California Oil and Gas Exploration and Production News

Termo v. Luther Epilogue- Exhaustion of Administrative Appeal Process Required Before Court Challenge of DOGGR Order

In its unpublished June 28, 2011 decision in Angus Petroleum Company v. Luther, 2011 Cal. App. Unpub. LEXIS 4835 (2011), the California Court of Appeal for the Fourth Appellate District held that the new statutory administrative hearing procedures of the Division of Oil, Gas and Geothermal Resources of the California Department of Conservation (“DOGGR”) enacted by the Legislature in 2010 toaddress the constitutional criticisms of DOGGR’s prior appeal process by the same court in Termo Co. v. Luther, 169 Cal.App.4th 394; 86 Cal.Rptr.3d 687 (2008), required an oil and gas operator to first pursue its administrative appeal remedies before filing a lawsuit challenging an order by DOGGR.

The earlier case, Termo Co. v. Luther, addressed the enforceability of an order under Public Resources Code § 3237 by the DOGGR Supervisor to an operator to abandon 28 oil wells. The Court of Appeal held in that case that "the right to continue to operate existing oil wells and to extract oil is a fundamental right, of particular importance in the current economic climate" and that the right to continue oil production operations was constitutionally protected. In deciding that the operator was entitled to a review of the DOGGR's administrative decision under the  “independent judgment” standard, rather than the more deferential “substantial evidence” standard, the Court also held that the administrative review process set forth in the Public Resources Code for handling challenges to a DOGGR order did not satisfy constitutional due process requirements.

Hydraulic Fracturing Disclosure Bill Moves Through California Legislature

On June 1, 2011, the California Assembly passed Assembly Bill 591, which, if ultimately passed by the State Senate and signed by the Governor, would impose a number of new public disclosure requirements on operators conducting hydraulic fracturing operations in California. Among other things, AB 591 would (1) require the operator to list the chemical constituents in the fracturing fluid; (2) require well histories to include information regarding (a) the amount and source of water used in the exploration or production from the well; (b) the radiological components or tracers injected into the well, and (c) a complete list of the chemicals used in the hydraulic fracturing. The information would be submitted to the Division of Oil, Gas and Geothermal Resources (“DOGGR”) and would then be added to existing Internet maps on the DOGGR’s Web site and made available to the public. 

CARB Releases Supplement to AB 32 Scoping Plan Functional Equivalent Document

On June 13, 2011, in response to a court order blocking implementation of the Cap-and-Trade Program proposed by the California Air Resources Board (“CARB”), CARB released the “Supplement to the AB 32 Scoping Plan Functional Equivalent Document” (“Supplement”).  This Supplement provides an expanded analysis of the five project alternatives geared towards meeting the goals of AB 32 and the 2008 Scoping Plan.  The Supplement was prepared by CARB in response to a San Francisco court’s finding that the analysis of the impacts of the alternatives in the 2008 Scoping Plan were not sufficient under the California Environmental Quality Act (“CEQA”) (see Association of Irritated Residents, et al. v. California Air Resources Board, et al., San Francisco Superior Court, Case Number CPF-09-509562, May 20, 2011).  However, in the meantime, the court’s order blocking implementation has been temporarily stayed pursuant to an order by the First Appellate District, Division 3 while it reviews CARB’s appeal.

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