BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 2453 (Tran) Hearing Date: 08/02/2010 Amended: 07/15/2010 Consultant: Brendan McCarthy Policy Vote: NR&W 8-0, Judic 4-0 AB 2453 (Tran), Page 2 _________________________________________________________________ ____ BILL SUMMARY: AB 2453 makes a variety of changes to the appeals process for operators of oil, gas, and geothermal well operators regulated by the Department of Conservation. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Additional legal costs $145 $145 $145 Special * * Oil, Gas, and Geothermal Administrative Fund. _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED. Under current law, the State Oil and Gas Supervisor leads the Division of Oil, Gas, and Geothermal Resources within the Department of Conservation. The Supervisor oversees the regulation of wells, tanks, facilities, and pipelines. The Supervisor may impose civil penalties up to $25,000 for violations of oil and gas regulations. Operators that have been fined may appeal a penalty through an administrative process within the Department of Conservation and may also seek judicial review of the administrative decision. A recent court ruling (Termo Company v. Bridgett Luther (2008), 169 Cal.App.4th 394) found that the current administrative appeals procedures lack due process protections and clarity. AB 2453 makes a variety of procedural changes to the administrative appeals process in an attempt to remedy the faults found in the recent court case. The bill requires orders from the Supervisor (or a district deputy) to provide a clear and concise explanation of the alleged violation, the potential penalties, and the right to appeal. The bill provides that the filing of a notice of appeal stays an order by the Supervisor in most cases. The bill requires a formal appeals process before an administrative law judge pursuant to existing law (commencing at Section 11500 of the Government Code). The bill provides for the manner of judicial review of a decision of the appeal process. AB 2453 (Tran), Page 2 The Department of Conservation indicates that it will need one additional legal counsel position and about $50,000 in additional staff costs to administer the new appeals process. The author's proposed amendments allow for an informal administrative appeals process in addition to the formal process. This will reduce costs by allowing some appeals to be handled through a less-costly process.