California Field Report – November, 2014

By Olman Valverde and Mike Flores, of Luna & Glushon

California Election Roundup

While national headlines show that the GOP significant improvements in the 2014 midterm elections, the results in California are decidedly mixed.

Democrat Jerry Brown won an unprecedented fourth term in Tuesday’s general election. Gov. Brown now has the distinction of being the oldest-sitting and longest-serving governor in the history of California.

Democrats continued their sweep of all state wide offices, maintaining control of the Governor’s office, Lt. Governor, Treasurer, Attorney General, Insurance Commissioner, Controller and Secretary of State. No Republican candidate has won state wide election in California since 2006.

Overall voter turnout was low, with only 30.9% of registered voters casting a ballot.

The low turnout seemed to help Republican candidates in local races. California Republicans gained seats in both houses of the Legislature and have defeated the supermajority held by Democrats since 2012.

With the passage Proposition 2, which creates a “rainy day fund” in the state budget, California’s credit rating on general obligation bonds was raised from A to A-plus by major credit-rating house Standard & Poor’s.

Hydraulic Fracturing Bans Pass in 2 Counties

In San Benito and Mendocino Counties, voters approved bans on high-intensity oil production techniques. In San Benito, nearly 57 percent of voters supported Measure J. Mendocino’s Measure S passed decisively with 67 percent of the vote.

No public records of past fracking in San Benito exist. State records document no active wells within Mendocino county borders.

LA City Council to Consider Aliso Canyon Oil Drilling Resolution

The Los Angeles City Council will consider a resolution requesting an environmental impact report for proposed oil drilling in Aliso Canyon near Porter Ranch.

The Termo Company, which already has 18 wells in the area, would like to build as many as 12 new wells on three new well pads north of the Santa Susana Mountains ridgeline.

Councilmember Mitch Englander submitted a resolution in July urging the Los Angeles County Department of Regional Planning to conduct a thorough environmental review, including an environmental impact report, of Termo’s plan.

The drilling would not take place in the city’s jurisdiction, but some Porter Ranch residents are concerned the project may affect them. The nearest new well would be located 1.65 miles from residents on West Via Urbino.

Ralph Combs, project manager for Termo, has said they have no plans for hydraulic fracturing at the site. However, Combs said they did frack at two wells in 2007 and 2011.

Kern County Scores Court Victory Against Chevron USA Inc.

Kern County prevailed against Chevron USA Inc. on October 24th in a landmark property tax case that would have effected a key source of local government funding.

A state appeals court ruling supported the county’s assertion that drilling new wells increases the value of oil property. The court rejected Chevron’s claim such activity merely preserves the land’s value.

The case could have set a precedent affecting other oil-producing counties around the state. In addition, the case will likely affect many pending actions wherein local oil companies have filed property tax appeals using the same legal argument as Chevron.

The ruling deals with a lawsuit Chevron filed against the county in October 2010, claiming it had been overcharged approximately $3.5 million in property taxes from 2006 to 2008.

Over that period, the company reported drilling more than 1,800 wells in the McKittrick, North Midway, Kern River, Midway Sunset, Lost Hills and Cymric oil fields. While some of these wells were intended to recover previously untapped reserves, Chevron said others were drilled merely to replace wells no longer working properly.

Kern officials said if they had lost the case, the county might have had to repay $17.8 million in property taxes that Chevron and other oil producers claimed the county had overcharged since 2006. That sum represents 4 percent of the discretionary spending in the county’s general fund in the current year.