CIPA’s Bonding Fix Bill Advances After Marathon Hearing in Assembly Natural Resources

After a long and politically difficult hearing last Monday night, CIPA’s sponsored bill, AB 2716 by Assembly Member Anamarie Avila Farias that fixes the broken bonding requirements for acquisitions of oil assets, passed out of the Assembly Natural Resources Committee. The hearing began at 2:30 p.m. in the State Capitol, but because AB 2716 was last on the agenda, the bill was not presented until nearly 7:00 p.m. The committee did not conclude its work on the measure until close to 9:00 p.m. By the end of the night, the bill had moved forward by the narrowest of margins.

According to the vote card, the yes votes came from Chair Isaac G. Bryan, Vice Chair Stan Ellis, Juan Alanis, Matt Haney, Josh Hoover, Alexandra Macedo, Al Muratsuchi, and Buffy Wicks, while the remaining members voted no or declined to vote. The result underscored just how difficult this vote was. AB 2716 is sponsored by CIPA but carried by a Democratic lawmaker. It was supported by CIPA and the California Chamber of Commerce, while opposed by WSPA, NRDC, and a long list of environmental groups. The committee analysis reflects the unusual lineup, and the hearing made plain that many lawmakers were wrestling with the politics of the bill in real time.

The complexity was heightened because AB 2716 was heard the same day and in the same committee as Assembly Member Greg Hart’s AB 2461, a bill backed by environmental interests and framed as a way to tighten AB 1167 (Oil & Gas: Acquisition; Bonding Requirements). That contrast exposed the central irony of the hearing. Hart’s bill was sold as cracking down on the industry, but CIPA’s bill is the one that increases meaningful financial security in practical ways.

AB 2716 will fix AB 1167, the 2023 law that froze California’s market for the sale and transfer of oil wells and production facilities. As CIPA has documented, and as the committee analysis confirms, since AB 1167 took effect virtually no active wells subject to the law have been transferred for continued operation. The bill blocked normal transactions, stranded mature assets, limited recapitalization, and prevented responsible operators from acquiring and managing properties.

Governor Gavin Newsom was concerned about this risk when he signed AB 1167 in 2023. In his signing message, he stated that increasing financial assurance requirements for transfers could create the risk of operators deserting hazardous wells and said he looked forward to working with the Legislature on “necessary revisions” if problems emerged. The Department of Finance also opposed AB 1167 at the time, warning that it could have unintended consequences and actually increase the number of orphan wells and the state’s financial liability.

The damage has not been limited to operators. In June 2025, the State Board of Equalization warned county assessors that AB 1167’s bonding mandate could have a “dramatic effect on property values,” because those costs must now be reflected in petroleum property valuations. Based on expert analysis commissioned in response, local governments in oil-producing counties have already suffered well over $130 million in lost local tax revenue. That means less money for schools, public safety, roads, libraries, and other core services in communities that can ill afford another Sacramento-made wound.

AB 2716 is the practical fix. The bill restores a workable transfer pathway while preserving taxpayer protections by aligning AB 1167 with California’s existing risk-based financial assurance framework under AB 1057, recognizing additional security already approved by CalGEM, expanding acceptable financial assurance tools beyond a single rigid bond structure, and creating a clearer path for acquisitions undertaken solely to plug and abandon wells.

Companies that have an approved AB 1057 compliance plan by the end of 2026 will be eligible to acquire oil assets without additional review from CalGEM. Under amendments added to the bill in committee, those compliance plans cannot be changed by CalGEM for five years. For entities that do not have a 1057 compliance plan, they can utilize self-insurance, corporate guarantees, sinking funds, and other tools available under AB 1057 but precluded by AB 1167.

CIPA appreciates the professionalism shown throughout the hearing by Chair Isaac Bryan, his personal staff, and the Assembly Natural Resources Committee staff. It was a long, difficult, and politically charged hearing, and their competence was evident throughout the process. CIPA likewise thanks Assembly Member Avila Farias for carrying the bill through a very difficult hearing and helping move forward a serious fix to a law that clearly broke the market it was supposed to regulate.

AB 2716 still has more road ahead and will next be heard in Assembly Appropriations Committee in May. But after a marathon hearing and a tough committee fight, the bill is alive and moving.