As discussed in our post on May 5, 2014, there are a number of California State Senate and Assembly bills that could impact oil and gas operations this year, if passed.  Friday, May 30 was the last day to pass bills out of their house of origin to the opposite house, the Senate or Assembly.

Bills that did not pass in their house of origin by May 30 have effectively died.  However, in certain circumstances a bill could be revived, e.g., through  “gut and amend” bills: when amendments to a bill remove the current contents in their entirety and replace them with different provisions.

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 June 2, 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.

  • 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

Reconsideration was granted after the Senate failed to pass this bill on May 28, 2014 in a 18-16 vote.  On May 29, 2014, the Senate again failed to pass this bill in a 16-16 vote.

  • 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

As of May 30, 2014, this bill remained in the Senate Governance and Finance Committee and failed to pass to the Assembly (note, the first hearing in the Senate was cancelled at the request of author on April 2, 2014).  Therefore, this bill is effectively dead.

  • 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 in the Senate on May 27, 2014; pending referral to Assembly Committee.

  • 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 in the Senate on May 28, 2014; pending referral to Assembly Committee.

  • 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

As of May 30, 2014, the Senate Appropriations Committee held this bill under submission.  Therefore, this bill is effectively dead.

  • Bill 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
  • As these provisions would become part of the Public Utilities Act, new criminal violations would be imposed

 ASSEMBLY BILLS (Status as of June 2, 2014)

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

Passed in the Assembly on May 19, 2014; hearing scheduled June 17, 2014 with Senate Energy Utilities & Communications Committee.

  • 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 in the Assembly on May 23, 2014; referred to Senate Committee on Rules for assignment.

  • 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

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.

  • 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 in the Assembly on May 23, 2014; referred to Senate Committee on Rules for assignment. 

  • 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