HB 418 - AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO STATE TAXES AND VESSEL-TO-VESSEL TRANSFERS OF PETROLEUM PRODUCTS.

More details on HB 418 from Vic Singer -

<> WHAT HB 418 PROPOSES TO DO: HB 418 proposes a new tax consisting of a fee of $1 per barrel upon any entity engaged in commercial lightering within Delaware's territorial jurisdiction.

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<> WHO ARE THE SPONSORS? HB 418 was filed by Rep. Edward Osienski (D, 24th District). Joint sponsors and/or cosponsors are Senator Karen Peterson (D, 9th District), Michael Barbieri (D, 18th District), Rep. Earl Jaques (D, 27th District) and Rep. John Kowalko (D, 27th District).

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<> WHAT IS "LIGHTERING?" "Lightering" is off-loading cargo from deep draft ocean vessels to shallower draft vessels able to reach port facilities up the Delaware or other rivers. The two vessels must be kept close enough together for the petroleum to be transferred by heavy hoses stretched or draped across the gap that separates them. After enough cargo is off-loaded from the deep draft tanker to reduce its draft to what the channel depth will accommodate, the deep draft tanker can also go upstream to the delivery target.

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<> WHY IS LIGHTERING IMPORTANT TO DELAWARE? Big Stone Anchorage is a Natural Resource entirely within Delaware's boundaries; the DE/NJ state line is a mile or more east of the Anchorage. The Anchorage is part of a 55 ft minimum depth (low tide) trench in the bottom of Delaware Bay that stretches from 7 to 17 miles northwest of Cape Henlopen. It is easily reached by deep draft tankers, and has been used for lightering petroleum for more than a half century.It is reputedly the only deep draft accessible sheltered inland bay between Maine and Texas.

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<> CAN LIGHTERING BE DONE AT SEA? Lightering can be done at sea, but inland bays are preferred because sheltering from heavy seas and storms make the activity safer and less susceptible to demurrage fees incurred due to high seas and stormy weather.

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<> WHAT IS A DEMURRAGE FEE? A demurrage fee is the charge that the user of seagoing vessel pays to the owner when the time required for loading, transporting and unloading the cargo exceeds what was provided for in the terms of the contract. It is analogous to the per day charge for renting a car.

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<> IS BIG STONE ANCHORAGE COVERED BY DELAWARE'S COASTAL ZONE ACT? The Anchorage is subject to all of Delaware's laws, including the Coastal Zone Act. The CZA forbids bulk product transfers of materials delivered by sea. But one company that has been lightering continuously at the Anchorage since before the CZA was enacted is "grandfathered" to continue its non-conforming activity, though all expansions and extensions are subject to CZA conditions.

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<> HOW MUCH PETROLEUM IS BEING LIGHTERED AT BIG STONE? DNREC reports that over 58 million barrels of crude were lightered at the Anchorage in CY 2013. But little or none went to the Delaware City Refinery because the refinery's Coastal Zone permit enables receiving more crude by rail than the refinery can use - - hence its planned exports to a sister refinery outside Delaware. The petroleum lightered at Big Stone goes to refineries in NJ, PA and other states on the eastern seaboard.

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<> HOW MUCH GASOLINE DOES A BARREL PRODUCE? A barrel of crude produces as much as 29 gallons of gasoline plus higher molecular weight hydrocarbons and residual oil (separately marketable products).

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<> UNDER THE HB 418 PROPOSAL, WHO PAYS? The "buck a barrel" proposal amounts to a tax less than 3.5 cents per gallon of gasoline derived from the lightered crude, but much less per gallon of the total amount shipped up river. All the lightered crude is sold to non-Delaware refineries, and only a fraction of it finds its way back to Delaware..

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<> IS IT FAIR TO IMPOSE DELAWARE'S REVENUE NEEDS ON NON-DELAWAREANS? Fair or not, taxes imposed on businesses with revenues mostly from sales outside the State of Delaware account for more than $1 Billion - - more than 30% - - of Delaware's State budget. HB 418 represents only a small addition to our historic practice. And it is analogous to the separation charge imposed by most oil and Cnatural gas producing states on their resources sold for use by Delawareans.

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<> IS THE PROPOSAL AN INTERFERENCE WITH INTERSTATE COMMERCE? Lightering at Big Stone Anchorage is a service started, performed and completed entirely within Delaware's boundaries. It is no more interstate commerce than the tax on a hotel room imposed on whoever rents it, or the toll on I-95 at the DE/MD State Line, or at the Delaware Memorial Bridges. Nor is it an interference with Maritime law, since the Anchorage is seven or more miles upstream from the mouth of the Delaware River.

 

 

Read the bill HERE -

SPONSOR:	Rep. Osienski & Sen. Peterson
	Reps. Barbieri, Jaques, Kowalko

 

HOUSE OF REPRESENTATIVES 147th GENERAL ASSEMBLY

 

HOUSE BILL NO. 418

 

AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO STATE TAXES AND VESSEL-TO-VESSEL TRANSFERS OF PETROLEUM PRODUCTS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all members elected to each house thereof concurring therein):


Section 1.  Amend §2901, Title 30 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and redesignating accordingly:
(11) “Lightering” means the commercial transfer from one vessel to another vessel of any material in bulk quantities exceeding 40 barrels occurring upon waters within the territorial jurisdiction of this State and for the purpose of reducing the channel depth required for passage of either vessel.
Section 2.  Amend Chapter 29, Title 30 of the Delaware Code by adding a new “§ 2913” thereto by making deletions as shown by strike through and insertions as shown by underline as follows and redesignating accordingly:
§ 2913.  Petroleum product lightering service providers; license requirement; additional fee per unit lightered.
 (a)  Any person engaged in lightering of petroleum products shall first obtain a license from the Department of Finance and pay therefor a license fee of $75.  Such license shall be valid until January 1, at which time it may be renewed for a full year and every year thereafter, provided that the person makes application therefor and payment of $75 for renewal.
(b)  In addition to the license fee required by subsection (a) of this section, any person engaged in lightering of petroleum products shall pay a fee at the rate of $1 per barrel of petroleum product transferred, which fee shall be payable monthly on or before the twentieth day of each month with respect to the aggregate amount of petroleum products lightered during the immediately preceding month. The monthly returns shall be accompanied by a certified statement on such forms as the Department of Finance shall require in computing the fee due.
(c) The fees assessed pursuant to this section shall be remitted to the Department of Finance on forms issued by the Department, subject to such regulations and requirements prescribed by the Secretary of Finance.
(d) The Department of Finance shall pay over all fees received pursuant to this section to the Department of Transportation to the credit of the Transportation Trust Fund pursuant to Chapter 14 of Title 2.  Said fees shall be used to finance the costs of roads, highways and other transportation facilities and not to defray the expenses and obligations of the general government of the State.
Section 3.  This act shall take effect January 1, 2015.

SYNOPSIS

This bill imposes a license requirement and fee of $1 per barrel upon any entity engaged in the commercial lightering of petroleum products on waters within the territorial jurisdiction of this State.