Oil conflict expands with referendum's certification

Feb. 6—The state oil industry's success last week in putting a contentious referendum on the November 2024 ballot has broadly escalated its conflict with Gov. Gavin Newsom and his anti-petroleum allies.

Of immediate interest to Kern County oil producers was that Friday's certification by the California Secretary of State put a halt to weeks-old regulations that had effectively banned drilling within 3,200 feet of a home, school or other gathering place, unless it was to maintain existing production.

Beyond that interim victory, the referendum's certification opened a new front in the battle for California's oil future and may have intensified fighting along two others — one originating with the governor, the other with environmental activists fresh off a related victory.

The trade group that launched the referendum and raised $21 million in support from more than 220 donors, the California Independent Petroleum Association, signaled its attention turns next to a political campaign it would sponsor leading up to the Nov. 5, 2024, general election.

"We will be discussing with our members and consultant to see what a 2024 campaign would look like," CEO Rock Zierman said by email Friday.

Zierman made reference, in addition to oilfield layoffs and other arguments against cutting in-state production, to a recent New York Times report on a new estimate that California receives about half of all oil being produced on deforested land in the Amazon rainforest.

Newsom, for his part, used what sounded like fighting words when news arrived Friday that the industry initiative had surpassed the necessary 623,000 valid signatures. His office issued a statement that oil companies were doing everything possible to "squeeze profits as they pollute our communities."

"We're not standing for it," Newsom stated. "California will hold Big Oil accountable, and it starts with passing our price gouging penalty to prevent extreme gas price spikes like the one we saw last fall."

Legislation has been proposed, but few details have emerged, since Newsom's call to punish oil refiners for a jump in prices at the pump last fall that was not echoed in other states.

A bill introduced by Sen. Nancy Skinner, D-Berkeley, would direct the California Energy Commission to penalize price gouging by refiners, with proceeds going to a consumer fund. Among details not yet ironed out is how much profit would be acceptable.

The Newsom administration's history with the buffer zone question dates back more than three years to its announcement of an administrative rule-making process that was supposed to result in new regulations.

After that effort stalled, Newsom led the introduction of a bill in the waning days of the last legislative session to ban new drilling within the 3,200-foot buffer zone. Senate Bill 1137, signed into law Sept. 16, would forbid well deepening and reworks, impose pollution controls on existing wells within the zone and restrict noise, light and dust while mandating new testing and paperwork.

Scientific research has linked proximity to oil and gas wells and health problems such as adverse birth outcomes, heart disease and respiratory diseases including asthma.

The oil industry says no formal correlation has been established supporting a 3,200 feet "setback" distance.

On Monday, two organizations that have advocated for creating the buffer decried the referendum. One of them called on the Newsom administration to exercise its discretion to ensure health and safety by putting emergency setback rules in place and ending new drilling permits "right away."

Staff attorney Hollin Kretzmann with the Arizona-based Center for Biological Diversity criticized the industry's referendum campaign, reiterating concerns some who signed the industry petition may have been misled about its goal. But he emphasized in a news release the governor "still has all the tools he needs to protect Californians from oil industry pollution."

The assertion state officials can essentially enforce setbacks without formal implementation of SB 1137 dates back months, at least to meetings in late October between administration officials and members of an environmental justice coalition tracking what they discovered to be a jump in oilfield permitting within the proposed buffer zones in the weeks following the law's passage.

Although the law would not take effect until January, the groups pressed state officials over a period of months to deny permits that would be barred under SB 1137.

Last month, then-State Oil and Gas Supervisor Udauk-Joe Ntuk suddenly resigned and was replaced on an interim basis by Gabe Tiffany, chief deputy director of the state Department of Conservation. Members of the EJ coalition welcomed Ntuk's departure and demanded Newsom do more to protect communities neighboring oilfields.

Kobi Naseck, coalition coordinator of Voices in Solidarity Against Oil in Neighborhoods, whose group had earlier asked the administration to use its discretion to deny permits in the proposed buffer zones, did not join Kretzmann in doing so again Monday. Naseck instead predicted in a news release that the oil industry will ultimately lose at the ballot box.

"Big Oil pushed their $20 million button to pay for a ballot measure to undo an immensely popular law. Really, it's a big bet, but what they don't understand is that they're betting against people power," he stated. "They're betting against Californians, and they're going to lose."

Tiffany made no mention about exercising discretion to deny permits in a notice to operators Friday advising them the provisions of SB 1137 have been stayed along with emergency regulations put in place Jan. 6.

"For as long as those statutes are stayed, the implementing regulations do not have effect or meaning," he stated, adding that applications for oilfield permits no longer need to include extra information that had been required under SB 1137 and the month-old emergency regulations.