CA Oil Well Regulator Steps Down One Week After Groups Complain to Governor About Conflict Of Interest In Decisions About Orphan Wells And Midnight Permits, says Consumer Watchdog

SACRAMENTO, Calif., Aug. 9, 2024 /PRNewswire/ -- A 30+ year veteran of California's oil and gas oversight agency is resigning one week after Consumer Watchdog and FracTracker Alliance questioned conflicts of interest in his decisions undermining two new state well regulation laws.

"Recent actions by CalGEM to undermine two state laws banning new oil well permits near communities and requiring adequate bonding of oil wells are nearly unfathomable," the groups wrote Governor Newsom last Friday. "These are not the actions of the agency you reformed in 2019 and 2020. Instead, they harken to the dark days of an agency controlled by a revolving door of financial interests with oil drillers, when oil drillers' legal and regulatory theories ruled the day."

The groups pointed to the relationship between David Shabazian, the just resigned Director of the Department of Conservation (DOC), and Jason Marshall, who spent 28 years at DOC before going to work for oil drillers who benefited from Shabazian's questionable decisions.

In May, Jason Marshall joined the driller California Resources Corporation (CRC) as Vice President of Regulatory Affairs, apparently leveraging his old relationship to compel Shabazian's decision not to enforce The Orphan Well Prevention Act following CRC's acquisition of Aera. Under the law, CRC should have been responsible for a bond of at least $2.4 billion to meet critical obligations for its newly acquired idle and low-producing wells. 

In addition, the groups questioned the DOC's decision to issue permits for oil wells in the half-mile public health setback zone between oil wells and neighborhoods within hours of when a ban on such permits took effect because oil drillers had withdrawn a referendum on the law creating it. 

"Shabazian's sudden departure is a hopeful sign that the Newsom Administration will not tolerate conflicts in decision making about oil drilling and will revisit Shabazian's decision not to require the $2.4 billion worth of bonding for the CRC Aera merger, which leaves the public on the hook for paying for the plugging and cleanup cost of wells," said Jamie Court, president of Consumer Watchdog. "The Governor needs to reverse the DOC decision and require adequate bonding of CRC."

Prior to joining CRC in May, Marshall worked for Berry Petroleum, which was recently granted 14 oil well drilling permits by DOC.

Marshall was part of the previous 2019 shakeup of the drilling agency following disclosures by Consumer Watchdog and FracTracker that oil drilling supervisors owned stock in the companies they regulated. The shakeup culminated in a management change with the departure of Marshall, the then Chief Deputy of the DOC in early 2020. 

"David Shabazian, the current Director of the Department of Conservation, has praised Marshall," the groups wrote in their letter last week. "After his resignation, Shabazian defended him from critics and credited him for his 'many years of dedicated service' and his 'wisdom and counsel on important issues.' 

"CalGEM's decisions to ignore The Orphan Wells Act and to issue new permits in the half-mile public health setback zone is making a mockery of your claim that a new CalGEM will be tough on oil drilling. Your Administration needs to conduct an independent investigation of how the CRC decision was made and Jason Marshall's role in CalGEM's decision making regarding orphan wells."

SOURCE Consumer Watchdog