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California
California Isn’t Enforcing Its Strongest-in-the-Nation Oil Well Cleanup Law on Its Largest Oil Company
Last October, California passed the nation’s strongest law to address the glut of oil and gas wells that are unplugged and ownerless, many leaking pollutants into the environment.
The legislation required that, as part of any sale or transfer of wells, the purchasing company set aside enough money in financial instruments known as bonds to cover the entire cleanup cost of low-producing wells if the companies go out of business without plugging them. It was a striking departure from the piecemeal steps taken by other state legislatures and federal agencies to reduce the number of orphan wells. California lawmakers repeatedly cited ProPublica’s work on the subject as a reason to act.
But in its first major test, California regulators sidestepped the law.
The California Geologic Energy Management Division, the state’s oil regulatory body, announced in late June that the law does not apply to the merger of California Resources Corp. and Aera Energy, two of the three companies that account for the vast majority of the state’s oil and gas production. If the law had been enforced, the deal would have provided billions of dollars in new bonds to ensure taxpayers weren’t eventually left with the cleanup bill.
Department of Conservation Director David Shabazian explained the agency’s decision in a letter to Assemblymember Wendy Carrillo, the Los Angeles Democrat who sponsored the new law. The bonding requirements “do not apply to stock transfers, nor does the law make any mention of such transactions,” Shabazian wrote. In other words, because Aera is still listed as the operator of the wells, the state can’t act.
That explanation did not appease Carrillo.
“This deal is exactly why we passed AB 1167, the Orphaned Well Prevention Act,” she said in an email to ProPublica and Capital & Main. “If a company is drilling for oil in California, they should be responsible for cleaning and closing that oil well. Not enforcing the law as intended sets-up our state for a potential financial catastrophe.”
The merger created the largest oil company in the state, with about 16,000 idle wells, which neither produce oil and gas nor are plugged and are at a higher risk of becoming orphans. That’s 40% of the total number of idle wells in the state.
“It’s an absurd interpretation of the law,” said Kyle Ferrar, who helped write AB 1167 as Western program coordinator with environmental group FracTracker Alliance. “They’re essentially creating a model to get around this bill.”
Richard Venn, a California Resources spokesperson, said in an emailed statement that the companies have plugged more than 5,000 wells and “have active and well-established programs for managing the full life cycle of wells and we have the size and financial resources to address all of our plugging obligations. The merger strengthens those resources.”
“Enormous Dereliction of Duty”
Credit:
Mark Olalde/ProPublica
In December, the California Geologic Energy Management Division wrote to the state’s oil companies notifying them that they should submit paperwork before completing “any acquisition” — agency staff bolded those words — to assist the state in determining necessary bonding levels under AB 1167. “This notice is to ensure that operators are aware of new bonding requirements that must be complied with in advance of acquiring certain wells and production facilities,” regulators wrote.
But the state concluded the California Resources and Aera merger didn’t trigger the bonding requirements because of the way it was structured.
In the state’s letter explaining regulators’ reasoning, Shabazian wrote that “if the operator of the well remains constant, changes in ownership of the operator’s holding company do not require new bonds.”
If regulators had applied the law to the merger, California Resources would have been required to put up an estimated $2.4 billion bond to guarantee Aera’s wells will be plugged, according to an analysis of state data. In comparison, that’s about eight times the total value of all outstanding cleanup bonds for all oil companies in the state.
Instead, Aera will continue operating with only a $3 million bond.
“This particular transaction is itself tremendously consequential, potentially the most consequential transaction that the state will see,” said Kassie Siegel, a senior counsel with the environmental group the Center for Biological Diversity.
Siegel worries that the state’s “enormous dereliction of duty” opens a loophole for the industry. Regulators are “creating a roadmap for other companies to similarly evade the law,” she said.
The agency’s decision also came after Aera spent about $250,000 lobbying in California in the first quarter of the year, including on “1167 implementation,” according to the company’s lobbying disclosure form.
Neither Aera nor state regulators answered questions about the company’s lobbying.
Despite California Resources’ assertions that the company resulting from the merger is financially stable, it faces serious challenges.
California Resources was formed when Oxy Petroleum spun off its West Coast assets, and the company has already gone through Chapter 11 bankruptcy. California Resources acknowledged in filings with the U.S. Securities and Exchange Commission that the merger left it and Aera with more than $1 billion in impending cleanup costs between them. In the records, the company also suggested that some of its key assets will reach the end of their economic lives in the coming years.
Aera, meanwhile, was sold by Shell and ExxonMobil in 2022 and ended up in the hands of German asset management group IKAV, investment fund Oaktree Capital Management and the Canada Pension Plan Investment Board.
IKAV did not respond to requests for comment, while the Canada Pension Plan Investment Board and Oaktree declined to answer questions.
The office of Gov. Gavin Newsom, who signed AB 1167 into law with a warning that it might need to be amended, also did not answer questions about whether he agreed with his agency’s interpretation of the legislation.
Aaron Cantú of Capital & Main contributed reporting.
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California
Rain continues in parts of California reeling from flooding and high tides – WTOP News
CORTE MADERA, Calif. (AP) — Crews cleared mud from key California highways as forecasters warned Sunday that more thunderstorms were…
CORTE MADERA, Calif. (AP) — Crews cleared mud from key California highways as forecasters warned Sunday that more thunderstorms were on the way after downpours and high tides caused flooding, road closures and rescues of people trapped in cars.
Five northern counties remained under a flood watch, with up to three inches (7.6 cm) of rain possible through Monday night in areas that have been drenched off and on since around Christmas, said the National Weather Service office in Eureka. At least a foot (.3 meters) of snow was likely in the mountains.
To the south near the San Francisco Bay Area, waters were slowly receding after roadways from Sausalito to San Rafael were flooded during heavy rain that coincided with record-breaking “ King Tides.” Such tides occur when the moon is in its closest position to the Earth, creating a stronger gravitational pull.
Some people kayaked along swamped streets, while others waded through water above their knees. Authorities were called to assist when cars got stuck in water as high as 3 and 4 feet (1.1 and 1.2 meters), Marin County Sheriff’s Sgt. Michael Dobbins said Saturday.
“I’ve been around here for the King Tides and I’ve never seen it this high. Never,” Jeremy Hager of San Rafael told KTVU-TV.
Flooding was reported across Marin, Sonoma, Alameda, San Mateo and San Francisco counties.
While the tides were waning, lingering thunderstorms on Sunday could cause additional problems throughout low-lying areas, forecasters said. “For anyone driving, slow down and allow extra time to reach your destination,” the Bay Area office of the weather service warned on social media.
Farther south in Santa Barbara County, a key highway was reopened Sunday after it was blocked for most of the weekend near Goleta due to a series of mudslides. A man died after he was swept into a creek during the storm, the sheriff’s office said Saturday.
Parts of Santa Barbara County received more than four inches (10 cm) of rain over two days, the weather service said Sunday.
After a mostly dry autumn, California has been hit by a series of powerful winter storms that brought the wettest holiday season to the state in years.
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California
California’s gubernatorial race heats up as Newsom’s term nears end, with many contenders
FRESNO, Calif. (FOX26) — In just over a year, Gavin Newsom’s term as California’s governor will come to an end, capping off nearly eight years in office.
Now the question is – who will take over once he steps down?
We spoke to political scientist Nathan Monroe about what could be one of Californias most unpredictable gubernatorial races yet.
With Governor Gavin Newsom’s term ending, the race to replace him begins.
This race will determine who leads the worlds fifth largest economy at a time when California is facing issues such as housing and affordability.
Californias next gubernatorial election is shaping up to be crowded – and for the first time in years – there’s no incumbent on the ballot.
“You say, well, just which democrat is going to win, right? Like, sort of republicans don’t have a shot. But what we have to keep in mind, right, is that the rules of elections matter. And in California, we have the top two primary system,” said Nathan Monroe, a Political Science Professor at UC Merced.
More than a dozen candidates are vying for the spot.
On the democratic side, contenders include former U.S. Secretary of Health and Human Services Xavier barrera, former U.S. Representative Katie Porter, Representative Eric Swalwell, former Los Angeles Mayor Antonio Villaraigosa, and former State Controller Betty Yee.
Political experts say the size of the field could make turnout and name recognition decisive and could lead to unexpected results in the primary.
“But if you divide that pie up by just two, and you divide the democratic pie up, which is admittedly a larger pie, by 7 or 8, the concern you get here is that democrats are going to lose out on even running to the general election. So even though there might be more democratic votes to be found in California for governor, they might not have a shot to cast those ballots for a democrat on the general election ballot,” said Monroe.
Monroe says party leaders may need to step in soon.
“I think the concern has to be among voters and I’m sure among the party leaders, so to speak, right, the party leaders sort of amorphously, is that they’ve got to figure out a way to delicately, you know, assure some candidates out of the race and figure out which candidates those should be and figure out how to manage those personalities and try to coordinate all the things that go in and around a gubernatorial election,” said Monroe.
On the Republican side, former Riverside County Sheriff Chad Bianco and Fox News contributor Steve Hilton.
With just a few months from the midterm elections, Monroe says both parties need to organize.
“What’s happening behind the scenes for the parties to try to coordinate themselves to make sure that the field that they offer to voters in June is a field that gives them the best chance for their best candidate to go forward to the general election,” said Monroe.
The primary election is set for June, with the general election in December.
California
Heavy rain, high tides cause flooding along stretch of Northern California
CORTE MADERA, Calif. (AP) — Heavy rain and high tides believed to be the most severe in two decades caused flooding in parts of Northern California on Saturday, prompting road closures and rescues of residents trapped in their cars.
Roadways through a 15-mile (24-kilometer) stretch from the Sausalito area to San Rafael were flooded after a downpour coincided with record-breaking “ King Tides,” Marin County Sheriff’s Sgt. Michael Dobbins said.
No injuries were reported but authorities were called to assist when cars got stuck in floodwater as high as three and four feet (1.1 and 1.2 meters), he said.
“There is a lot of water in the roadways,” Dobbins said, adding the tides were reportedly the highest in more than two decades. “Along with heavy rains, it just created the perfect storm for flooding on the streets.”
Authorities in the communities near San Francisco asked residents to stay home wherever possible until waters recede. Some residents kayaked along what normally would be city streets. Others waded out in water that passed their knees.
A flood warning was in place for the San Francisco area until 2 p.m. Saturday and an advisory until 2 p.m. Sunday, according to the National Weather Service in San Francisco.
King Tides occur when the sun, moon and Earth are in alignment and the moon is in its closest position to the Earth, creating a stronger gravitational pull.
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