September 11, 2015, was the deadline for lawmakers to pass legislation and send to the Governor for signature or veto. Below is a summary of several bills related to oil and gas activities, which Stoel Rives has been monitoring. We note that several bills have been identified as two-year bills and, as such, we will provide periodic updates as those bills move through the remainder of the 2015-2016 Legislative Session.

SENATE BILLS

SB-13 (Pavley): Groundwater

SB-13 was chaptered on September 3, 2015.

This bill will:

• Specify that the State Water Resources Control Board (“the Board”) is authorized to designate a high-or medium-priority basin as a probationary basin.
• Provide a local agency or groundwater sustainability agency 90 or 180 days, as prescribed, to remedy certain deficiencies that caused the board to designate the basin as a probationary basin.
• Authorize the board to develop an interim plan for certain probationary basins one year after the designation of the basin as a probationary basin.
• Authorize a mutual water company to participate in a groundwater sustainability agency and would provide that a water corporation or a mutual water company may participate through a memorandum of agreement or other legal agreement.
• Require, if the Department of Water Resources (“the Department”) determines that all or part of a basin or subbasin is not being monitored, the Department to determine whether there is sufficient interest in establishing a groundwater sustainability plan.
• Eliminate the provision requiring a local agency or combination of local agencies that elect to be a groundwater sustainability agency for a basin to submit a prescribed notice of intent to the Department that includes the proposed boundaries of the basin and requires the Department to post the notice on its Internet Web site within 15 days of receipt.
• Require local agencies to seek to reach agreement to allow prompt designation of a groundwater sustainability agency.
• Require a new notice to be submitted and the Department to post notice if agreement is reached by the local agencies involving a material change from the information in the posted notice.
• Require the Department to post only complete notices it receives.
• Extend the deadline for a basin that is elevated to a medium- or high-priority basin before January 31, 2017, and is not subject to critical conditions of overdraft to be managed under a groundwater sustainability plan to January 31, 2022.
• State that a guideline, criterion, bulletin, or other technical or procedural analysis or guidance prepared by the department as required by the Sustainable Groundwater Management Act is not subject to the Administrative Procedure Act, except as prescribed.

SB-20 (Pavley): Wells: reports: public availability

SB-20 is a two-year bill. Stoel Rives will continue to monitor this bill during the 2015-2016 legislative process and will provide updates accordingly.

This bill would create the California Water Resiliency Investment Fund in the State Treasury and provide that moneys in the fund are available, upon appropriation by the Legislature, for the purpose of providing a more dependable water supply for California.

 SB-32 (Pavley): California Global Warming Solutions Act of 2006: emissions limit

SB-32 failed to move forward prior to the September 11, 2015 deadline and has effectively failed. Stoel Rives will provide an official update as to SB-32’s status when available.

SB-209 (Pavley): Surface mining: inspections: training

SB-209 failed to move forward prior to the September 11, 2015 deadline and has effectively failed. Stoel Rives will provide an official update as to SB-209’s status when available.

SB-248 (Pavley): Oil and gas: well history

SB-248 is a two-year bill. Stoel Rives will continue to monitor this bill during the 2015-2016 legislative process and will provide updates accordingly

If passed, SB-248 will:

• Require the State Oil and Gas Supervisor (“supervisor”) to establish an inspection program for all activities regulated pursuant to these provisions and would require the total number of inspections and results of the inspections to be included in the above-referenced report.
• Require the Division of Oil, Gas, and Geothermal Resources’ (“division”) regulations, field rules, notices, manuals, and other requirements to be reviewed and revised, as needed, through a public process at least once every 10 years. Require the division, as part of the Oil and Gas Data Management System developed pursuant to the Budget Act of 2015, to ensure that required well data and well-related submissions are retained and readily available to the public and that publicly available data are machine readable. Unless otherwise incorporated in the Oil and Gas Data Management System, the bill would require the division to post certain information that it receives on its Internet Web site.
• Define “enhanced oil recovery” for purposes of provisions relating to the regulation of oil and gas.
• Require the division, by July 1, 2017, to develop and implement additional safeguards, as needed, to protect groundwater where a well stimulation treatment is proposed for a shallow well or at a shallow depth in a well, as specified.
• Require all operations on or in the well of any form to be systematically, completely, and accurately described and recorded in the well history.
• Require fluid injected or emplaced in the well to be fully characterized and reported as part of the. history, as specified.
• Require the monthly statement to the supervisor to include the full characterization of the chemical composition of water produced from each well.
• Require the operator of a waste disposal well to provide to the supervisor each quarter certain information regarding waste disposal injections.
• Prohibit, commencing July 1, 2017, a chemical from being injected or emplaced in a well unless the division has in its possession specified information developed through established techniques about its physical, chemical, and biological properties in order to permit assessment of its toxicity, persistence, and mobility in the surrounding environment.
• Require the division to post a list of chemicals and the measured parameters that meet this criteria on its Internet Web site. The bill would require the division to consult with the Office of Environmental Health Hazard Assessment in establishing the acceptable techniques and the list of measured parameters. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.
• Require the division, on or before January 1, 2018, to update and revise these regulations, except as specified, according to specified criteria and would require the division to consult with independent experts and stakeholders in the development and review of the regulations.
• Require the regulations to include certain requirements, including reporting requirements.
• Require injection wells and well projects existing as of December 31, 2017, to be brought into compliance with these regulations on or before January 1, 2020.
• Require these provisions to be liberally construed in order to meet specified requirements and to provide public transparency.
• Provide that where the division shares jurisdiction over an injection well with a federal entity, the division’s rules and regulations are to apply in addition to all applicable federal laws and regulations.
• Require an injection well subject to specified emergency regulations, or any successor regulations, of the division regarding aquifer exemptions to immediately cease injection operations, other than those required for plugging and abandonment operations, if the well is not in compliance with those regulations by the applicable regulatory deadline. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.
• Revise the definition of an oil sump and provide that, in order to protect groundwater, surface water, air quality, and wildlife resources, commencing July 1, 2017, no oil sumps shall be used for the disposal of waters or waste waters attendant to oil and gas field exploration, development, and production.

SB-545 (Jackson): Oil and gas operations

SB-545 is a two-year bill. Stoel Rives will continue to monitor this bill during the 2015-2016 legislative process and will provide updates accordingly.

If passed, SB-545 would:

• No longer require the supervisor to perform his or her duties in that manner.
• Require the supervisor to supervise the exploration and production of hydrocarbons, including, among other things, the drilling, operation, maintenance, and abandonment of wells, use of enhanced oil recovery methods, as defined, and stimulation, as provided, and would authorize the supervisor to allow an owner or operator of a well to drill, operate, maintain, and abandon wells utilizing all known methods and practices to increase the ultimate recovery of hydrocarbons if the supervisor finds that those methods and practices are consistent with existing law.
• Require an owner or operator of a well to file an application for approval to commence drilling, containing specified information, and would prohibit any drilling until written approval is given by the supervisor or the district deputy containing specified findings. The bill would authorize the supervisor, upon request, to grant a one-year extension if operations have not commenced within one year of the approval.
• Require the applications and approvals by the supervisor or the district deputy to be posted on the division’s Internet Web site within 10 working days. Require the supervisor to perform his or her duties in conformance with that act. Limit the authorization to maintain the confidentiality of well records to exploratory wells and only if the owner or operator includes specified information in the written request. The bill would deem both the request for, and the granting of, confidential well status to be public records and would require that information to be accessible on the division’s Internet Web site.
• Require all well records of a confidential well, as defined, to be posted on the division’s Internet Web site within 10 working days once the confidential well period has ended.
• Require that the confidential period for an offshore well not exceed 3 years from the cessation of drilling operations and would authorize the supervisor to extend the period of confidentiality for confidential wells for only 6 months, upon receiving a written request documenting extenuating circumstances.
• Require an owner or operator of a well to report specified information to the applicable regional water quality control board within 5 days of any loss of well and well casing integrity. Because a violation of this requirement would be a crime, the bill would impose a state-mandated local program.
• Authorize any committee of oil producers to make recommendations to the supervisor regarding oil and gas exploration and production, as specified, and would require the division to post any recommendations received by the supervisor on the division’s Internet Web site.

ASSEMBLY BILLS

AB-356 (Williams): Oil and gas: groundwater monitoring

AB-356 is a two-year bill. Stoel Rives will continue to monitor this bill during the 2015-2016 legislative process and will provide updates accordingly.

If passed, AB-356 will

• Authorize the supervisor to require a well operator to implement a monitoring program for belowground oil production tanks and facilities, and disposal and injection wells. Failure to comply with this requirement would be a crime.
• Require the division to annually review underground injection or disposal projects approved by the division that use Class II wells.
• Require the operator of the project, as a part of its application or the annual review process, to submit to the State Water Resources Control Board or appropriate regional water quality control board for its review and concurrence a groundwater monitoring plan containing certain information, including, among other things, a schedule for monitoring and reporting groundwater quality data, as provided.
• Authorize the state board or appropriate regional water quality control board to periodically require the modification of the plan to reflect changing conditions.
• Require the data be submitted to the state board in an electronic format compatible with the state board’s geotracker database. Because a violation of this requirement would be a crime, this bill would impose a state-mandated local program.
• Require the division, prior to proposing to the United States Environmental Protection Agency an aquifer for exemption, to hold a public hearing on the proposal and to submit the proposal to the state board for review and written concurrence.
• Authorize the state board to concur with the proposal if certain conditions are met.

AB-815 (Ridley-Thomas): Oil spill prevention and response fees: collection

Chaptered by the Secretary of State on July 15, 2015.

The bill:

• Authorizes a marine terminal operator or a refinery operator receiving petroleum products derived from crude oil refined in the state to presume the fee has been previously collected.
• No longer requires the owner of the crude oil or petroleum products to remit the fee to the board.
• States the intent of the Legislature that the board collect the oil spill prevention and administration fee only upon first delivery to a refinery or marine terminal and not upon the subsequent movement of that same crude oil or petroleum products following that first delivery.
• Requires every person who operates a refinery in this state, a marine terminal in waters of the state, or a pipeline to transport crude oil out of the state or petroleum products into the state to register with the board for the purposes of the oil spill prevention and administration fee and the uniform oil spill response fee, as applicable.
• Deletes the definition of oil, and would define barrel to mean 42 gallons of crude oil or petroleum products for these purposes.

AB-1034 (Obernolte): Surface mining and reclamation plans: exemption

Sent to the Governor for signature or veto on September 9, 2015

If signed by the Governor, this bill will:

• Require a lead agency to consider the construction and operation of a renewable energy generation facility on disturbed mined lands to be an interim use and will prohibit a lead agency from requiring an amendment to an approved reclamation plan if specified criteria are met.
• Require a lead agency to submit to the director an application for an operating permit for a renewable energy generation facility prior to approving the operating permit, as specified.
• Authorize the director to prepare written comments to the operating permit application and would require the lead agency, at least 30 days prior to approving the operating permit, to prepare a written response to the director’s comments.

AB-1142 (Gray): Mining and geology: surface mining

AB-1142 failed to move forward prior to the September 11, 2015 deadline and has effectively failed. Stoel Rives will provide an official update as to this bill’s status when available.

AB-1490 Rendon: Oil and gas: well stimulation treatments: seismic activities

AB-1490 is a two-year bill. Stoel Rives will continue to monitor this bill during the 2015-2016 legislative process and will provide updates accordingly.

If passed, this bill would:

• Prohibit a well operator from conducting a well stimulation treatment following the occurrence of an earthquake of magnitude 2.5 or higher on a well that is within a radius of 10 miles from the epicenter of the earthquake until the division completes a certain evaluation and is satisfied that the well stimulation treatment does not create a heightened risk of seismic activity.
• Prohibit wastewater disposal wells and all well stimulation treatments within 10 miles of a recently active fault, as defined.
• Violation of these prohibitions would be a crime.

AB-1501 (Rendon): Well stimulation treatments: emissions

AB-1501 is a two-year bill. Stoel Rives will continue to monitor this bill during the 2015-2016 legislative process and will provide updates accordingly.

If passed, this bill would require:

• An air quality management district to establish an emission standard for methane from a well stimulation treatment, as defined, or a production facility, as defined, and to issue a permit or other regulatory document to an owner or operator to enforce that standard.
• The emission standard to include specified components.
• The State Air Resources Board or an air quality management district, as appropriate, to install monitoring stations near any site approved by the division for a well stimulation treatment or a production facility, as specified.