BY WES VENTEICHER, POLITICO

SACRAMENTO, California — A California state Senate committee voted Tuesday to approve a bill targeting low-production oil wells within 3,200 feet of homes and schools, raising the stakes for an oil industry group’s decision this week on whether it will advance or drop its effort to get voters to protect wells in the same zone.

What happened: The Senate Natural Resources and Water Committee approved Assemblymember Isaac Bryan’s CA AB 2716 on a 6-4 vote. The bill would fine oil companies $10,000 per day for operating wells that produce less than 15 barrels per day in the setback zone.

Democratic Sen. Melissa Hurtado joined Republicans in opposing it and Democratic Sen. Susan Talamantes Eggman declined to vote, citing concerns about jobs and California’s ability to meet its continued demand for gasoline.

Why it matters: The bill could factor into the California Independent Petroleum Association’s decision — due by Thursday — on whether it will drop its referendum challenge to California’s oil setback law, which prohibits new wells plus a procedure that rejuvenates existing wells within the 3,200-foot zone.

Bryan’s bill is one of the biggest remaining threats to the oil industry this legislative session, making it a likely target if CIPA were to try to get anything in exchange for pulling the referendum. The setback law, CA SB1137 (21R), is polling well, and a Jane Fonda-led fundraising effort to preserve it has raised millions of dollars.

Bryan said during Tuesday’s hearing that he was talking with CIPA Chair Jonathan Gregory about potential changes to the bill, with an eye toward trying to help out smaller oil producers, but declined to say whether a deal might be in the works.

What they said: Bryan at Tuesday’s hearing accused oil companies of continuing to operate low-production wells only to avoid closure costs, saying wells near homes should face more stringent requirements to keep operating.

“If you are going to drill right next to my grandmother’s house, then you better be extracting enough oil to lower my gas prices,” he said.

Gregory, the CIPA chair and CEO of Matrix Oil Corp., told the committee that Bryan’s bill would put him out of business.

He said his company has about 150 active wells around the city of La Habra Heights in Los Angeles County that each net about $200,000 per year at current oil prices. He said he would have to shut down all but about a dozen of them and lay off his 16 employees if Bryan’s bill were to pass.

“Maybe that’s not what you think about when you think about Big Oil,” he said.

Gregory also said that SB 1137 would severely impact his company, pledging he would fight “all day long” to protect it. He declined to discuss any negotiations over the referendum.

What’s next: CIPA, which hasn’t launched a publicity campaign yet, has until Thursday evening to decide whether it will pull the referendum or keep it on the ballot.