SB1259 - Refineries: decommissioning and remediation: cost estimates.

Amended IN Assembly August 21, 2026 Amended IN Assembly August 13, 2026 Amended IN Assembly July 02, 2026 Amended IN Assembly June 18, 2026 Amended IN Senate May 18, 2026 Amended IN Senate April 23, 2026 Amended IN Senate April 14, 2026 Amended IN Senate March 26, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 1259 Introduced by Senators Blakespear and Gonzalez (Principal coauthor: Assembly Member Muratsuchi) (Coauthors: Senators Allen and Stern) February 19, 2026 An act to add Article 4.5 (commencing with Section 13277) to Chapter 4 of Division 7 of the Water Code, relating to refineries. LEGISLATIVE COUNSEL'S DIGEST SB 1259, as amended, Blakespear. Refineries: decommissioning and remediation: cost estimates. Existing law establishes the State Water Resources Control Board in the California Environmental Protection Agency (CalEPA) and the California regional water quality control boards which prescribe waste discharge requirements in accordance with the Federal Water Pollution Control Act and the Porter-Cologne Water Quality Control Act. Existing law, the Petroleum Industry Information Reporting Act of 1980, requires refiners, as defined, to report monthly to the State Energy Resources Conservation and Development Commission (Energy Commission), for each of their refineries, specified information, and requires that any confidential information pertinent to the responsibilities of the Energy Commission, as provided, which is obtained by another state agency be available to the Energy Commission and be treated in a confidential manner. This bill would require, no later than December 31, 2028, every refiner, as defined for purposes of the bill, to submit to CalEPA a retirement plan setting forth information concerning decommissioning and site remediation for every refinery it owns, operates, or controls, as provided. The bill would require the CalEPA, no later than 6 months following the submission of the retirement plan, to review the retirement plan for completeness and reasonableness and to make a determination as to whether the retirement plan complies with the requirements imposed by the bill. The bill would require CalEPA, if it determines that the retirement plan complies with the bill’s requirements, to make the retirement plan available on CalEPA’s internet website for public comments for not less than 45 days. The bill would authorize CalEPA to require further revisions to the retirement plan after the public comment period, as provided, before it is deemed final. The bill would require CalEPA, after CalEPA has determined that no further revisions are necessary, to promptly post the final retirement plan on its internet website. This bill would require a refiner who who, on or after January 1, 2026, gives notice of intent to permanently shut down, shut down to reconfigure, or sell a refinery in a transaction that may result in a refinery shutting down or reconfiguring, as provided, to submit either the required retirement plan, or, if a final retirement plan has been released, an update of the retirement plan within a specified timeframe, as provided. The bill would require, on or before December 31, 2027, CalEPA to publicly provide an overview of the methods, costs, and timelines associated with soil and groundwater remediation that have been employed at refineries that have undergone decommissioning and remediation and to update the overview, as provided. This bill would make information filed pursuant to the above-described provisions confidential information, as provided. The bill would require a refiner to file the final retirement plan concurrently with the Energy Commission and the Division of Occupational Safety and Health. The bill would authorize CalEPA, the Energy Commission, and the Division of Occupational Safety and Health to share the information with the Legislature, a state or local any governmental agency, or a local government, including an air pollution control district or an air quality management district, only if the Legislature, the state or local governmental agency, or the local government that receives the information agrees to maintain the confidentiality of the information. The bill would further require any information that is, or may be, accessible by the public, as provided, by CalEPA, the Department of Toxic Substances Control, a certified unified program agency, or a local government, to be made publicly available even if that information is also contained in the retirement plan. This bill would require, on or before December 31, 2027, CalEPA, in coordination with the Energy Commission, to compile a survey of existing local, state, and federal statutory and regulatory requirements applicable to refiners concerning decommissioning, closure, financial assurance, and site remediation obligations, as provided, for a specified purpose. This bill would require CalEPA, no later than one year after the retirement plans are deemed final, to publish publicly on CalEPA’s internet website a report assessing the total decommissioning and remediation liabilities for refineries in the state, and identify opportunities for greater transparency prior to the closure notice, as provided. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. The Legislature finds and declares all of the following: (a) California has entered a transition period in which its legacy petroleum fuels system is declining while the replacement decarbonized transportation system is still scaling up. During this period, the continued operation of California’s remaining refineries serves critical public interests, including fuel supply reliability, employment, and regional economic stability, and the state has a responsibility to understand and address the pressures threatening that continued operation before closures become inevitable. (b) Multiple recent petroleum refinery retirement announcements have exposed the absence of a state framework for understanding why refineries are closing, what barriers to continued operation exist, and what policy interventions could support a stable transition. The state has responded to closures reactively, without the information or tools needed to evaluate whether those outcomes were avoidable. (c) The state cannot manage the transition one crisis at a time. But the lesson of recent closures is not only that the state needs better closure management tools; it is that the state lacked early enough visibility into operational, financial, and regulatory pressures to evaluate strategic actions to manage the transition in the public’s best interest. Proactive governance means building that visibility now, while California’s remaining refineries are still operating. (d) California’s petroleum infrastructure is almost entirely privately owned, and the state cannot directly control the timing or sequence of its retirement. The state’s role is therefore to build the planning, transparency, and financial accountability frameworks that align private retirement decisions with the public interest. (e) Waiting for a closure announcement to gather information limits the state’s ability to evaluate and act on policy options regarding continued operation, stabilize fuel supply, reduce workforce or community impacts, or evaluate policy interventions that could sustain systemwide reliability. These interventions could support infrastructure operations to maintain safety and reliability through governmental coordination and transparency and promote investor confidence. (f) Petroleum refineries in the state have been in operation for many decades, in some cases for over a century, commencing their operations in most cases long before the advent of modern environmental laws. For that reason, refinery sites tend to be heavily contaminated with hydrocarbons and associated toxic chemicals that can pose a threat to public health both offsite and onsite, and require costly and prolonged efforts to clean up. (g) Sea level rise associated with climate change will cause groundwater levels to rise and increase flooding, especially in coastal areas. Most refineries in the state are near the ocean or connected waters due to their logistical shipping needs. Contamination at refinery sites is of particular concern because the rising groundwater levels may cause subsurface contaminants to migrate, increasing the risk of negative health and environmental impacts. (h) Explicit requirements exist in other energy sectors to develop, disclose, and plan for retirement obligations to ensure orderly and well-managed decommissioning, and prevent the cost of retirement from being shifted onto taxpayers. These industry-specific requirements are in place for nuclear generating facilities, wind and solar installations, and fossil fuel extraction, for example. However, there are no requirements specifically addressing refinery retirements, even though refineries pose closure challenges of comparable or greater scale and complexity. (i) While refiners who are publicly traded corporations are required to report their asset retirement obligations to the United States Securities and Exchange Commission in quarterly and annual reports, applicable accounting principles have been interpreted to allow refiners to delay presenting a cost estimate for those obligations until a firm retirement date is announced. Even when refinery asset retirement obligation values are eventually reported to the commission, the calculation of those obligations does not necessarily include the costs of postretirement site remediation. This reporting gap leaves the state, host communities, and investors without the information needed to plan responsibly, well before a closure date is set. (j) The state has a strong interest in obtaining a full understanding of refinery operational and financial health, including decommissioning and remediation obligations, not only to prevent those costs from falling on taxpayers, but to enable the state to distinguish between refineries facing genuine market-driven transition and those facing pressures that state policy could address. (k) Communities that are economically dependent upon refineries are under pressure to see the land returned to productive use as soon as possible. State and local governments have historically played a role in facilitating rapid redevelopment, such as offers of tax increment financing or protecting buyers from certain liabilities. Without advance understanding of the extent of pollution, the scope of remediation, and the timeline and sequencing of necessary cleanup work, state and local governments may be unable to make informed financial decisions or attract necessary investors. (l) Communities that are economically dependent on refineries also face fiscal exposure from the loss of property and other tax revenue, and workforce exposure from the loss of high-wage jobs that comparable regional industries are not positioned to absorb at similar wages or scale. Long-term planning, remediation, and redevelopment of former refinery sites represents a significant challenge, but meeting that challenge can be an opportunity to support the creation of high-road jobs and new avenues of economic development. (m) A June 27, 2025, letter from State Energy Resources Conservation and Development Commission vice chair Siva Gunda to Governor Gavin Newsom recognized the value to “identify challenges, opportunities, and strategies for the future of land affected by the transition (e.g. remediation, marketability, and value), such as Asset Retirement Obligations and standards for refinery remediation and decommissioning plans.” (n) Senate Bill 237 (Chapter 118 of the Statutes of 2025) of the 2025–26 Regular Session directed the State Energy Resources Conservation and Development Commission to submit an assessment to the Legislature and Governor this year that, in part, “evaluates the recommendations and strategies put forward by” that same June 27 letter. That assessment has found that California has made meaningful governance progress, but that significant gaps remain, including the absence of a systematic framework for assessing what is driving individual refinery closures, and what the state’s options are for serving the public interest. Moreover, the physical and financial legacies of petroleum infrastructure, remediation obligations that in other industrial sectors have repeatedly fallen to the public, require the same kind of forward-looking accountability that California has applied in other contexts. (o) Senate Bill 237 (Chapter 118 of the Statutes of 2025) of the 2025–26 Regular Session directed the State Energy Resources Conservation and Development Commission to submit an assessment to the Legislature and the Governor. The State Energy Resources Conservation and Development Commission issued a draft assessment report on May 1, 2026, stating: “Even if more information becomes available after operations have ceased, more comprehensive, standardized, and transparent estimates of site remediation needs and methods ahead of time could enable the state and local communities to better prepare for and manage the myriad changes future petroleum infrastructure retirements will bring. The state, host communities, and investors would benefit from more transparency into the liability a company bears for decommissioning and remediation of a refinery or other major petroleum infrastructure site and how that is calculated.” (p) Generally accepted accounting principles dictate that calculating the fair value of an asset retirement obligation requires a settlement date to estimate the present value. However, refiners’ financial reports state that their plants have “indeterminate lives for the purposes of estimating asset retirement obligations” because dates upon which they would retire assets cannot be reasonably estimated. Even when these asset retirement obligations are disclosed, they are not standardized for the activities required, the level of remediation required, or the extent to which the company will cover the costs. (q) The retirement plans required by this act are intended to be estimates of decommissioning and site remediation needs to facilitate statewide preparation for and management of future changes to the state’s petroleum infrastructure. SEC. 2. Article 4.5 (commencing with Section 13277) is added to Chapter 4 of Division 7 of the Water Code, to read: Article 4.5. Retirement Plan for Oil Refineries 13277. For purposes o [Text truncated for display. Full text available on Congress.gov.]