California's Oil and Gas Regulator Approved Hundreds of New Wells Without Required Oversight

The agency responsible for regulating California’s oil and natural gas industry violated state rules by approving hundreds of new wells in 2019 without proper review, according to a recent audit.

The state Department of Finance’s review of California’s Geologic Energy Management Division (CalGEM) found numerous violations, including inadequate environmental and safety reviews and a failure to follow current guidelines.

That news has environmental groups outraged, but hardly surprised.

“For far too long, we have seen the fox guarding the hen house with CalGEM,” said Monica Embrey, associate director of the Sierra Club’s Beyond Dirty Fuels Campaign.

The audit focused specifically on injection wells, used by oil and gas companies to expedite the drilling process and pump wastewater underground, where it risks contaminating the water supply.

“They've been injecting this toxic wastewater into what are supposed to be protected aquifers,” said Hollin Kretzmann, an attorney with the Center for Biological Diversity. “Groundwater that could be used for agriculture or municipal use now has oil industry waste in it.”

The audit found CalGEM approved hundreds of these kinds of wells — which have been at the center of several large oil spills across California — without proper review and approval.

“Our state oil and gas regulator has consistently looked the other way before rubber stamping approvals for hundreds of oil and gas wells and dangerous projects around the state,” Kretzmann said.

CalGEM regulators are supposed to first review the environmental and safety impacts of each overall project before issuing permits for individual wells. That initial assessment fell by the wayside in several instances, according to the audit.

“Our oil and gas regulator pretended that that first step happened,” Kretzmann said. “The underlying review never happened.”

The audit also found that several drilling projects were approved by CalGEM officials who lacked the proper authorization to do so.

Moreover, it found the agency authorized the expansion of existing projects without completing additional review. In one instance, the agency allowed a 640-acre project expansion — one that included the drilling of 400 new wells — without revisiting its initial review of the potential environmental or safety outcomes.

In an emailed statement, CalGEM said it “appreciates the audit” and has already made some of the changes, and welcomes the additional suggested improvements.

The Department of Finance has asked the agency to submit a plan within 60 days detailing how it intends to address the problems.

This is not the first state audit to find significant issues with the regulatory agency. A 2011 audit from the U.S. Environmental Protection Agency discovered that the agency had failed to implement necessary measures to protect drinking water, and in a follow-up review three years later, found it had still not addressed those problems.

Embrey of the Sierra Club said the findings of the audit are evidence of a much larger problem at the agency.

“They are understaffed and under-resourced,” she said. “And, I will say, there's a long, long revolving door between the regulators and the oil industry themselves.”