Now That California Resources Corp. Will Buy Rival Berry Corp., It’s Time for Newsom to Demand Full Bonding to Avoid Taxpayers Holding the Bag

California regulators have not held the largest onshore oil producer in the state, California Resources Corp., adequately financially responsible for the wells of acquired companies such as Aera Energy. Now that the company known as CRC is buying yet another rival, Bakersfield-based Berry Corp., it’s time for California to demand enough bonding to protect the state’s taxpayers, Consumer Watchdog said today.
 
“This time around Governor Newsom and his regulators must stand up to the biggest onshore oil producer in the state by following existing laws on bonding to avoid saddling taxpayers with billions of dollars for well plugging and reclamation costs in the end,” said Consumer Advocate Liza Tucker. 
 
Last year, during the CRC/Aera deal’s finalization, David Shabazian, the then director of the Department of Conservation (DOC), allowed CRC to reduce its bonding obligation while he had a long-standing relationship with regulator-turned-corporate-lieutenant Jason Marshall. Marshall, who took a job at CRC in 2024, spent 28 years at the DOC where critics observed lax regulation under his leadership and financial conflicts of interest.
 
Shabazian had a 30-year DOC career until stepping down in August 2024 after Consumer Watchdog and FracTracker Alliance pointed out his undermining of the state bonding law and his relationship with Marshall.
 
“When CRC acquired Aera Energy last year, regulators sided with CRC to reduce its bonding amount to $30 million and allowed the two companies to share one liability bond on the flimsy pretext that the all-stock deal represented only a change in ownership but not in assets,” said Tucker. “The CRC/Berry deal is also an all-stock transaction. The Newsom Administration has a law on its side allowing it to declare full bonding, and only an inside deal between former colleagues derailed its application. With David Shabazian gone, Newsom now has a clean slate to demand full bonding.”
 
Wendy Carrillo is the author of AB 1167, a 2023 law to prevent the orphaning of wells by owners.  The legislation requires the buyer of another oil producer to file a bond with CalGEM in an amount the supervisor determines is enough to cover, in full, all costs of well plugging and remediation. Statutorily, a buyer can be required to post a bond of as much as $30 million.
 
But in June 2024, Shabazian refused to honor the law. In a specious letter to Wendy Carrillo, Shabazian stated, “Based on the SEC filings and materials provided to the Department, it is evident that only ownership of Aera Energy LLC is being transferred, not any of Aera’s assets.” Carrillo and nine other lawmakers disagreed in a letter written to CalGEM. “The wording triggers the full-cost bonding requirement upon any type of transfer, with a broad array of examples listed (‘by purchase, transfer, assignment, conveyance, exchange, or other disposition’),” the lawmakers wrote.
 
After the Berry acquisition, CRC will control more than 40,000 wells in California—more than 14,000 of them idle, according to research by Kyle Ferrar, Western Program Director of FracTracker Alliance. These idle wells now make up about nearly half (46.3%) of all idle wells in the state, the most held by any operator. That represents $1.6 billion in immediately necessary funds to cover plugging costs, according to Ferrar.  That breaks down to about $112,000 to plug one well. The cost to plug all of CRC’s 40,000 wells would come to $4.52 billion.
  
“The sad fact is that even a maximum bond of $30 million per acquisition transaction is not remotely enough to ensure that California taxpayers aren’t saddled with a giant environmental and fiscal mess if the acquisition involves more than a few hundred wells,” said Tucker.  “Lawmakers that just opened up Kern County, the cradle of oil production, to more drilling in a disastrous package of energy laws should take up this issue and ensure that the monetary bar is raised to reflect reality instead of giving oil companies yet another pass.”