California Oil Regulators Issued Hundreds Of Improper Permits, Audit Finds

Published on


November 26, 2020

California oil regulators ignored their own regulations and issued improper permits for hundreds of new wells last year, according to an audit by the state Department of Finance that was finalized this week.

That’s one of the findings in the long-awaited report, which concluded that while the troubled California Geologic Energy Management Divisionor CalGEM, “generally” complied with laws governing safe underground injection and fracking techniques, there were notable exceptions and significant room for improvement, including:

  • DUMMY FOLDERS. The audit found that CalGEM created 33 “placeholder” folders for large steam projects that were supposed to undergo geologic and engineering reviews. Fourteen of those were used to issue 201 related permits from April through October 2019. But there was no evidence that required reviews were conducted and the overall project was properly approved; instead, permits were issued with a “placeholder” project number. 
  • IMPROPER MODIFICATIONS OF PROJECTS. Auditors found that the agency allowed companies to modifylarge oilfield projects without forcing them to complete required additional reviews. In one instance, regulators signed off on a 640-acre oilfield expansion, adding 400 new wells to an existing project.
  • OUT-OF-DATE POLICIES. Although CalGEM’s oil and gas supervisor finalized new regulations for injection wells per the U.S. Safe Drinking Water Act in April 2019, it hasn’t bothered to update its own internal policies and processes to enforce those regulations. Instead, staff rely on badly outdated 2010 procedures or no standardized processes, the review found. There are multiple types of injection wells; some are used to inject contaminated wastewater from oil operations beneath the surface, while others blast steam underground to loosen up heavy crude oil.
  • SHODDY AND MISSING PAPERWORK. Staff incorrectly mapped and diagrammed some proposed fracking projects, and there was no available documentation of risk assessments they supposedly performed for others.

The auditors recommended that injection cease at improperly approved wells until they were tied to a properly approved project.

CalGEM has 60 days to submit a corrective action plan to the Finance Department. In a written response to the auditors, the agency said it has already implemented some changes and would work on others. Neither CalGEM nor the Department of Finance responded to e-mailed questions from The Desert Sun.

Underground injection projects again under scrutiny

The audit was requested after stories in The Desert Sun in 2019 revealed that CalGEM employees used so-called “dummy” folders to approve new injection wells for several oil companies that do risky steam injection.  While a CalGEM spokeswoman said at the time there were isolated instances of “dummy” folders, the reviewers found nearly three dozen, and the practice continued after it was made public.

High-pressure steaming has been linked to hundreds of oil spills in California oil fields, a Desert Sun/ProPublica investigation found, some of which have lasted for decades and been turned into now illegal but profitable unpermitted production sites for oil companies. The spills are dangerous for workers and damaging to wildlife.

Underground injection has been an area of controversy for the oil and gas agency for years. In 2014, documents revealed that thousands of UIC permits had been issued outside of legal “areas of review” meant to guarantee new wells won’t contaminate underground aquifers and harm drinking water and irrigation supplies. Since 2012, the agency has vowed to clean up the problems and review all of its UIC projects. 

CalGEM officials made those promises again this month after receiving a draft of the audit, saying in a letter to the auditors they were committed to “periodic” reviews of underground injection projects. They also said a “roundtable” of staff experts has been set up to devise standard operating procedures, but gave no timeline for when they would be implemented.

CalGEM also said it had rescinded approvals for some permits, though it didn’t say where or when. The agency said most improperly permitted wells had already been “merged” into the files of existing projects.  

Activists call audit ‘damning,’ say CalGEM practices ‘reckless’

Critics said CalGEM’s response made no sense.

“It’s unclear what they mean by ‘merging’ those illegal permits,” said Hollin Kretzmann, an attorney with the Center for Biological Diversity, an environmental group. “That would seem only to create a separate problem.”

Kretzmann also criticized state officials for releasing the report on the eve of Thanksgiving, when news coverage might be minimal. “It’s no wonder Gov. (Gavin) Newsom tried to bury this damning report the day before Thanksgiving,” Kretzmann said. “It shows state regulators have repeatedly ignored their own regulations to allow dangerous oil projects to go ahead without even reviewing the risks to our water, air and safety.”

He and other activists are angry about the continued issuance of fracking permits while the audit and other reviews have been underway.

Newsom recently came under fire for having dinner at the upscale French Laundry restaurant with close friend Jason Kinney during the COVID-19 pandemic. Kinney is a lobbyist whose firm represents Aera Energy, which received the first fracking permits after Newsom had placed a moratorium on them pending review by a national science laboratory.

In an email, Deputy Natural Resources Secretary Lisa Lien-Mager said the Newsom administration “has made it a clear priority to strengthen regulatory oversight of oil and gas production in California.”

She added: “We appreciate that the audit validated many of CalGEM’s practices and welcome the suggested process improvements, many of which already have been put in place or will be in place soon.”

She noted each fracking permit issued had undergone scientific scrutiny by the Lawrence Livermore National Laboratories.

But others disagreed. 

“California has some of the best environmental laws and regulations in the country. But laws and regulations are only good when they are followed,” said Liza Tucker with Consumer Watchdog, which closely monitors CalGEM and its permitting process.

“As this state audit confirms,” she said, CalGEM “continues to engage in its reckless practices of granting permits without proper review, rubberstamping illegal wells under ‘dummy files.’ It’s outrageous.”

Janet Wilson reports on the environment for The Desert Sun. Email her at jane[email protected] and follow her on Twitter @JanetWilson66.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases