Groups Question Oil Industry Influence Over CalGEM As Newsom Well Regulator Approves Midnight Permits & Fails To Require Well Bonding, Says Consumer Watchdog

LOS ANGELES, Aug. 5, 2024 /PRNewswire/ -- Oil regulators approved 35 new oil and gas well drilling permits in the second quarter of 2024, about half of which were potentially illegally issued within the community setback zone, up from zero new drills approved in the same quarter last year, according to Consumer Watchdog and FracTracker Alliance. In addition, the pace of plugging wells slowed by a quarter over the same period last year, though the issuance of all types of permits in total fell 41%. (See Table 1 at bottom.) 

The groups took issue with Newsom's oil well regulator, the California Geologic Energy Management Division (CalGEM), for undermining two state laws banning new oil well permits near communities and requiring adequate bonding of oil wells.

In a letter to the Governor, they questioned the influence of a former top oil regulator who went to work for two oil drillers who benefited from CalGEM's decisions and called for an independent investigation of the revolving door. 

In June, CalGEM violated SB 1137 (Gonzalez)—the public health setback law of 3,200 feet between drilling and communities—hours after the ban on community drilling took effect when the oil industry withdrew its referendum to overturn the law. CalGEM approved 17 permits within the setback zone.  

In addition, CalGEM is failing to implement state law requiring adequate bonding for oil wells under California Resource Corporation's (CRC) recently completed acquisition of Aera Energy, making the company California's top holder of idle wells–wells that no longer produce oil and could soon become orphan. The Orphan Well Prevention Act requires that drillers who acquire the "right to operate" a low-producing or idle well be responsible for full bonding but CalGEM is refusing to apply the law. 

"New drilling locks California into decades of continued fossil fuel consumption and the environmental impacts that entails," said Kyle Ferrar, Western Program Director at FracTracker Alliance. "The state should not be allowing operators to drill new oil and gas wells, particularly when the state is so under-bonded to deal with cleaning up existing wells." 

"Governor Newsom needs to get control of CalGEM, or its failure to regulate oil wells will stick to him like oil tar," said Liza Tucker, energy director at Consumer Watchdog.  

Another 14 permits were issued to Berry Petroleum. Jason Marshall, a former top Department of Conservation regulator who had served as Acting Director of CalGEM and its predecessor agency more than once over 28 years, left to become Vice President of Corporate Affairs at Berry in 2020. While at CalGEM, groups criticized him for allowing lax permitting and regulation, and for conflicts of interest. In May, Marshall joined California Resources Corporation (CRC) as Vice President of Regulatory Affairs, helping to leverage the state's decision not to enforce The Orphan Well Prevention Act just as CRC acquired Aera. 

"Will Governor Newsom allow Jason Marshall to continue to run CalGEM or will he order the agency to enforce the law?" asked Tucker. "CalGEM's decisions to issue new permits in the setback zone and to fail to endorse orphan well laws is making a mockery of Newsom's claim to be tough on oil drilling. Newsom needs to conduct an investigation of Jason Marshall's role in CalGEM's decision making and reverse its course."  

Consumer Watchdog and FracTracker called on Newsom to fire Marshall and other top deputies in July 2019 after it learned about financial conflicts of interests with supervisors at the regulatory agency owning stock in oil companies they regulated. Marshall resigned as the Department of Conservation's Chief Deputy in February 2020.  

Conservation Director David Shabazian praised Marshall after his resignation for his "many years of dedicated service" and his "wisdom and counsel on important issues." Shabazian made the decision recently not to enforce The Orphan Well Act on CRC after Marshall joined the company. 

"Governor Newsom shook up CalGEM in response to disclosures about conflicts of interest under Marshall's watch, but now it appears Marshall's influence over decision making is alive and well," said Tucker. "Newsom needs an external investigation into Marshall's influence over Shabazian and CalGEM."

Table 1.

CalGEM Data Analyzed by FracTracker Alliance

For more permitting information, see: NewsomWellWatch.com, which is run by the groups and maps all California oil wells.

SOURCE Consumer Watchdog