCES
OF
OIL
SPILL
RISK
Report Page 13
Facil
ity-O
ther
Pipe
line
Refin
ery
Railr
oad
Oil T
erm
inal
Tank
er Tr
uck
Gas S
tatio
nPo
wer U
tility
Tank
Bar
geVe
hicle
-Oth
erNo
n-Ta
nk V
esse
lM
ilitar
yFis
hing
Ves
sel
Facil
ity-M
illing
Resid
entia
lPl
easu
re C
raft
Tank
Ship
Towbo
at/T
ugbo
atAi
rpor
tAi
rcra
ftPa
ssen
ger V
esse
lUn
know
nFe
rry
0
10
20
30
40
50
60
70
80
90
100
17.9
0
15.7
6
15.5
7
8.66
7.35
6.55
6.29
4.33
3.66
3.51
1.89
1.85
1.56
1.42
1.41
1.18
0.50
0.31
0.12
0.10
0.06
0.02
0.01
Approach #1 – Historic Spill DataM
easu
re o
f R
elat
ive
Ris
k
Rank-Ordered Risk Sources
• Risk is spread across all sources.• Assumes what has happened since
1995 continues into future.• Even those sources with low relative
risk are still sources of risk.
Note: Scores represent relative risk across all waters of the state. Scores add to 100. Numbers may not total due to rounding.Data Source: JLARC consultants, Applied Science Associates (ASA).
Facil
ity-O
ther
Tank
Ship
Railr
oad
Towbo
at/T
ugbo
atOi
l Ter
min
alRe
finer
yPi
pelin
eTa
nker
Truc
kNo
n-Ta
nk V
esse
lGa
s Sta
tion
Power
Util
ityFa
cility
-Milli
ngTa
nk B
arge
Fishi
ng V
esse
lVe
hicle
-Oth
erPl
easu
re C
raft
Milit
ary
Resid
entia
l
Pass
enge
r Ves
sel
Airc
raft
Airp
ort
Ferry
Unkn
own
0
10
20
30
40
50
60
70
80
90
100
21.2
1
16.9
6
10.2
4
8.10
8.04
7.88
5.58
3.84
2.83
2.54
2.48
2.20
1.88
1.75
1.49
0.73
0.66
0.57
0.51
0.27
0.19
0.05
0.01
21.2
1
16.9
6
10.2
4
8.10
8.04
7.88
5.58
3.84
2.83
2.54
2.48
2.20
1.88
1.75
1.49
0.73
0.66
0.57
0.51
0.27
0.19
0.05
0.01
0
10
20
30
40
50
60
70
80
90
100
Approach #2 – Potential Spillage
• Risk is spread across all sources.• By assuming small probability of worst-
case discharge, rank orders change.• Even those sources with low relative
risk are still sources of risk.
Rank-Ordered Risk Sources
Mea
sure
of
Rel
ativ
e R
isk
Note: Scores represent relative risk across all waters of the state. Scores add to 100. Numbers may not total due to rounding.Data Source: JLARC consultants, Applied Science Associates (ASA).
Pipe
line
Facil
ity-O
ther
Refin
ery
Railr
oad
Tank
er Tr
uck
Oil T
erm
inal
Gas S
tatio
nTa
nk B
arge
Vehi
cle-O
ther
Power
Util
ityNo
n-Ta
nk V
esse
lM
ilitar
yFis
hing
Ves
sel
Resid
entia
lPl
easu
re C
raft
Facil
ity-M
illing
Tank
Ship
Towbo
at/T
ugbo
atAi
rcra
ftAi
rpor
tPa
ssen
ger V
esse
lUn
know
nFe
rry
0
10
20
30
40
50
60
70
80
90
100
18.1
6
15.4
7
13.4
5
9.97
7.54
6.35
5.43
4.21
4.04
3.74
2.40
2.13
1.80
1.62
1.37
1.23
0.46
0.35
0.11
0.10
0.06
0.03
0.01
Approach #3 – Projected Changes in 2015 Based on Historic Data
• Risk is spread across all sources.• Adjusting historic data for changes in
regulations, industry operations, and vessel traffic changes rank order.
• Even those sources with low relative risk are still sources of risk.
Rank-Ordered Risk Sources
Mea
sure
of
Rel
ativ
e R
isk
Note: Scores represent relative risk across all waters of the state. Scores add to 100. Numbers may not total due to rounding.Data Source: JLARC consultants, Applied Science Associates (ASA).18
.16
15.4
7
13.4
5
9.97
7.54
6.35
5.43
4.21
4.04
3.74
2.40
2.13
1.80
1.62
1.37
1.23
0.46
0.35
0.11
0.10
0.06
0.03
0.01
0
10
20
30
40
50
60
70
80
90
100
Facil
ity-O
ther
Tank
Ship
Railr
oad
Towbo
at/T
ugbo
atOi
l Ter
min
alRe
finer
yPi
pelin
eTa
nker
Truc
kNo
n-Ta
nk V
esse
lGa
s Sta
tion
Power
Util
ityTa
nk B
arge
Fishi
ng V
esse
lFa
cility
-Milli
ngVe
hicle
-Oth
erPl
easu
re C
raft
Milit
ary
Resid
entia
l
Pass
enge
r Ves
sel
Airc
raft
Airp
ort
Ferry
Unkn
own
0
10
20
30
40
50
60
70
80
90
100
18.7
3
15.1
0
12.0
6
9.54
7.10
6.96
6.57
4.53
3.67
2.24
2.19
2.10
2.06
1.94
1.75
0.86
0.77
0.67
0.60
0.32
0.16
0.05
0.01
21.2
1
16.9
6
10.2
4
8.10
8.04
7.88
5.58
3.84
2.83
2.54
2.48
2.20
1.88
1.75
1.49
0.73
0.66
0.57
0.51
0.27
0.19
0.05
0.01
0
10
20
30
40
50
60
70
80
90
100
Approach #4 – Projected Changes in 2015 Based on Potential Spillage
• Risk is spread across all sources.• Adjusting potential spillage for changes
in regulations, industry operations, and vessel traffic changes rank order.
• Even those sources with low relative risk are still sources of risk.
Note: Scores represent relative risk across all waters of the state. Scores add to 100. Numbers may not total due to rounding.Data Source: JLARC consultants, Applied Science Associates (ASA).
Rank-Ordered Risk Sources
Mea
sure
of
Rel
ativ
e R
isk
18.7
3
15.1
0
12.0
6
9.54
7.10
6.96
6.57
4.53
3.67
2.24
2.19
2.10
2.06
1.94
1.75
0.86
0.77
0.67
0.60
0.32
0.16
0.05
0.01
0
10
20
30
40
50
60
70
80
90
100
January 7, 2009 11
No One Approach is “Better”
• Multiple ways of analyzing risk: this study uses four.
• Each is different—one approach is not “better” than another.
• Fundamentally, all approaches attempt to predict the future, which is uncertain.
• Risk will change over time—one large spill might change ranking.
Review of Oil Spill Risk and Comparison to Funding Mechanism
SOURCES
OF
OIL
SPILL
RISK
Report Page 13-14
January 7, 2009 12
Do Oil Spill Taxes Directly Align With the Sources of Risk?
Two Major Sources of Revenue: Oil Spill Taxes
Based on ownership of oil when it is first received
in a storage tank at a marine terminal,
from a waterborne vessel or barge
Sources of Risk
Based on transportationmode or activity such as:
Pipeline
Tank Barge
Manufacturing Facility
Review of Oil Spill Risk and Comparison to Funding MechanismReport Page 27
ALIGNMENT
January 7, 2009 13
Oil Spill Taxes Not Directly Aligned With Risk Sources
Review of Oil Spill Risk and Comparison to Funding Mechanism
Two Major Sources of Revenue: Oil Spill TaxesSources of Risk
Report Page 27
≠Transportation Mode or Activity
Ownership of oil in storage tank
ALIGNMENT
January 7, 2009
Three Additional Considerations When Funding Oil Spill Programs
1.Attributes of a high-quality tax structure• Equitable, inexpensive and efficient to
administer, with minimal impacts on economic decision making
2. Impacts of U.S. Constitution on Washington tax law• U.S. Constitution’s Interstate Commerce Clause
3.Practices of other coastal states• May not align with risk, but provide alternatives:
Oregon taxes each vessel trip New Hampshire includes pipelines
Review of Oil Spill Risk and Comparison to Funding Mechanism 14
FUNDING
CONSIDERATIONS
Report Pages 29-31
January 7, 2009Review of Oil Spill Risk and Comparison to Funding Mechanism 15
Summary of Answers to Three Key Questions
1. Sources and risks?• Spills occur across the state from many
different sources.
2. Alignment with funding?• Current sources of oil spill revenues do not
align with sources of risk.
3. Alternative funding sources?• While not necessarily risk based, some
other states have broader or different tax bases.
Report Pages 33-34
PRESENTATION
SUMMARY
January 7, 2009 16
Consider Practical Issues if Goal is Aligning Risk With Funding
• Multiple transportation modes and activities across the state associated with oil spill risk
• Risk changes over time
• Develop data system for risk assessment
• Select specific risk assessment approach
Review of Oil Spill Risk and Comparison to Funding Mechanism
PRESENTATION
SUMMARY
Report Pages 34
January 7, 2009Review of Oil Spill Risk and Comparison to Funding Mechanism 17
No Recommendations in Report: Agencies Provided Opportunity to Comment
• OFM and the Department of Revenue had no specific comments.
• The Department of Ecology, the Department of Fish and Wildlife, and the Oil Spill Advisory Council provided detailed comments.
AGENCY
RESPONSES
Appendix 2
January 7, 2009Review of Oil Spill Risk and Comparison to Funding Mechanism 18
Department of Ecology’s Response Addresses Workload and Funding
• Ecology states that JLARC identifies sources of risk not regulated by Ecology’s Spills Program. If the Legislature wants them regulated, additional funding and authority is required.
• Ecology states that the Spills Program needs a fully reliable, equitable, and sustainable funding mechanism.
• Ecology states that any new fee should be:−Proportionate to current program workload; −Based on industry sectors the Spills Program
currently regulates; and−Administratively efficient and legally sustainable.
AGENCY
RESPONSES
Appendix 2
January 7, 2009Review of Oil Spill Risk and Comparison to Funding Mechanism 19
Fish And Wildlife’s Response Addresses Methodology and Funding
• Department of Fish and Wildlife cautions policy makers against attaching too much accuracy to actual numbers in the report. Near misses are not included in JLARC’s data.
• The Department points out that: sources of risk are diverse; the presence of oil creates risk; a funding solution based on each exchange of oil and petroleum products might be more practical.
• The Department states that the spills program has been instrumental in reducing spill risk; gains will be diminished if programs are reduced due to a lack of funding.
AGENCY
RESPONSES
Appendix 2
January 7, 2009Review of Oil Spill Risk and Comparison to Funding Mechanism 20
• Based on indications in the report, the Council states that it would be almost impossible to directly align revenue with percentage of risk posed.
• According to the Council, the Legislature should consider:−Charging a fee or tax related to oil itself or
commodity activity, and as close to the well head as possible;
−Eliminating the barrel tax, replace with fee on all bulk transfers of oil products on, over, or within a distance that could drain to waters of state; and
−Ecology’s proposed oil handling fee.
Oil Spill Advisory Council’s Response Addresses Funding and Alignment
AGENCY
RESPONSES
Appendix 2
January 7, 2009 21
Contact Information
Elisabeth [email protected]
John Woolley [email protected]
www.jlarc.leg.wa.gov
Review of Oil Spill Risk and Comparison to Funding Mechanism