2026 Legislative Post-Mortem: Defensive Victories and Unfinished Business

The California Legislature has finally adjourned, bringing an end to another difficult legislative year for the state's oil and natural gas industry. As CIPA takes stock, the final results are mixed: several potentially damaging anti-oil measures failed to reach the governor's desk, while one of CIPA's highest-priority bills fell frustratingly short despite strong bipartisan support.

On the positive side, four of the five major refinery bills failed during the legislative process. SB 1259 (Blakespear), SB 966 (Gonzalez), SB 1245 (Stern), and SB 493 (Becker) all died, while AB 605 (Muratsuchi) was the only measure in the group to pass.

That is an important defensive victory for California's petroleum industry.

Taken together, the failed bills threatened to add still more regulatory costs and uncertainty to a refining sector that California itself has acknowledged is increasingly fragile. The proposals ranged from new refinery closure and financial disclosure requirements to changes in process safety management, additional uncertainty surrounding refinery investments and fuel specifications, and another attempt to regulate refining margins during periods of overseas military conflict.

The defeat of those measures matters well beyond the refining sector. California's independent oil producers need a viable in-state refining industry just as California's refineries need reliable supplies of crude oil. Policies that make California refineries more expensive, uncertain, or uneconomic to operate ultimately threaten the entire domestic petroleum supply chain.

There is little environmental logic in shutting down California production and refining capacity only to replace the lost supply with crude oil and refined products transported thousands of miles into the state. Every gallon California refineries do not produce must ultimately be replaced somewhere else, under another jurisdiction's environmental standards, labor requirements, and tax structure.

Unfortunately, the session also ended with a major disappointment for CIPA.

AB 2716 (Avila Farias), CIPA's sponsored legislation, was held in the Senate Appropriations Committee without a vote allowed, just one step away from reaching the Senate Floor. The outcome was particularly frustrating because AB 2716 had earned broad bipartisan support as it moved through the Legislature and had zero fiscal impact on the State's General Fund.

The bill sought to repair problems created by AB 1167 that have effectively frozen legitimate transfers of oil and gas properties by imposing unworkable bonding requirements. AB 2716 offered a practical solution that would have allowed responsible operators to acquire producing properties while protecting taxpayers and ensuring adequate financial assurances for eventual well plugging and abandonment.

Despite building a bipartisan coalition around that solution, the bill was stopped in its final committee.

That fight, however, is not over.

Assembly Member Anamarie Avila Farias is preparing to reintroduce the legislation at the beginning of the 2027 Legislative Session, giving CIPA an opportunity to begin the process anew and build upon the substantial support developed during the past year.

The final scorecard therefore contains both victories and unfinished business. Preventing four additional refinery mandates from becoming law was unquestionably good news for California's petroleum industry. Losing AB 2716 was unquestionably a setback, but CIPA will be back at the Capitol when the doors open next year with its unfinished business.