Updated Status of Oil and Gas-related Bills in California's Legislature

by Stoel Rives LLP

The end of the 2013-2014 legislative session is coming to a close.  Below are key deadlines for the Legislature and Governor:

  • August 15 was the last day for fiscal committees to meet and report bills to the Floor.
  • August 18-31 Floor Session only - no committees, other than conference committees and Rules committee, may meet for any purpose.
  • August 22 is the last day to amend bills on the Floor.
  • August 31 is the last day for each house to pass bills.
  • All bills passed by the Legislature by September 1, 2014 must be signed or vetoed by the Governor on or before September 30, 2014.

Below you will find summaries of each piece of oil and gas-related legislation, with an updated status for each bill. Stoel Rives has a dedicated team of professionals that will continue to track these bills.

SENATE BILLS (Status as of August 14, 2014)

SB 1017 (Evans): Taxation: Oil Severance Tax Law

As of May 30, 2014, the Senate Appropriations Committee held this bill under submission. Therefore, this bill is effectively dead. However, Stoel Rives will monitor this bill until the end of the legislative session.

  • Will impose an oil and gas severance upon any operator
  • Tax administered by State Board of Equalization
  • All tax revenues, penalties, and interest collected would be deposited into the California Higher Education Fund

SB 1132 (Mitchell): Oil and Gas: Well Stimulation Treatments

As previously noted, this bill failed to pass the Senate on May 29, 2014 and the bill’s status is listed as “failed.”

  • Would impose a moratorium on all well stimulation activities until the completion of the independent scientific study required by Pub. Resources Code § 3160(a);
  • Amendments extended the deadline for completing study from January 1, 2015 to June 30, 2016;
  • Amendments would also change the standard for the scientific study required by SB 4 - a committee of representatives from various California state agencies will determine whether the study indicates that well stimulation activities “do not contribute to the deterioration of environmental conditions in a way that threatens public health and welfare or the environmental or economic sustainability of the state.”

SB 1156 (Steinberg): California Carbon Tax Law of 2014

As previously reported, this bill failed to pass to the Assembly and, therefore, is effectively dead.

  • Would impose carbon tax on suppliers of fossil fuels; and,
  • Revenues would be deposited in the Carbon Tax Revenue Special Fund in the State Treasury.

SB 1281 (Pavley): Oil & Gas Production; Water Use Reporting

SB-1281 was passed by the Assembly Committee on Appropriations on August 14, 2014.

  • Would require the use, or treatment and use, of water produced through oil field activities and recycled water to the extent feasible;
  • Operators would be required to submit quarterly statement to the State Oil and Gas Supervisor to include the source and amount of fluid or gas injected into each well, and the source and amount of water to generate such fluid or gas;
  • Would require disclosures of additional information related to the treatment of water and use of treated or recycled water; and
  • Would prohibit use of water from a groundwater basin or sub-basin designated as high priority if the use would compromise existing use for domestic or irrigation purposes.

SB 1319 (Pavley): Oil Spills: Oil Spill Prevention and Response

Passed by the Assembly Committee on Appropriations on August 14, 2014.

  • Would generally expand the Lempert-Keene-Seastrand Oil Spill Prevention and Response Act relating to oil spills to cover all waters of the state (including protection of animals living within inland waters), and expand the scope of crimes within the act. The current California oil spill contingency plan will have to be amended by January 1, 2017 to cover inland state waters; and
  • Would require additional planning and implementation of processes for screening non-vessel handling and transport of oil.

SB 1389 (Hill): Natural Gas Pipeline Safety Act of 2011

As of May 30, 2014, the Senate Appropriations Committee held this bill under submission. Therefore, this bill is effectively dead. However, Stoel Rives will monitor this bill until the end of the legislative session.

  • Would prohibit a gas corporation from determining the maximum allowable operating pressure of an intrastate transmission line or segment of an intrastate transmission line using the highest actual operating pressure the line or segment was subject to during the 5-year period preceding July 1, 1970, pursuant to a specified federal regulation, and would require that the maximum allowable operating pressure be determined pursuant to rules or orders of the commission; and
  • Would impose new criminal violations.

ASSEMBLY BILLS (Status as of August 14, 2014)

AB 1763 (Perea): State Energy Plan for 2030 and 2050

The June 17, 2014 hearing with Senate Energy Utilities & Communications Committee was canceled at the request of the author. No further action has been taken on the bill since that date.

  • Would require the State Energy Resources Conservation and Development Commission to develop and submit a report containing a state energy plan for 2030 to 2050 to the Governor and Legislature by January 1, 2016.

AB 1937 (Gordon): Natural Gas Pipeline Safety Act of 2011: School and Hospital Notification of Maintenance and Testing of Gas Pipelines

This bill was passed by the Senate on August 7 and Assembly on August 11. On August 15, the bill was sent to enrolling and engrossing for presentation to the Governor for signature or veto.

  • Would require gas corporation to provide not less than three working days’ notice to school or hospital officials prior to undertaking nonemergency gas pipeline maintenance or testing when work is located within 500 feet of such facilities;
  • Would require gas corporation to maintain record or date and time of notification provided to school or hospital officials; and
  • Violation of these requirements would be considered a crime.

AB 2420 (Nazarian): Well Stimulation Treatments, Local Prohibition

As of May 30, 2014, awaiting second hearing in Assembly Local Government Committee after the bill failed to pass the Assembly Local Government Committee in a 2-3 vote and reconsideration was granted on April 30, 2014. Therefore, this bill is effectively dead.

  • Would authorize a city or county to adopt and enforce a local ordinance prohibiting well stimulation treatments.

AB 2678 (Ridley-Thomas): Oil Spills, Oil Spill Technical Advisory Committee

This bill was amended on June 25, 2014 by the Senate Committee on Natural Resources and Water. On August 5, 2013, the bill was ordered to a third reading and is currently in the Senate floor process.

  • Would modify the membership of the TAC by substituting a faculty member from the Karen C. Drayer Wildlife Health Center at UC Davis or the Director of the Oiled Wildlife Care Network for the current member who has previously worked in state government; adding a new member who represents an environmental group with an interest in protecting inland natural resources from oil spills; and, adding a new member who represents an environmental justice group concerned about the risk of oil spills from railroad tank cars traveling through disadvantaged communities; and
  • All three of the proposed new members will be appointed by the Governor and the total number of the TAC members will increase to 16.

Written by:

Stoel Rives LLP

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