CIPA Pushes Back on SB 1137 Implementation Regulations

The California Independent Petroleum Association (CIPA) has submitted formal comments opposing the Department of Conservation’s Geologic Energy Management Division (CalGEM) draft regulations for implementing SB 1137. The association’s letter underscores the economic, environmental, and energy supply risks tied to the law, which establishes Health Protection Zones around oil and gas facilities.

CIPA, representing approximately 300 independent oil and gas operators, service and supply companies, and royalty owners across California, stated that the regulations are based on “false premises” and will worsen the state’s energy crisis. CIPA emphasized that California’s oil demand reached 648 million barrels in 2023 and continues to climb, even as in-state production has dropped to levels not seen in decades. CIPA warned that the rules will accelerate refinery closures and increase reliance on imports, driving up consumer costs while shifting environmental burdens overseas.

The letter criticized CalGEM’s Initial Statement of Reasons as inaccurate and misleading. For example, the Department claimed the regulations would clean up pollution and remediate health impacts, a claim CIPA called “completely false,” arguing that the true intent of SB 1137 is to phase out domestic production. CIPA also pointed out that imported crude oil is exempt from California’s cap-and-trade program, meaning every displaced barrel of in-state production increases global greenhouse gas emissions.

CIPA further took issue with the Economic Impact Analysis, which CIPA said ignored the financial burden on small and mid-sized producers. The analysis accounted only for state costs and those of the largest operators, overlooking the 200+ independent operators that fund CalGEM’s operations through assessments.

The actual industrywide costs of compliance could exceed $100 million annually, disproportionately harming smaller producers. More significantly, the regulations would prevent reworks, sidetracks, and new drilling in Health Protection Zones, which include nearly all wells in Los Angeles and Orange Counties and more than one-quarter of Ventura County wells. Without the ability to maintain or increase production, decline rates will accelerate and supply shortfalls will grow.

The comment letter also raised concerns about regulatory overreach. CIPA noted that the proposed rules impose documentation, mapping, and notification requirements that go far beyond the statutory language of SB 1137. For example, operators would be required to submit detailed inventories of nearby buildings and structures, including addresses, even though the statute only requires a simple certification. In other cases, CalGEM ignored previous input from industry stakeholders, creating duplicative or contradictory standards.

CIPA also highlighted a parallel process underway at the California Air Resources Board to develop performance standards for air monitoring under SB 1137. CIPA stressed the need for coordination between CalGEM, CARB, and local air districts to ensure consistency and clarity before implementation begins.

“SB 1137 and its implementing regulations are not about public health, they are about eliminating California oil production,” said CIPA Chief Executive Officer Rock Zierman. “This misguided approach will shutter refineries, increase dependence on foreign oil, and make energy more expensive for California families and businesses while raising global emissions. CalGEM must revise its analysis and rulemaking to reflect the true economic and environmental impacts.”

CIPA concluded its letter by urging CalGEM to correct the record in its Statement of Reasons and Economic Impact Analysis and to revise the draft regulations so operators have a clear, workable path to compliance. CIPA reaffirmed its opposition to SB 1137, warning that its implementation will undercut California’s energy security at a time when demand continues to rise.