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Newsom Cut 128 Oil Regulation Jobs Because the Oil Industry Asked Nicely

Dear Gavin, Your budget sucks, too.

Credit: Flickr | Shiny Things

“Because one thing I know about cuts, there’s a human being behind every single number. Behind every category is a dream that is either deferred, in some case a dream that is denied. I am sober about it, I’m not naive about cuts.” — Gavin Newsom, May 14, 2020

On Monday, 500 people called into Los Angeles City Council Budget and Finance committee meeting to yell at our elected officials over their awful budget. This was beautiful. Our city budget is trash and undemocratic and people are noticing.

But during this time of local unrest and possibility, our governor has proposed a budget of his own.

Our State Budget is trash, too.

Five months after he congratulated himself on addressing climate head-on, Governor Gavin Newsom proposed a May revised budget that cuts environmental protection by 94%.

Somehow, it gets worse, so please stay with me.

From Budget Summary

The May budget included cuts to electric car rebates, $15 million for another national park, and $4.75 billion in climate bonds for wildlife, flood, and drought resilience projects across the state.

Some of these programs were not great, to begin with. Take the Climate Catalyst fund — which was supposed to provide low-interest loans to market-ready projects — according to Jim Walsh, Senior Energy Policy Analyst at Food & Water Watch, a chunk of this money was going towards biogas projects run by the gas company. That’s right. We are funneling clean energy money into dirty energy. (Biogas is not good.)

But there is one cut that is especially aggravating. That’s the cut to 128 new positions to the California Geologic Energy Management Division (CalGEM), which regulates oil, natural gas, and geothermal energy.

This is the big cut we need to talk about.

For context, CalGEM is new. CalGEM replaced the Division of Oil, Gas & Geothermal Resources (DOGGR) last year when the former regulatory body was mired by scandal (top oil regulators owned stock in the oil companies). Unlike DOGGR, CalGEM is dedicated to prioritizing “protecting public health, safety, and the environment.”

But if they cut these positions, are they? These new jobs would increase transparency for the oil industry and also figure out bonding — how much money oil industries have to put up for clean up when they get a permit to drill. These jobs could save our state billions on the cost of cleaning oil wells.

And the money for these positions did not come from the general fund, or from cap-and-trade. The money for these positions came from a marginal fee on the oil and gas industries ($24 million a year). A fee that our state decided to drop because the oil industry asked them to.

The California Independent Petroleum Association (CIPA) sent letters to Wade Crowfoot (California Secretary for Natural Resources) and Uduak-Joe Ntuk (CA State Oil & Gas Supervisor at the CalGEM and former Engineer at Chevron) asking them to cut the 128 positions to CalGEM because the industry was hurting too much to pay right now.

20 03 30 cipa letter to newsom admin from Nicole Levin

And our state government listened.

It’s worth noting the person in charge of regulating the oil and gas industry in California worked previously as an engineer at Chevron. Also, before this job, he was the city’s Petroleum Administrator, the very man responsible for delaying a study on neighborhood drilling. (He has also still not been replaced, our city has no Petroleum Administrator.)

On a call with Last Chance Alliance (LCA), a coalition of over 700 health, environmental justice, climate and labor organizations, Crowfoot said that they dropped the fee because of the “real fear” of companies not being stable and able to pay their fees to CalGEM. “We’ve been really transparent that, that we are phasing out reliance on fossil fuels and basically carbon pollution, but the notion of companies and the industry being upside down and creating that level of risk both to the oil fields but also the communities that rely on the production has been really concerning.”

Currently, the oil industry only accounts for 0.1% of our state’s GDP and 0.2% of our state’s jobs.

A quick reminder: climate change, and the climate crisis, is a racial justice issue. Here in Los Angeles County, we have over 5,000 active wells, mostly located in low-income communities of color.

580,000 people live within a quarter-mile of an active well and 3.5 million people live within one mile (for reference, this is one-third of the county’s population.) Most of these people living near oil production are black and brown.

44% of Black people live near oil wells, whereas only 33% of white people live by oil wells. The numbers are also high for the Latinx and Asian communities, 37% and 38%, respectively. And if you are thinking, living by an oil well sounds dangerous, you’re right. Common sense prevails: it is very bad for you.

It took our City Council years to release a study on the issue — again, a former Chevron engineer led the charge on this — which for the most part, ignores science and proposes a 600-foot buffer between existing oil drilling and homes. Whereas, health officials and frontline communities, such as STAND-LA, as well as 40,000 Californians across the state have been advocating for a 2,500-foot buffer zone between homes and schools and oil drilling.

In the area surrounding the Inglewood Oil Field — the largest urban oil field in the country— there are four times as many asthma trips to the Emergency Room than the rest of the country. Four times. And remember, air pollution is linked to COVID deaths.

But this oil drilling isn’t just deadly and racially targeted. It’s expensive. And taxpayers are on the hook to clean it up.

A report by The California Council of Science and Technology (CCST) found that the State of California is liable to clean up 5,540 abandoned oil wells for a cost of half a billion dollars. Furthermore, there are another 70,000 wells that are economically marginal and idle that will eventually have to be plugged and cleaned up (this could cost an additional $9.1 billion.)

The state has never made oil companies pay the true cost of doing business in California. Oil companies put up bond money when they receive permits in order to eventually close those wells, but only $110 million is in state hands. If regulators don’t step up, we will have to pay for this.

According to Liza Tucker, consumer advocate for Consumer Watchdog, it costs, on average, $86,000 to plug and clean up a well. Oil companies prefer not to spend that kind of money, and so they often leave them idle or underused.

Oil companies will also offload wells they don’t want to hold onto anymore onto smaller, less financially stable operators and then desert or “orphan” the well because they can’t afford to plug them up, Tucker said.

According to Tucker, oil prices started to tumble in 2014 when hydraulic fracturing and horizontal drilling led to a huge glut of oil production domestically. Oil companies started borrowing to cover the cost of drilling and paying investors dividends. “It’s not COVID that killed off the oil industry. They’re saying it’s COVID, but it has to do with overproduction of oil and an orgy of borrowing billions of dollars coming due soon,” Tucker said.

In fact, a report published this February found that California Resource Corporation, a company spun off from Occidental Petroleum six years ago, currently owns 6,000 active and 11,000 idle wells, and according to its own website, it is the largest oil producer in the state.

The report by the Institute for Energy Economics and Financial Analysis (IEEFA), found that if CRC goes bankrupt it could leave Californians with $1.2 billion in plugging and cleanup costs. Not to mention additional environmental cleanup costs. And this company is not clean, a NASA study found that CRC is one of the top four “super-emitters” of methane in the state.

“On the surface, CRC looks like your average struggling oil venture. But it raises the question of whether the company was created specifically to offload Occidental’s California cleanup liabilities,” said IEEFA energy financial analyst and report author Clark Williams-Derry in the report.

If only there was a way to make the industry pay for the toxic mess they are creating. Oh. There was. The Governor’s budget included those128 positions over the next three years to update bonding levels and increase industry oversight and enforcement.

Let’s talk about these cuts to environmental protection.

One reason that we have less money this year for environmental protection, is because we rely on fossil fuel production to fund our clean energy programs.

“California’s overhyped cap-and-trade system, like other models, is supposed to be simple. Place a limit (the cap) on some carbon-emitting energy sources, forcing polluters to choose between reducing emissions or buying credits to keep polluting,” said Walsh.

This money from the credits then funds environmental programs. However, with emissions down, the latest cap-and-trade action in California only raised $25 million in revenue, compared to hundreds of millions in previous years.

“The loss of cap and trade are certainly contributing to the cuts in clean energy programs, highlighting the inherent conflict of raising money by polluting our planet,” Walsh said.

The program also fails to lower emissions. Emissions have actually gone up since California implemented the program.

Our state is siding with the fossil fuel industry at a time when we need to hold them accountable the most. At a time when people are dying from pollution and when we are cutting essential services — education, healthcare. Remember this chart? It wasn’t just environmental protection that was cut. (Corrections, also were barely touched, and we definitely need to address our prisons.)

From Budget Summary

And I wish that these cuts were a one-off, happening in a vacuum. But our governor has been aligning himself time and time again with the oil industry. Despite running on a platform to ban fracking, Newsom has been issuing new permits — he issued 12 more on June 1st! (Even though it’s so clear we do not need more oil wells.)

Newsom’s administration has allowed to ramp up of Aliso Canyon, a gas storage facility that is not only on an active faultline and leaking but which he promised to shut down.

And, oh yeah! Last year Newsom sided against a statewide bill that would have protected the state from Trump’s environmental rollbacks.

It is very possible that the State Assembly will put the CalGEM money back in the budget — the deadline to pass the budget is this Monday, June 15th.

A statement from LCA from an April press release still rings true: “It’s time for Governor Newsom to double down on his public health leadership. We call on the Governor and his administration to listen to the best available science and public health data that tells us that our best chance to protect frontline communities and avoid the worst impacts of the climate crisis is to phase out fossil fuel extraction. The state can’t claim to be a leader in protecting public health until it does so.”

Call your state representatives, and your Governor, we need to regulate the oil industry, not pay their bills.

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