Updated Status of Oil- and Gas-Related Bills Proposed in California’s 2015-2016 Legislative Session

June 3, 2016 was the final deadline for oil- and gas-related bills introduced in the 2015-2016 legislative session to move through their house of origin.  Below is a summary of those bills, many of which relate to natural gas storage following the Aliso Canyon natural gas well leak.  Stoel Rives is monitoring these bills and will provide updates as the bills move through the legislative process.

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The Other Shoe Just Dropped on Methane Emissions from the Oil and Gas Industry

Not to be outdone by its federal counter-parts, the California Air Resources Board (“ARB”) released Greenhouse Gas Emission Standards for Crude Oil and Natural Gas Facilities (“proposed rule”) for methane emissions on Tuesday, May 31, following a slew of recent federal regulations targeting reduction of methane emissions.  Cal. Code Regs. tit. 14, §§ 95665-95676 (proposed).  The federal Bureau of Land Management released proposed regulations for reducing waste and methane emissions in oil and gas operations in January 2016.  Then, in May 2016, the U.S. Environmental Protection Agency also began regulating methane when it released final regulations to curb emissions of methane and volatile organic compounds from additional new, modified, and reconstructed sources in the oil and gas industry.

While methane is the current emissions target for regulators’ greenhouse gas reduction efforts, the oil and gas sector is the industry target.  The proposed rule is part of California’s plan to reduce emissions from short-lived climate pollutants, including methane emissions, by 40-45% by 2025.  This follows the Obama Administration’s similar methane emissions reduction goal.

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Southern California Environmental Update #1

This is the first update on environmental regulatory and legal developments in Los Angeles and adjacent counties, as well as the Southern San Joaquin l Valley.  Let us know what you think.  Your comments on this Update will be considered for inclusion in future updates.

South Coast Air Quality Management District

*New Management:  The Governing Board has appointed Wayne Nastri, former Regional Administrator of USEPA for the Pacific Southwest and Hawaii, as interim replacement for Dr. Barry Wallerstein, dismissed by the Board in early March.  While the Board’s April appointment of Nastri was disrupted by community activists protesting the appointment as anti-environmental, some wearing clown suits, Nastri has also been praised by a leading environmental group.  Quoted in the Los Angeles Times, Joel Reynolds, western director and senior attorney at the Natural Resources Defense Council said, “He has a strong environmental record, a good sense of strategy and an understanding of how important the public is in environmental decision-making,” Others describe Nastri as flexible, open and collaborative. Continue Reading

Part the Seas: Federal Report Finds Offshore Fracking has No Significant Impact

On May 27, 2016, the Bureau of Ocean Energy Management (“BOEM”) and the Bureau of Safety and Environmental Enforcement (“BSEE”) jointly released a Programmatic Environmental Assessment (“PEA”) for well stimulation treatment activities at operations on the Outer Continental Shelf (“OCS”) of offshore California.  The agencies identified and studied the environmental impacts of 43 lease areas at 23 active wells that could undergo well stimulation treatments, which includes hydraulic fracturing (“fracking”).

As required under the National Environmental Policy Act, the PEA evaluated a range of potential impacts including air quality, water quality, commercial and recreational fisheries, recreation and tourism, and environmental justice.  In conducting the analysis, the agencies adopted definitions contained in California’s Senate Bill 4.  For example, well stimulation treatments “include, but are not limited to, hydraulic fracturing treatments and acid well stimulations.”

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Clean Up Green Up—Supplemental Use Districts—more regulation for three LA City Neighborhoods

On June 4, 2016, the City of Los Angeles rolls out its much-discussed Clean Up Green Up (CUGU) pilot program for three communities: Boyle Heights, Wilmington and Pacoima. Ordinance 184246, approved by Mayor Garcetti on April 22, 2016, adds new rules to the City’s Planning and Zoning Code and Building Code. CUGU is controversial. Communities and their advocates say that the cumulative environmental impacts from multiple businesses in these neighborhoods expose residents to higher levels of pollution than other City neighborhoods. They also say the program is designed to help neighborhood businesses obtain permits and comply with regulations. Businesses and their advocates assert that the program has abandoned promises for meaningful incentives and assistance to local businesses. They also say that the program will discourage business improvement because major improvements or additions bring down the new regulations on the heads of existing businesses. Continue Reading

New Regulations for California Groundwater Management

California has moved one step closer to implementing the Sustainable Groundwater Management Act (“SGMA”), California’s landmark groundwater legislation. On Wednesday, May 18, the California Water Commission adopted a set of regulations that will govern the creation of groundwater sustainability plans (“GSPs”) by local Groundwater Sustainability Agencies (“GSAs”). The emergency regulations, developed by the Department of Water Resources (“DWR”), take effect in June.

The new regulations will have some real impacts on GSAs and their implementation of SGMA. The most significant requirements include: Continue Reading

New Laws Reform California’s Surface Mining and Reclamation Act

True to his word, Governor Jerry Brown signed two bills, AB 1142 and SB 209, into law on Monday to reform California’s Surface Mining and Reclamation Act (SMARA).  Now, before getting too excited, keep in mind that the new laws are nowhere near the “top to bottom” reform called for by Brown in 2013.  Local control with state oversight still remains at the heart of SMARA.  However, the new laws will have some real impacts on operators and lead agencies during inspections and state-review of reclamation plans and financial assurances.  The most significant reforms include:

New Name but No Changes in Responsibilities

The Office of Mine Reclamation (OMR) will be renamed the “Division of Mine Reclamation” and the Director of OMR will be the “Supervisor of Mine Reclamation.”  Despite a new name and title, the oversight role and responsibility of the renamed Division of Mine Reclamation and Supervisor of Mine Reclamation remain very much the same as before this reform.

Reform Is Expensive

Maximum annual fees imposed on operators will increase from $4,000 to $6,000 in 2017 to $8,000 in 2018 and to $10,000 starting in 2019.

Reclamation Plan Contents Clarified

The new laws clarified the required contents of reclamation plans for new surface mining operations.  The most significant change requires all engineering, geologist, or land surveyor related maps, diagrams or calculations to include a signature and seal from a California-licensed professional.  This has long been the policy of OMR, based on a policy adopted by the State Mining and Geology Board; however, that policy was never formally adopted through a rule making process applicable to all mines.  As a result, the policy frequently caused confusion as to its applicability during OMR’s review process for reclamation plans. Continue Reading

CA Lawmaker Floats a Legislative Fix to Siskiyou County Farm Bureau Case

Last summer, the Third District Court of Appeal issued a sweeping ruling in Siskiyou County Farm Bureau v. Department of Fish and Wildlife, which made any substantial diversions of water subject to the streambed alteration agreement provisions of the California Fish and Game Code (“CDFW”).  The court ruled that California Fish and Game Code section 1602 (“Section 1602”) gives the California Department of Fish and Wildlife broad authority to regulate water diversions, even when diverters have the legal right to use the water.

This decision caused ripples throughout California, as holders of water rights were now required to provide notice to the CDFW of their historical diversions. Such notification can often necessitate a Streambed Alteration Agreement (which is now a misnomer, as now parties may be required to enter into the agreement despite having never altered the streambed) and potential mitigation measures imposed by the CDFW.

The court held that the most natural reading of the term “divert” as used in Section 1602, when viewing it from historical applications and through the existing legal lens, includes diversions of water that do not cause alteration of or damage to the streambed. The court recognized the implications of its decision, but stated that a fix was to be found “in the halls of the Legislature” as a defect, if any, is a policy issue.  The court’s statements were heard by Senator Jim Nielsen, who recently introduced S.B. 1026.  This Bill seeks to reign-in Section 1602 to limit the definition of diversions to only those diversions that actually alter the bed, channel, or bank of a river, stream, or lake.

If the proposed Bill stays afloat through both chambers and is signed into law, it will provide relief to owners of water rights who draw water from streams without ever altering the streambed. However, owners of water rights may have an uphill battle ahead of them; earlier this week, S.B. 1026 was swamped in its first attempt to sail out of the Senate Committee on Natural Resources and Water on a 3-4 vote.  This does not mark the end of S.B. 1026, but it undoubtedly slows its progress.  Stay tuned for updates on this Bill and other water legislation in the California Legislature’s pipeline.

California Proposes Emergency Regulation to Ease the Prop 65 Warning Burden on Canned and Bottled Food and Beverage Products

California’s Office of Environmental Health Hazard Assessment (“OEHHA”) added Bisphenol A (“BPA”) to the Proposition 65 (“Prop 65”) list as a chemical known to cause reproductive toxicity, on May 11, 2015. Prop 65 provides companies with a one year grace period before having to comply with newly listed chemicals, meaning that as of May 11, 2016, companies must provide a Prop 65 warning for exposures to BPA.[1]  As a result, companies are in a mad dash to eliminate BPA from products and/or add Prop 65 warnings to products containing BPA that will be sold in California.

On March 17, 2016, OEHHA took action under the Emergency Rulemaking Process to allow a temporary use of a standard point-of-sale warning message for BPA exposures from canned and bottled food and beverage products—this regulation would eliminate the need for placement of Prop 65 warnings for BPA on individual products.   Instead, a warning at the cash register or check-out line concerning BPA would be deemed an acceptable alternative.

OEHHA has stated that “canned and bottled foods and beverages” means food and beverages packaged in hermetically sealed, durable metal or glass containers, including, but not limited to, fruits, vegetables, soups, pasta products, milk, soda, and alcoholic beverages. OEHHA is proposing the regulation because it understands that even though companies in these industries are taking steps to remove BPA from their products, it will take time to sell thru existing retail inventories.  OEHHA also is hoping to avoid a situation where retailers have to pull large amounts of canned food and beverage products from California due to the upcoming deadline to warn for products containing BPA.

The proposed warning language for the BPA point-of-sale warning is as follows:

WARNING.  Many cans containing food and beverages sold here have epoxy linings used to avoid microbial contamination and extend shelf life.  Lids on jars and caps on bottles may also have epoxy linings.  Some of these linings can leach small amount of bisphenol A (BPA) into the food or beverage.  BPA is a chemical known to the State of California to cause harm to the female reproductive system.  For more information go to:  www.P65Warnings.ca.gov/BPA.

If adopted, the manufacturer, producer, packager, importer or distributor of the canned or bottled food or beverage can either place a Prop 65 warning to the product that meets the existing requirements of the law (the standard safe harbor warning), or provide written notice through its agent or trader association to the retailer or its authorized agent. The notice must inform the retailer that a warning is required for the product, include the exact name or description of the product that requires the warning (such as the UPC number or other identifying designation), and provide or offer to provide a number of point-of-sale warning signs that contain the warning language listed above.  The retailer receiving the notice must post the point-of-sale warning signs and is responsible for placement and maintenance of the signs.

A point-of-sale sign is a better option for manufacturers and distributors and, if effectively utilized by retailers, could help reduce Prop 65 lawsuits regarding BPA in these products by Prop 65 plaintiffs (also known as “bounty hunters”). The emergency regulation would expire in 180 days but during that period OEHHA will proceed with a regular rulemaking process to extend it as an interim measure for a one-year period from the date of adoption.  It may provide some relief to food and beverage companies in the short-term, but food and beverage companies should continue to take action to address BPA in their products—either by working to remove potential BPA exposures or moving toward use of a Prop 65 warning for such exposures.

 


[1] A warning is not required if exposure to BPA in the product will have no observable effect assuming exposure at 1,000 times the level in question (the maximum allowable dose level, or MADL).  There is no simple test to determine whether a product containing BPA is below the MADL and to make such a determination requires the assistance of an expert toxicologist experienced in conducting Prop 65 exposure assessments.

Status of Oil- and Gas-Related Bills Proposed in California’s 2015-2016 Legislative Session

February 19, 2016 was the deadline for lawmakers to introduce legislation to the 2015-2016 California Legislative Session, and the Legislature’s ever-growing appetite for regulating the energy industry in California shows no signs of being satiated anytime soon.  More bills than ever proposing to add new regulations on the oil and gas industry have been introduced.  Below is a summary of those bills, many of which relate to natural gas storage following the Aliso Canyon natural gas well leak.  Stoel Rives is monitoring these bills and will provide updates as the bills move through the legislative process.

ASSEMBLY BILLS

AB 1759 (Bonta): Hydrogen fluoride: notice of use: substitution

This bill would require an owner or operator of an oil refinery that uses hydrogen fluoride, hydrofluoric acid, or modified hydrofluoric acid in its operations to send out biannual notices to each business, school, child care facility, library, church, community facility, senior facility, and residence within a 3.5-mile radius of the refinery.  The cost of the notice must be paid by the owner or operator of the refinery, and the owner or operator must file a copy of the notice and distribution list with the California Air Resources Board.

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