This is the first in a series of posts to provide the latest on environmental and legal developments affecting oil and gas operations and development and other industries in Los Angeles and adjacent counties, as well as the southern San Joaquin Valley. In this post, we’ll provide an update on legislation proposed in 2019 that affects industry in southern California, implementation of significant legislation previously adopted, and initiatives in Los Angeles to limit oil and gas operations.
AB 617 Implementation
The stated goal of AB 617 (Garcia, 2017) is to protect communities with disproportionate levels of air emissions and provide stricter penalties for certain infractions by regulated entities. In line with AB 617, the California Air Resources Board (CARB) is implementing the Community Air Protection Program and finalized its first annual selection of communities for participation in the Program in September 2018. Air districts are now identifying candidate communities to be considered for the second year of the Community Air Protection Program. CARB isn’t likely to vote on the selections until later in 2019.
In the first round of community selection, South Coast Air Quality Management District (South Coast Air District) chose (1) Wilmington/West Long Beach/Carson; (2) San Bernardino/Muscoy; and (3) Boyle Heights/East Los Angeles/West Commerce. On September 6, 2019, South Coast Air District’s Governing Board approved Community Emission Reduction Programs for these areas. Most of the plans set goals for action, and enhanced enforcement, rulemaking and incentive grants will follow. The plan for San Bernardino/Muscoy focuses on truck, rail bus traffic, warehouses (as an indirect source), concrete and asphalt batch plants, and rock and aggregate plants. The plan for Boyle Heights/East Los Angeles/West Commerce focuses on neighborhood and freeway truck and bus traffic, railyards, metal processing facilities, rendering facilities, auto body shops, and general industrial facilities, along with reducing exposure at schools, childcare facilities, community centers, libraries, and public housing projects.
The plan for Wilmington/West Long Beach/Carson is the only one of the three that focuses on oil drilling and refineries. It also targets ports, neighborhood truck traffic, and railyards, and reducing exposure at schools, childcare centers and homes. Related to oil drilling, the Plan includes increased emphasis on monitoring of wells by both mobile methods and community monitoring, leak detection and repair, oil well notifications, and review and potential tightening of the Rule 1148 oil well series and Rule 1173 (Control of Volatile Organic Compound Leaks and Releases from Components at Petroleum Facilities and Chemical Plants).
At the Septmber 6, 2019 meeting, the South Coast Air District Governing Board also agreed to recommend to CARB these communities for Year 2 of AB 617: (1) the Coachella Valley and (2) South Gate, Florence-Firestone (East), Walnut Park, Huntington Park (West), Cudahy, Bell Gardens (South).
AB 617 requires CARB and air districts to work together to develop plans for additional air quality requirements for those communities. The Community Steering Committees have substantial influence on these plans. Residents of these communities have been allowed to join the Los Angeles-area Steering Committees, but there is a notable absence of business representatives. Business owners residing outside the Communities have generally not been eligible for Steering Committee membership. Activists have been critical of South Coast Air District and continue to raise community expectations about their ability to influence regulation of local businesses through the Steering Committees.
New reporting requirements under AB 617 are not limited to CARB-selected Community Air Protection Program communities. Regulated entities are required to report all air emissions, including toxics emissions, in 2019. Both CARB’s Regulation for Reporting of Criteria Pollutant and Toxic Air Contaminant Emissions and South Coast Air District’s Toxics Annual Emission Reporting will drastically increase fees for certain businesses.
Both houses of the Legislature approved the following bills for signature by the Governor. The California Independent Petroleum Association is requesting that the Goveror veto these bills.
AB 342 (Muratsuchi)
AB 342 bans California from issuing new leases for the extraction of oil and gas deposits from state lands. The language in the bill is clear in its mandate to not allow agencies such as the State Lands Commission (SLC) to issue new leases. What isn’t clear, however, nor mentioned in AB 342, is how the bill applies to lease extensions or renewals. CIPA highlighted this shortcoming in its veto request to Governor Gavin Newsom which states in part: “the lack of clarity of whether AB 342 includes renewals or extensions will allow the SLC to subjectively interpret policy to the detriment of California operators.” Without clarity, the SLC could determine an extension or renewal is a new lease and deny it on those grounds alone, eliminating existing facilities, which could result in increased imported foreign oil, eliminate jobs, and reduce state tax revenues, while having no overall environmental benefit.
AB 1057 (Limón)
AB 1057 would require producers to provide additional financial guarantees for plugging and abandoning wells. Current law requires a $25,000 cash indemnity bond for one well. Twenty or more wells requires a blanket bond for $1-3 million. AB 1057 would allow the Caliofrnia Department of Resources, Division of Oil, Gas, and Geothermal Resources (DOGGR) to set the amount of the bond, and also alter DOGGR’s name and mission to tilt much more strongly to environmental protection and away from production of the oil and gas resource.
City of L.A. and L.A. County Initiatives
Both the City of L.A. and L.A. County are proposing substantial setbacks between oil and gas activities and residences. The City of L.A. Office of Petroleum and Natural Gas Administration & Safety issued a report on July 29, 2019 on “Feasibility of Amending Current City Land Use Codes in Connection with Health Impacts at Oil and Gas Wells and Drill Sites.” The report recommends a 600-foot setback from sensitive receptors for existing wells, associated facilities, and drill sites and a 1500-foot setback for new wells.
L.A. County adopted a Sustainability Plan on August 6, 2019 with the goal of a fossil fuel-free County, including the sunset of oil and gas operations. The City of L.A.’s Green New Deal, launched April 29, 2019, similarly calls for the sunset of oil and gas production countywide, reducing oil production by 40% below 2013 levels by 2021. There is no current movement on the Green New Deal.
Stoel Rives and Tether Law appreciate the assistance of the staff of the California Small Business Alliance and the California Independent Petroleum Association in the preparation of this post. Thank you!