LOS ANGELES, Calif. — On September 27, Assemblymember Carrillo and over a dozen advocates with climate, community and environmental justice organizations held a press conference to call on Governor Gavin Newsom to hold oil companies accountable by signing the Orphan Well Prevention Act, AB 1167, into law.
On the day before, over 100 groups sent a letter asking the Governor to sign the legislation.
The Orphan Well Prevention Act would require oil companies to take out full bonding to cover the clean up cost of idle and marginally-producing wells when they are transferred in ownership, helping to solve the growing orphan well crisis, according to a press statement from a coalition of climate groups.
The text of the bill reads: “This bill would require a person who acquires the right to operate a well or production facility, whether by purchase, transfer, assignment, conveyance, exchange, or other disposition, except a well as specified, to instead file with the supervisor an individual indemnity bond for the well or production facility, or a blanket indemnity bond for multiple wells or production facilities, in an amount determined by the supervisor to be sufficient to cover, in full, all costs of plugging and abandonment, decommissioning of the facility, and site restoration, as provided.”
A new interactive map released by Environment California shows the breakdown of idle and orphan wells and the threats wells pose to groundwater in California by county, Senate and Assembly district, as well as estimated costs for clean up.
“California’s oil producing days are numbered, but the pollution that oil wells cause can linger for a long time. We need more than blind trust that oil companies will clean up their mess – we need strong, legally binding assurance. Governor Newsom can take the next logical step to hold oil and gas operators accountable by signing the Orphan Well Prevention Act into law,” said Steven King, Clean Energy Advocate at Environment California.
King said there are currently about 5,400 orphan wells in California — idle wells which owners have abandoned their responsibility to clean up — leaving them for California taxpayers to address. Current bonding rules only require oil companies to take out a minimal bond to cover the cost of cleaning up oil wells at the end of their life, sometimes amounting to as little as a few hundred dollars per well.
“However, the average cost statewide to clean up a well according to the California Council on Science and Technology is $68,000. With nearly 70,000 idle and marginally-producing wells across the state, many at high risk of becoming orphaned, taxpayers are vulnerable to pay exorbitant fees to clean up wells that rightfully should be paid by the companies responsible for the oil wells,” according to the coalition.
“AB 1167, the Orphan Well Prevention Act, is a top priority for California Environmental Voters because it will implement the polluter pays principle, protect taxpayers from having to clean up Big Oil's mess, and ensure that vulnerable communities achieve justice in fighting for healthy, livable communities,” said Fatima Iqbal-Zubair, Legislative Affairs Manager at California Environmental Voters. “We applaud the Governor suing oil companies to make them pay the price of the damages they have caused. By signing this bill, the Governor has the opportunity to continue to hold the oil industry accountable and at the same time ensure California taxpayers are not stuck with the price for cleaning up oil wells.”
“For too long the fossil fuel industry has profited off of endangering communities across California and avoiding accountability for any harm caused. To make matters worse, the very same communities they pollute are expected to cover the cost of cleaning up hazardous orphan wells,” said Andrea Vega, Southern California Senior Organizer, Food & Water Watch, “Earlier this month, Governor Newsom made an important step towards holding these polluters accountable by launching a lawsuit against several major fossil fuel companies for knowingly causing climate change and deceiving the public about its impacts. It is critical that the industry be held to account and forced to pay for the damage their deceit has caused to our communities and our climate. However, a lawsuit alone is not enough. Governor Newsom must take action now to rein in the fossil fuel industry by signing AB 1167.”
"Governor Newsom, it's time to put an end to the 'dine-and-dash' practices of oil companies in California. AB 1167, the Orphan Well Prevention Act, is our chance to make sure they pay their fair share. For too long, these companies have feasted on massive profits from polluting oil drilling, leaving taxpayers to foot the cleanup bill. It's time for a change,” said Nicole Rivera, Government Relations Director at The Climate Center. “AB 1167 ensures that when an oil well changes hands, the new owner must provide financial security for the full cost of cleanup, no exceptions. We can't afford to let history repeat itself. Let's protect California's future and sign this bill into law."
“The oil lobby spearheaded by the Western States Petroleum Association (WSPA) and the California Independent Productions Association (CIPA) engaged in desperate 11th hour tactics to kill this bill. They leaned heavily on faulty analysis of the bill by the California Department of Finance, which in turn closely mirrored industry talking points. The flaws in those talking points have been fully addressed by the experts at Carbon Tracker and FracTracker,” according to the groups.
The legislation is arriving on the Governor’s desk in tandem with his “vigorous push” to hold the oil industry accountable rather than letting its costs fall on the public to pay, the coalition said.
“In particular, the Governor fought a tough battle this year with the oil industry over price gouging legislation, culminating in the passage of SBX1-2 over heavy industry opposition; and now the state has filed a lawsuit against the big five oil companies, seeking to make them pay for the climate damage they caused. Groups are now calling on Governor Newsom to continue his leadership to hold oil companies accountable by signing AB 1167 without hesitation,” the groups argued.
“Big Oil fought AB 1167 tooth and nail because they know it will be effective in holding them accountable for the orphan well mess they’ve made,” said Ann Alexander, a senior attorney at NRDC (Natural Resources Defense Council). “The stakes here are incredibly high for both Californians’ health and their pocketbooks. We’re counting on the Governor to do the right thing and not succumb to the misinformation the industry has been relentlessly peddling about this bill.”
“It is so energizing to see Governor Newsom take on big oil with the recent lawsuit announcement, but we need to be holding oil executives accountable on all fronts," said Jasmine Vazin, Senior Campaign Representative with the Sierra Club. “Enacting AB 1167 is an accountability measure that is necessary to ensure polluters are paying for their clean up responsibilities they take on in California. This bill will address the state’s orphan well crisis that if not solved will cost state taxpayers billions, and is a critical piece of legislation for the Governor to sign.”
“AB 1167 is specifically designed to address the prevalent practice of larger oil companies transferring their idle and marginally-producing wells to smaller and potentially less solvent companies, creating a risk that these smaller companies will lack the means to properly close the wells. This in fact occurred several years ago when Greka Energy’s Rincon Island Limited Partnership (RILP) acquired a large set of offshore wells that had been drilled by a major oil company, but ultimately went bankrupt and left taxpayers to foot a bill of $27 million thus far to pay for the cleanup,” the coalition continued.
“A law was subsequently passed requiring full-cost bonding for offshore oil wells, but it did not apply to onshore wells. Other states, including Arkansas and Colorado, already have laws in place requiring full cost bonding for idle or marginally-producing wells,” the groups stated.
“The lack of sufficient bonding funds for plugging oil and gas wells presents an imminent threat to the taxpayers of California. Research by FracTracker has shown that the trend of big oil to divest their bad assets to likely insolvent companies is increasing,” said Kyle Ferrar, Western Program Director at FracTracker Alliance and author of a comprehensive report earlier this year on the risk of well transfers in California. “Without AB 1167 California will remain unprotected from the tens of thousands of wells that will likely be orphaned within the next decade.”
The press conference took place in the Vista Hermosa Natural Park, sitting directly on top of the once highly active Los Angeles Oil Field. Surrounding the park, orphan and idle wells still dot the landscape and leak toxic emissions or spill oil onto the street, threatening the health and safety of Angelenos every day. The Vista Hermosa Community Group has been organizing to hold polluters accountable and secure funding for clean up of these leaking wells.
"For our Vista Hermosa Community, the threat of idle and orphan wells is not theoretical. We live every day with the consequences of uncapped wells. We have all lost family members to the health impacts of uncapped wells. Many of us suffer from health effects and chronic conditions like asthma,” said Danny Luna, leader with the Vista Hermosa Community Group. “We don’t want any more communities to suffer. We urge the Governor to sign AB 1167. It is time for communities like ours that suffer from idle/orphan wells to receive state support and resources to cap the wells and heal our community."
“Too many of our communities are way too familiar with the impacts of idle and orphan wells. For every idle and orphan well in the state, there are community members suffering from higher rates of cancer and chronic illness. We are literally being poisoned; we cannot allow any more wells to be orphaned,” Nicolas Gardner-Serna, Hub Coordinator at Sunrise Movement LA. “Polluters must be responsible for cleaning up their messes. We urge the Governor to sign AB 1167 to protect our communities and prevent any further harm.”
In a statement, Rob Schuwerk, Executive Director, Carbon Tracker North America, also urged Newsom to sign California’s new orphan wells law:
“Something has to be done to address the orphan well problem in the state. We calculate that 58% of future available cash flows for plugging and reclamation will be earned in the next two years alone. Corporate law typically requires that creditors are paid before equity holders, but in California today, it is backward: owners of oil and gas wells are taking profits long after cash flows can no longer satisfy plugging and remediation obligations.”
WSPA and Big Oil pump Big Money into influencing California regulators
The Western States Petroleum Association (WSPA), Chevron and the oil companies exercise their influence and power through a very sophisticated public relations machine in California and the U.S.
WSPA describes itself as “non-profit trade association” that represents companies that account for the bulk of petroleum exploration, production, refining, transportation and marketing in Arizona, California, Nevada, Oregon, and Washington. WSPA’s headquarters is located right here on L Street in Sacramento.
Catherine Reheis-Boyd, the President and CEO of WSPA, is the former chair of the Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force for the South Coast to create “marine protected areas” in the same region that she was lobbying for new offshore drilling.
Since 2009 I have documented how WSPA and the oil companies wield their power in 8 major ways: through (1) lobbying; (2) campaign spending; (3) serving on and putting shills on regulatory panels; (4) creating Astroturf groups; (5) working in collaboration with media; (6) sponsoring awards ceremonies and dinners, including those for legislators and journalists; (7) contributing to non profit organizations; and (8) creating alliances with labor unions, mainly construction trades.
The oil and gas industry spent over $34.2 million in the 2021-22 Legislative Session lobbying against SB 1137, legislation to mandate 3200 foot buffer zones around oil and gas wells, and other bills they were opposed to: cal-access.sos.ca.gov/…
For the oil companies, this was just pocket change when you consider that combined profits of California oil refiners, including PBF Energy, Chevron, Marathon Petroleum, Valero, and Phillips 66, were $75.4 billion in 2022.
The two biggest spenders were WSPA and Chevron. WSPA spent $11.7 million in the 2021-22 session, while Chevron spent a total of $8.6 million lobbying California officials.
Lobbying disclosures from Quarter 2 of 2023 reveal that oil companies and trade associations spent more than $3 million lobbying and a grand total of $4,085,639.57 in just three months to shape policymaking efforts in its favor in California. That brings the total spent by Big Oil and WSPA to over $13.4 million total in the first six months of 2023, putting them on track to exceed the 2022 expenditure of $18 million.
Chevron topped the lobbying expenses with $1,139,130, while WSPA placed second with $716,824.
The latest disclosures follow the $9.4 million that Big Oil spent to influence the California Legislature, Governor’s Office and agencies in the first quarter of 2023. Chevron came in first with over $4.9 million spent in the first quarter, while the WSPA finished second with over $2.3 million and Aera Energy finished third with nearly $628,000.
WSPA sponsors media dinners and awards for journalists
Over the past year, Big Oil has launched a chilling campaign to sponsor dinners, awards ceremonies and conferences for journalists and the media. WPSA sponsored a “media dinner” on Tuesday, February 28 in Sacramento as part of #BizFedSactoDays.
The flyer for the event stated, “Journalists who play an outsize role in shaping narratives about state politics and holding lawmakers accountable will join business leaders to pull back the curtain on how they select and tell stories about California policies, policy and power.”
Speakers at the program included Coleen Nelson of the Sacramento Bee, Laurel Rosenhall of the Los Angeles Times, Kaitlyn Schallhorn of the Orange County Register and Dan Walters of Cal Matters.
More recently, the Sacramento Press Club announced that WSPA was a new “Lede Sponsor” of the Sacramento Press Club's Journalism Awards Reception that was held on March 29. Sadly, only two journalists, myself and Aaron Cantu of Capital and Main, publicly challenged the funding of journalist awards by Big Oil.
In addition to sponsoring journalism events in California, the Western States Petroleum Association has expanded its campaign to influence journalists nationally. WSPA and the controversial waste management firm Veolia North America sponsored events at this year’s Society of Environmental Journalists (SEJ) conference in Boise, Idaho, according to a report from DeSmog: scq.io/...
The agenda for the conference, hosted in Boise, Idaho, revealed that WSPA and the waste management company Veolia North America sponsored two of the “beat dinners” hosted on April 21, the article by Sam Bright reported.
When #BigOil teams up with journalists, columnists and editors at events and only a couple of writers thinks there’s something wrong with this, you know we must be in deep trouble.