California will soon have more power to fine oil companies that cause major spills or other hazards. The new law, which will take effect on 1 January 2024, was written in response to a Desert Sun and ProPublica investigation that found the state agency charged with regulating fossil fuel companies had a spotty enforcement record and had collected no fines in 2020. Governor Gavin Newsom signed Assembly Bill 631 into law on 7 October.
The law increases penalties to up to $70,000 a day for persistent violations and gives state regulators new powers to seek criminal enforcement.
“This measure ensures that California has 21st century enforcement tools to protect communities from oil operators who break the law, endanger public health and threaten the environment,” said Assemblymember Gregg Hart, who authored the bill. “AB 631 will strengthen compliance and deter the pattern of treating violations as the cost of doing business. I applaud Governor Newsom for signing this important legislation into law.
Under the new law, California’s oil regulator, the California Geologic Energy Management Division (CalGEM), can refer cases to local prosecutors and ask a Superior Court judge to compel operators to correct violations that could threaten public health, safety and the environment. The oil and gas regulator who heads CalGEM can also, for the first time, recover all response, prosecution and enforcement costs from oil companies.
Critics have long questioned CalGEM’s willingness to use its enforcement powers. In 2021, The Desert Sun and ProPublica found that despite the expanded powers, the agency had issued few fines over $5,000 – and had yet to collect a fine over $35,000.
Agency officials had vowed to improve enforcement transparency, and CalGEM’s public affairs office said last week that the agency had collected nearly $1.2 million for 24 civil penalty orders in 2022-23. But it did not respond to questions for this article about whether penalties assessed against oil companies from 2018 to 2020 were ever paid, despite promises by officials presented with those results to improve enforcement transparency.
In an unsigned email, the office also did not answer whether Chevron had paid any or all of a $2.7 million penalty for a 2019 spill, known as a “surface expression” because the raw crude shot straight out of the ground. Chevron had protested the fine at the time, saying there was no safety threat, despite the death of one of its own workers in a similar spill in 2011.
Another spill at a nearby Chevron oil field is still going on five years later, the agency admitted in its email response to our questions, though it said Chevron’s ‘mitigation programme’ had reduced the amount spilled by 99%. The Desert Sun and ProPublica also found that instead of stopping such spills, CalGEM has allowed companies to scoop up the spilled oil and process it for sale. The Chevron spill, which was first reported in 2003 and had already spilled more oil than the Exxon Valdez tanker that ran aground in Alaska, had earned Chevron an estimated $11.6 million from 2016 to 2019.
In 2021, Chevron called the spill a “seep” and a company spokesman said: “We take very seriously our responsibility to operate safely and in a manner that protects public health, the communities where we operate and the environment.”
In its email, CalGEM said the penalties available under the new law “are a strong incentive for operators to address issues identified by CalGEM inspectors. Our focus is to ensure safe, clean operations that protect the environment through strong regulation of oil and gas operations.”