American Oil and Gas Reporter - October 2015 - 45

State Legislative Report

Calif. Legislators Approve Climate Bill
SACRAMENTO, CA.-California legislators passed a revised climate change
bill just before they closed their 2015
session on Sept. 11, dropping a provision
to cut petroleum use in the state by 50
percent. Kevin de León, D-Los Angeles,
the Senate pro tem, sponsored the bill,
SB 350.
The California Independent Petroleum
Association joined with industry allies
to persuade lawmakers that a key provision-the bill's requirement that the California Air Resources Board (CARB) lay
out a path to cut petroleum use in half by
2030-would impose significant costs on
Californians. Remaining in SB 350 are
provisions requiring the state to get 50
percent of its electricity from renewable
sources in 15 years and to double energy
efficiency in buildings by 2030.
P. Anthony Thomas, CIPA's director
of government affairs, says the association
garnered support from a number of Assembly Democrats worried about the bill's
economic impacts on their constituents.
Before ending the 2015 session,
Thomas says CIPA also worked with
legislators to rewrite parts of three bills
introduced in response to a May oil spill
at Refugio State Beach. According to
the state's legislative website:
* SB 295, sponsored by Senator Hannah-Beth Jackson, D-Santa Barbara, stiffens oil pipeline inspection requirements
and re-establishes authority for the state
fire marshal to inspect federally regulated
pipelines.
* SB 414, also written by Jackson,
bans the use of toxic dispersants for oil
spills in marine protected areas; creates
a voluntary program for crews of fishing
vessels to become paid contractors who
can immediately respond to oil spills
through the Office of Spill Prevention
and Response; and requires the office to
study best available technology for cleaning oil spills.
* AB 864, authored by Assemblyman
Das Williams, D-Carpentaria, requires
operators of interstate pipelines near environmentally sensitive areas to use the
best achievable technologies to reduce
the amount of oil released in any spills
to protect state waters and wildlife.
Thomas adds CIPA was successful in
stopping SB 788, co-authored by Jackson
and Senator Mike McGuire, D-Healdsburg. The bill was held in the Assembly
Appropriations Committee, officially defeating it for the second consecutive year.
The bill would have banned new offshore

drilling in the Tranquillon Ridge section
of the marine protected area in Santa
Barbara Channel.
"After CIPA and industry allies met
with legislators and negotiated tweaks
on the three spill bills, the association
removed its opposition. That is significant
because it shows that CIPA's 500-plus
members care as much about the environment as any advocate on behalf of air
or water," Thomas says. "Those bills are
on Governor Jerry Brown's desk. SB
350 also is on the governor's desk, and
he is expected to sign them all."

Economics
According to the California Drivers
Alliance, the petroleum reduction requirement proposed in SB 350 made no provision to replace the 13 billion gallons of
gasoline and 3.3 billion gallons of diesel
fuel consumed in California annually. It
would have required the state's average
fuel economy to jump from 25.3 miles a
gallon to 50 mpg in 15 years, or the
number of electric vehicles in the state to
increase from the 100,000 cars and trucks
now on the road to 13 million by 2030.
A projection from the California Independent Oil Marketers Association
foresaw the state imposing a credit system
similar to cap-and-trade to accommodate
the petroleum-reduction provision under
which oil producers would have been
forced to bid for a limited number of
credits. The association warns those
credits would have been expensive, and
likely would have resulted in higher gasoline prices.
CIPA's Thomas agrees with the gasoline price prediction. "Oil and natural
gas are no different than retailers, utilities
or banks," he poses. "If those entities are
saddled with additional costs, at some
point they likely will pass those costs
along to customers. If gasoline prices
rise, they hurt those who cannot afford it
most. So, in CIPA's view, it was protecting
the pocketbook of the under-represented."
Thomas says several Democratic legislators who supported the removal of
SB 350's petroleum mandate expressed
an economic motive. He points out the
state's legislative districts have seen very
dissimilar outcomes regarding environmental legislation and income levels.
He compares legislative districts that
have received government rebates for
buying electric cars and home solar power
units versus those that cannot afford
them. For example, Thomas says As-

sembly District 59, which is mainly inner-city Los Angeles, totaled 94 vehicle
rebates from 2010 to 2015 worth
$257,000. Since 2006, the district has
seen 32 solar projects installed with $1.6
million in rebates going to residents.
By contrast, Thomas points out, in
Assembly District 50, which encompasses
Hollywood and Santa Monica, the state
paid more than $8.4 million for 4,019
electric vehicle rebates and $13.4 million
for its 1,257 solar units.
"Interestingly enough, the representative from Assembly District 59 supported
SB 350," Thomas reports. "CIPA advised
legislators from districts with less income
per capita that this legislation was unbalanced. This is an economic issue: the
poor are subsidizing the more affluent."

Bureaucratic Power
CIPA also expressed concern about
how much power SB 350 would have
granted the California Air Resources
Board, Thomas says. According to a legislative analysis, before it was revised,
SB 350 would have broadened the agency's
responsibilities to include cutting petroleum
use in the state.
"CIPA had a major issue with the
proposal because the bill essentially said
CARB could write and implement the
petroleum reduction plan," Thomas says.
"The association believes it is the legislature's job to bring forward any plan
CARB develops in bill form so all stakeholders may debate it."
While de León, the bill's sponsor, did
not agree with CIPA's position, Thomas
says enough legislators did.
Thomas points out that the 37 million
people who live in California elect 120
legislators, but bureaucrats are appointed.
"Should bureaucrats have that authority?"
he asks. "CARB is part of the executive
branch and the people elect the governor.
Should a regulatory agency possess so
much authority, even though its members
are appointed by the governor, who was
elected by voters?"
Looking To 2016
Thomas says CIPA began the 2015
legislative session monitoring more than
30 bills that had something to do with oil
or gas. When considering how the industry
fared overall, he replied, "We are not dissatisfied with the results of the session."
Looking to next year, he says legislators
may revive the petroleum use restrictions,
adding he expects water use and additional

OCTOBER 2015 45

American Oil and Gas Reporter - October 2015

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