April 2008 Industry Digest

IOGA WV Reports Defeat Of Surface Owners’ Bill Of Rights Proposals

CHARLESTON, W.V.–The Independent Oil & Gas Association of West Virginia says it emerged from the state’s 2008 legislative session on the winning side of issues that many oil and natural gas companies considered the most pertinent. Producers deeming the defeat of S 482 and HB 4286, establishing a surface owners’ bill of rights, as the industry’s top legislative priority will hear no dissent from IOGA WV Executive Director Charlie Burd.

He explains that although the bills had the fervent support of the West Virginia Surface Owners Association, S 482 failed to pass the Senate Energy, Industry and Mining Committee and HB 4286 died in the House Industry, Labor and Economic Development Committee. He adds that three separate resolutions to launch interim studies on the issue also failed to garner sufficient committee support.

According to Burd, IOGA WV Past President Phil Reale coordinated the industry’s advocacy against the measures. “The process was really one of education,” Burd describes. “After reviewing the legislation, we developed talking points that we shared with the senators and delegates working in those committees. But in general, any time we could get ear of a delegate or senator, we explained why this legislation was unfavorable to both the industry and West Virginia. In coordination with that, since the WVSRO was playing this issue out in the media, we felt compelled to educate the public.”

Burd explains that the WVSRO emphasized emotional appeals while the industry emphasized facts about split estates and the basics of mineral rights. “Those who own the minerals beneath the surface have every right and every legal recourse to recover their asset,” he observes.

Even so, Burd continues, IOGA WV plans to seek common ground with surface owners, and the association hopes groups such as WVSRO will recognize that the scenarios on which they based their lobbying represent the exception and not the rule.

“IOGA WV and other industry leaders will be working this summer in hopes of developing a position that we can take into (future) legislative sessions, because we know these issues are not going away,” Burd reveals. “There will probably be an effort between the associations and the industry to look at the overall process and see where industry-driven improvements can be made that might better satisfy landowner requests. We will do an internal review of the process and see where improvements can be made.”

While the association won its most pivotal battle, he acknowledges that the industry suffered a defeat on an issue that West Virginia Governor Joe Manchin had taken up during previous sessions. Burd notes that while Manchin’s push to eliminate the five-year severance tax exemption on new coalbed methane wells came up short in 2006 and 2007, the governor succeeded in 2008 in accelerating the incentive’s sunset from Jan. 1, 2011, to Jan. 1, 2009, with some of the support perhaps coming from lawmakers encouraged by new earmarks that would send some of the revenue to counties. “A portion of the CBM severance tax will be directly appropriated to the producing counties for infrastructure development of water and sewer projects,” Burd notes.

“We did not support the bill,” Burd adds. “The coalbed methane industry had been provided an incentive to invest that is being taken away. In the end, there was a compromise that grandfathered wells on which work begins on or before Dec. 31, 2008, which will lessen the sting. Going forward, producers know the economics will change, and they will factor those new economics into their future drilling programs.”

However, he reports, the industry did prevail against the governor’s proposal to collect severance taxes through first purchasers, a bill that IOGA WV feared would prove unworkable, considering the state’s severance tax exemption for marginal wells and other credit programs. “There may be hundreds of wells behind a sales point,” Burd notes. “How would a first purchaser know which wells did and did not qualify?”

Finally, he concludes, successful water quality and anti-degredation bills resolved a discussion with which the legislature had wrestled for several years. The anti-degredation bill, SB 456, returned stream quality designations to the three tiers first laid out by the U.S. Environmental Protection Agency, with Tier 3.0 streams entailing the highest water quality standard.

“The legislature eliminated the Tier 2.5 presumptive streams list and placed those streams back to a Tier 2.0 designation, with the exception of those stream segments located totally on public lands and those waters of special interest such as trout streams. Those were set at a Tier 3.0 designation,” Burd notes. “This is probably as close to a middle ground as could have been achieved, but the industry is concerned that Tier 2.0 segments lying upstream of Tier 3.0 segments could virtually become Tier 3.0 segments also.”

Alabama Considers Raising Severance Tax

JACKSON, MS.–The U.S. Oil & Gas Association, Alabama/Mississippi Division, was watching a bill in the Alabama Legislature that it warns would dramatically increase severance taxes paid by the state’s offshore operators.

USOGA says HB 326 would change the severance tax on natural gas produced from state waters in the Gulf of Mexico from 6 percent of value to a volumetric tax beginning at about 90 cents an Mcf. Introduced by Government Appropriations Committee Chairman John Knight, D-Montgomery, USOGA warns it would “increase the amount of severance taxes dramatically for offshore operators.”

“Further, the legislation does not appear to allow for normal treating and processing expenses to make the gas marketable,” the association adds.

USOGA says Governor Bob Riley testified in support of the bill at a joint hearing of the House Government Appropriations and Senate Finance and Taxation Education committees in March, although no action was taken at that time. The association notes that it testified against the measure, citing the impact of changing tax policies on producers.

USOGA points out that HB 326 also has been endorsed by the Alabama Education Association, and notes that both the state’s Education Trust Fund and general fund are projecting $500 million shortfalls for fiscal 2009.

On other state legislation, USOGA reports the House of Representatives passed HB 590 in mid-March. HB 590 authorizes the Alabama Oil and Gas Board to amend the field rules regarding production from natural gas shale or coalbed methane reservoirs if operators can prove that additional wells are necessary to drain an existing unit.

Also, the association says, the Senate Energy and Natural Resources Committee approved HB 234, which provides incentives for developing clean-coal, nuclear and renewable energy projects. The bill passed out of the House of Representatives in late February.

A product of the Joint Legislative Committee on Energy Policy, HB 234 provides tax abatements up to 80 percent for noneducational sales by facilities that use coal gasification, coal liquefaction or hydropower. The legislation also provides motor fuel incentives for transporting renewable sources of energy used to generate electricity, according to USOGA.

Favorable Bills Progress In Mississippi Legislature

JACKSON, MS.–Several bills of interest to the oil and gas industry continued moving through the Mississippi Legislature in March, passing a key deadline March 18 by which committees must approve general bills originating in the other chamber, according to the U.S. Oil & Gas Association, Alabama/Mississippi Division.

USOGA says companion eminent domain bills, HB 591 and SB 2822, not only passed out of committee, but each received a favorable floor vote in the opposite chamber. HB 591 passed the Mississippi Senate on March 19, while SB 2822 was approved in the House on March 7. Both bills prohibit the use of eminent domain “for the purpose of taking or damaging privately owned real property for private development or a private purpose,” and condition the use of eminent domain on providing just compensation, according to USOGA. However, the association says it supports both measures because they exempt common carriers and facilities used to transmit natural gas, liquid hydrocarbons, or other utility products.

HB 1215 and SB 2431 require all operators of underground facilities to participate in Mississippi One Call, and strengthen the notification requirements for excavators. USOGA says it supports the bills as important safety measures for natural gas transmission lines. HB 1215 was approved by the full Senate on March 19 after passing the Senate Public Utilities Committee on March 11, the association reports, while SB 2431 passed the House Public Utilities Committee on March 12.

Finally, USOGA says HB 631 passed the Senate Oil, Gas & Minerals Committee on March 6. HB 631 clarifies that oil and gas operations regulated by the Mississippi Oil and Gas Board are not subject to the state Board of Contractors.

Oklahoma Senate Votes To Keep Gas Incentives

OKLAHOMA CITY–The Oklahoma Independent Petroleum Association reports that a pair of bills has passed the 2008 Oklahoma Senate that would maintain deep gas drilling tax incentives scheduled to expire at the end of June.

According to OIPA Vice President of Governmental Affairs Bruce Stallsworth, wells drilled from 15,000-17,499 feet receive a 48-month gross production tax exemption, while wells drilled 17,500 feet or deeper than are exempt from GPT for 60 months. He adds that although the incentive is not subject to trigger prices, the law limits the GPT rebate to $25 million a year.

Stallsworth explains that a pair of 47-1 Senate votes passed both SB 1688, which extends the incentives through June 30, 2011, and SB 1588, which extends them through June 30, 2018. The title has been removed from both bills, he notes, adding that SB 1688 has been assigned to the House Energy Committee, where it was likely to be heard in the first weeks of April, while SB 1588 was assigned to the House Appropriations and Budget Committee.

Another bill that passed the Senate, SB 1535, would return half of the proceeds from fines for overweight trucks to the counties for road maintenance. Stallsworth cautions, “SB 1535 is designed to provide additional road funding for local governments, but also would incentivize local law enforcement to target oil and gas trucking (because agriculture trucks are exempt).

“Unlike any other industry, the oil and gas industry already helps the counties with their roads in a significant way,” Stallsworth continues. “In the past few years, more than $90 million annually has been taken out of GPT revenues and returned to the counties for roads and bridges. No other segment of the trucking industry that uses county roads pays for the use of those roads.”

Finally, OIPA has commended the revival of an oil field equipment theft bill after HB 1696 languished in conference committee during the 2007 session. Stallsworth says OIPA staff and leaders met with legislators and urged them to use the bill to create additional paperwork requirements on equipment dealers and require invoices or bills of lading when transporting equipment. In early March, he said House staff was redrafting a bill for further review.

Kansas Legislators Kill Surface Damage Bills

TOPEKA, KS.–The Kansas Legislature has rejected two attempts to change the way the state regulates surface damages from oil and gas activities, reports Wichita Association of Petroleum Landmen President Diana Edmiston.

WAPL, along with the Kansas Independent Oil & Gas Association and the Eastern Kansas Oil & Gas Association, had been negotiating on notification and compensation issues relating to drilling with a landowners group that included the Kansas Farm Bureau, Kansas Livestock Association, Southwest Kansas Royalty Owners Association, and Eastern Kansas Royalty Owners Association. Legislators introduced two bills in response to a breakdown in the talks (The Reporter, March 2008, pg. 24).

According to KIOGA Executive Vice President Ed Cross, SB 589, a proposal sponsored by Senate Majority Leader Derek Schmidt, R-Independence, died in committee. SB 589 would have created a new generation of legal challenges to well-established precedents that have served both industry and landowners well over the years, he says.

On March 5, the KCC’s Oil and Gas Advisory Committee recommended to the commission that it open an investigation of the surface rights issue, Cross says. “From the industry’s standpoint, this may be a better venue in which to explore the scope of the problem and maybe find a workable solution. I think this may be the beginning of an environment in which the solution can be worked out, and it may not involve any legislation,” he says.

KIOGA is encouraging this approach, Cross adds, in large part because the association never was certain whether complaints about surface damages and compensation were a widespread problem or the result of a small number of oil and gas operators. The Advisory Committee’s suggestion would put the issue itno an environment where the extent of the problem can be better determined, he says.

“If the scope (of the problem) is such that it requires additional action, then the KCC venue may be a better place to develop a course of action that would best benefit the interests of all stakeholders,” Cross assesses. “We want to find out whether the scope of the problem is so small that does not require anything other than perhaps educational materials for landowners.”

Edmiston points out that at least one of the provisions contained in the Schmidt’s bill, SB 589, remains alive. That clause calls for adding two members to the Oil & Gas Advisory Committee to represent surface and mineral owner interests. Legislators attached that language to HB 2892, a bill written by the Energy and Utilities Committee that deals with crude oil storage.

The working group created by WAPL, KIOGA and EKOGA will continue to watch for developments inside and outside the legislature, Edmiston says. She notes that the KCC continues to remain involved by way of its advisory committee, and could take action outside of the legislative session.

“Just because SB 589 was dead in the committee does not mean the issue is dead,” Cross offers. “Even if the bill is dead, the concern is still out there. We are going to have to address surface damages one way or another, either through the KCC or through another avenue. We want to try to find a workable solution, not just a compromise.”

KIOGA Monitors Bills On Indemnification, Immigration, Energy

TOPEKA, KS.–The Kansas Independent Oil & Gas Association remained in a monitoring mode through March with respect to the Kansas Legislature, Executive Vice President Ed Cross reports. The association’s chief concern was ensuring that bills unrelated to oil and gas activities did not inadvertently affect KIOGA members, he says.

Indemnification legislation remains a key issue, Cross notes. House Substitute for SB 379 would amend state law regulating indemnification provisions in construction contracts by adding motor carrier transportation agreements, dealership agreements, and franchise agreements, he says. KIOGA has been working with House Judiciary Committee Chairman Mike O’Neal, R-Hutchinson, Cross reports, to make sure the bill does not affect the oil and gas industry.

“So far we have been successful,” Cross said in late March. “I think we have it such that oil and gas agreements will (not be included) in that piece of legislation. This is something the industry needs in order to keep our contracts in line.”

The unique requirements caused by drilling in remote locations and the need to sometimes hire laborers quickly make the oil and gas industry especially mindful of immigration regulations, Cross says of another hot topic in the 2008 legislature. Both the Kansas House and Senate are considering changes to immigration laws.

House Substitute for SB 329 includes tough sanctions against employers, Cross warns. According the state’s legislative Web site, employers could face the loss of business licenses after a scaled-up series of sanctions and fines.

The bill would place Kansas businesses licenses in jeopardy, remove due process for Kansas businesses, mandate businesses to use E-Verify and make contractors liable for subcontractors, he reports.

Substitute for SB 458, sponsored by the Senate Committee on Federal and State Affairs, would create the Kansas Immigration Enforcement and Reform Act. It would prohibit a business from knowingly hiring an illegal alien. Employers would face civil suits, although the legislation prohibits any charges if the business uses the federal verification system.

“Legislators probably are going to take the bills to conference; the House will probably soften its sanction provisions, while the Senate will increase some of its sanctions,” Cross predicts.

He says KIOGA is concerned that employers could face severe penalties because it usually takes several days to verify immigration status. Many oil and gas operators make hires in the field, and should not be penalized because of delays in verification, Cross offers.

The Senate Ways and Means Committee is seeking to use new fees on document recording to fund housing programs in the Greensburg, Ks., and Southeast Kansas disaster areas, Cross reports. SB 605 would require county registers of deeds to assess an additional $1.00 a page fee on all recorded documents.

“In many western Kansas counties, the oil and gas industry records the most documents–assignments, leases, filings, etc.,” Cross says. “We don’t object to helping disaster housing relief, but SB 605 is asking one industry to fund something totally unrelated to what it is doing.”

KIOGA also is watching HB 2949, written by the House Federal and State Affairs Committee, Cross adds. According the legislative Web site, the bill seeks to enact a Kansas energy plan that would continue to promote alternative and renewable energy, and increase the state’s electric transmission infrastructure.

In addition, HB 2949 would set priorities for the future fuel mix for base-load electricity generation, the Web site says. By 2020, the mandated fuel mix would be 70 percent coal, 25 percent nuclear and 5 percent natural gas. By 2028, the mix would be 60 percent coal, 40 percent nuclear and a negligible amount from natural gas.

Cross reports he testified before the committee, recommending that any fuel mix decisions should be made by the market, not through regulation. He predicts the committee will not take any action on the measure as a bill but may offer it as a suggestion through a resolution.

COGA Still Anticipates Legislation To Increase Severance Tax Revenues

DENVER–As the Colorado Legislature moved into the second half of its 2008 session in mid-March, the state’s oil and gas industry still was waiting for an anticipated attempt to increase severance taxes, according to the Colorado Oil & Gas Association.

COGA President Meg Collins notes that it has been widely reported that Representative Kathleen Curry, D-Gunnison, intends to sponsor a bill that would either raise the severance tax rate or eliminate certain exemptions. She explains that Colorado taxes oil and gas properties that have less than $25,000 in gross annual income at 2.0 percent, and gradually increases the rate to 5.0 percent for properties that gross $300,000 or more. Operators also can take a credit for as much as 87.5 percent of their county ad valorem taxes.

Although COGA still expects to see a severance tax bill during the legislative session, Collins says the delay could indicate Curry has been having difficulty finding support for increasing taxes among the broader business community. She points out that organizations such as the Colorado Competitive Council and Club 20 have declined to endorse raising the severance tax. “People are recognizing that if you want less of something, tax it, and they sort of like the jobs and benefits this industry is providing Colorado,” Collins reflects.

In the meantime, however, another group has filed a ballot initiative to increase severance taxes. Local press accounts say the Donnell-Kay Foundation, which is described as a Denver-based group for educational causes, has filed an initiative that would raise $200 million a year by eliminating the severance tax credit for ad valorem taxes paid. The money would be split 60/40 percent between capital construction projects at the state’s colleges and universities, and for state and local communities impacted by oil and gas development, the reports say.

At least four other ballot initiatives to either raise the severance tax rate or eliminate credits or exemptions were filed in February (The Reporter, March 2008, pg. 20).

In other legislative developments, Collins says two bills COGA opposed have died in committee. She says HB 1230 would have required mobile machinery that burned diesel fuel to meet Tier 2 emission standards by Jan. 1, 2010, and to meet Tier 3 standards by Jan. 1, 2013. It also would have assessed a $25-a-horsepower penalty on engines that failed to meet emission standards. Collins reports HB 1230 was postponed indefinitely in the House Committee on Health and Human Services in the face of broad opposition by the construction industry, cement companies, local governments, oil and gas companies, and others.

Another bill, SB 124, was arrested in the House Committee on Local Government after slipping through the Senate fairly unnoticed, Collins continues. SB 124 would have repealed Colorado’s “call-before-you-dig” requirements for road and landscape maintenance that was less than 12 inches deep when dug by hand or four inches when dug by machine. Joining COGA in opposing SB 124, Collins says, were county governments that feared for the safety of their workers and natural gas utilities concerned about their liability in the event of any accidents.

A couple bills still in play that Collins draws attention to are HB 1083 and HB 1227. HB 1083 changes the formula for distributing local governments’ shares of federal and state mineral leases by considering the number of mining and drilling permits issued, and total production in a county, rather than basing it solely on the number of oil and gas employees living in a county.

Collins says there has been talk of amending HB 1083 to also direct some mineral revenues to higher education, which she points out, creates “a crosscurrent in the debate about raising severance taxes.”

Observing that meeting the needs of higher education frequently is cited as a reason to raise severance taxes, she says there is talk of directing mineral revenues toward education, which could be especially significant in light of the U.S. Bureau of Land Management’s March 13 announcement that it intends to proceed with natural gas leasing in the Naval Oil Shale Reserve on the Roan Plateau in western Colorado, which BLM estimates could generate $400 million-$500 million for Colorado.

“I think there are some Republicans who could get on board with not raising taxes and having the redistribution of federal mineral revenues take care of some of higher education’s needs,” Collins assesses.

Less favorable, Collins continues, is HB 1227, which would reauthorize the Colorado Public Utilities Commission. What troubles COGA, she explains, is a section in HB 1227 that would extend the intervener status of the Office of Consumer Council, which now advocates for the public on utility rates, to include environmental issues.

“Our view is there is any number of laws that already protect the environment–environmental assessments and impact statements, plus all the air, water and waste laws the Department of Public Health and Environment enforces–that you don’t need someone else with this authority as well,” Collins states, adding: “It is just one more indication that, in a lot of ways, the environmentalists basically are running the show these days.”

HB 1227 passed the House of Representatives on third reading, while HB 1083 passed the Senate Committee on Local Government and was pending on the Senate floor as of mid-March, according to the state’s legislative Web site.

Wyoming Legislature Remains On Task During 2008 Session

CASPER, WY.–Although the Wyoming Legislature is supposed to devote itself to budget matters during the 20-day sessions of even-numbered years and save other topics for the 40-day, odd-year sessions, Petroleum Association of Wyoming President Bruce Hinchey notes that legislators have not always observed that rule.

However, he suggests, lawmakers’ discipline during the 2008 session constitutes one reason why it went reasonably well for the state’s oil and natural gas industry. “It was pretty smooth,” Hinchey assesses the session that ran from Feb. 11 through March 7. “For once, legislators concentrated on the budget instead of the type of extraneous legislation that usually comes up. The fact there were a lot fewer bills shows how good they were at policing themselves.”

He indicates the session was not entirely smooth because legislators chose to ignore PAW’s advice and pass HB 133, regarding helium taxation. “The one disappointment was that the helium bill could have worked out far better had it been written during this summer’s interim,” Hinchey suggests. “But there was fear the state might lose out on couple million bucks.”

The state may still lose that revenue, pending presumptive litigation against the new law, he points out. HB 133 taxes helium at the 6 percent severance tax rate, keeping the point of valuation, exemptions, enforcement remedies and distributions the same as other natural gas production.

Hinchey explains that the genesis for the complex issue lies with a federal law passed in the late 1990s that governs the intricacies of helium ownership. He notes that one Wyoming natural gas processing plant has a minute percentage of helium in its gas stream that is nevertheless large enough in absolute terms to trigger a federal requirement that it be removed and sold.

“The federal government retains ownership of the helium and the state wants to tax it somehow,” Hinchey describes. “So the state came up with HB 133, and even though the company never really owns the helium–although it sells it for the government and pays the government a percentage–the state came up with a bill that would tax its severance.”

He adds that although PAW largely conceded to the state’s desire to tax helium, the association was skeptical about the bill’s methodology. “We testified to the committee in January that this may not be the correct way to do it,” Hinchey recalls. “The legislature agreed to perform an interim study, but meanwhile the two (revenue committee) chairmen drafted (HB 133) at the prodding of the governor and the senate president.”

Another tax bill pertinent to gas processing, in which lawmakers did heed PAW’s advice, Hinchey says, was HB 54, which allows for proportionate profits in conjunction with a new, modified net-back method that sets one point of valuation and a taxable value floor for taxing producer-owned processing plants. “There were several possible scenarios, but without any outside contracts, the Wyoming Department of Revenue could only use the proportion of profits method,” he explains. “PAW and a few of its member companies worked with the Department of Revenue on the language. Everyone agreed to it and we were pleased the bill passed with no amendments.”

According to Hinchey, the association was forced to change its position on another bill, SF 46, when an amendment changed its implications. He says PAW initially supported the legislation, which would have given the state engineer authority to create new capacity in water courses if requested by a landowner in cases of existing or expected discharges from coalbed methane operations.

“We had worked with the state engineer and the Department of Environmental Quality,” Hinchey recalls. “Then a few environmental groups and ranchers came out against it, and the bill was amended in the Senate to give one landowner a veto over the entire process. We couldn’t get the amendment stripped, so at that point we worked with others to defeat the legislation.”

Two other successful bills in which PAW had a hand–HB 89 and HB 90–deal with underground injection. HB 90 allows the DEQ to create an advisory board and rules to expand the underground injection control program to include carbon dioxide sequestration, but exempts oil and gas CO2 tertiary recovery projects.

“HB 89 sets into law a new concept that gives the surface owner ownership of the pore spaces devoid of minerals,” Hinchey summarizes. “We worked very hard to make sure it did not upset the dominance of the mineral estate, or (force companies) to negotiate with the surface owner beyond (the content of) surface owner agreements. That was not only for producing minerals, but also for injections for waterfloods, water disposal wells, or anything like that. Several amendments were put on, and we feel we have that covered.”

Utah Senators Support House On Wilderness

SALT LAKE CITY–The Utah Senate has joined the state’s House of Representatives in passing a resolution demanding that the U.S. Congress halt efforts to designate more wilderness lands in the state.

Americans for American Energy (AAE) reports that in late February, the Utah Senate voted 22-3 in favor of HJR 10, which urges Congress not to enact legislation designating additional wilderness in the state without the unanimous support of Utah’s congressional delegation. The Utah House of Representatives approved HJR 10 earlier in the month (The Reporter, March 2008, pg. 20).

AAE notes that HJR 10 is a response to HR 1919, legislation introduced in Congress by Representative Maurice Hinchey, D-N.Y., that would designate 9.4 million acres in southern Utah as protected wilderness areas.

HJR 10 also urges the U.S. Bureau of Land Management “not to restrict access to existing public lands in Utah under its jurisdiction through so-called wilderness characteristics options in resource management plans,” according to AAE.

In passing HJR 10, AAE quotes Utah State Senator Mike Dmitrich, D-Price, who sponsored the bill in the Senate, as saying, “Oil, gas and mining resources are the roots of our economy in Utah. We cannot afford to let environmental elitists and New York politicians lock away these public lands from the Utah public.”

In one other Utah legislative development, local press reports say the legislature passed and sent to Governor Jon Huntsman Jr., a bill establishing goals for public-power and corporate utilities to generate 20 percent of their electricity from renewable sources by 2025.

According to the press accounts, SB 202 invokes no penalties for utilities that fail to reach the goal, and allows them to pass along any cost increases resulting from technology or renewable-energy upgrades. In addition, reports say, the bill defines nuclear and “clean-coal” technology as renewable sources along with traditional alternatives such as solar, wind or geothermal.

CIPA Urges Legislature To Rewrite California’s Meal Period Regulation

SACRAMENTO, CA.–State Assemblyman Charles Calderon, D-City of Industry, is sponsoring a bill to change California law regarding meal periods at the request of the California Independent Petroleum Association and other industry groups, CIPA Chief Executive Officer Rock Zierman reports.

Existing law requires employers to provide employees who work more than five hours in a workday with an off-duty meal period of not less than 30 minutes, CIPA reports. Employers also are required to provide employees working more than 10 hours in a workday with a second meal period of similar length. CIPA says the law is problematic for drilling personnel who work 12-hour shifts on wells under pressure.

CIPA says it has joined a coalition of industry groups pushing to revise the regulation. In March, the bill advanced to the Senate Labor & Industrial Relations Committee, with an April hearing scheduled.

Calderon’s bill, SB 1539, would specify that a meal period based on working more than five hours in a workday is required to be provided before the employee completes six hours of work, unless the existing waiver provision is invoked. The waiver provision for the second meal period would be changed to provide an exemption for provisions within Industrial Welfare Commission wage orders in effect since Jan. 1, CIPA says.

SB 1539 also specifies conditions under which the on-duty meal periods are permitted rather than meal periods in which the employee is relieved of all duties, the association explains. Under the bill, CIPA points out, an employee’s meal period provisions would be covered by a valid collective bargaining agreement rather than the statutory requirement.

Off-duty meal periods would be permitted, CIPA says, if:

• The employer and employee sign a written agreement for such periods;


• The employee has an opportunity to eat while on duty; and


• The employer counts the on-duty meal period as time worked.

In addition, SB 1539 requires that the nature of the work prevents the employee from being relieved of all duty because:

• The employee works alone or is the only person in the employee’s job classification who is on duty at the location, or there are no other qualified employees who can reasonably relieve the employee;


• State or federal law requires the employee to remain on duty at all times;


• The nature of the work or relevant circumstances make it unreasonable or unsafe for the employee to be relieved of all duty; and


• The work product or process would be destroyed or damaged by relieving the employee of all duty.

The California legislature continues its efforts to deal with onshore oil spills, the association says. As introduced by Assemblywoman Lois Wolk, D-Davis, AB 2912 requires the state Office of Oil Spill Prevention and Response to plan for prevention of and response to oil spills in inland waters, and requires that fines and penalties for inland spills be raised to the same levels authorized for marine spills.

CIPA explains that the bill would require operators in nonmarine waters to prepare and implement an oil spill contingency plan that has been approved by the administrator for oil spill responses. The plan would include specific actions that should be taken to prevent, prepare for and deal with oil spills.

AB 2912 has been referred to the committees on Natural Resources and Judiciary, the state legislative Web site reports.