‘Job Killer’ Bills Limit In-State Energy Efforts

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JopKillerTwo California Chamber of Commerce-opposed “job killer” bills that limit in-state energy development passed the Assembly Natural Resources Committee this week.

AB 356 (Williams; D-Santa Barbara) jeopardizes high-paying middle class jobs in resource extraction fields by severely restricting wastewater injection sites and requiring unnecessary monitoring of those sites.

AB 1490 (Rendon; D-Lakewood) drives up fuel prices and energy prices by imposing a de facto moratorium on well stimulation activities by halting the activity after an earthquake of a magnitude 2.0 or higher.

AB 356

AB 356 has been identified as a “job killer” because it will drastically cut the number of well-paying jobs in the energy production field in more than half of California. California is the third largest oil-producing state in the nation, the source of approximately 575,000 barrels of oil per day.

Oil and gas production in California is a $34 billion a year industry, employing more than 25,000 people with an annual payroll of over $1.5 billion. These are good middle-class jobs, many located in parts of the state where there are few other employment opportunities offering such wages and benefits.

The ripple effects of the loss of those jobs hurts the local economy, especially main street businesses patronized by those workers such as grocery stores, dry cleaners, gas stations, restaurants, repairs shops, boutiques, etc.

AB 356 significantly alters the administration of the Underground Injection Control (UIC) program for Class II wells in California. Specifically, this legislation establishes new definitions for “Class II wells” and “Exempt aquifers” that are inconsistent with existing federal definitions.

AB 356 ignores the work plan developed by the state in coordination with the U.S. Environmental Protection Agency and establishes new rules for the program that in some cases are inconsistent with federal regulations. The changes proposed in AB 356 would slow and in many cases create a complete barrier to oil production.

Rather than rushing to implement new rules and requirements for the UIC program, the CalChamber urged the Assembly Natural Resources Committee to allow the regulatory agencies to implement their work plan. Enacting legislation that creates inconsistencies and new burdens on state regulators will hamper current regulatory efforts and harm California’s economy.

AB 1490

In essence, AB 1490 attempts to create a de facto moratorium on well stimulation activities until the Division of Oil, Gas, and Geothermal Resources (DOGGR) completes an evaluation and is satisfied that well stimulation “does not create a heightened risk of seismic activity.”

Using a precautionary principle approach to shut down or delay these legally permitted activities without a solid scientific basis will unnecessarily and substantially threaten the state’s supplies of oil and natural gas, raising business costs, and harming California’s economy as a whole.

Ban Not Justified

AB 1490 ignores a longstanding track record of hydraulic fracturing and well stimulation activities in California and imposes a de facto moratorium simply because there may be well stimulation activity near a fault that has been active for the last 200 years.

Hydraulic fracturing, wastewater disposal and well stimulation treatments have a long history in California and have been safely conducted in and around faults for many decades. In California, hydraulic fracturing has been used as a production stimulation method for more than 30 years with no reported damage to the environment.

Regulatory Process in Place

Moreover, AB 1490 duplicates existing regulations and disregards existing law (enacted two years ago) and an independent scientific study already underway to address seismic-related issues.

The mere proximity of an active fault that may be within 10 miles of a well stimulation treatment or wastewater disposal activity should not be the scientific basis for imposing a de facto moratorium on such activity. The presence of a fault near these activities does not necessarily imply an increased potential for induced seismicity nor increased risk to groundwater.

Decades of disposal operations involving many industries have demonstrated that when properly planned, operated, and monitored, fluid disposal wells are safe and any potential concerns about risks can be managed.

Going forward, there is a regulatory process in place to address these concerns, which is why the existing regulations, coupled with the independent scientific study, should be more than adequate to address concerns about groundwater, potential seismicity and any relation to well stimulation treatments wastewater disposal.

By imposing a ban or delay of these legally permitted activities without demonstrating a causal link to seismicity, AB 1490 will only increase business costs, hamper California’s economy and deprive the state of much-needed fuel, jobs and tax revenues.

Key Votes

AB 356 passed Assembly Natural Resources on April 27, 6-2:

Ayes: Williams (D-Santa Barbara), Cristina Garcia (D-Bell Gardens), McCarty (D-Sacramento), Rendon (D-Lakewood), Mark Stone (D-Scotts Valley), Wood (D-Healdsburg).

Noes: Dahle (R-Bieber), Harper (R-Huntington Beach).

Absent/abstaining/not voting: Hadley (R-Manhattan Beach).

AB 1490 passed Assembly Natural Resources on April 27, 6-3:

Ayes: Williams (D-Santa Barbara), Cristina Garcia (D-Bell Gardens), McCarty (D-Sacramento), Rendon (D-Lakewood), Mark Stone (D-Scotts Valley), Wood (D-Healdsburg).

Noes: Dahle (R-Bieber), Hadley (R-Manhattan Beach), Harper (R-Huntington Beach).

Action Needed

Both bills will be considered next by the Assembly Appropriations Committee. A hearing date has not yet been set.

Contact committee members and your Assembly representative and urge them to oppose AB 356 and AB 1490.

Staff Contact: Anthony Samson

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Anthony Samson
About Anthony Samson
Anthony Samson, CalChamber policy advocate for environmental regulation, housing and land use issues from November 2013 through 2016, is senior attorney/policy advisor for Arnold & Porter Kaye Scholer LLP. He previously was an attorney at a statewide law firm that specializes in mining, land use, and natural resources law. He earned a B.A. from the University of California at Santa Barbara, and a J.D. from Michigan State University College of Law, where he served as the articles editor of the Michigan State Law Review.