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SACRAMENTO, Calif. Aug. 24, 2020 — Last-minute amendments to Senate Bill 1012 in the California legislature threaten to shift massive oil-industry well-cleanup costs to taxpayers. S.B. 1012, introduced by Sen. Melissa Hurtado, would make changes to the California Public Resources Code that could make it harder for the state to recoup well-remediation costs from oil companies.
“Oil companies are trying to rewrite state rules behind closed doors to stick California taxpayers with the bill for cleaning up their mess,” said Hollin Kretzmann, a senior attorney at the Center for Biological Diversity. “It’s grotesque that they’re trying to sneak these changes through while our state is being ravaged by wildfires, heat waves and the pandemic. State senators should reject this bill and make sure oil companies don’t walk away from their cleanup costs.”
The latest amendments — made without any committee hearing and entirely out of public view — would add ambiguous language requiring the state oil and gas supervisor to make undefined “reasonable efforts” to collect remediation money from a current operator of a well before seeking compensation from a prior operator. The supervisor already has authority to obtain funds from prior owners, so the new language only adds ambiguity for oil companies to exploit.
In addition, a provision that would have clarified that the California State Lands Commission is not an “operator” was removed without explanation. That agency only leases state tidelands to oil companies. It has commonly been understood that the oil companies that drill and produce oil are responsible for cleanup.
Each of these changes could hamper the state’s ability to collect cleanup money from oil companies, which may shift the cost to taxpayers. The California Council of Science and Technology reported that it would cost $9.2 billion to remediate the 107,000 oil and gas wells in California, yet oil companies have set aside a small fraction of that cost for cleanup.
The vote comes at a time when major oil and gas companies have filed for bankruptcy, unable to meet their financial obligations. California’s largest oil and gas producer, California Resources Corporation, filed for bankruptcy last month. That company and its affiliates have nine active leases from the State Lands Commission, the most of any operator. The commission also allowed CRC to defer $1.8 million in royalty payments to the state from 2016 to 2018.