California Regulators Didn't Follow Rules In Approving Hundreds Of New Oil Well Permits, Audit Finds

A state audit released the day before Thanksgiving shows that California oil regulators didn’t follow their own rules and in 2019 issued hundreds of inappropriate permits for new wells.

Environmental advocates like Hollin Kretzmann say making the announcement before a major holiday was an attempt to bury the audit. He’s an attorney with the Center for Biological Diversity’s Climate Law Institute.

“This is a huge embarrassment for the governor,” he said. “One of the shocking things is just how pervasive these violations are in virtually every aspect of oil and gas permitting. The governor is going to have a hard time photo-opping his way out of this one, he's going to have to take some real action to show that he actually cares about public health and safety and about the environment.”

While the Department of Finance audit found the California Geologic Energy Management Division, CalGEM, was “generally” in accordance with its laws, it also found major areas lacking. CalGEM has the authority to regulate how the oil and gas industry can produce oil. At the same time, the audit states the agency “is responsible for safeguarding public health and the environment while working to reach state climate and carbon-neutral objectives.”

Auditors found big oilfield projects were modified without extra review, in other cases internal policies hadn’t been updated when it came to new safe drinking water regulations, and there was missing or incorrect paperwork filed. 

Perhaps the largest misgiving is over “dummy projects.'' In those cases CalGEM created temporary folders for projects that needed deep environmental review, but the auditors found little evidence that they took place. This meant 201 wells from April to October 2019 were allowed to move forward with no evidence of review. 

Recommendations from the audit included stopping injection at wells that weren’t approved properly. The Department of Finance did not respond for comment. 

The information came about because CalGEM asked for an independent audit last November to determine whether current processes are in line with state regulations and policies months after the Desert Sun found evidence of “dummy files” being used. The agency also wanted recommendations for improvement.

With two days of state holiday, CalGEM officials weren’t available for comment Friday, but a public information officer released an emailed statement.

“CalGEM appreciates that the audit validated many of its practices and welcomes the suggested process improvements, many of which already have been put in place or will be in place soon,” the email read.

The email also noted CalGEM will submit a detailed action plan within 60 days on how the agency “has implemented and will further implement the audit’s constructive recommendations.”

Environmental Groups Look Beyond The Audit

While the audit focused specifically on CalGEM’s permit approval process, environmental groups say the findings present an opportunity for Gov. Gavin Newsom to veer away from oil exploration, starting with fracking.

Kretzmann, with the Center for Biological Diversity, says the plan must include buffer zones — although not mentioned in the audit, buffer zones are an issue the agency is working on — that would mandate oil extraction won’t take place within a minimum of 2,500 feet from homes and schools. This is important because, he says, too often people’s health and safety are in jeopardy with oil wells close to where they live, but they don’t always know that. 

“Virtually every other state has some health and safety buffer, California does not,” he said. “[The governor] also has to figure out how we're going to transition away from this dangerous fossil fuel industry that we have in the state. One step in that direction would be to just prohibit new permits from going out the door.”

He says this could begin with stopping all hydraulic fracturing, or fracking, permits, and not waiting on the legislature to come up with a plan. Fracking is a practice where a high-pressure cocktail of water, chemicals and sand are shot into the ground to establish an oil well. It breaks up layers of rock and the oil and natural gas escape through the cracks.

Kretzmann is irked by the state continuing to issue fracking permits, which the audit goes into detail about, including that all fracking permit applications must be reviewed by the Lawrence Livermore National Laboratory. He says the audit comes more than a week after CalGEM approved eight permits to Chevron, bringing the total fracking permits this year to 62. 

“Why are we issuing new permits and approving new injection projects to get more oil out of the ground, when we should be going the exact opposite direction?” he questioned, “We need to speed our transition away from fossil fuels, to protect frontline communities to improve our air and water quality, and to protect our climate.”

Fracking is an oil extraction practice that has the potential to contaminate drinking water and pollute air, according to environmental advocates like Kathryn Phillips, director of Sierra Club California. 

“Common sense would suggest that you wouldn't want a big industrial operation literally in your backyard,” she said. “You would not want people to be exposed to that. But in parts of Los Angeles and parts of the San Joaquin Valley, that is what is going on.”

In a September executive order, Gov. Gavin Newsom asked the legislature to come up with a plan to stop fracking in California by 2024. But advocates and experts continue to say the governor has the authority to do this himself.

Deborah A. Sivas, an attorney with the Stanford University Environmental Law Clinic, says it comes down to Gov. Newsom not wanting to enforce this and a desire to avoid lawsuits.

“Not to say the industry wouldn't sue and it wouldn't get wrapped up in court,” she said. “But it would be a move in the right direction, as opposed to we're going to study it, and maybe we'll get some legislation.”

She says as California takes a stand on climate change, the governor needs to take decisive action on ending fracking as a signal of a transition to green energy.

“Sometimes you just need bold, bold moves, especially given our climate situation,” she said.