A California Chamber of Commerce-opposed job killer bill that will increase prices and the need to import foreign oil advanced from the Assembly to the Senate last week.
The CalChamber labeled AB 345 (Muratsuchi; D-Torrance) a job killer because it threatens to eliminate thousands of high-paying California jobs, result in California importing even more foreign oil, and raise oil and gas prices.
Arbitrary Setbacks
AB 345 requires the California Geologic Energy Management Division (CalGEM) to adopt regulations with predisposed setback requirements for new and existing oil and gas wells.
CalGEM announced in November 2019 a series of initiatives and formal rulemaking to safeguard public health and the environment, as well as advance California’s goal to become carbon-neutral by 2045.
The actions include a rulemaking process considering the best available science and data to inform any new protective requirements. It will involve consulting with environmental and public health advocates, as well as public health authorities, including the California Department of Public Health, the California Environmental Protection Agency, and other health experts.
AB 345 puts the cart before the horse by requiring CalGEM to adopt regulations likely requiring the exact same 2,500 feet minimum setback requirements that existed in the prior versions of the bill, politicizing the rulemaking by predisposing an outcome before an analysis has even begun.
By pre-determining arbitrary setback requirements before the agency analyzes safety requirements during formal rulemaking, AB 345 undermines the state agency responsible for managing oil and gas operations in a way that would likely lead to significant and unnecessary cost increases for all Californians.
Reliance on Foreign Oil
Although intended to help California reach its environmental goals, AB 345 would achieve the opposite. The bill does nothing to reduce California’s oil and gas energy demands—it merely drives production out of California and forces the state to rely on even more foreign oil imports.
According to the California Energy Commission, California is relying more on foreign oil than at any time since the agency started tracking the sources of crude oil used in 1982.
In 2018, California imported 370 million barrels, or 57% of the state’s crude oil supply, from foreign nations like Saudi Arabia (37%), Colombia (13%) and Iraq (8%).
In 1992, California imported just 33 million barrels, or 5% of its supply.
Banning in-state oil and gas production—in a state with the most stringent environmental regulations in the world—only to shift suppliers to foreign oil regimes with abysmal environmental and labor protections fails to address climate change. The ban merely trades greenhouse gas emissions in California for greenhouse gas emissions elsewhere.
Imperils Thousands of Jobs
Should the arbitrary minimum setback requirements prescribed in AB 345 be adopted, approximately 87% of all oil and gas wells in the City of Los Angeles and 66% of all oil and gas wells in Los Angeles County would shut down. The shutdowns could eliminate approximately 6,000 high-wage jobs in Los Angeles County alone.
Moreover, the Assembly Appropriations Committee estimated that AB 345’s setback requirements could cost California up to $4 billion in lost state revenue and subject the state to significant legal liability under the takings clause of the U.S. Constitution.
AB 345 passed the Assembly on January 27 on a 42-30 vote with 8 abstentions. The bill awaits assignment to a committee in the Senate.
