legislators

SACRAMENTO — Amid concerns that refinery closures could send gas prices soaring, California legislative leaders Wednesday introduced a last-minute deal aimed at increasing oil production to shore up the struggling fossil-fuel industry while further restricting offshore drilling.

The compromise, brokered by Gov. Gavin Newsom, Assembly Speaker Robert Rivas and Senate Pro Tem Mike McGuire, would streamline environmental approvals for new wells in oil-rich Kern County and increase oil production. The bill also would make offshore drilling more difficult by tightening the safety and regulatory requirements for pipelines.

With support from Rivas and McGuire, Senate Bill 237 is expected to pass as part of a flurry of last-minute activity during the Legislature’s final week. Newsom’s office said the governor “looks forward to signing it when it reaches his desk.”

The late introduction of the measure may force the Legislature to extend its 2025 session, set to end Friday, by another day because bills must be in print for 72 hours before they can be voted on.

The bill was introduced Wednesday as part of a package of energy policies that aims to address growing concerns about affordability and the closure of California oil refineries.

Valero and Phillips 66 plan to close plants in the San Francisco Bay Area and Los Angeles County’s South Bay, which would reduce California’s in-state oil refining capacity by an estimated 20%. Industry experts warn that losing refining capacity could lead to more volatile gas prices.

The closures have become a sore spot for Newsom and for state Democrats, pitting their longtime clean-energy goals against concerns about the rising cost of living — a major political liability.

The package tries to strike a balance between the oil industry and climate activists, but neither side seemed particularly pleased: Environmental groups panned the agreements, and industry groups said they were still reviewing the bill.

“I don’t think what’s in that legislation is going to keep refineries open,” said Michael Wara, the director of Stanford University’s Climate and Energy Policy Program.

Crude oil produced in California makes up a fraction of what refineries turn into gasoline, he said, so although increasing production may help stabilize the decline of local oil companies, it won’t benefit the refineries.

The bill would grant statutory approval for up to 2,000 new wells per year in the oil fields of Kern County, the heart of California oil country, which produce about three-fourths of the state’s crude oil. That legislative fix, effective through 2036, would in effect circumvent years of legal challenges by environmental groups seeking to stymie drilling.

The state, which has championed and pioneered progressive environmental policies to slash carbon emissions, also is home to a billion-dollar oil industry that helps power its economy and has significant political sway in Sacramento. Despite steady declines in production, California remains the eighth-largest crude oil producing state in the nation, according to the U.S. Energy Information Administration.

Hollin Kretzmann, an attorney at the Center for Biological Diversity’s Climate Law Institute, said the legislation “acknowledges the harms of oil drilling yet takes radical steps to boost it.”

“Removing environmental safeguards won’t reverse the terminal decline of California oil production but it will allow the industry to do more damage on its way out the door,” Kretzmann said, adding that it will have “no impact on refinery closures or gas prices.”

Ted Cordova, a vice president of E&B Natural Resources, an oil and natural gas company with operations in Kern County, told reporters earlier this week that California needs to reverse falling oil production to keep refineries operating. He said his firm gets emails from pipeline companies saying they are operating “at dangerously low levels, can you send us more?”

The bill also has the potential to create new hurdles for Sable Offshore Corp., the Texas oil firm that is moving toward restarting offshore drilling along Santa Barbara County’s coast, depending on when the company navigates through a litany of ongoing litigation and necessary state approvals.

The company has moved forward on repairs to the network of oil pipelines that burst in 2015 in one of the state’s worst oil spills, despite opposition from the California Coastal Commission.

The bill, which would take effect in January, reasserts the authority of the commission to oversee pipeline repair projects and requires the “best available technology” for any pipe transporting petroleum from offshore. That could add lengthy governmental reviews for Sable if the operation isn’t running by January.

The company, despite reports that it’s running low on capital and has suffered repeated setbacks, continues to say it hopes to begin sales as soon as possible.

Representatives from Sable did not respond to questions Wednesday.

Mary Nichols, an attorney at UCLA Law’s Emmett Institute on Climate Change and the Environment, said the bill probably wouldn’t affect the ongoing project off Santa Barbara County’s coast — which remains tied up in litigation — but makes clear that there’s no easy path for any other company looking to take advantage of offshore oil in federal waters under the oil-friendly Trump administration.

“This was designed to send a message to anybody else who might be thinking about doing the same thing,” said Nichols, a former chair of the California Air Resources Board.

Lawmakers also introduced a tentative deal on cap-and-trade, an ambitious climate program that has raised roughly $31 billion since its inception 11 years ago. The revised language would extend the program from its current 2030 deadline until 2045.

The program, last renewed in 2017, requires major polluters such as power plants and oil refineries to purchase credits for each ton of carbon dioxide they emit, and allows those companies buy or sell their unused credits at quarterly auctions.

Assemblymember Lori D. Wilson (D-Suisun City), one of the authors of SB 237, said she was glad to make progress on the push and pull between the state’s fuel needs and its commitment to green energy. She said she understands there are environmental concerns, but “at the end of the day, our purpose was an issue of petroleum supply.”

“We all don’t want an import model,” she said.

Times staff writers Melody Gutierrez and Hayley Smith contributed to this report.

Frank McCourt will have to pursue his proposed Dodger Stadium gondola without legislation that would have limited potential legal challenges to the project.

After The Times reported on the legislation, Los Angeles Mayor Karen Bass and the City Council publicly opposed it, asking a state Assembly committee to strip the language that would have benefited the gondola project or kill the bill entirely.

On Friday, the committee stripped the language and moved ahead with the remainder of the bill, which is designed to expedite transit projects in California. Under the now-removed language, future legal challenges to certain Los Angeles transit projects would have been limited to 12 months.

The language of the bill did not cite any specific project, but a staff report called the gondola proposal “one project that would benefit.”

A court fight over Metro’s approval of the environmental impact report for the project is at 17 months and counting.

In a letter to state legislators in which she shared the council resolution opposing the language in question, City Councilwoman Eunisses Hernandez said the language would amount to “carve outs” from a worthy bill in order to ease challenges to “a billionaire’s private project.”

McCourt, the former Dodgers owner, first proposed a gondola from Union Station to Dodger Stadium in 2018. The project requires approvals from four public agencies, including the City Council, which is expected to consider the gondola after the completion of a city-commissioned Dodger Stadium traffic study next year.

When a landmark state environmental law threatened to halt enrollment at UC Berkeley, legislators stepped in and wrote an exemption. When the Sacramento Kings were about to leave town, lawmakers brushed the environmental rules aside for the team’s new arena. When the law stymied the renovation of the state Capitol, they acted once again.

Lawmakers’ willingness to poke holes in the California Environmental Quality Act for specific projects without overhauling the law in general has led commentators to describe the changes as “Swiss cheese CEQA.”

Now, after years of nibbling at it, Gov. Gavin Newsom and the Legislature are going in with the knives.

Two proposals have advanced rapidly through the Legislature: one to wipe away the law for most urban housing developments, the other to weaken the rules for most everything else. Legal experts say the efforts would be the most profound changes to CEQA in generations. Newsom not only endorsed the bills last month, but also put them on a fast track to approval by proposing their passage as part of the state budget, which bypasses normal committee hearings and means they could become law within weeks.

“This is the biggest opportunity to do something big and bold, and the only impediment is us,” Newsom said when announcing his support for the legislation.

Nearly the entire 55-year history of the California Environmental Quality Act has featured dueling narratives about its effects. On its face the law is simple: It requires proponents to disclose and, if possible, lessen the environmental effects of a project. In practice, this has led to tomes of environmental impact reports, including volumes of soil testing and traffic modeling studies, and sometimes years of disputes in court. Many credit CEQA for helping preserve the state’s scenic vistas and waterways while others decry its ability to thwart housing and infrastructure projects, including the long-delayed and budget-busting high-speed rail.

On the latter point, evidence supports both sides of the argument. One study by UC Berkeley law professors found that fewer than 3% of housing projects in many big cities across the state over a three-year period faced any litigation. But some contend that the threat of a lawsuit is enough to chill development, and examples continue to pile up of CEQA stalling construction of homeless shelters, a food bank and child-care center.

What’s clear is that CEQA has become embedded as a key point of leverage in California’s development process. Los Angeles Mayor Karen Bass once recalled that when she worked as a community organizer in the 1990s, Westside land-use attorneys who were successful in stopping development in their communities taught her how to use CEQA to block liquor stores in South L.A.

Organized labor learned to use the law to its advantage and became one of its most ardent supporters, alongside environmentalists — major constituencies within Democratic politics in the state. Besides carve-outs for individual projects in recent years, lawmakers have passed CEQA streamlining for certain kinds of housing and other developments. These fast-track measures can be used only if proponents agree to pay higher wages to construction workers or set aside a portion of the project for low-income housing on land considered the least environmentally sensitive.

Labor groups’ argument is simple, said Pete Rodriguez, vice president-Western District of the United Brotherhood of Carpenters and Joiners: CEQA exemptions save time and money for developers, so some benefit should go to workers.

“When you expedite the process and you let a developer get the TSA pass, for example, to get quicker through the line at the airport, there should be labor standards attached to that as well,” Rodriguez said at a Los Angeles Business Council panel in April.

The two bills now under debate — Assembly Bill 609 by Assemblymember Buffy Wicks (D-Oakland) and Senate Bill 607 by Sen. Scott Wiener (D-San Francisco) — break with that tradition. They propose broad CEQA changes without any labor or other requirements.

Wicks’ bill would exempt most urban housing developments from CEQA. Wiener’s legislation, among other provisions, would in effect lessen the number of projects, housing and otherwise, that would need to complete a full environmental review, narrowing the law’s scope.

“Both are much, much more far-reaching than anything that has been proposed in living memory to deal with CEQA,” said Chris Elmendorf, a UC Davis law professor who tracks state environmental and housing legislation.

The legislation wouldn’t have much of an effect on rebuilding after L.A.’s wildfires, as single-family home construction is exempt and Newsom already waived other parts of the law by executive order.

The environment inside and outside the Legislature has become friendlier to more aggressive proposals. “Abundance,” a recent book co-written by New York Times opinion writer Ezra Klein, makes the case that CEQA and other laws supported by Democrats have hamstrung the ability to build housing and critical infrastructure projects, citing specifically California’s affordability crisis and challenges with high-speed rail, in ways that have stifled the American Dream and the party’s political fortunes.

The idea has become a cause celebre in certain circles. Newsom invited Klein onto his podcast. This spring, Klein met with Wicks and Wiener and other lawmakers, including Robert Rivas (D-Hollister) and Mike McGuire (D-Healdsburg), the leaders of the state Assembly and Senate, respectively.

Wicks and Wiener are veteran legislators and former chairs of legislative housing committees who have written much of the prior CEQA streamlining legislation. Even though it took bruising battles to pass previous bills, the resulting production hasn’t come close to resolving the state’s shortage, Wicks said.

“We need housing on a massive scale,” Wicks said.

To opponents of the bills, including dozens of environmental and labor groups, the effort misplaces the source of building woes and instead would restrict one of the few ways community groups can shape development.

Asha Sharma, state policy manager for Leadership Counsel for Justice & Accountability, said her organization uses CEQA to reduce the polluting effects of projects in neighborhoods already overburdened by environmental problems.

The proposed changes would empower public agencies and developers at the expense of those who would be affected by their decisions, she said.

“What folks aren’t realizing is that along with the environmental regulations comes a lot of public transparency and public engagement,” said Sharma, whose group advocates for low-income Californians in rural areas. “When you’re rolling back CEQA, you’re rolling back that too.”

Because of the hefty push behind the legislation, Sharma expects the bills will be approved in some form. But it remains uncertain how they might change. Newsom, the two lawmakers and legislative leaders are negotiating amendments.

Wicks said her bill will not require developers to reserve part of their projects for low-income housing to receive a CEQA exemption; cities can mandate that on their own, she said. Wicks indicated, however, that labor standards could be part of a final deal, saying she’s “had some conversations in that regard.”

Wiener’s bill was gutted in a legislative fiscal committee last month, with lawmakers saying they wanted to meet infrastructure and affordability needs “without compromising environmental protections.” Afterward, Wiener and McGuire, the Senate leader, released a joint statement declaring their intent to pass a version of the legislation as part of the budget, as the governor had proposed.

Wiener remained committed to the principles in his initial bill.

“What I can say is that I’m highly optimistic that we will pass strong changes to CEQA that will make it easier and faster to deliver all of the good things that make Californians’ lives better and more affordable,” Wiener said.

Should the language in the final deal be anything like what’s been discussed, the changes to CEQA would be substantial, said Ethan Elkind, director of the climate program at UC Berkeley’s Center for Law, Energy & the Environment. Still, he said the law’s effects on housing development were overblown. Many other issues, such as local zoning restrictions, lack of funding and misaligned tax incentives, play a much larger role in limiting construction long before projects can even get to the point where CEQA becomes a concern, he said.

“CEQA is the last resort of a NIMBY,” said Elkind, referring to residents who try to block housing near them. “It’s almost like we’re working backwards here.”

Wicks agreed that the Legislature would have to do more to strip away regulations that make it harder to build housing. But she argued that the CEQA changes would take away a major barrier: the uncertainty developers face from legal threats.

Passing major CEQA reforms would demonstrate lawmakers’ willingness to tackle some of the state’s toughest challenges, she said.

“It sends a signal to the world that we’re ready to build,” Wicks said.

A group of California legislators representing the Sacramento-San Joaquin River Delta area said Tuesday that they will fight Gov. Gavin Newsom’s plan to build a $20-billion water tunnel, contending the project is a threat to their region and would leave millions of Californians paying much higher water bills.

Newsom has said the tunnel project is vital to improving the reliability of water deliveries as climate change shrinks California’s snowpack and alters the timing of runoff. But the Democratic lawmakers criticized Newsom’s latest proposal to accelerate steps toward construction of the 45-mile tunnel by short-cutting permitting for the project and limiting avenues for legal challenges.

“Fast-tracking the Delta Conveyance Project is a direct attack on our region’s environmental integrity, economic stability and public trust,” said Assemblymember Lori D. Wilson (D-Suisun City). “We are united in our opposition to this project, not just because of what it threatens to destroy, but because of what it represents — a broken process that silences local voices.”

Wilson and other members of the Delta caucus spoke at a news conference in the Capitol. They said the project would harm the Delta’s farmlands, communities and ecosystem, and would place a large financial burden on ratepayers in Southern California.

They said the cost, most recently estimated at $20.1 billion, is likely to be much higher.

“The project would have to be paid for by ratepayers who are already overburdened with soaring utility costs and aren’t even aware of how the cost of this is going to impact them in their pocketbooks,” said state Sen. Jerry McNerney (D-Stockton). “This project will set a precedent for bypassing well-established environmental laws.”

The tunnel would transport water from the Sacramento River to the state’s pumping facilities on the south side of the delta, where supplies enter the aqueducts of the State Water Project and are delivered to 27 million people and 750,000 acres of farmland, including parts of the Central Valley.

Supporters of the plan, including water agencies in Southern California and Silicon Valley, say the state needs to build new infrastructure in the delta to protect the water supply in the face of climate change and earthquake risks.

Opponents, including agencies in the delta and environmental advocates, say the project is an expensive boondoggle that would harm the environment and communities, and that the state should pursue other alternatives.

The legislators called for different types of water solutions, including investing in projects to recycle wastewater, boost water storage, and rebuild aging levees in the delta to protect freshwater supplies and reduce earthquake risks.

Newsom, who is set to serve through 2026 and then leave office, has said the tunnel project is critical for the state’s future.

The governor said his latest proposal would simplify permitting by eliminating certain deadlines from water rights permits; narrow legal review to avoid delays from legal challenges; confirm that the state has authority to issue bonds to pay for the project, which would be repaid by water agencies; and accelerate state efforts to acquire land for construction.

The governor’s approach, part of his latest budget proposal, was praised by supporters of the project and managers of water agencies, who said it would reduce regulatory and legal uncertainty.

Charley Wilson, executive director of the nonprofit Southern California Water Coalition, said the ability of the State Water Project to reliably deliver water is declining, while demand continues to rise.

“Southern California stands to lose up to 10% of our water supply from the State Water Project if we don’t act,” Wilson said, calling the project the best path to offsetting those losses.

Graham Bradner, executive director of the Delta Conveyance Design and Construction Authority, said the governor’s proposal would “save years of delay and potentially billions in costs by removing unnecessary hurdles.”

The legislators, however, said they will fight Newsom’s attempt to short-cut the established process.

“The governor is asking for a blank check, without cost caps, without meaningful oversight, without even committee hearings,” said state Sen. Christopher Cabaldon (D-West Sacramento). “What we have before us is a proposal to advance this under the dead of night with no public oversight or input.”

Cabaldon stressed that the public ultimately would pay for the project.

“The real threat here is to the pocketbooks, the monthly water bills, of residents throughout Southern California,” Cabaldon said.

McNerny said he expects the group of legislators will “do pretty well in gathering Senate opposition.”

“There is going to be significant opposition. It’s going to be vocal. It’s going to be harsh,” he said.

The project has been supported by leaders of water agencies in Southern California who are considering investing in it.

In December, the board of the Metropolitan Water District of Southern California voted to spend $141.6 million for a large share of the preliminary planning work. The district, which delivers water for 19 million people, isn’t expected to decide whether to invest in building the tunnel until 2027.

The legislators spoke beside leaders of environmental, fishing and tribal groups who oppose the project. Malissa Tayaba, vice chair of the Shingle Springs Band of Miwok Indians, said the project would harm the region and her tribe.

“It seems that to Gov. Newsom, our culture, our ancestors and the environment that sustains us is worth less than the ability to over-divert water from our rivers to send more water and money to commercial water interests,” Tayaba said.