Capitol Alert

Oil industry allies challenge California regulator's funding request

A group of California lawmakers wants to block a funding increase for the regulatory agency that oversees the state's oil and gas industry, unless it tackles a backlog of applications for dozens of drilling projects.

In a letter sent last month to four members of the Senate and Assembly budget committees, 15 legislators requested that the budget chairs ask the Department of Oil, Gas and Geothermal Resources why it has not made "permit review as high a priority as inspections and enforcement" and whether it could redirect existing revenues to "better meet its requirement to maximize the recovery of resources."

"Over the past decade, DOGGR's staff has more than doubled while production in California has declined dramatically. Despite these added resources to fund additional staff and the decline in overall production, permits continue to be delayed and reviewed in a timely manner," the letter states. "We are requesting that you hold DOGGR accountable and that the agency does not grow its staff any further prior to addressing the permits backlog issue."

Their frustration echoes the California Independent Petroleum Association, a trade association for oil and natural gas companies, who pay fees that fund DOGGR's operations.

The association has raised concerns that its industry is suffering while 86 new project applications, tied to more than 2,000 proposed well sites, remain under review by DOGGR and the State Water Board, sometimes for years. California has already fallen from the third-largest oil-producing state last year to the sixth-largest this year, according to the association, and is on the verge of being taken by Colorado as well.

No one from the association was available to comment on the budget negotiations, a spokeswoman said Friday.

Among those who signed the letter are members of the Legislature's caucus of business-friendly Democrats, including Assemblyman Rudy Salas of Bakersfield, and a handful of Republicans.

Salas said they just want to get to the bottom of the permit holdup. Lawmakers also organized a meeting last month between the petroleum association and representatives from DOGGR.

"Back home, in my district, people are just trying to get to work," he said. "I would hate that to be because of a game that somebody is playing."

The oil and gas agency has generally been friendly with the industry it oversees, particularly under Gov. Jerry Brown. In 2011, he fired top regulators who later said they had warned him that his orders to override groundwater contamination protections and issue permits for oilfield injection wells would violate state and federal laws. Brown denied the allegations, but boasted publicly that their dismissals led to faster permitting.

DOGGR is seeking a funding increase of $7.9 million next year, which would be paid for with higher fees on permits, to add 27 employees for inspections and enforcement. While it advanced in the Senate, the Assembly budget committee has yet to approve the request.

The agency sent a letter to the Legislature on Friday further defending its need for the new positions. Department of Conservation spokeswoman Teresa Schilling said California has one of the lowest inspector-to-well ratios in the country and adding more employees in the field could allow those in administrative positions to put more focus on addressing the permit backlog.

"We're doing everything we can to ensure that oil and gas operations in California are done safely," she said.

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