Published on 10/20/23
The regulatory landscape for oil companies in California is poised for a transformation as the state gears up to augment its authority in penalizing oil firms implicated in major spills or other hazardous incidents. The freshly minted legislation, slated to be operational from January 1, 2024, was conceived in the aftermath of an investigative exposition by Desert Sun and ProPublica. The probe unearthed a lackadaisical enforcement track record by the state agency responsible for overseeing fossil fuel companies, notably with zero fines collected in the year 2020. The legislation, known as Assembly Bill 631, received the gubernatorial stamp of approval from Governor Gavin Newsom on October 7.
This legal amendment escalates the financial penalties, with a potential fine of up to $70,000 per day for ongoing violations, and empowers state regulators with the prerogative to seek criminal enforcement.
Assemblymember Gregg Hart, the craftsman behind the bill, emphasized that the enactment of this measure equips California with modern-day enforcement apparatus to shield communities from the detrimental actions of oil operators in breach of the law. The legislation, Hart mentions, is a stride towards bolstering compliance and disrupting the habitual approach of perceiving violations merely as an operational expense. The gesture of Governor Newsom in endorsing this pivotal legislation was hailed by Hart.
Under the aegis of the new law, the state’s oil regulatory body, the California Geologic Energy Management Division (CalGEM), will have the latitude to channel cases to local prosecutors and solicit a Superior Court judge to mandate operators to remedy violations posing a threat to public health, safety, and the environment. Additionally, the law enables the oil and gas supervisor at the helm of CalGEM to recoup all costs incurred in response, prosecution, and enforcement endeavors from petroleum companies.
The enforcement vigor of CalGEM has been under a cloud of skepticism for a significant duration. A previous investigation in 2021 by The Desert Sun and ProPublica underscored that despite an augmentation in enforcement powers, the agency had seldom imposed fines exceeding $5,000, with no fines surpassing $35,000 being collected.
While the agency pledged to enhance enforcement transparency, a disclosure from CalGEM’s public affairs office revealed a collection of nearly $1.2 million from 24 civil penalty orders during the fiscal years 2022-23. However, the agency remained reticent on queries regarding the payment status of penalties levied against oil firms from 2018 to 2020, despite prior commitments to bolster enforcement transparency.
An inquiry about the payment of a $2.7 million penalty by Chevron for a 2019 spill, dubbed a “surface expression” due to the eruption of crude directly from the ground, also went unanswered in an unsigned email from the agency. Although Chevron contested the fine asserting a lack of safety threat, the incident echoes a grim resonance of a similar spill in 2011 that resulted in the demise of a Chevron worker.
The saga of spills continues with another ongoing spill at a Chevron oil field, albeit with a reported 99% reduction in spill volume courtesy of Chevron’s “mitigation program”. Yet, rather than halting these spills, CalGEM permitted the companies to retrieve and process the spilt oil for sale. A spill by Chevron, first reported in 2003, has reportedly generated an estimated revenue of $11.6 million for the company from 2016 to 2019, outpacing the volume of crude released in the Exxon Valdez mishap in Alaska.
In a statement in 2021, Chevron labeled the spill a “seep,” with a company spokesperson iterating the firm's dedication to operating safely and protecting public health, local communities, and the environment.
The unfolding legislative and regulatory dynamics underscore a proactive stance by the state towards curbing environmental and public health hazards emanating from the operations of oil companies. Through the lens of Assembly Bill 631, the quest for a more stringent regulatory enforcement framework reflects the broader aspiration of fostering a safer and more compliant operational landscape within California’s petroleum sector.
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