CIPA’s Bonding Fix Bill Heads to Assembly Floor

CIPA’s sponsored legislation, AB 2716 by Assembly Member Anamarie Ávila Farías, cleared another major hurdle today when it passed out of the Assembly Appropriations Committee and advanced to the Assembly Floor.

This is an important step forward for California’s independent oil and gas producers, local governments, workers, royalty owners, and the communities that depend on a functioning in-state energy sector. AB 2716 is a focused and practical bill intended to repair the unintended consequences of AB 1167, which has effectively frozen the transfer of oil and gas assets across California by imposing bonding requirements that do not reflect the realities of the commercial surety market or the way responsible asset transactions occur.

Since AB 1167 took effect, independent operators have faced a deeply distorted marketplace. Transactions that should allow productive assets to move from one responsible operator to another have stalled. Wells and facilities that could otherwise be maintained, operated, plugged, transferred, or responsibly decommissioned have become stranded. That is bad policy, bad economics, and bad stewardship.

AB 2716 does not eliminate accountability. It does not weaken CalGEM’s authority. It does not excuse operators from their plugging, abandonment, decommissioning, or site restoration obligations. Instead, the bill restores a workable pathway for transactions by recognizing financial assurance mechanisms already available under California law and by allowing responsible transfers to proceed under a more rational structure.

For CIPA members, the issue is straightforward. California cannot claim to care about energy reliability, environmental responsibility, local tax revenues, and orderly well management while maintaining a statutory scheme that prevents assets from moving to capable operators. A frozen marketplace does not protect the public. It traps assets, depresses property values, limits investment, and accelerates the very instability policymakers say they want to prevent.

AB 2716 is especially important at a time when California is importing more crude oil from foreign sources, losing refinery capacity, and watching in-state production continue to decline. Every barrier placed in front of responsible California production increases the state’s dependence on imported barrels delivered by ocean-going tankers. That means more exposure to foreign supply chains, higher costs, and greater risk to California consumers.

CIPA appreciates Assembly Member Ávila Farías for authoring this important legislation and for staying focused on a difficult but necessary fix. The bill has required serious education with legislators, staff, local governments, and stakeholders because the issue is technical, but the consequences are very real. AB 2716 is about restoring function to a broken part of California law.

Importantly, AB 2716 is now double joined to AB 2641 (Hart), a bill that requires corporate transactions that don’t involve a change of operator to also follow the AB 1167 protocols, furthering the need for AB 2716. Before the hearing, only AB 2716 was joined to the Hart bill, not the other way around, meaning the environmental sponsors of the Hart bill controlled the fate of the Avila Farias bill.

AB 2716 now moves to the Assembly Floor, where it must pass before the house-of-origin deadline. CIPA will continue working aggressively to secure the votes needed to move AB 2716 to the Senate.

Today’s vote is not the finish line, but it is meaningful progress. For independent producers who have watched Sacramento make California’s energy system more fragile year after year, AB 2716 represents a rare and important opportunity to move policy back toward common sense.