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
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          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.
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                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13    Fund
           
          Additional legal costs $200       $200        $200      Special  
          *                                 
          * Oil, Gas, and Geothermal Administrative Fund.
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          ____

          STAFF COMMENTS: This bill meets the criteria for referral to the  
          Suspense File.
          
          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. 

          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.