New tax on oil clears California senate committee.

New tax on oil clears California senate committee

A state Senate committee, ending weeks of political gridlock, gave the go-ahead for creation of a $150 million oil cleanup fund subsidized by a 25 cents-a-barrel tax on petroleum products.

The senate's Governmental Organization Committee, which rejected a similar plan last month amid intense lobbying, unanimously approved a measure by state Sen. Barry Keene (D-Benicia). It now goes to the Judiciary Committee.

A rival but similar plan by Assemblyman Ted Lempert (D-San Mateo) is in the assembly's Judiciary Committee, and the two chambers are expected to work out their differences in conference committee before the legislative session ends next month.

The main difference between the two bills concerns liability for organizations that clean up oil spills. Major oil companies like Atlantic Richfield and Unocal, represented by the Western States Petroleum Association, want full immunity from prosecution granted to the organizations they hire to clean up oil spills.

Without that provision, oil companies claim it is difficult to find organizations willing to accept the liability involved. However, the California Trial Lawyers Association has argued to the assembly that only qualified immunity should be granted.

"The oil industry has worked in good faith on a workable bill, and we don't consider one with qualified immunity to be a good response," said association lobbyist Mike Kahl. "We are also concerned about the size of the fund."

Kahl estimated it would take about six months for the $150 million emergency fund to be generated.

Both Keene's and Lempert's bills are similar to legislation awaiting President Bush's signature.

Two weeks ago Congress voted to establish a $1 billion federal trust fund, financed by the oil companies, that would provide money for emergency cleanups and victim compensation. The federal legislation, stemming from the Exxon Valdez spill and a rash of other accidents involving petroleum products at sea, would also require double hulls on all oil tankers using American ports.

The Lempert and Keene bills call for a $150 million cleanup fund under control of the state. The money would be generated from the 25 cents-a-barrel tax on all oil products brought into California, regardless of whether it is drilled inside or outside the state. The tax would be levied on all oil producers except small independents that turn out less than 500 barrels day.

California legislators argue that even if federal legislation pass, the state needs its own cleanup fund.

They say that in the event of simultaneous accidents on the East and West coasts, lawmakers give priority to the eastern U.S. because it has more congressional representation.