California Oil Companies Face Tougher Enforcement Under New Law

California will soon have more authority to fine oil companies that cause major spills or other hazards. The new law, which will go into effect on Jan. 1, 2024, was authored in response to a Desert Sun and ProPublica probe that found the state agency charged with regulating fossil fuel companies had a spotty enforcement record and had collected no fines in 2020. Gov. Gavin Newsom signed Assembly Bill 631 on Oct. 7.

The law increases penalties to as much as $70,000 per day for continuing violations, and it gives state regulators new abilities to request criminal enforcement.

“This measure ensures California has 21st-century enforcement tools to protect communities from oil operators that violate 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 Gov. Newsom for signing this significant legislation.”

Under the new law, California’s oil regulator, the California Geologic Energy Management Division, or CalGEM, can refer cases to local prosecutors and ask a Superior Court judge to compel operators to correct violations that might threaten public health, safety and the environment. The oil and gas supervisor, who heads CalGEM, can also for the first time recover all response, prosecution and enforcement costs from the petroleum companies.

Critics have long questioned CalGEM’s willingness to exercise its enforcement authority. In 2021, The Desert Sun and ProPublica found that the agency had imposed few fines above $5,000, despite enhanced powers — and had yet to collect a fine above $35,000.

Officials at the agency had vowed to improve enforcement transparency, and CalGEM’s public affairs office said last week that the agency has 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 findings 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 raw crude shoots 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 on a Chevron oil field nearby is also still running five years later, the agency admitted in its email in response to our questions, though it said Chevron’s “mitigation program” has reduced the amount being spilled by 99%. The Desert Sun and ProPublica also found that rather than stopping such oil spills, CalGEM allowed companies to scoop up the spilled oil and process it for sale. The Chevron spill, which was first reported in 2003, and which had already spewed more crude than the Exxon Valdez tanker that ran aground in Alaska, had earned Chevron an estimated $11.6 million from 2016 to 2019.

Chevron in 2021 called the spill a “seep,” and a company spokesperson said, “We take our responsibility to operate safely and in a manner that protects public health, the communities where we operate and the environment very seriously.”

In its email, CalGEM said that the penalties available under the new law are “a powerful motivator for operators to address issues that CalGEM inspectors have identified. Our focus is on ensuring safe, clean operations that safeguard the environment through strong regulation of oil and gas operations.”

Earlier reporting by The Desert Sun and ProPublica found that there was a substantial backlog in enforcement, which the agency said in a budget request was due to understaffing, despite having received funding for more staff.

The agency received funding in 2022-23 for additional staff too.

Environmental groups and a county prosecutor cheered the passage and signing of the bill.

The district attorney for Santa Barbara County, John Savrnoch, said the law would provide his office “with additional tools to help prevent harm to our environment and to hold polluters accountable.”

Linda Krop, chief counsel for the Environmental Defense Center, said, “This legislation is important to protect the public from bearing the cost of illegal activities by oil and gas companies.”