BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 2453
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          Date of Hearing:   May 5, 2010

                                Felipe Fuentes, Chair

                 AB 2453 (Tran) - As Introduced:  February 19, 2010 

          Policy Committee:                              Natural  
                       Judiciary                              10-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No


          This bill creates due process safeguards and requires use of  
          certain evidentiary standards as they relate to decisions by the  
          Department of Conservation's (DOC's) Division of Oil, Gas and  
          Geothermal Resources (DOGGR).  Specifically, this bill:

           Relative to Appeals Processes

           1)Eliminates current appeals process in which an appeal of an  
            enforcement order issued by the DOGGR supervisor may be made  
            by requesting a hearing to be conducted by the Director of  

          2)Establishes a bifurcated process with "formal" and "informal"  
            processes for appealing enforcement actions administratively  
            before seeking judicial review.

           Relative to Notification and Due Process

           1)Requires an order of the DOGGR supervisor to clearly and  
            concisely state the acts the operator is charged with, the  
            statutory basis of the action, the associated penalties and  
            operator requirements, and the right of the operator to appeal  
            the action.  

           2)Extends the statute of limitations to file a lawsuit by 20  
            days, to a total of 30 days.  

           3)For an order that imposes penalties greater than $10,000 or  
            could terminate operations, provides a "formal" hearing to be  


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            conducted by an administrative law judge subject to the due  
            process requirements of the Administrative Procedures Act.  

          Relative to Evidentiary Standards
          1)Requires the court to apply the "substantial evidence"  
            standard to its review the DOC director's decisions.

           FISCAL EFFECT  

          DOC estimates it will need one staff counsel position, at an  
          approximate cost of $145,000 a year, to represent DOGGR in both  
          informal and formal hearings (special fund).


           1)Rationale  .  DOC-the bill's sponsor-intends this bill to  
            address shortcomings identified by a California appellate  
            court decision, Termo Company v. Luther.  The sponsor  
            describes this bill as addressing the procedural concerns  
            raised by the court, as well as similar concerns that might be  
            raised by other courts in the future.

           2)Background  .  The Division of Oil, Gas, and Geothermal  
            Resources within DOC regulates oil, gas, and geothermal well  
            operations throughout the state. The division issues  
            production permits and oversees the drilling, operation,  
            maintenance, as well as the plugging and abandonment of wells.  
            The DOGGR also provides detailed production reports on oil and  
            gas output in the state.

            As described in the Judiciary Committee analysis:

               In Termo Company v. Bridgett Luther (2008), 169 Cal. App.  
               4th 394, the California Court of Appeal (4th Dist.) held  
               that the trial court incorrectly applied a "substantial  
               evidence" standard of review when it upheld an order of the  
               Director requiring an operator to abandon 28 oil wells in  
               Huntington Beach that were allegedly posing a threat to  
               public health and safety and the environment.  The Court of  
               Appeal held that the trial court was not justified in  
               departing from the normal "independent judgment" standard  
               of review, required by Code of Civil Procedure Section  
               1094.5, because the statute at issue (Public Resources Code  
               Sections 3350 et seq.) does not contain sufficient  


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               procedural safeguards that otherwise might allow the court  
               to employ a "substantial evidence" standard of review  
               (pursuant to Tex-Cal Land Management v. Agricultural Labor  
               Relations Board (1979) 24 Cal.3d 335.)  The Court also  
               found that although the applicable Public Resource Code set  
               forth a standard of review to be applied, it does not  
               clearly express a "substantial evidence" standard, and  
               that, in any case, the requisite due process safeguards are  
               lacking that would justify use of that standard.

           3)Support  .  This bill is supported by the Department of  
            Conservation (sponsor) and the Western States Petroleum  
            Association (WSPA), the members of which are subject to DOGGR  
            regulations and actions.

           4)There is no registered opposition to this bill.
           Analysis Prepared by  :    Jay Dickenson / APPR. / (916) 319-2081