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This post was co-authored by Beth Ginsberg & Krista McIntyre.

The U.S. Department of Justice (U.S. DOJ) recently issued a memorandum stating that settlements, including consent decrees, entered by the Environmental Protection Agency (EPA) and other federal agencies can no longer include a Supplemental Environmental Project (SEP), unless the SEP is expressly authorized by Congress. Companies and individuals accused of violating environmental laws and permits, like Clean Air Act and Clean Water Act permits, commonly agree to perform SEPs to fund projects that go beyond compliance instead of paying a higher cash penalty to the U.S. Treasury. Going forward, companies, individuals, and local governments will no longer have SEPs as a settlement option.

To support this policy reversal after more than 30 years, U.S. DOJ cites to the Miscellaneous Receipts Act, which grants only Congress the authority to decide how to appropriate federal funds. The U.S. DOJ views SEPs as federal funds, and, in U.S. DOJ’s opinion, the EPA and other federal agencies lack the authority to divert those funds to third party recipients and to select the projects that should receive the funds. The power of the purse rests squarely with Congress. “[W]ith SEPs, money otherwise destined for the Treasury finds its way to another destination, not at the insistence of Congress, where the Constitution puts that authority, but instead at the insistence of an administrative agency, or a non-federal entity, or some combination thereof.”
Continue Reading Reversing 30-Year Policy, U.S. DOJ Says Settlements Can No Longer Include Supplemental Environmental Projects (SEPs)

Stoel Rives’ Oil & Gas Team has been monitoring bills introduced by California legislators since the beginning of the 2019-2020 Legislative Session.  Below is the latest update on a list of bills, summarized pursuant to the Legislative Counsel’s Digest, that our team has been following and will continue to monitor as the 2019-2020 Legislative Session proceeds.

Please also see our Renewable + Law post summarizing bills related to other energy topics here.

AB 345 (Muratsuchi, D): Natural Resources: Oil and Gas: Regulation of Operations.

STATUS: Last amended March 18, 2019; currently in Senate Appropriations suspense file.

Would require the Secretary of the Natural Resources Agency to create an environmental justice program within the agency to identify and address any gaps in existing programs, policies, or activities that may impede the achievement of environmental justice. The bill, contingent upon funding for this purpose, would require the secretary to establish a grant-based reimbursement program to enable environmental justice and community groups to meaningfully participate in rulemaking and other regulatory processes at departments and entities within the agency.Continue Reading Oil & Gas Related Bills Update for the 2019-2020 Legislative Session

On February 14, 2020, the State Water Resources Control Board (SWRCB) published Draft Guidance for the State Wetland Definition and Procedures for Discharges of Dredged or Fill Material to Waters of the State (Draft Guidance). The Draft Guidance pertains to the SWRCB’s adoption of a State Wetland Definition and Procedures for Discharges of…

The California Geologic Energy Management Division (“CalGEM”), formerly known as the Division of Oil, Gas, and Geothermal Resources (“DOGGR”), is actively working on revising its regulations to better align its regulatory mandates with the new goals of Assembly Bill 1057, which requires CalGEM to focus on protecting public health and the environment, and less on efficient and effective oil and gas production. The scope and extent of these regulatory changes may have far-reaching consequences for the oil and gas industry in California. As part of its pre-rulemaking process, CalGEM is hosting community workshops and accepting public comments regarding its proposed regulatory changes.

I.      WHY IS CALGEM HOSTING WORKSHOPS?

While CalGEM’s materials on its pre-rulemaking process do not explain the exact nature or effect of these workshops, CalGEM’s workshops align with its new focus and November 2019 announcement of new oil and gas initiatives.  Effective January 1, 2020, Assembly Bill 1057 changed DOGGR’s name to CalGEM and updated CalGEM’s focus from development and production of petroleum resources to transitioning to a low-carbon future and protecting public health, safety and the environment.  In addition, last November CalGEM released a series of initiatives targeting certain oil and gas extraction methods, intended to safeguard public health and the environment.  The November initiatives include:

  1. Imposing a moratorium on new oil extraction wells that use high-pressure steam to break oil formations below the ground;
  2. Announcing new rules for public health and safety protections near oil and gas extraction facilities would be updated and strengthened; and
  3. Completing an independent audit of CalGEM’s permitting processes for well stimulation and underground injection control and a scientific review of pending well stimulation permits to ensure public health, safety and environmental protections are met prior to approving each permit.

These initiatives are in line with the State of California’s overall climate goal of achieving carbon neutrality by 2045.  California intends to meet this goal, in part, by decreasing fossil fuel dependence and consumption.
Continue Reading CalGEM’s Public Health Rulemaking Workshops

Oil rig at sunsetNearly two months ago, on November 19, 2019, the Department of Conservation’s Division of Oil, Gas and Geothermal Resources[1] (“DOGGR”) announced a moratorium on approvals of new oil extraction wells that use a high-pressure cyclic steaming process to break apart a geological formation to extract oil.

The announcement did not contain much, if any,…

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.
Continue Reading Southern California Environmental Law Update

The 2019-2020 California Legislative Session has officially reached its first deadline. February 22, 2019 marked the deadline by which bills could be introduced for the first half of the Session. Lawmakers will begin Spring Recess April 12 and reconvene April 22. The last day for bills to be passed out of the house of origin is May 31, 2019.

Below is a list of some of the key bills Stoel Rives’ Oil & Gas Team will be monitoring throughout the Legislative Session.

AB 255 (Limòn, D) and SB 834 (Jackson, D): State lands: leasing: oil and gas.

Status: Introduced January 23, 2019; referred to Committee on Natural Resources February 7, 2019.

The Lempert-Keene-Seastrand Oil Spill Prevention and Response Act authorizes the administrator for oil spill response to offer grants to a local government with jurisdiction over or directly adjacent to waters of the state to provide oil spill response equipment to be deployed by a certified local spill response manager, as provided. This bill would provide that Native American tribes and other public entities are also eligible to receive those grants.

AB 353 (Muratsuchi, D): Oil and gas: Definitions: additive.

Status: Introduced February 4, 2019; awaiting referral.

Under current law, the Division of Oil, Gas, and Geothermal Resources in the Department of Conservation regulates the drilling, operation, maintenance, and abandonment of oil and gas wells in the state. Current law defines various terms for those purposes, including “additive.” This bill would make a non-substantive change to that definition.
Continue Reading Oil & Gas Related Bills Introduced in the 2019-2020 Legislative Session

On November 6, 2018, the State Water Resources Control Board adopted an amendment to the National Pollutant Discharge Elimination System General Permit for Storm Water Discharges Associated with Industrial Activities (General Permit). The General Permit Amendment addresses the implementation of previously-adopted Total Maximum Daily Loads (TMDLs), the new federal Sufficiently Sensitive Methods Rule, and statewide Compliance Options. These changes take effect on July 1, 2020.
Continue Reading 2018 IGP Amendments – Everything You Need to Know

Environmental groups have obtained a favorable Clean Water Act (“CWA”) ruling from the U.S. District Court for the Central District of California, which can be viewed as an expansion of jurisdiction for stormwater permitting for industrial sources.  In the Order, issued on August 9, 2018, Judge Stephen V. Wilson held that if the U.S. Environmental Protection Agency (“EPA”) determines that stormwater discharges “cause or contribute to violations of water quality standards,” then regulators must limit such stormwater discharges under the mandates of the CWA.  EPA is required to regulate stormwater discharges through the National Pollution Discharge Elimination System (“NPDES”) permitting scheme, and does not have discretion to address the pollution through other methods.
Continue Reading Court Finds that Privately-Owned Industrial Stormwater Discharges Require Clean Water Act Permits

 On July 27, 2018 the California Division of Oil, Gas, and Geothermal Resources (“DOGGR”) issued two notices of proposed rulemaking action applicable to oil and gas operations in the state.  DOGGR released updated underground injection control (“UIC”) regulations, as well as proposed regulations for idle well testing and management.

UIC Regulations

DOGGR supervises the drilling, operation, maintenance, and plugging and abandonment of onshore and offshore oil, gas, and geothermal wells.  Wells that inject fluid for the purposes of enhancing oil or gas recovery, re-pressuring oil or gas reservoirs, or disposing of wastewater and other byproducts associated with oil and gas production – referred to as injection wells or UIC wells – fall within DOGGR’s regulatory scope.Continue Reading DOGGR Issues Revised Regulations for UIC and Idle Wells

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