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September 24, 2020 – Gov. Gavin Newsom on Wednesday defended his administration’s record on oil regulation in California, following an investigation by The Desert Sun and ProPublica that showed petroleum companies are profiting off dangerous inland spills.
The state enacted regulations last year to curb the spills, known as surface expressions, but the news organizations found that more than two dozen have occurred since then. Three are still running, according to state officials, including one that’s spilled more than 2 million gallons of oil and wastewater.
On Wednesday, Newsom and California Natural Resources Secretary Wade Crowfoot insisted that the state has made clear it has zero tolerance for surface expressions. In part, they cited a pause that the administration placed last year on new permits for high-pressure cyclic steaming — also known as steam fracking — a controversial extraction technique that has been linked to the spills.
“We’ve been very aggressive in terms of our enforcement,” Newsom said when asked about the spills during a press conference. “We put a moratorium on cyclic steam fracking a number of months ago. We have strategies in place being advanced specifically” by the California Geologic Energy Management Division, or CalGEM, the main state agency regulating the oil industry.
The moratorium did not suspend any existing steam fracking permits. The state has hired federal scientists to study whether steam fracking can be done safely, and Newsom said the results will be released soon. The state is also studying how to transition California off of oil extraction in a way that is fair to thousands of oil industry workers, as well as millions of drivers. The state used more than 600 million barrels of oil last year, according to Crowfoot.
Newsom said the state had invested substantially in CalGEM, with stepped-up enforcement, more staffing and new leadership. Crowfoot echoed the governor, saying, “We have a zero-tolerance policy moving forward for these inland oil spills.”
Newsom’s comments came during a press conference in which he announced a series of measures to combat climate change, including an executive order that calls for a ban on the sale of new gasoline-powered cars and other passenger vehicles in the state by 2035. He also vowed to work with the Legislature to phase out new permits for hydraulic fracturing by 2024, a different method of extraction that accounts for about 2% of California’s oil production.
Some environmental groups, however, have criticized Newsom for his approach to the oil industry, saying he has failed to live up to his rhetoric.
On Monday, the Center for Biological Diversity wrote Newsom to notify him it intends to sue the state over what it considers the illegal permitting of new oil wells in California. CalGEM says the permits are in compliance with state environmental laws. The environmental group has also called on the administration to tighten the 2019 regulations on surface expressions, which explicitly allowed steam fracking.
“We urge you to direct your regulators to … hold the oil industry accountable for its damage and stop allowing oil companies to profit from their oil spills,” the group wrote, citing the Desert Sun-ProPublica investigation.
As the news organizations reported last week, over the past two decades, petroleum companies have earned millions harvesting oil from spills, many linked to cyclic steaming.
The surface expressions can be dangerous, as oil erupts from the bare ground and spews fluids and potentially toxic gases. In one case, a worker died.
When spills surface, nothing in the 2019 regulations stops producers from turning them into moneymakers. At one spill site, dubbed GS-5, Chevron has made an estimated $11.6 million in the last three years alone, according to an analysis of production data provided by the state.
Chevron and state regulators have said that they’re trying to stop the spill and that they have reduced the flow by 90%.
CalGEM has the power to fine companies $25,000 a day for ongoing spills, but it has rarely issued financial penalties for surface expressions. In fact, the agency has issued just one fine under the new spill regulations, against Chevron for a large spill last summer. The company appealed and CalGEM has not moved forward with an appeal hearing.
Officials have mostly issued “notices of violation” — citations without fines — against several oil companies, and they say that approach is working. But they also say implementing the regulation will take time, and they’re committed to strengthening enforcement and other actions if needed.
“We need to create disincentives for these surface expression spills and remove any incentives; that’s what we’re committed to doing as we move forward,” said Crowfoot, who oversees CalGEM and said he has been working closely with the agency. “I am resolute that we’re going to make progress, so if there are more things we can do to hasten that, we certainly will look at those.”