There are a number of California State Senate and Assembly bills that could impact oil and gas operations this year, if passed.  Stoel Rives has a dedicated team of professionals tracking these bills.  Below you will find summaries of each piece of oil and gas-related legislation.

SENATE BILLS (Status as of May 2, 2014)

SB 1017 (Evans):  Taxation:  Oil Severance Tax Law
Passed Education Committee on April 24, 2014; referred to Committee on Government and Finance; hearing in Committee on Government and Finance May 7, 2014

  • Bill 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
Passed Senate Environmental Quality Committee on April 30, 2014; referred to Committee on Appropriations

  • Bill 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
Awaiting hearing of Senate Governance and Finance Committee; first hearing cancelled at the request of author on April 2, 2014

  • Bill would impose carbon tax on suppliers of fossil fuels
  • Revenues would be deposited in the Carbon Tax Revenue Special Fund in the State Treasury

SB 1281 (Pavley):  Oil & Gas Production; Water Use Reporting
Passed Senate Natural Resources and Water Committee on April 29, 2014; referred to Committee on Appropriations; hearing in Committee on Appropriations May 12, 2014

  • Bill 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 monthly 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

SB 1319 (Pavley):  Oil Spills:  Oil Spill Prevention and Response
Passed Senate Environmental Quality Committee on April 30, 2014; referred to Committee on Appropriations

  • This bill 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
  • The bill would require additional planning and implementation of processes for screening nonvessel handling and transport of oil
  • Existing law imposes an oil spill prevention and administration fee not to exceed $0.065 per barrel of crude oil or petroleum products and not to exceed $0.05 on persons owning crude oil or petroleum products at a marine terminal.  This bill would require the administrator to annually determine the fee, and would delete the fee exception for independent crude oil producers

SB 1389 (Hill):  Natural Gas Pipeline Safety Act of 2011
Passed Senate Energy, Utilities and Communications Committee on April 29, 2014; referred to Committee on Appropriations

  • Bill would require the Commission on State Mandates to adopt rules for gas corporations concerning the maximum allowable operating pressure for an intrastate transmission line installed prior to July 1, 1970, and would require that the rules adopted be compatible with specified regulations concerning maximum allowable operating pressure adopted by the federal Pipeline and Hazardous Materials Safety Administration
  • As these provisions would become part of the Public Utilities Act, new criminal violations would be imposed

ASSEMBLY BILLS (Status as of May 2, 2014)

AB 1763 (Perea):  State Energy Plan for 2030 and 2050
Passed Assembly Natural Resources Committee and referred to Committee on Appropriations on April 28, 2014

  • 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
Passed Assembly Utilities and Commerce Committee and referred to Committee on Appropriations on April 28, 2014; sent to suspense file pursuant to Joint Rule 62(a) on April 28, 2014

  • 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
  • Violation of these requirements would be considered a crime

AB 2420 (Nazarian):  Well Stimulation Treatments, Local Prohibition
Hearing in Assembly Local Government Committee; failed passage, reconsideration granted April 30, 2014

  • This bill 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
Passed Assembly Natural Resources Committee on April 28, 2014; non-appropriation bill

  • The Oil Spill Technical Advisory Committee is currently composed of 10 members, and this bill would instead require the Governor to appoint a member who is a faculty member of the Karen C. Drayer Wildlife Health Center at UC Davis or the Director of the Oiled Wildlife Care Network

Co-authored by Michael N. Mills and Kimberly J. Hellwig