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California isn’t enforcing its strongest-in-the-nation oil well cleanup law on its largest oil company By Mark Olalde, ProPublica This story was originally published by ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.
Oil well pump jacks. | Photo by Richard Masoner CC BY-SA 2.0
Series: Unplugged: Will Taxpayers Foot the Oil Industry’s Cleanup Bill? nplugged oil and gas wells accelerate climate change, threaten public health and risk hitting taxpayers’ wallets. Money set aside to fix the problem covers less than 2% of the impending cost. 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 side-
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stepped 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 See Oil cleanup Page 02
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” 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
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Supervisor Solis presents $2M grant to El Monte for interim housing By Staff
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os Angeles County Supervisor Hilda Solis on Wednesday awarded $2 million in grant funding for two interim housing sites in El Monte that aim to reduce homelessness. The funds from the First District Community Grants Program will allow the city to support operations and services at the Hilda Solis Iris House, formerly the Budget Inn at 10038 Valley Blvd., and the Hilda Solis Rose Court, formerly the M Motel at 10024 Valley Blvd. “Jurisdictions across the First District have played a critical role in bolstering our homeless services system – including the City of El Monte,” Solis said in a statement. “While some communities continue to push back against offering our most vulnerable a chance, the City of El Monte has been a leading partner in our fight to solve homelessness. To that end, I am proud to show my gratitude by providing the City of El Monte with $2 million to support operations and services at their two Homekey sites.” El Monte City Manager Alma Martinez said in a statement, “The City of El Monte is grateful to Supervisor Solis for this much-needed investment. As the leading city in the San Gabriel Valley moving forward initiatives to shelter our unhoused, receiving this funding is a testament to our resolve in addressing the homelessness crisis.” Last year, Solis joined El Monte city officials for a ribbon-cutting ceremony to open the Hilda Solis Iris House. The city oversaw the repurposing of the two-story, 40-unit former motel into interim housing funded by a $4.1 million
Homekey Round 1 grant from the state, city officials said. The facility prioritizes housing for 18- to 24-yearold “transition-aged youth” who are currently or formerly in foster care and/ or impacted by the probation system. The city bought the M Motel with a $10.3 million Homekey Round 1 grant and $7.5 million from LA County after Solis’ advocacy helped El Monte cover a budget gap, according to the city. The Hilda Solis Rose Court is expected to open in January and serve people the county engages via Pathway Home and other encampment-clearing programs. The facility will provide temporary housing during its first five years, and in year six it will become permanent supportive housing. The Homekey program has provided money to municipal governments to develop a wide variety of housing types, including hotels, motels, hostels, single-family homes and multifamily apartments, adult residential facilities and manufactured housing. Homekey funding has also enabled the conversion of commercial buildings and other existing structures to serve people who are unhoused or at-risk of becoming homeless. This latest funding is the most recent in a series of grants to nonprofit organizations and schools in Solis’ district, according to the supervisor’s office. The Community Grant Program, which Solis started in 2014, helps develop and support services for district residents that include arts, environmental justice, health, housing, immigration and education.